Consumer choice as the ultimate goal of antitrust

University of Pittsburgh Law Review

Volumn 62, Issue 3, 2001, Pages 503-524

  Lande, Robert H ^a  

^a NONE

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EID: 0035613362     PISSN: 00419915     EISSN: None     Source Type: Journal    
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References (111)

1. Not every activity that distorts or restricts the choices that otherwise would be open to consumers is an antitrust violation, of course. The activity in question must also violate a specific antitrust statute.
2. See Neil W. Averitt & Robert H. Lande, Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law, 65 ANTITRUST L.J. 713 (1997).
3. Moreover, each product has a cluster of other attributes, such as quality and availability of related services. The free market will decide the mix of price, quality, and related attributes that consumers value most. See generally Neil W. Averitt & Robert H. Lande, Consumer Choice: The Practical Reason For Both Antitrust and Consumer Protection Law, 10 LOY. CONSUMER L, REV. 44, 44-46 (1998).
4. Some products are withdrawn from the market because not enough consumers desire to purchase them; some firms exit the market because they are not as innovative or efficient as rival firms; and some firms disappear through merger because they had not attained a minimum efficient scale. These processes reflect the ordinary workings of the marketplace. What antitrust forbids is conduct that artificially reduces the number of options directly, and without truly reflecting consumer choice.
5. Of course, it is not self-evident what will constitute an "artificial" restriction on the range of choice. Every contract restricts competition to some degree. Moving by merger from four firms to three is no more "artificial" than moving from one hundred to ninety-nine. The process is the same. All the choice cases must therefore be judged, in some way, by ascertaining the marginal value of the option that is lost through the conduct at issue, and condemning losses that are too great. This is basically a restatement of the rule of reason, and the choice description of the goals of antitrust is an application and embodiment of the rule of reason.
6. It is axiomatic that perfect competition, the perfect functioning of a competitive market, will maximize consumer choice and the welfare of consumers. Markets that diverge significantly from perfect competition may not do so, however. If a market's microeconomic characteristics differ dramatically from those required for perfect competition, a condition termed "market failure" can exist. When these problems are present, the overall level of consumer welfare may be far below what it otherwise would be, and wealth that Congress assigned to consumers may be "unfairly" acquired by firms with market power. For an extended discussion of the concept of market failure, see Averitt & Lande, supra note 2.
7. The antitrust statutes have as one of their goals enhancing economic efficiency. See Robert H. Lande, Wealth Transfers as the Original And Primary Concern of Antitrust: The Efficiency Interpretation Challenged, 34 HASTINGS L.J. 65 (1982), passim and especially at 106-26. The statutes serve other economic goals as well. The primary goal of these statutes is to prevent unfair transfers of wealth from consumers to firms with market power (the antitrust statutes) or to firms unfairly acting against consumer interests (the consumer protection statutes).
8. Some refinements and complexities should be added to this basic model if the circumstances require them. In some cases, the direction in which market power is exercised may be reversed, and it may be the manufacturers who need help in finding a range of marketplace options. This may be the case, for example, if a manufacturer is confronting a purchasing cartel that has agreed on a common policy to keep prices low. With appropriate adjustments, this article's orientation around the concept of consumer choice can accommodate these different circumstances. For the sake of simplicity in the following discussion, however, this article will normally speak in terms of the most common situation, which is that of ultimate consumers purchasing from a limited number of manufacturers.
9. Markets can fail to provide the optimal level of consumer choice for a variety of reasons. A leading scholar of the subject, Professor Edwin Mansfield, believes that perfect competition requires four conditions: product homogeneity, relatively small buyers and sellers, mobile resources, and perfect information. Significant problems in any of these areas can cause competition to be suboptimal. See EDWIN MANSFIELD, MICROECONOMICS: THEORY AND APPLICATIONS 232-33 (5th ed. 1985). Some of these market failures are external to the consumer, or "outside the head" of the consumer, leading to an inability of the market to provide sufficient options. Antitrust law may be viewed, in economic terms, as intended to identify and compensate for this type of market failure. By contrast, market failures internal to consumers cause problems that are within the realm of the consumer protection laws. Both types of market failures must be avoided if the economy is to work properly; a functioning market requires both a competitive array of options to begin with, and an ability on the part of consumers to choose effectively among them. A model economic consumer - all-knowing, all-rational, and supremely intelligent - is not vulnerable to consumer protection violations. But even this hypothetical "perfect" consumer could be vulnerable to antitrust violations. No consumer, no matter how astute, experienced, or well-informed, can protect him or herself against a cartel or illegally acquired monopoly. Except on rare occasions, ultimate consumers have no choice but to deal with a widget cartel or monopoly (or else to move to a less-desirable substitute); it generally is not cost effective for an individual consumer to build his or her own widget factory. By thus subdividing market failures into those taking place "inside" and "outside" the head of ultimate consumers, categories of economic analysis become most nearly congruent with the kinds of consumer choice problems of concern to antitrust and consumer-protection laws and agencies. Without such market failures, as this term was broadly defined above, there could be no antitrust violations significantly harming consumer welfare. For example, in a perfect, frictionless world, businesses could still meet and fix prices, resulting in a technical violation of the antitrust laws and even in criminal penalties. But it could not substantially harm consumer welfare, because perfect information among businesses would allow some to quickly enter the price-fixed markets and compete away supracompetitive margins. In fact, if other businesses in the industry possessed information that truly was perfect, they would know that prices were about to rise due to a price-fixing scheme and would have an incentive to enter quickly to obtain a share of the monopoly profits. This competition, if it occurred quickly and perfectly, would soon drive prices down to only an insignificant fraction above the competitive level. Consumer welfare thus would not be significantly lowered. What makes antitrust injury possible in these circumstances is the presence of external market failures. Market imperfections such as search costs, faulty information, time lags, and sunk costs can enable a cartel to keep prices elevated for a significant period. For an extended discussion of market failure issues in an antitrust and consumer protection context, see Averitt & Lande, supra note 2, at 722-34.
10. Markets can fail to provide the optimal level of consumer choice for a variety of reasons. A leading scholar of the subject, Professor Edwin Mansfield, believes that perfect competition requires four conditions: product homogeneity, relatively small buyers and sellers, mobile resources, and perfect information. Significant problems in any of these areas can cause competition to be suboptimal. See EDWIN MANSFIELD, MICROECONOMICS: THEORY AND APPLICATIONS 232-33 (5th ed. 1985). Some of these market failures are external to the consumer, or "outside the head" of the consumer, leading to an inability of the market to provide sufficient options. Antitrust law may be viewed, in economic terms, as intended to identify and compensate for this type of market failure. By contrast, market failures internal to consumers cause problems that are within the realm of the consumer protection laws. Both types of market failures must be avoided if the economy is to work properly; a functioning market requires both a competitive array of options to begin with, and an ability on the part of consumers to choose effectively among them. A model economic consumer - all-knowing, all-rational, and supremely intelligent - is not vulnerable to consumer protection violations. But even this hypothetical "perfect" consumer could be vulnerable to antitrust violations. No consumer, no matter how astute, experienced, or well-informed, can protect him or herself against a cartel or illegally acquired monopoly. Except on rare occasions, ultimate consumers have no choice but to deal with a widget cartel or monopoly (or else to move to a less-desirable substitute); it generally is not cost effective for an individual consumer to build his or her own widget factory. By thus subdividing market failures into those taking place "inside" and "outside" the head of ultimate consumers, categories of economic analysis become most nearly congruent with the kinds of consumer choice problems of concern to antitrust and consumer-protection laws and agencies. Without such market failures, as this term was broadly defined above, there could be no antitrust violations significantly harming consumer welfare. For example, in a perfect, frictionless world, businesses could still meet and fix prices, resulting in a technical violation of the antitrust laws and even in criminal penalties. But it could not substantially harm consumer welfare, because perfect information among businesses would allow some to quickly enter the price-fixed markets and compete away supracompetitive margins. In fact, if other businesses in the industry possessed information that truly was perfect, they would know that prices were about to rise due to a price-fixing scheme and would have an incentive to enter quickly to obtain a share of the monopoly profits. This competition, if it occurred quickly and perfectly, would soon drive prices down to only an insignificant fraction above the competitive level. Consumer welfare thus would not be significantly lowered. What makes antitrust injury possible in these circumstances is the presence of external market failures. Market imperfections such as search costs, faulty information, time lags, and sunk costs can enable a cartel to keep prices elevated for a significant period. For an extended discussion of market failure issues in an antitrust and consumer protection context, see Averitt & Lande, supra note 2, at 722-34.
11. Of course, not every horizontal restraint is illegal. A joint venture that increases industry-wide innovation, for example, is generally procompetitive and legal. See A.B.A. ANTITRUST LAW SECTION, ANTITRUST LAW DEVELOPMENTS (THIRD) (3d ed. 1992); HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY 140-240 (1994).
12. Of course, not every horizontal restraint is illegal. A joint venture that increases industry-wide innovation, for example, is generally procompetitive and legal. See A.B.A. ANTITRUST LAW SECTION, ANTITRUST LAW DEVELOPMENTS (THIRD) (3d ed. 1992); HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY 140-240 (1994).
13. Price fixing also can, to a small degree, distort consumer choice. A few consumers might not purchase if they knew that prices were fixed. The principal reason why the antitrust laws condemn price fixing, however, is because it eliminates the option of price competition from the market.
14. Price fixing also has a number of indirect anticompetitive effects. It shields inefficient firms from hard competition. See Lande, supra note 7, at 78-79. It also causes allocative inefficiency and a transfer of wealth from consumers to producers. Id. at 72-77.
15. For an excellent discussion of predatory pricing theory and case law, see James D. Hurwitz & William E. Kovacic, Judicial Analysis of Predation: The Emerging Trends, 35 VAND. L. REV. 63 (1982), and HOVENKAMP, supra note 10, at 298-328.
16. For an excellent discussion of predatory pricing theory and case law, see James D. Hurwitz & William E. Kovacic, Judicial Analysis of Predation: The Emerging Trends, 35 VAND. L. REV. 63 (1982), and HOVENKAMP, supra note 10, at 298-328.
17. This assumes the existence of effective barriers to entry, for without them similar firms would be able to enter and offer the desired options.
18. HOVENKAMP, supra note 10, at 455-66, 479-88.
19. J.R. Gould & B.S. Yamey, Professor Bork on Vertical Price Fixing, 76 YALE L.J. 722, 729 (1967) (stating that "r.p.m. [resale price maintenance] restricts the range of consumers' choice. . . . The restriction of the range of consumers' choice is prima facie against public policy.") (emphasis in original). For an overview of these effects, see Alan A. Fisher et al., Do the DOJ Vertical Restraints Guidelines Provide Guidance?, 32 ANTITRUST BULL. 609, 615-23 (1987).
20. J.R. Gould & B.S. Yamey, Professor Bork on Vertical Price Fixing, 76 YALE L.J. 722, 729 (1967) (stating that "r.p.m. [resale price maintenance] restricts the range of consumers' choice. . . . The restriction of the range of consumers' choice is prima facie against public policy.") (emphasis in original). For an overview of these effects, see Alan A. Fisher et al., Do the DOJ Vertical Restraints Guidelines Provide Guidance?, 32 ANTITRUST BULL. 609, 615-23 (1987).
21. Fisher et al., supra note 16, at 615-23.
22. Id. at 615-16. Moreover, these offsetting efficiencies can sometimes be characterized as attempts to overcome market failures. See id. (discussing the point of sale "free-rider" problem).
23. W. at 615-16. For this reason, non-price vertical restraints are judged under a rule of reason standard. See Cont'l T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977). Many believe that RPM also should be judged under the rule of reason or that it even should be deemed per se legal. See Fisher et al., supra note 16, at 615 n.18.
24. See Thomas G. Krattenmaker & Steven C. Salop, Anticompetitive Exclusion: Raising Rivals' Costs to Achieve Power Over Price, 96 YALE L.J. 209 (1986).
25. For a thorough explanation and discussion of the necessary prerequisites to this conduct, see Thomas G. Krattenmaker et al., Monopoly Power and Market Power in Antitrust Law, 76 GEO. L.J. 241, 248-53, 265-69 (1987).
26. As an additional example, see Jacob Inwald & Anthony A. Carli, Jr., Note, The Treatment of Delivery Services Under Section 2(e) of the Robinson-Patman Act, 51 GEO. WASH.L.REV.727, 727 (1983) (stating that the legislative history of the Robinson-Patman Act evidences that Congress believed "that the public interest in competition and consumer choice would suffer from the demise of small business, [and it therefore] enacted the Robinson-Patman Act in 1936 . . .").
27. Depending on the specific antitrust principle involved, improper restrictions on consumer options may occur either directly as a result of firms' actions vis-à-vis their customers, or indirectly as a result of firms' actions vis-à-vis their competitors. For example, if a firm with market power over a product will sell it only when packaged with a second product, consumers' choices are directly reduced and distorted. The firm's action vis-à-vis its customers may be condemned as an illegal tying arrangement. Alternatively, suppose that a firm merges with all of its competitors and then raises prices to a monopoly level. While monopoly pricing and the production of only a single brand is not illegal, the process by which the firm acquired this power to constrain options certainly might be illegal. The firm's actions vis-à-vis its competitors may then be condemned as involving anticompetitive mergers.
28. 374 U.S. 363 (1968).
29. See id. at 368.
30. Id.
31. See also Brown Shoe Co. v. United States, 370 U.S. 294, 345 n.72 (1962) (The discussed legislative history of Section 7 of the Clayton Act and found that "expansion through merger is more likely to reduce available consumer choice while providing no increase in industry capacity, jobs or output. It was for these reasons, among others, Congress expressed its disapproval of successive acquisitions.").
32. See Aspen Skiing Co. v. Aspen Highland Skiing Corp., 472 U.S. 585, 610 (1985) (finding the defendant's behavior to be based on discouraging business with the plaintiff, and thereby not allowing "consumers to make their own choice on these matters of quality"); Berkey Photo v. Eastman Kodak Co., 603 F.2d 263, 287 (2d Cir. 1979) (The court found that whether a monopolist creates an inferior product is irrelevant, and the "only question that can be answered is whether there is sufficient demand for a particular product to make its production worthwhile, and the response, so long as the free choice of consumers is preserved, can only be inferred from the reaction of the market."); GAF Corp. v. Eastman Kodak Co., 519 F. Supp. 1203, 1227 (S.D.N.Y. 1981) (The court discussed unlawful uses of monopoly power such as using monopoly power in one market to distort consumer choice in another market. A monopolist's use of monopoly power in one market to coerce consumer choice of its new product in the same market is also unlawfully coercive.); Hewlett-Packard Co. v. Boston Scientific Corp., 77 F. Supp. 2d 189, 199 (D. Mass. 1999) (The court denied defendant's motion to dismiss plaintiffs Sherman Act Section 2 claim, stating "[plaintiff] claims that [defendant] injured the competitive process by engaging in predatory acts which drove [plaintiff] out of the market for both consoles and catheters, depriving consumers of a meaningful choice of competing innovative products. If proven, these allegations are sufficient to show that [defendant] injured competition, which is exactly the type of injury the antitrust laws were designed to prevent.").
33. See Ghem, Inc. v. Mapco Petroleum, 767 F. Supp. 1418, 1422 (M.D.Tenn. 1990) (Noantitrust violation occurred because plaintiff failed "to suggest how [defendant's] pricing practices have hindered consumer choices."); Gowan Car Care Ctr. v. Murphy Oil USA, 2000 WL 1477789, at *8, 230 F.3d 1358 (6th Cir. 2000) ("Plaintiffs have failed to suggest how [defendant's] pricing practices have hindered consumer choices. In fact, it seems quite clear that consumers have benefitted . . . ."); Sterns Airport Equip. v. FMC Corp., 170 F.3d 518, 531 (5th Cir. 1999) ("[T]he [pricing] conduct at issue did not violate the antitrust laws. It was merely vigorous competition, and the ultimate consumer of the product at all times retained the power of choice."); General Indus. Corp. v. Hartz Mountain Corp., 810 F.2d 795, 804 (8th Cir. 1987) (The jury could make the reasonable inference that the defendant's practice attempted to monopolize the relevant market, and thereby "preempt[ed] any opportunity for the consumer to make a real choice.").
34. See NCAA v. Board of Regents, 468 U.S. 85, 102 (1984) (Conduct is deemed procompetitive where the "[defendant's] actions widen consumer choice - not only the choices available to sports fans but also those available to athletes . . . ."); FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 459 (1986) (The Court found that a horizontal agreement to restrain trade which limits "consumer choice by impeding the 'ordinary give and take of the marketplace,' cannot be sustained under the Rule of Reason.") (quoting Nat'l Soc'y of Prof. Eng'r v. United States, 435 U.S. 679, 692 (1978)); United States v. Nat'l Soc'y of Prof. Eng'r, 404 F. Supp. 457, 460 (D.D.C. 1975), rev'd on other grounds, 935 U.S. 679 (1978) ("[S]ince alternative sources (e.g., non-licensed professional engineers) are non-existent, the impact upon the public of defendant's pricing restraint is plain. Without the ability to utilize and compare prices in selecting engineering services, the consumer is prevented from making an informed, intelligent choice.").
35. See S.C. Communis. v. FCC, 56 F.3d 1484 (D.C. Cir. 1995) (finding that the vertical merger was not in violation of antitrust laws, as the FCC determined the pro-competitive effects substantially outweighed the anti-competitive effects). See also In re Applications of McCaw & AT&T Co., 9 F.C.C.R. 5386, 1994 WL 511406 (Sept. 19, 1994).
36. Full Draw Prod. v. Easton Sports Inc., 182 F.3d 745, 755 (10th Cir. 1999) (For purposes of standing on the claimed antitrust injury, "[t]he effect of defendants' alleged boycott was not to increase competition between the two trade shows, but rather to distort and ultimately reduce competition by destroying one source of output . . . and thereby limiting consumer choice to the other source of output. . . ."); Wilk v. AMA, 895 F.2d 352, 360 (7th Cir. 1990) (The Circuit Court affirmed the District Court's opinion that the defendant's boycott was illegal, as "[i]t is anticompetitive and it raises costs to interfere with the consumer's free choice to take the product of his liking. . . .") (citing Wilk v. AMA, 671 F. Supp. 1495, 1478-79 (N.D. Ill. 1987)).
37. Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 27 (1984) ("Tying arrangements need only be condemned if they restrain competition on the merits by forcing purchases that would not otherwise be made."); Roy B. Taylor Sales, Inc. v. Hollymatic Corp., 28 F.3d 1379, 1384 (5th Cir. 1994) (finding that a tying arrangement did not exist and further stating that in tying arrangements, "a foreclosure of choice to an ultimate consumer appears to be the principal key to a tie that is illegal per se"); Berkey Photo Inc. v. Eastman Kodak Co., 603 F.2d 263, 270-71 (2d Cir. 1979) (discussing the 1954 FTC investigation of Kodak's "tie-in" arrangement requiring Kodak to process film purchased by consumers and stating "[c]onsumers had little choice but to purchase Kodak film, and in so doing they acquired the right to have that film developed and printed by CP&P at no further charge"); Northern Pac. Ry. v. United States, 356 U.S. 1, 6 (1958) (In tying arrangements, "buyers are forced to forego their free choice between competing products."); Rosebrough Monument Co. v. Mem'l Park Cemetery Ass'n, 666 F.2d 1130, 1138, 1139 (8th Cir. 1981) (Defendant trade association's practice of providing members with the exclusive right to "prepare the foundation, place, and maintain monuments in their respective cemeteries" "stunts rather than develops trade within the cemetery industry and limits consumer choice and the free flow of commerce.").
38. Image Technical Servs. Inc. v. Eastman Kodak Co., 125 F.3d 1195, 1212 (9th Cir. 1997) (One factor leading to conclusion that the defendant's practices were actionable was that "Kodak's market share in the equipment market further limit[ed] choices by consumers.").
39. See Barry v. Blue Cross, 805 F.2d 866, 873 (9th Cir. 1986) (The court found that the vertical agreement between physicians and the defendant insurance company to refer patients to defendant's participating physicians was not a violation of antitrust law and actually had the pro-competitive effect of "offer[ing] consumers the added choice of health care services subject to a sort of central 'quality control.'").
40. In deciding this case, Judge Thomas P. Jackson bifurcated the factual and legal findings into two reported decisions. The Findings of Fact are available at United States v. Microsoft, 84 F. Supp. 2d 9 (D.D.C. 1999), and the Conclusions of Law are available at United States v. Microsoft, 87 F. Supp. 2d 30 (D.D.C. 2000). I am grateful to Michaela Roberts for excellent assistance with the research and analysis that went into this section.
41. See United States v. Microsoft Corp., 84 F. Supp. 2d 9 (D.D.C. 1999).
42. See United States v. Microsoft Corp., Brief for Appellees United States and the State Plaintiffs (Jan. 12, 2001), available at http://www.usdoj.gov/atr/cases/f7200/7230.htm (last visited Mar. 10, 2001) (choose Word Perfect version); United States v. Microsoft Corp., Brief for Defendant-Appellant (Nov. 27, 2000), available at http://ecfp.cadc.uscourts.gov/MS-Docs/1602/0.pdf (last visited Jan. 19, 2001).
43. See United States v. Microsoft Corp., Brief for Appellees United States and the State Plaintiffs (Jan. 12, 2001), available at http://www.usdoj.gov/atr/cases/f7200/7230.htm (last visited Mar. 10, 2001) (choose Word Perfect version); United States v. Microsoft Corp., Brief for Defendant-Appellant (Nov. 27, 2000), available at http://ecfp.cadc.uscourts.gov/MS-Docs/1602/0.pdf (last visited Jan. 19, 2001).
44. The Government asserted, in the United States' brief, for example, in the heading of a major section of its Joint Proposed Conclusions of Law: "A Monopolist May Not Deliberately Take Actions That Erect Obstacles To Consumer Choice On The Merits . . ." (Heading, Section I(B)(1). Another heading asserted that "Microsoft Took Costly Actions That Impaired Consumer Choice . . ." (Heading, Section I(B)(2)). Microsoft, by contrast, stressed its innovations; it asserted that its conduct was only meeting the demands of consumers, and it alleged that its actions benefited consumers in numerous ways, most of which had nothing to do with price. Summary of Proposed Findings of Fact at 2-3.
45. In antitrust, alarm bells normally go off at the prospect of a firm raising the price of something by 20% due to anticompetitive conduct. This is not the case in the computer area, however, because prices are typically decreasing. Innovation and the enhanced choices that innovation makes possible are normally more important than price effects in these markets. See also supra note 12.
46. See supra notes 39-40.
47. Judge Jackson's Findings of Fact in the Microsoft case ends with a section titled "The Effect on Consumers of Microsoft's Efforts To Protect The Applications Barrier To Entry." See Microsoft, 84 F. Supp. 2d at 110. This section discusses the deleterious effects of Microsoft's conduct on consumer choice or innovation in almost every paragraph. He did not, however, even make a single finding that Microsoft raised the price of any of its products to specific levels. Pricing issues were minor ones in his Findings of Fact and Conclusions of Law.
48. See Microsoft, 84 F. Supp. 2d at 15. Jackson stated, "a consumer would not obtain a satisfactory substitute for an Intel-compatible PC operating system even if he purchased a server, since server operating systems lack the features - and support for the breadth of applications - that induce users to purchase Intel-compatible PC operating systems." Id.
49. See id. at 19. Judge Jackson found, "[t]he consumer wants an operating system that runs not only types of applications that he knows he will want to use, but also those types in which he might develop an interest later." Id.
50. Jackson found that [t]he actions that Microsoft took against Navigator hobbled a form of innovation that had shown the potential to depress the applications barrier to entry sufficiently to enable other firms to compete effectively against Microsoft in the market for Intel-compatible PC operating systems. That competition would have conduced to consumer choice and nurtured innovation. Id. at 111-12.
51. See id. The decision states, By refusing to offer those OEMs who requested it a version of Windows without Web browsing software, and by preventing OEMs from removing Internet Explorer - or even the most obvious means of invoking it - prior to shipment, Microsoft forced OEMs to ignore consumer demand for a browserless version of Windows. Id. at 111.
52. See id. at 48.
53. See id. at 111.
54. Microsoft, 84 F. Supp. 2d at 112.
55. See Microsoft, 87 F. Supp. 2d at 44. Judge Jackson held, "Microsoft's anticompetitive actions trammeled the competitive process through which the computer software industry generally stimulates innovation and conduces to the optimum benefit of consumers." Id.
56. "Microsoft was willing . . . to obstruct the development of Windows-compatible applications if they would be easy to port to other platforms and would thus diminish the applications barrier to entry." Id.
57. Id. at 50. The decision states: Considering the "character of demand" for the two products, as opposed to their "functional relation," Web browsers and operating systems are "distinguishable in the eyes of buyers." Consumers often base their choice of which browser should reside on their operating system on their individual demand for the specific functionalities or characteristics of a particular browser, separate and apart from the functionalities afforded by the operating system itself. Id. (citations omitted).
58. Id. at 51. Judge Jackson stated "[t]his Court concludes that Microsoft's decision to offer only the bundled - 'integrated' - version of Windows and Internet Explorer derived not from technical necessity or business efficiencies; rather, it was the result of a deliberate and purposeful choice to quell incipient competition before it reached truly minatory proportions."
59. See Brief for Appellant-Defendant, supra note 38, at 12 (stating "[c]onsumers - the intended beneficiaries of the antitrust laws - have greatly benefitted from Microsoft's efforts to offer improved products at attractive prices") (emphasis added); Brief for Appellees-United States and the State Plaintiffs, supra note 38, at 121 ("Microsoft violated the antitrust laws through a wide range of predatory and exclusionary acts that maintained its operating system monopoly by protecting and raising the applications barrier to entry. That illegal conduct restricted consumer choice and deterred innovation in the personal computer industry.").
60. See Brief for Appellees-United States and the State Plaintiffs, supra note 38, at 3, 8-9, 11-12, 19-20, 24-25, 27, 42-43 of argument section.
61. See id. at 44.
62. See id. at 84. The government stated that "maintaining this monopoly necessarily generates future harm to consumers, in addition to the harm they already had experienced through the constriction of their choices." Id.
63. Id. at 125.
64. See Brief for Appellant-Defendant, supra note 38, at 2 (arguing that Microsoft's integration of an Internet browser with its operating system and free distribution of that integrated product "clearly benefitted [consumers] . . .").
65. Id. at 93.
66. Id. at 74.
67. Id. at 80.
68. Id. at 80, 83.
69. A choice analysis may or may not call for stricter antitrust enforcement in a particular industry, but it will never call for looser enforcement. For example, this analysis as applied to mergers will require, in all cases, at least the number of firms required by the Merger Guidelines, in order to protect the basic range of price options. However, to protect the non-price options, some further number of firms may sometimes be required.
70. Non-price competition is often extremely important to both businesses and consumers. Such competition can take place in terms of innovation, scheduling, service, convenience, or product variety. Such factors can be especially important in particular industries. At certain times in the past, for example, the airlines appeared to compete in large part in terms of scheduling and convenience. Also, members of the motion picture industry still compete in terms of product innovation. These qualities may or may not be readily expressed in terms of price, but they definitely affect the range of choice in the marketplace and thus are easily comprehended under a formula that focuses on the factor of choice.
71. Personal Protective Armor Association, 59 Fed. Reg. 19019 (1994).
72. See Int'l Ass'n of Conference Interpreters, Docket No. 9270, slip op. at 35-36 (Feb. 19, 1997), available at http://www.ftc.gov/os/adjpro/d9270/index.htm (The court found violations on price fixing and other per se theories, but dismissed for insufficient proof the charges involving non-price restraints judged under the rule of reason. "With the exception of three findings . . . all of the effects discussed by the ALJ stem from the price-related restraints.").
73. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines, 62 ANTITRUST & TRADE REG. REP. (BNA) § 0.1, at 107 (Apr. 2, 1992).
74. Id.
75. "Sellers with market power also may lessen competition on dimensions other than price, such as product quality, service, or innovation." Id. at n.6.
76. The footnote actually elaborates this consideration at somewhat more length than the federal guidelines. It reads: "Tacit or active collusion on terms of trade other than price also produces wealth transfer effects. This would include, for example, an agreement to eliminate rivalry on service features or to limit the choices otherwise available to consumers." 4 TRADE REG. REP. (CCH) ¶ 13,405, at 21,186 n.17.
77. Id. at 21,185.
78. See, e.g., FTC v. PPG Indus., Inc., 798 F.2d 1500 (D.C. Cir. 1986) (preliminarily enjoining merger of manufacturers of high technology aircraft transparencies, who competed, among other ways, in new product development).
79. The common editorial stamp may be particularly troublesome if the different communications companies appear to be competing and if consumers therefore do not have their critical guard up. This might happen if their underlying common ownership is not generally known, and if they are structured to pursue different formats or market niches in a way that suggests different editorial viewpoints. For example, on November 2, 1999, American Media purchased Globe Communications for $105 million. This merger resulted in the combined ownership of three of the best known supermarket tabloids: the National Enquirer, the Star, and the Globe. David Pecker, chief executive and chairman of American Media, stated that he intended to develop clear editorial differences among the three papers, giving the company the ability to compete at each level of sophistication with the market's newer competitors. See Paul Farhi, Three-Headed Baby? Rival Tabloids Joined in Corporate Deal, WASH. POST, Nov. 3, 1999, at C01.
80. Antitrust enforcers could not challenge every merger involving intellectual property on the grounds that, by removing the products of the acquired firm as an independent force in the market, the merger would necessarily impair consumer choice. True, in some linguistic sense every merger of a product involving some element of creativity removes a choice from the market. The incorporation of Oldsmobile into General Motors deprived those consumers who preferred the independent Oldsmobile design department ofthat choice. This deprivation of choice alone cannot be the basis for illegality, however, for such an argument would prove too much. It would result in the illegality of every merger involving non-fungible products, regardless of how small the element of independence in the product or how much or how little importance consumers attach to that independence in the context of the particular product involved. Congress cannot have intended this to constitute the "substantial" lessening of competition that is the concern of Section 7. Actually figuring out how to express the threshold of substantiality for different types of non-price competition would be a difficult job, of course, but it is one that needs to be undertaken if antitrust is to come to grips with this set of issues.
81. This is one of the principal reasons for the enactment of the Newspaper Preservation Act. Competing newspapers are permitted to form Joint Operating Agreements in order to save money and avoid a downward spiral that might result in bankruptcy. They are required to do so, however, in a manner that preserves editorial competition and reportorial competition.
82. As Robert Pitofsky, Chair, Federal Trade Commission, observed: [If] you have issues in the newspaper business, in book publishing, news generally, entertainment, . . . you want to be more careful and thorough in your investigation than if the very same problems arose in cosmetics, or lumber, or coal mining. [If] somebody monopolizes the cosmetics fields, they're going to take money out of consumers' pockets, but the implications for democratic values are zero. On the other hand, if they monopolize books, you're talking about implications that go way beyond what the wholesale price of the books might be. Alec Kleil, A Hard Look at Media Mergers, WASH. POST, Nov. 29, 2000, at E1, available at http://www.washtech.com/news/merger/5513-1.html (last visited Apr. 4, 2001).
83. An absence of price effects is particularly likely if we assume relatively low entry barriers and a strategy of limit pricing by the firms in the market.
84. See James V. Grimaldi, Battle of the Titans, WASH. POST, Nov. 27, 2000, at E8; Kathy Chen, Antitrust-Advocacy Group Seeks Breakup of Voter News Service, Citing Florida, WALL ST. J., Nov. 28, 2000, at A12; Associated Press, Breakup of Voter News Service Urged, JSONUNE: MILWAUKEE J. SENTINEL (Nov. 28, 2000), available at http://www.jsonline.com/election2000/ap/nov00/ap-recountvns112800.asp (last visited Apr. 4, 2001).
85. See James V. Grimaldi, Battle of the Titans, WASH. POST, Nov. 27, 2000, at E8; Kathy Chen, Antitrust-Advocacy Group Seeks Breakup of Voter News Service, Citing Florida, WALL ST. J., Nov. 28, 2000, at A12; Associated Press, Breakup of Voter News Service Urged, JSONUNE: MILWAUKEE J. SENTINEL (Nov. 28, 2000), available at http://www.jsonline.com/election2000/ap/nov00/ap-recountvns112800.asp (last visited Apr. 4, 2001).
86. See James V. Grimaldi, Battle of the Titans, WASH. POST, Nov. 27, 2000, at E8; Kathy Chen, Antitrust-Advocacy Group Seeks Breakup of Voter News Service, Citing Florida, WALL ST. J., Nov. 28, 2000, at A12; Associated Press, Breakup of Voter News Service Urged, JSONUNE: MILWAUKEE J. SENTINEL (Nov. 28, 2000), available at http://www.jsonline.com/election2000/ap/nov00/ap-recountvns112800.asp (last visited Apr. 4, 2001).
87. See id.
88. See also Jeremy Gerard, TV Networks May Approve A Pool of Election Exit Polls, N.Y. TIMES, Oct. 31, 1989, at C26; James A. Barnes, The Polling Business, 5 THE PUBLIC PERSPECTIVE, Nov. 1993, No. 1, at 17; Reuven Frank, Election Night; On Television, 75 THE NEW LEADER, No. 13, at 20.
89. See also Jeremy Gerard, TV Networks May Approve A Pool of Election Exit Polls, N.Y. TIMES, Oct. 31, 1989, at C26; James A. Barnes, The Polling Business, 5 THE PUBLIC PERSPECTIVE, Nov. 1993, No. 1, at 17; Reuven Frank, Election Night; On Television, 75 THE NEW LEADER, No. 13, at 20.
90. See also Jeremy Gerard, TV Networks May Approve A Pool of Election Exit Polls, N.Y. TIMES, Oct. 31, 1989, at C26; James A. Barnes, The Polling Business, 5 THE PUBLIC PERSPECTIVE, Nov. 1993, No. 1, at 17; Reuven Frank, Election Night; On Television, 75 THE NEW LEADER, No. 13, at 20.
91. As one news commentator observed: "When each news team talked about 'our projection' and 'our call,' it was, in effect, committing consumer fraud." Moshe Adler, Bungled Election Projection? Blame the Feds!, available at http://www.salon.com/tech/feature/2000/12/07/antitrust/index.html (last visited Dec. 7, 2000).
92. Id.
93. Id. 85. A similar situation arose with a court case in Israel in 1998. See Determination Pursuant to Section 43(a)(1) of the Antitrust Law, 5748-1988, A Restrictive Practice Between the Second Channel News Company and the Israel Broadcasting Authority (Jan. 20, 1998) (concerning the Israeli court case). In that case, the only existing Israeli news channels, Second Channel and Israel Broadcasting Authority, agreed to coordinate their broadcasting of speeches by public officials. See id. Executives from both channels met and determined the time both would air speeches, as well as the editing of these speeches. See id. The Israeli Antitrust Commission argued that the activity was anticompetitive as it diminished the competition between the two channels for viewers. See id. However, the channels argued that their coordination aided them in their "duty to prevent public figures from 'dictating to the media what should be published, including the timing and content of such publications,' . . . and . . . [avoiding] the situation of 'people talking above the heads of the reporters and deciding for [the channels] when . . . and . . . how to have press conferences. . . .'" Id. The court did not agree with the news channels and found the coordination to be a restrictive practice under Israeli antitrust law. See id. The court stated: "Before us is a 'practice,' within the meaning pursuant to the Law - as a joint framework for the making of commercial decisions (in this case, what would and what would not be broadcast), constitutes a 'practice.'" Id. Further the court stated [i]ndeed, by the practice entered into by the Networks, the two restricted themselves in relation to each other. Each one of them denied itself, by agreement, some of the right to make autonomous decisions regarding the manner of covering events such as press conferences, taking place during peak viewing hours. Id. Finally, the court found that "[t]he uniform front has a commercial impact, including an impact on the viewing ratings of each of the Networks. Needless to say, viewing ratings are a measure of professional - and occasionally also artistic - success, and a basis for commercial success." Id. In sum the court held that [t]he existence of competition between the television Networks operates to the benefit of the consumer; it gives rise to competition for his preferences, and thus causes an incessant effort to cater more accurately to his taste. The prevention of competition in this case is a restrictive practice, damaging the consumer's welfare. Id. After the court rendered this decision, both channels appealed. Ariel Katz was one of the government's attorneys handling the appeal. He states: "Quite disappointingly, the case ended in a sort of consent decree in which the channels fundamentally agreed not to engage in any coordination of the content of their broadcast without prior notification to the Commissioner. . . ." E-mail from Ariel Katz to Robert H. Lande dated Nov. 12, 2000 (on file with the authors). He further commented on the impact this decision would have in Israel if those news channels created an agreement similar to that of the Voter News Service, [I]f our channels chose to supply a coordinated election prediction, they would have to notify their intention to the Commissioner who would be able to challenge it. As it seems, we have only 2 news channels in Israel but their separate assessments on election nights really marks and highlights the competition between them. Id.
94. Antitrust Guidelines For Collaborations Among Competitors, Federal Trade Commission and the U.S. Department of Justice (Apr. 7, 2000), available at http://www.ftc.gov/os/1999/9910/ jointventureguidelines.html.
95. See Associated Press v. United States, 326 U.S. 1 (1945).
96. Moshe Adler observes that [m]ost events require coverage from different angles in order for the public to get a full picture, and even then, most stories are too complex for the kind of postmortem applied to the election prediction. When angles are missing, how is the public to know that anything is amiss? . . . . . . [T]extbook economics is built on the assumption that consumers are fully informed about the quality of the product they are getting. Such is not the case in the media: If consumers are offered only a few sources of news, how can they know what they're missing? Adler, supra note 82.
97. An unusual example may be that of supermarket tabloids. Due to a recent merger, all of the major supermarket tabloids are now owned by one company. American Media, Inc. owns the National Enquirer, Star, Globe, National Examiner, Sun and Weekly World News. Rather than continuing to compete with one another, each publication reportedly will specialize in one niche of the tabloid market. For example, the Enquirer will focus on Hollywood news, the Sun will use health and religious stories to appeal to the 55+ audience, and the Weekly World News will concentrate on stories involving aliens, UFOs, and Elvis. See Sensationalism Six Pack: One Company Owns All the U.S. Supermarket Tabloids, SKEPTICAL ENQUIRER, 8, Jan./Feb. 2001, quoting the AMERICAN JOURNALISM REVIEW, available at http://ajr.newslink.org/ajrdarciesept00.html. In addition, the author of a critical biography of Michael Eisner, CEO of Disney Corp., recently charged that she is being boycotted by Disney-owned publications. If true, this conduct could be an example of the kind of abuse that arises from undue media concentration. In the extreme, this type of behavior could even threaten the free competition of ideas in our society. See Eisner Biographer Mousetrapped?, WASH. POST, Mar. 16, 2000, at C3. Other specialty media markets also are showing signs of increased concentration. For example, the world of gay and lesbian media has consolidated markedly over the last six years. The proposed merger of Liberation Publications with Planet Out, each with a history of mergers and acquisitions, is illustrative of this trend. On November 15, 2000, the two largest Internet companies targeting this market, Planet Out and Gay.com, announced their merger. This merger created a media outlet with 1.6 million registered users that reaches 3.5 million individuals a month. The nearest competitor, Gaywired.com, has a mere 500,000 users. Prior to this merger, Planet Out had already subsumed OnQ, another large on-line service, and purchased a substantial share of Gay Financial Network (gfn.com). Meanwhile, in 1996, Los Angeles- based Liberation Publications (LPI), publisher of the Advocate, purchased Boston based Alyson Publications, the oldest gay and lesbian trade book publisher in the country. In April, 2000, LPI purchased its largest competitor, New York-based Out magazine, creating a company with a joint circulation of 200,000, or roughly five times greater that its closest competitor. In February of 2000, LPI and Planet Out announced their merger, a deal which as of February 2001 is still not final. In response to increased concentration in this specialized media market, community advocates are urging members of the gay and lesbian community to contact the Antitrust Division of the Department of Justice to complain. See Michael Bronski, Gay Media Monopoly, at http://www.Zmag.org/commentaries (last visited Feb. 18, 2001).
98. An unusual example may be that of supermarket tabloids. Due to a recent merger, all of the major supermarket tabloids are now owned by one company. American Media, Inc. owns the National Enquirer, Star, Globe, National Examiner, Sun and Weekly World News. Rather than continuing to compete with one another, each publication reportedly will specialize in one niche of the tabloid market. For example, the Enquirer will focus on Hollywood news, the Sun will use health and religious stories to appeal to the 55+ audience, and the Weekly World News will concentrate on stories involving aliens, UFOs, and Elvis. See Sensationalism Six Pack: One Company Owns All the U.S. Supermarket Tabloids, SKEPTICAL ENQUIRER, 8, Jan./Feb. 2001, quoting the AMERICAN JOURNALISM REVIEW, available at http://ajr.newslink.org/ajrdarciesept00.html. In addition, the author of a critical biography of Michael Eisner, CEO of Disney Corp., recently charged that she is being boycotted by Disney-owned publications. If true, this conduct could be an example of the kind of abuse that arises from undue media concentration. In the extreme, this type of behavior could even threaten the free competition of ideas in our society. See Eisner Biographer Mousetrapped?, WASH. POST, Mar. 16, 2000, at C3. Other specialty media markets also are showing signs of increased concentration. For example, the world of gay and lesbian media has consolidated markedly over the last six years. The proposed merger of Liberation Publications with Planet Out, each with a history of mergers and acquisitions, is illustrative of this trend. On November 15, 2000, the two largest Internet companies targeting this market, Planet Out and Gay.com, announced their merger. This merger created a media outlet with 1.6 million registered users that reaches 3.5 million individuals a month. The nearest competitor, Gaywired.com, has a mere 500,000 users. Prior to this merger, Planet Out had already subsumed OnQ, another large on-line service, and purchased a substantial share of Gay Financial Network (gfn.com). Meanwhile, in 1996, Los Angeles- based Liberation Publications (LPI), publisher of the Advocate, purchased Boston based Alyson Publications, the oldest gay and lesbian trade book publisher in the country. In April, 2000, LPI purchased its largest competitor, New York-based Out magazine, creating a company with a joint circulation of 200,000, or roughly five times greater that its closest competitor. In February of 2000, LPI and Planet Out announced their merger, a deal which as of February 2001 is still not final. In response to increased concentration in this specialized media market, community advocates are urging members of the gay and lesbian community to contact the Antitrust Division of the Department of Justice to complain. See Michael Bronski, Gay Media Monopoly, at http://www.Zmag.org/commentaries (last visited Feb. 18, 2001).
99. An unusual example may be that of supermarket tabloids. Due to a recent merger, all of the major supermarket tabloids are now owned by one company. American Media, Inc. owns the National Enquirer, Star, Globe, National Examiner, Sun and Weekly World News. Rather than continuing to compete with one another, each publication reportedly will specialize in one niche of the tabloid market. For example, the Enquirer will focus on Hollywood news, the Sun will use health and religious stories to appeal to the 55+ audience, and the Weekly World News will concentrate on stories involving aliens, UFOs, and Elvis. See Sensationalism Six Pack: One Company Owns All the U.S. Supermarket Tabloids, SKEPTICAL ENQUIRER, 8, Jan./Feb. 2001, quoting the AMERICAN JOURNALISM REVIEW, available at http://ajr.newslink.org/ajrdarciesept00.html. In addition, the author of a critical biography of Michael Eisner, CEO of Disney Corp., recently charged that she is being boycotted by Disney-owned publications. If true, this conduct could be an example of the kind of abuse that arises from undue media
100. An unusual example may be that of supermarket tabloids. Due to a recent merger, all of the major supermarket tabloids are now owned by one company. American Media, Inc. owns the National Enquirer, Star, Globe, National Examiner, Sun and Weekly World News. Rather than continuing to compete with one another, each publication reportedly will specialize in one niche of the tabloid market. For example, the Enquirer will focus on Hollywood news, the Sun will use health and religious stories to appeal to the 55+ audience, and the Weekly World News will concentrate on stories involving aliens, UFOs, and Elvis. See Sensationalism Six Pack: One Company Owns All the U.S. Supermarket Tabloids, SKEPTICAL ENQUIRER, 8, Jan./Feb. 2001, quoting the AMERICAN JOURNALISM REVIEW, available at http://ajr.newslink.org/ajrdarciesept00.html. In addition, the author of a critical biography of Michael Eisner, CEO of Disney Corp., recently charged that she is being boycotted by Disney-owned publications. If true, this conduct could be an example of the kind of abuse that arises from undue media concentration. In the extreme, this type of behavior could even threaten the free competition of ideas in our society. See Eisner Biographer Mousetrapped?, WASH. POST, Mar. 16, 2000, at C3. Other specialty media markets also are showing signs of increased concentration. For example, the world of gay and lesbian media has consolidated markedly over the last six years. The proposed merger of Liberation Publications with Planet Out, each with a history of mergers and acquisitions, is illustrative of this trend. On November 15, 2000, the two largest Internet companies targeting this market, Planet Out and Gay.com, announced their merger. This merger created a media outlet with 1.6 million registered users that reaches 3.5 million individuals a month. The nearest competitor, Gaywired.com, has a mere 500,000 users. Prior to this merger, Planet Out had already subsumed OnQ, another large on-line service, and purchased a substantial share of Gay Financial Network (gfn.com). Meanwhile, in 1996, Los Angeles-based Liberation Publications (LPI), publisher of the Advocate, purchased Boston based Alyson Publications, the oldest gay and lesbian trade book publisher in the country. In April, 2000, LPI purchased its largest competitor, New York-based Out magazine, creating a company with a joint circulation of 200,000, or roughly five times greater that its closest competitor. In February of 2000, LPI and Planet Out announced their merger, a deal which as of February 2001 is still not final. In response to increased concentration in this specialized media market, community advocates are urging members of the gay and lesbian community to contact the Antitrust Division of the Department of Justice to complain. See Michael Bronski, Gay Media Monopoly, at http://www.Zmag.org/commentaries (last visited Feb. 18, 2001).
101. For an analysis of many of the antitrust issues involved in this merger, see Statement of Robert H. Lande made at the Hearing on the America Online/Time Warner Merger before the Committee on Commerce, Science, and Transportation, United Sates Senate (Mar. 2, 2000).
102. FTC backs AOL-Time Warner merger, THE JOURNAL RECORD, Dec. 15, 2000, available at 2000 WL 14300520.
103. Jaret Seiberg, Time Warner, AOL Deal Rankles Lawmakers, N.Y. L.J., Jan. 11, 2000, at 1, available at http://www/law.com/cgi-bin/gx.cgi/ (last visited Apr. 4, 2001). See also FTC Approves APL/Time Warner Merger With Conditions, FTC News Release, Dec. 14, 2000, available at 2000 WL 1836342 (F.T.C.) ("[O]ur concern was that the merger of these two powerful companies would deny to competitors access to this amazing new broadband technology . . . . This order is intended to ensure that this new medium, characterized by openness, diversity and freedom, will not be closed down as a result of this merger."). Commissioner Pitofsky's statements were closely echoed by the statements of other Commissioners. In his concurring statement to the FTC's consent, Commissioner Thompson stated: "I voted to accept the settlement, however, because the consent will not only provide a means to address these concerns, but will also send an important message to the market that high speed internet should continue to provide consumers with choice of service and diversity of content." In the Matter of America On Line, Inc./Time Warner, Inc., No. C-3989, 2000 WL 1843019 (F.T.C.) (Dec. 14, 2000) (Concurring Statement of Commissioner Mozelle W. Thompson). In a later statement, Commissioner Thompson reiterated that the agreement was not as broad as he would have wished. AOL Merger Clears Last Big Hurdle; FTC Mandates Open Access To Time Warner's Cable, WASH. POST, Dec. 15, 2000, at A01, available at http:// washingtonpost.com/wp-dyn/business/industries/media/aoltimewarner/archive/. Commissioner Thomas B. Leary, one of the two Republican Commissioners, agreed: "I acknowledge that I had and I continue to have concerns about these content issues . . . ." Id. Commissioner Orson Swindle, considered by many to be the more conservative, pro-business of the Commissioners, said that the ideologically divided commission "found the compromise" it needed in the terms of the agreement. See David McGuire & Robert MacMillan, AOL-TW Deal Setup Allays Many Consumer Worries, NEWSBYTES NEWS NETWORK, Dec. 14, 2000, also available at 2000 WL 27303933. Swindle added that the Commission would stand by and enforce the agreement regardless of who headed the Agency in the new administration. Id.
104. Jaret Seiberg, Time Warner, AOL Deal Rankles Lawmakers, N.Y. L.J., Jan. 11, 2000, at 1, available at http://www/law.com/cgi-bin/gx.cgi/ (last visited Apr. 4, 2001). See also FTC Approves APL/Time Warner Merger With Conditions, FTC News Release, Dec. 14, 2000, available at 2000 WL 1836342 (F.T.C.) ("[O]ur concern was that the merger of these two powerful companies would deny to competitors access to this amazing new broadband technology . . . . This order is intended to ensure that this new medium, characterized by openness, diversity and freedom, will not be closed down as a result of this merger."). Commissioner Pitofsky's statements were closely echoed by the statements of other Commissioners. In his concurring statement to the FTC's consent, Commissioner Thompson stated: "I voted to accept the settlement, however, because the consent will not only provide a means to address these concerns, but will also send an important message to the market that high speed internet should continue to provide consumers with choice of service and diversity of content." In the Matter of America On Line, Inc./Time Warner, Inc., No. C-3989, 2000 WL 1843019 (F.T.C.) (Dec. 14, 2000) (Concurring Statement of Commissioner Mozelle W. Thompson). In a later statement, Commissioner Thompson reiterated that the agreement was not as broad as he would have wished. AOL Merger Clears Last Big Hurdle; FTC Mandates Open Access To Time Warner's Cable, WASH. POST, Dec. 15, 2000, at A01, available at http:// washingtonpost.com/wp-dyn/business/industries/media/aoltimewarner/archive/. Commissioner Thomas B. Leary, one of the two Republican Commissioners, agreed: "I acknowledge that I had and I continue to have concerns about these content issues . . . ." Id. Commissioner Orson Swindle, considered by many to be the more conservative, pro-business of the Commissioners, said that the ideologically divided commission "found the compromise" it needed in the terms of the agreement. See David McGuire & Robert MacMillan, AOL-TW Deal Setup Allays Many Consumer Worries, NEWSBYTES NEWS NETWORK, Dec. 14, 2000, also available at 2000 WL 27303933. Swindle added that the Commission would stand by and enforce the agreement regardless of who headed the Agency in the new administration. Id.
105. Jaret Seiberg, Time Warner, AOL Deal Rankles Lawmakers, N.Y. L.J., Jan. 11, 2000, at 1, available at http://www/law.com/cgi-bin/gx.cgi/ (last visited Apr. 4, 2001). See also FTC Approves APL/Time Warner Merger With Conditions, FTC News Release, Dec. 14, 2000, available at 2000 WL 1836342 (F.T.C.) ("[O]ur concern was that the merger of these two powerful companies would deny to competitors access to this amazing new broadband technology . . . . This order is intended to ensure that this new medium, characterized by openness, diversity and freedom, will not be closed down as a result of this merger."). Commissioner Pitofsky's statements were closely echoed by the statements of other Commissioners. In his concurring statement to the FTC's consent, Commissioner Thompson stated: "I voted to accept the settlement, however, because the consent will not only provide a means to address these concerns, but will also send an important message to the market that high speed internet should continue to provide consumers with choice of service and diversity of content." In the Matter of America On Line, Inc./Time Warner, Inc., No. C-3989, 2000 WL 1843019 (F.T.C.) (Dec. 14, 2000) (Concurring Statement of Commissioner Mozelle W. Thompson). In a later statement, Commissioner Thompson reiterated that the agreement was not as broad as he would have wished. AOL Merger Clears Last Big Hurdle; FTC Mandates Open Access To Time Warner's Cable, WASH. POST, Dec. 15, 2000, at A01, available at http:// washingtonpost.com/wp-dyn/business/industries/media/aoltimewarner/archive/. Commissioner Thomas B. Leary, one of the two Republican Commissioners, agreed: "I acknowledge that I had and I continue to have concerns about these content issues . . . ." Id. Commissioner Orson Swindle, considered by many to be the more conservative, pro-business of the Commissioners, said that the ideologically divided commission "found the compromise" it needed in the terms of the agreement. See David McGuire & Robert MacMillan, AOL-TW Deal Setup Allays Many Consumer Worries, NEWSBYTES NEWS NETWORK, Dec. 14, 2000, also available at 2000 WL 27303933. Swindle added that the Commission would stand by and enforce the agreement regardless of who headed the Agency in the new administration. Id.
106. Jaret Seiberg, Time Warner, AOL Deal Rankles Lawmakers, N.Y. L.J., Jan. 11, 2000, at 1, available at http://www/law.com/cgi-bin/gx.cgi/ (last visited Apr. 4, 2001). See also FTC Approves APL/Time Warner Merger With Conditions, FTC News Release, Dec. 14, 2000, available at 2000 WL 1836342 (F.T.C.) ("[O]ur concern was that the merger of these two powerful companies would deny to competitors access to this amazing new broadband technology . . . . This order is intended to ensure that this new medium, characterized by openness, diversity and freedom, will not be closed down as a result of this merger."). Commissioner Pitofsky's statements were closely echoed by the statements of other Commissioners. In his concurring statement to the FTC's consent, Commissioner Thompson stated: "I voted to accept the settlement, however, because the consent will not only provide a means to address these concerns, but will also send an important message to the market that high speed internet should continue to provide consumers with choice of service and diversity of content." In the Matter of America On Line, Inc./Time Warner, Inc., No. C-3989, 2000 WL 1843019 (F.T.C.) (Dec. 14, 2000) (Concurring Statement of Commissioner Mozelle W. Thompson). In a later statement, Commissioner Thompson reiterated that the agreement was not as broad as he would have wished. AOL Merger Clears Last Big Hurdle; FTC Mandates Open Access To Time Warner's Cable, WASH. POST, Dec. 15, 2000, at A01, available at http:// washingtonpost.com/wp-dyn/business/industries/media/aoltimewarner/archive/. Commissioner Thomas B. Leary, one of the two Republican Commissioners, agreed: "I acknowledge that I had and I continue to have concerns about these content issues . . . ." Id. Commissioner Orson Swindle, considered by many to be the more conservative, pro-business of the Commissioners, said that the ideologically divided commission "found the compromise" it needed in the terms of the agreement. See David McGuire & Robert MacMillan, AOL-TW Deal Setup Allays Many Consumer Worries, NEWSBYTES NEWS NETWORK, Dec. 14, 2000, also available at 2000 WL 27303933. Swindle added that the Commission would stand by and enforce the agreement regardless of who headed the Agency in the new administration. Id.
107. Both the National Broadcasting Company ("NBC") and the Central Broadcasting Service ("CBS") independently investigated the actions of the VNS on election night 2000. See NBC News Releases Summary of Election Night Review, Jan. 04, 2001, available at http://www.nbcmv.com/pw2/main (last visited Mar. 10, 2001); Linda Mason et al., CBS News Coverage of Election Night 2000: Investigation, Analysis, Recommendations, Jan. 2001 (on file with the author). Regarding the mistaken data received from the VNS, NBC found that, although "VNS's fundamental methodology is sound, its system needs improvement, including a computer upgrade." NBC News Releases Summary of Election Night Review, supra. To that end, NBC was willing to provide its share of funding to support the upgrade. See id. In addition, NBC found that its internal policies must be revised to facilitate its efforts in projecting election results. See id. These policy changes include "not project[ing] a winner in a state until after the last scheduled poll closing time in that state, . . . [defining] terms (like 'projection' or 'too close to call'), . . . explain[ing] the methodology for collecting the data it presents, [and using] other available news sources, such as AP." Id. The report concluded that, "[t]he lesson from Election Night 2000 is that sufficient resources must be in place to ensure the reliability of NBC's Election Night reporting in the future," and that "[b]eing right, not first, is what matters." Id. CBS News similarly reviewed the election night debacle. See Linda Mason et al., supra. In its analysis, CBS found that to avoid similar problems in the future, it must: strengthen management oversight of the Decision Desk . . ., modify the language and graphics used on-air to call races, making clear that CBS calls are estimates, not facts, . . . withhold an official call until all the polls have closed in [a state with multiple closing times], . . . invest additional resources in key states with close races, . . . [and] either invest additional resources to fix problems at VNS or build an alternative service with a new consortium. See id. at 4-5. Specifically regarding the problems at VNS, CBS found that, "VNS, in a preliminary review, [cited] its own imperfections: problems with the sample, with the equipment, with the software and with quality control." See id. at 31. The findings of both these reports highlight the internal problems faced by VNS, and lead to the question of whether those problems would have been borne out by the market and fixed had competition existed for accurate election night exit polling.
108. Both the National Broadcasting Company ("NBC") and the Central Broadcasting Service ("CBS") independently investigated the actions of the VNS on election night 2000. See NBC News Releases Summary of Election Night Review, Jan. 04, 2001, available at http://www.nbcmv.com/pw2/main (last visited Mar. 10, 2001); Linda Mason et al., CBS News Coverage of Election Night 2000: Investigation, Analysis, Recommendations, Jan. 2001 (on file with the author). Regarding the mistaken data received from the VNS, NBC found that, although "VNS's fundamental methodology is sound, its system needs improvement, including a computer upgrade." NBC News Releases Summary of Election Night Review, supra. To that end, NBC was willing to provide its share of funding to support the upgrade. See id. In addition, NBC found that its internal policies must be revised to facilitate its efforts in projecting election results. See id. These policy changes include "not project[ing] a winner in a state until after the last scheduled poll closing time in that state, . . . [defining] terms (like 'projection' or 'too close to call'), . . . explain[ing] the methodology for collecting the data it presents, [and using] other available news sources, such as AP." Id. The report concluded that, "[t]he lesson from Election Night 2000 is that sufficient resources must be in place to ensure the reliability of NBC's Election Night reporting in the future," and that "[b]eing right, not first, is what matters." Id. CBS News similarly reviewed the election night debacle. See Linda Mason et al., supra. In its analysis, CBS found that to avoid similar problems in the future, it must: strengthen management oversight of the Decision Desk . . ., modify the language and graphics used on-air to call races, making clear that CBS calls are estimates, not facts, . . . withhold an official call until all the polls have closed in [a state with multiple closing times], . . . invest additional resources in key states with close races, . . . [and] either invest additional resources to fix problems at VNS or build an alternative service with a new consortium. See id. at 4-5. Specifically regarding the problems at VNS, CBS found that, "VNS, in a preliminary review, [cited] its own imperfections: problems with the sample, with the equipment, with the software and with quality control." See id. at 31. The findings of both these reports highlight the internal problems faced by VNS, and lead to the question of whether those problems would have been borne out by the market and fixed had competition existed for accurate election night exit polling.
109. Both the National Broadcasting Company ("NBC") and the Central Broadcasting Service ("CBS") independently investigated the actions of the VNS on election night 2000. See NBC News Releases Summary of Election Night Review, Jan. 04, 2001, available at http://www.nbcmv.com/pw2/main (last visited Mar. 10, 2001); Linda Mason et al., CBS News Coverage of Election Night 2000: Investigation, Analysis, Recommendations, Jan. 2001 (on file with the author). Regarding the mistaken data received from the VNS, NBC found that, although "VNS's fundamental methodology is sound, its system needs improvement, including a computer upgrade." NBC News Releases Summary of Election Night Review, supra. To that end, NBC was willing to provide its share of funding to support the upgrade. See id. In addition, NBC found that its internal policies must be revised to facilitate its efforts in projecting election results. See id. These policy changes include "not project[ing] a winner in a state until after the last scheduled poll closing time in that state, . . . [defining] terms (like 'projection' or 'too close to call'), . . . explain[ing] the methodology for collecting the data it presents, [and using] other available news sources, such as AP." Id. The report concluded that, "[t]he lesson from Election Night 2000 is that sufficient resources must be in place to ensure the reliability of NBC's Election Night reporting in the future," and that "[b]eing right, not first, is what matters." Id. CBS News similarly reviewed the election night debacle. See Linda Mason et al., supra. In its analysis, CBS found that to avoid similar problems in the future, it must: strengthen management oversight of the Decision Desk . . ., modify the language and graphics used on-air to call races, making clear that CBS calls are estimates, not facts, . . . withhold an official call until all the polls have closed in [a state with multiple closing times], . . . invest additional resources in key states with close races, . . . [and] either invest additional resources to fix problems at VNS or build an alternative service with a new consortium. See id. at 4-5. Specifically regarding the problems at VNS, CBS found that, "VNS, in a preliminary review, [cited] its own imperfections: problems with the sample, with the equipment, with the software and with quality control." See id. at 31. The findings of both these reports highlight the internal problems faced by VNS, and lead to the question of whether those problems would have been borne out by the market and fixed had competition existed for accurate election night exit polling.
110. Both the National Broadcasting Company ("NBC") and the Central Broadcasting Service ("CBS") independently investigated the actions of the VNS on election night 2000. See NBC News Releases Summary of Election Night Review, Jan. 04, 2001, available at http://www.nbcmv.com/pw2/main (last visited Mar. 10, 2001); Linda Mason et al., CBS News Coverage of Election Night 2000: Investigation, Analysis, Recommendations, Jan. 2001 (on file with the author). Regarding the mistaken data received from the VNS, NBC found that, although "VNS's fundamental methodology is sound, its system needs improvement, including a computer upgrade." NBC News Releases Summary of Election Night Review, supra. To that end, NBC was willing to provide its share of funding to support the upgrade. See id. In addition, NBC found that its internal policies must be revised to facilitate its efforts in projecting election results. See id. These policy changes include "not project[ing] a winner in a state until after the last scheduled poll closing time in that state, . . . [defining] terms (like 'projection' or 'too close to call'), . . . explain[ing] the methodology for collecting the data it presents, [and using] other available news sources, such as AP." Id. The report concluded that, "[t]he lesson from Election Night 2000 is that sufficient resources must be in place to ensure the reliability of NBC's Election Night reporting in the future," and that "[b]eing right, not first, is what matters." Id. CBS News similarly reviewed the election night debacle. See Linda Mason et al., supra. In its analysis, CBS found that to avoid similar problems in the future, it must: strengthen management oversight of the Decision Desk . . ., modify the language and graphics used on-air to call races, making clear that CBS calls are estimates, not facts, . . . withhold an official call until all the polls have closed in [a state with multiple closing times], . . . invest additional resources in key states with close races, . . . [and] either invest additional resources to fix problems at VNS or build an alternative service with a new consortium. See id. at 4-5. Specifically regarding the problems at VNS, CBS found that, "VNS, in a preliminary review, [cited] its own imperfections: problems with the sample, with the equipment, with the software and with quality control." See id. at 31. The findings of both these reports highlight the internal problems faced by VNS, and lead to the question of whether those problems would have been borne out by the market and fixed had competition existed for accurate election night exit polling.
111. Cf. Associated Press v. United States, 326 U.S. 1, 20 (1945) (First Amendment considerations support application of the Sherman Act to the media, since both provisions are intended to encourage diversity, although the media context did not alter ordinary Sherman Act standards.).