Antitrust Injury, Merger Policy, and the Competitor Plaintiff

Iowa Law Review

Volumn 82, Issue 1, 1996, Pages 127-149

  Page, William H ^a,b,c,d   Lopatka, John E ^d,e,f  

^a MISSISSIPPI COLLEGE   (United States)

^b TULANE UNIVERSITY   (United States)

^c UNIVERSITY OF NEW MEXICO   (United States)

^d UNIVERSITY OF CHICAGO   (United States)

^e UNIVERSITY OF SOUTH CAROLINA   (United States)

^f LOYOLA UNIVERSITY CHICAGO   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0347308724     PISSN: 00210552     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (177)

1. Atlantic Richfield Co. v. USA Petroleum, 495 U.S. 328, 344 (1990) (emphasis omitted); see also id. at 343 n.13 (discussing several antitrust injury doctrine cases). See generally William H. Page, The Scope of Liability for Antitrust Violations, 37 Stan. L. Rev. 1445 (1985) (proposing an economic approach to antitrust injury and standing).
2. See, e.g., Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979); Page, supra note 1, at 1465.
3. See William M. Landes, Optimal Sanctions for Antitrust Violations, 50 U. Chi. L. Rev. 652, 653-58 (1983); Page, supra note 1, at 1453.
4. See ARCO, 495 U.S. at 343-44 ("Conduct in violation of the antitrust laws may have three effects, often interwoven: In some respects the conduct may reduce competition, in other respects it may increase competition, and in still other respects effects may be neutral as to competition.").
5. Treble damages are available under Section 4 of the Clayton Act See 15 U.S.C. § 15(a) (1994) (providing that antitrust plaintiff may recover three times the damages "by him sustained").
6. See Page, supra note 1, at 1459-61.
7. 429 U.S. 477 (1977).
8. See id. at 481-83; see also William H. Page, Antitrust Damages and Economic Efficiency: An Approach to Antitrust Injury, 47 U. Chi. L. Rev. 467, 469 n.14 (1980) (discussing record in Brunswick).
9. See Brunswick, 429 U.S. at 486-87. A plaintiff must be injured "in the way that the framers of the antitrust laws had in mind." Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 709 (7th Cir. 1984) (Posner, J.).
10. 479 U.S. 104 (1986).
11. Section 16 of the Clayton Act permits injunctive relief in antitrust cases. See 15 U.S.C. § 26 (1994).
12. See Cargill, 479 U.S. at 113 (stating that damage and injunction provisions offer "complementary remedies for a single set of injuries"). An injunction suit delays a potentially beneficial transaction and creates the risk of an erroneous finding of liability. See John E. Lopatka & James F. Mongoven, After Preliminary Relief in Merger Cases Is Denied, What Then?, 17 Res. L. & Econ. 149, 158-59 (1995). Easterbrook and Fischel also suggest that a plaintiff with the right to an injunction can extort from the merging firms a payment equal to the value of the transaction. See Frank H. Easterbrook & Daniel R. Fischel, Antitrust Suits by Targets of Tender Offers, 80 Mich. L. Rev. 1155, 1169 (1982).
13. See Cargill, 479 U.S. at 113 (stating that damage and injunction provisions offer "complementary remedies for a single set of injuries"). An injunction suit delays a potentially beneficial transaction and creates the risk of an erroneous finding of liability. See John E. Lopatka & James F. Mongoven, After Preliminary Relief in Merger Cases Is Denied, What Then?, 17 Res. L. & Econ. 149, 158-59 (1995). Easterbrook and Fischel also suggest that a plaintiff with the right to an injunction can extort from the merging firms a payment equal to the value of the transaction. See Frank H. Easterbrook & Daniel R. Fischel, Antitrust Suits by Targets of Tender Offers, 80 Mich. L. Rev. 1155, 1169 (1982).
14. See Cargill, 479 U.S. at 116.
15. See id. at 116.
16. See Brief for the United States and Federal Trade Commission as Amicus Curiae at 9-12, Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) (No. 85-473). Commentators have made the same argument See Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1, 36 (1984) (arguing that "the identity of the plaintiff is all the court needs to know" in order to dismiss the case) ; Edward A Snyder & Thomas E. Kauper, Misuse of the Antitrust Laws: The Competitor Plaintiff, 90 Mich. L. Rev. 551, 596 (1991) (arguing that "the extent of the misuse of antitrust laws . . . and the prospect for future misuse based on claims of predatory and exclusionary conduct" support abolishing competitor standing).
17. See Brief for the United States and Federal Trade Commission as Amicus Curiae at 9-12, Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) (No. 85-473). Commentators have made the same argument See Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1, 36 (1984) (arguing that "the identity of the plaintiff is all the court needs to know" in order to dismiss the case) ; Edward A Snyder & Thomas E. Kauper, Misuse of the Antitrust Laws: The Competitor Plaintiff, 90 Mich. L. Rev. 551, 596 (1991) (arguing that "the extent of the misuse of antitrust laws . . . and the prospect for future misuse based on claims of predatory and exclusionary conduct" support abolishing competitor standing).
18. See United States & FTC Amicus Brief at 9-12, Cargill (No. 85-473).
19. See id. at 25.
20. See Cargill, 479 U.S. at 121 ("While firms may engage in [predatory pricing] only infrequently, there is ample evidence suggesting that the practice does occur.").
21. See id. at 119-21; see also Community Publishers, Inc. v. Donrey Corp., 892 F. Supp. 1146, 1166 (W.D. Ark. 1995) (recognizing the "risk posed by competitor suits," but nevertheless holding that "this is one of those rare cases where the court believes that a competitor plaintiff has successfully proved a threat of antitrust injury").
22. See Cargill, 479 U.S. at 119 n.15.
23. Id. at 121 n.17.
24. Id. at 119 n.15.
25. See also ABA Antitrust Section Monograph No. 16, Private Litigation Under Section 7 of the Clayton Act: Law and Policy 78-83 (1989) (reviewing arguments concerning relevance of plaintiff's motivation). See, e.g., Easterbrook, supra note 15, at 36-39.
26. See Joseph F. Brodley, Antitrust Standing in Private Merger Cases: Reconciling Private Incentives and Public Enforcement Goals, 94 Mich. L. Rev. 1, 3-10 (1995). Professor Brodley's argument is precisely the opposite of the argument made by Snyder and Kauper, who contend that the antitrust injury doctrine has been ineffective in screening perverse suits by competitors, and should be replaced by a per se rule barring suits by competitors. See Snyder & Kauper, supra note 15, at 575-76, 597-98. For a response to that argument, see William H. Page & Roger D. Blair, Controlling the Competitor Plaintiff in Antitrust Litigation, 91 Mich. L. Rev. 111 (1992).
27. See Joseph F. Brodley, Antitrust Standing in Private Merger Cases: Reconciling Private Incentives and Public Enforcement Goals, 94 Mich. L. Rev. 1, 3-10 (1995). Professor Brodley's argument is precisely the opposite of the argument made by Snyder and Kauper, who contend that the antitrust injury doctrine has been ineffective in screening perverse suits by competitors, and should be replaced by a per se rule barring suits by competitors. See Snyder & Kauper, supra note 15, at 575-76, 597-98. For a response to that argument, see William H. Page & Roger D. Blair, Controlling the Competitor Plaintiff in Antitrust Litigation, 91 Mich. L. Rev. 111 (1992).
28. See Brodley, supra note 24, at 15-16.
29. See id. at 6-9. For a more optimistic assessment of competitors' chances of blocking mergers, see Tefft W. Smith & Hilliard M. Sterling, Challenging Competitors' Mergers: A Real Strategic Option, 65 Antitrust L.J. 57 (1996).
30. See Brodley, supra note 24, at 29.
31. See id. at 35-38.
32. See id. 9-10.
33. See id. at 49-51.
34. See id. at 30-34.
35. See Brodley, supra note 24, at 4.
36. See id. at 17 n.62.
37. See id. at 17.
38. See id. at 13 (citing Page, supra note 1). As we show below, Brodley overstates Page's position in cases in which the plaintiff seeks an injunction.
39. See id.
40. See Brodley, supra note 24, at 15.
41. Id. at 14 (emphasis added) (footnote omitted). He continues: [C]onduct is anticompetitive under the antitrust laws not only when it is directly exploitive and output reducing but also when it damages the long-run competitive conditions by which antitrust seeks to achieve superior performance in pricing, production and innovation. Id. at 15.
42. See id. at 29. By anticompetitive structure, Brodley presumably means high market concentration and barriers to entry.
43. See id. at 11-12.
44. See id. at 21. He also refers to effective private enforcement as a "doctrine." See id. at 16.
45. See Brodley, supra note 24, at 21.
46. See id. at 38. Professor Brodley draws a number of conclusions about the relative effectiveness of the various classes of plaintiffs, based on a data set consisting of reported cases. Professor Brodley also offers a lengthy discussion of the inadequacy of state parens patriae actions as a means of merger enforcement See id. at 38-44. We have no disagreement with this analysis.
47. See id. at 46.
48. See id. at 29-30.
49. See id. at 30.
50. See Brodley, supra note 24, at 30.
51. See id.
52. See id. at 46.
53. See Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 119-21 n.15 (1986) (noting that even if the plaintiff had alleged predatory pricing, it was doubtful that the court would have supported the claim).
54. Brodley cites favorably Steven Salop's suggestion that the plaintiff in Cargill might have successfully alleged that the defendant "was engaged in a strategic price squeeze, forcing up the plaintiff's input prices while lowering prices in the plaintiff's downstream market" See Brodley, supra note 24, at 27 n.109 (citing Steven C. Salop, New Economic Theories of Anticompetitive Exclusion, 56 Antitrust L.J. 57, 58 (1987)).
55. See Brodley, supra note 24, at 50.
56. Id. at 49-50.
57. See id. at 49, 50, 52.
58. Id. at 50.
59. See id. at 51.
60. 472 U.S. 585 (1985).
61. See Brodley, supra note 24, at 68.
62. Id. at 66.
63. See id. at 9-10.
64. See id. at 4. Professor Brodley states in a footnote: "To be sure, judicial standards needed updating; the Supreme Court has not decided a substantive merger case since 1978. The lack of up-to-date law was no justification for not presenting the Court with cases that would have allowed modernization of merger law." Id. at 9 n.31. This criticism is beside the point of whether the government failed to bring winnable cases under existing standards. Moreover, the updating of merger law during the 1980s would undoubtedly have taken the form of an explicit relaxation of the Draconian standards suggested in cases like United States v. Van's Grocery, 384 U.S. 270 (1966), and Brown Shoe Co. v. United States, 370 U.S. 294 (1962), which continued to cast a shadow over merger enforcement The enforcement agencies cannot fairly be condemned for failing to pursue more vigorously merger challenges they believed to be ill-founded in order to secure defeats in the Supreme Court that would have confirmed their convictions.
65. On the reconceptualization of antitrust generally, see William H. Page, The Chicago School and the Evolution of Antitrust: Characterization, Antitrust Injury, and Evidentiary Sufficiency, 75 Va. L. Rev. 1221 (1989) (arguing that Supreme Court has reinterpreted existing rules of liability in light of Chicago School models). Lower courts, recognizing this change in antitrust law, require higher concentration levels to establish a prima fade case of illegality and permit a broader range of evidence to rebut the prima fade case than courts did during the Warren Court era. As one commentator wrote, "at least with respect to the antitrust treatment of mergers and acquisitions, the most influential source of law is not the definitive decisions of the Supreme Court[,] . . . but rather the guidelines drafted and promulgated by lawyers and economists at the Department of Justice and the Federal Trade Commission. " Michael Malina, Some Thoughts on the Source of Antitrust Law in the Nineties, 63 Antitrust L.J. 853, 854 (1995) (stating that merger guidelines are the most important source of merger standards today); see also United States v. Baker Hughes, Inc., 908 F.2d 981, 990 (D.C. Cir. 1990) ("Although the Supreme Court has not overruled these [1960s] section 7 precedents, it has cut them back sharply."); Hospital Corp. of Am. v. FTC, 807 F.2d 1381, 1386 (7th Cir. 1986) (noting that economic reorientation of antitrust law "cast[s] doubt on the continued vitality" of 1960s precedents); Malcolm B. Coate, Economics, the Guidelines and the Evolution of Merger Policy, 37 Antitrust Bull. 997, 1023 (1992) (concluding that courts have abandoned structuralist approach in merger cases and instead focus on behavior in affected markets); Malcolm B. Coate, Merger Analysis in the Courts, 16 Managerial & Decision Econ. 581 (1995) (concluding that courts in recent merger cases have focused on issues highlighted in the merger guidelines); Andrew N. Kleit & Malcolm B. Coate, Are Judges Leading Economic Theory? Sunk Costs, the Threat of Entry and the Competitive Process, 60 S. Econ. J. 103 (1993) (concluding that courts now require entry barriers in merger cases).
66. On the reconceptualization of antitrust generally, see William H. Page, The Chicago School and the Evolution of Antitrust: Characterization, Antitrust Injury, and Evidentiary Sufficiency, 75 Va. L. Rev. 1221 (1989) (arguing that Supreme Court has reinterpreted existing rules of liability in light of Chicago School models). Lower courts, recognizing this change in antitrust law, require higher concentration levels to establish a prima fade case of illegality and permit a broader range of evidence to rebut the prima fade case than courts did during the Warren Court era. As one commentator wrote, "at least with respect to the antitrust treatment of mergers and acquisitions, the most influential source of law is not the definitive decisions of the Supreme Court[,] . . . but rather the guidelines drafted and promulgated by lawyers and economists at the Department of Justice and the Federal Trade Commission. " Michael Malina, Some Thoughts on the Source of Antitrust Law in the Nineties, 63 Antitrust L.J. 853, 854 (1995) (stating that merger guidelines are the most important source of merger standards today); see also United States v. Baker Hughes, Inc., 908 F.2d 981, 990 (D.C. Cir. 1990) ("Although the Supreme Court has not overruled these [1960s] section 7 precedents, it has cut them back sharply."); Hospital Corp. of Am. v. FTC, 807 F.2d 1381, 1386 (7th Cir. 1986) (noting that economic reorientation of antitrust law "cast[s] doubt on the continued vitality" of 1960s precedents); Malcolm B. Coate, Economics, the Guidelines and the Evolution of Merger Policy, 37 Antitrust Bull. 997, 1023 (1992) (concluding that courts have abandoned structuralist approach in merger cases and instead focus on behavior in affected markets); Malcolm B. Coate, Merger Analysis in the Courts, 16 Managerial & Decision Econ. 581 (1995) (concluding that courts in recent merger cases have focused on issues highlighted in the merger guidelines); Andrew N. Kleit & Malcolm B. Coate, Are Judges Leading Economic Theory? Sunk Costs, the Threat of Entry and the Competitive Process, 60 S. Econ. J. 103 (1993) (concluding that courts now require entry barriers in merger cases).
67. On the reconceptualization of antitrust generally, see William H. Page, The Chicago School and the Evolution of Antitrust: Characterization, Antitrust Injury, and Evidentiary Sufficiency, 75 Va. L. Rev. 1221 (1989) (arguing that Supreme Court has reinterpreted existing rules of liability in light of Chicago School models). Lower courts, recognizing this change in antitrust law, require higher concentration levels to establish a prima fade case of illegality and permit a broader range of evidence to rebut the prima fade case than courts did during the Warren Court era. As one commentator wrote, "at least with respect to the antitrust treatment of mergers and acquisitions, the most influential source of law is not the definitive decisions of the Supreme Court[,] . . . but rather the guidelines drafted and promulgated by lawyers and economists at the Department of Justice and the Federal Trade Commission. " Michael Malina, Some Thoughts on the Source of Antitrust Law in the Nineties, 63 Antitrust L.J. 853, 854 (1995) (stating that merger guidelines are the most important source of merger standards today); see also United States v. Baker Hughes, Inc., 908 F.2d 981, 990 (D.C. Cir. 1990) ("Although the Supreme Court has not overruled these [1960s] section 7 precedents, it has cut them back sharply."); Hospital Corp. of Am. v. FTC, 807 F.2d 1381, 1386 (7th Cir. 1986) (noting that economic reorientation of antitrust law "cast[s] doubt on the continued vitality" of 1960s precedents); Malcolm B. Coate, Economics, the Guidelines and the Evolution of Merger Policy, 37 Antitrust Bull. 997, 1023 (1992) (concluding that courts have abandoned structuralist approach in merger cases and instead focus on behavior in affected markets); Malcolm B. Coate, Merger Analysis in the Courts, 16 Managerial & Decision Econ. 581 (1995) (concluding that courts in recent merger cases have focused on issues highlighted in the merger guidelines); Andrew N. Kleit & Malcolm B. Coate, Are Judges Leading Economic Theory? Sunk Costs, the Threat of Entry and the Competitive Process, 60 S. Econ. J. 103 (1993) (concluding that courts now require entry barriers in merger cases).
68. On the reconceptualization of antitrust generally, see William H. Page, The Chicago School and the Evolution of Antitrust: Characterization, Antitrust Injury, and Evidentiary Sufficiency, 75 Va. L. Rev. 1221 (1989) (arguing that Supreme Court has reinterpreted existing rules of liability in light of Chicago School models). Lower courts, recognizing this change in antitrust law, require higher concentration levels to establish a prima fade case of illegality and permit a broader range of evidence to rebut the prima fade case than courts did during the Warren Court era. As one commentator wrote, "at least with respect to the antitrust treatment of mergers and acquisitions, the most influential source of law is not the definitive decisions of the Supreme Court[,] . . . but rather the guidelines drafted and promulgated by lawyers and economists at the Department of Justice and the Federal Trade Commission. " Michael Malina, Some Thoughts on the Source of Antitrust Law in the Nineties, 63 Antitrust L.J. 853, 854 (1995) (stating that merger guidelines are the most important source of merger standards today); see also United States v. Baker Hughes, Inc., 908 F.2d 981, 990 (D.C. Cir. 1990) ("Although the Supreme Court has not overruled these [1960s] section 7 precedents, it has cut them back sharply."); Hospital Corp. of Am. v. FTC, 807 F.2d 1381, 1386 (7th Cir. 1986) (noting that economic reorientation of antitrust law "cast[s] doubt on the continued vitality" of 1960s precedents); Malcolm B. Coate, Economics, the Guidelines and the Evolution of Merger Policy, 37 Antitrust Bull. 997, 1023 (1992) (concluding that courts have abandoned structuralist approach in merger cases and instead focus on behavior in affected markets); Malcolm B. Coate, Merger Analysis in the Courts, 16 Managerial & Decision Econ. 581 (1995) (concluding that courts in recent merger cases have focused on issues highlighted in the merger guidelines); Andrew N. Kleit & Malcolm B. Coate, Are Judges Leading Economic Theory? Sunk Costs, the Threat of Entry and the Competitive Process, 60 S. Econ. J. 103 (1993) (concluding that courts now require entry barriers in merger cases).
69. On the reconceptualization of antitrust generally, see William H. Page, The Chicago School and the Evolution of Antitrust: Characterization, Antitrust Injury, and Evidentiary Sufficiency, 75 Va. L. Rev. 1221 (1989) (arguing that Supreme Court has reinterpreted existing rules of liability in light of Chicago School models). Lower courts, recognizing this change in antitrust law, require higher concentration levels to establish a prima fade case of illegality and permit a broader range of evidence to rebut the prima fade case than courts did during the Warren Court era. As one commentator wrote, "at least with respect to the antitrust treatment of mergers and acquisitions, the most influential source of law is not the definitive decisions of the Supreme Court[,] . . . but rather the guidelines drafted and promulgated by lawyers and economists at the Department of Justice and the Federal Trade Commission. " Michael Malina, Some Thoughts on the Source of Antitrust Law in the Nineties, 63 Antitrust L.J. 853, 854 (1995) (stating that merger guidelines are the most important source of merger standards today); see also United States v. Baker Hughes, Inc., 908 F.2d 981, 990 (D.C. Cir. 1990) ("Although the Supreme Court has not overruled these [1960s] section 7 precedents, it has cut them back sharply."); Hospital Corp. of Am. v. FTC, 807 F.2d 1381, 1386 (7th Cir. 1986) (noting that economic reorientation of antitrust law "cast[s] doubt on the continued vitality" of 1960s precedents); Malcolm B. Coate, Economics, the Guidelines and the Evolution of Merger Policy, 37 Antitrust Bull. 997, 1023 (1992) (concluding that courts have abandoned structuralist approach in merger cases and instead focus on behavior in affected markets); Malcolm B. Coate, Merger Analysis in the Courts, 16 Managerial & Decision Econ. 581 (1995) (concluding that courts in recent merger cases have focused on issues highlighted in the merger guidelines); Andrew N. Kleit & Malcolm B. Coate, Are Judges Leading Economic Theory? Sunk Costs, the Threat of Entry and the Competitive Process, 60 S. Econ. J. 103 (1993) (concluding that courts now require entry barriers in merger cases).
70. For example, Professor Brodley contends that courts should consider the "gravity of the violation" in shaping procedural rules to control private actions and that a "standard for assessing gravity of the violation is readily available in the Department of Justice and FTC Merger Guidelines." See Brodley, supra note 24, at 27-28. He also comments that the Guidelines "reflect[] modern economic views." See id. at 50 n.201.
71. See Thomas Krattenmaker & Robert Pitofsky, Antitrust Merger Policy and the Reagan Administration, 33 Antitrust Bull. 211, 226 (1988).
72. See Malcolm B. Coate et al., Bureaucracy and Politics in FTC Merger Challenges, 33 J.L. & Econ. 463, 464, 481-82 (1990); Malcolm B. Coate, Merger Enforcement at the Reagan/Bush FTC, in The Economics of the Antitrust Process 135, 138, 148 (Malcolm B. Coate & Andrew N. Kleit eds., 1996). The authors suggest that, occasionally, political pressure resulted in the challenge of economically unobjectionable mergers. Id. at 144. These studies focused solely on the FTC, but it is reasonable to assume that enforcement attitudes would be roughly comparable at both agencies in any given administration.
73. See Malcolm B. Coate et al., Bureaucracy and Politics in FTC Merger Challenges, 33 J.L. & Econ. 463, 464, 481-82 (1990); Malcolm B. Coate, Merger Enforcement at the Reagan/Bush FTC, in The Economics of the Antitrust Process 135, 138, 148 (Malcolm B. Coate & Andrew N. Kleit eds., 1996). The authors suggest that, occasionally, political pressure resulted in the challenge of economically unobjectionable mergers. Id. at 144. These studies focused solely on the FTC, but it is reasonable to assume that enforcement attitudes would be roughly comparable at both agencies in any given administration.
74. See Brodley, supra note 24, at 35.
75. Most mergers opposed by the federal agencies culminate in the abandonment of the transaction or in negotiated settlements, with the merging firms agreeing to make changes in the transaction that alleviate the anticompetitive concerns. See, e.g., Malcolm B. Coate et al., Fight, Fold or Settle?: Modelling the Reaction to FTC Merger Challenges, 33 Econ. Inquiry 537, 537-51 (1995) (discussing the determinants of a respondent's decision to litigate, abandon the transaction, or settle in response to an FTC merger challenge); Lopatka & Mongoven, supra note 12, at 189-203 (reporting the resolutions of all mergers during 1977 through 1995 in which the FTC or DOJ sought or was authorized to seek preliminary relief). Although the Antitrust Division of the Department of Justice lost 5 of the 6 cases that went to trial during the 3 years of Assistant Attorney General James F. Rill's tenure, the Division achieved successful settlements of 32 other cases. See Rill Discusses Accomplishments, Disappointments of Division Tenure, 63 Antitrust & Trade Reg. Rep. (BNA) 253, 254 (Aug. 27, 1992).
76. Most mergers opposed by the federal agencies culminate in the abandonment of the transaction or in negotiated settlements, with the merging firms agreeing to make changes in the transaction that alleviate the anticompetitive concerns. See, e.g., Malcolm B. Coate et al., Fight, Fold or Settle?: Modelling the Reaction to FTC Merger Challenges, 33 Econ. Inquiry 537, 537-51 (1995) (discussing the determinants of a respondent's decision to litigate, abandon the transaction, or settle in response to an FTC merger challenge); Lopatka & Mongoven, supra note 12, at 189-203 (reporting the resolutions of all mergers during 1977 through 1995 in which the FTC or DOJ sought or was authorized to seek preliminary relief). Although the Antitrust Division of the Department of Justice lost 5 of the 6 cases that went to trial during the 3 years of Assistant Attorney General James F. Rill's tenure, the Division achieved successful settlements of 32 other cases. See Rill Discusses Accomplishments, Disappointments of Division Tenure, 63 Antitrust & Trade Reg. Rep. (BNA) 253, 254 (Aug. 27, 1992).
77. The Division initiated 134 merger investigations in 1995, up from a 10-year low of 74 to 1988. It filed 10 new cases challenging mergers in 1994 and 9 in 1995, up from 4 new cases in both 1991 and 1992. See Antitrust Division Workload Statistics, FY 1986-1995, 70 Antitrust & Trade Reg. Rep. (BNA) 299, 300-01 (Mar. 14, 1995). In one significant case, the Division obtained a settlement of its challenge of Microsoft's acquisition of Intuit, Inc. See Microsoft Halts Merger With Intuit; Prospect of Lengthy Antitrust Trial Is Key, Wash. Post, May 21, 1995, at Al. The FTC reported 35 "challenges of anticompetitive mergers" during fiscal year 1995; this "figure represents the high-water mark for number of mergers challenged since at least 1980." See Pitofsky Reports That FTG's 1995 Record Evidences Tough Enforcement of Core Laws, 69 Antitrust & Trade Reg. Rep. (BNA) 566 (Nov. 16, 1995).
78. The Division initiated 134 merger investigations in 1995, up from a 10-year low of 74 to 1988. It filed 10 new cases challenging mergers in 1994 and 9 in 1995, up from 4 new cases in both 1991 and 1992. See Antitrust Division Workload Statistics, FY 1986-1995, 70 Antitrust & Trade Reg. Rep. (BNA) 299, 300-01 (Mar. 14, 1995). In one significant case, the Division obtained a settlement of its challenge of Microsoft's acquisition of Intuit, Inc. See Microsoft Halts Merger With Intuit; Prospect of Lengthy Antitrust Trial Is Key, Wash. Post, May 21, 1995, at Al. The FTC reported 35 "challenges of anticompetitive mergers" during fiscal year 1995; this "figure represents the high-water mark for number of mergers challenged since at least 1980." See Pitofsky Reports That FTG's 1995 Record Evidences Tough Enforcement of Core Laws, 69 Antitrust & Trade Reg. Rep. (BNA) 566 (Nov. 16, 1995).
79. The Division initiated 134 merger investigations in 1995, up from a 10-year low of 74 to 1988. It filed 10 new cases challenging mergers in 1994 and 9 in 1995, up from 4 new cases in both 1991 and 1992. See Antitrust Division Workload Statistics, FY 1986-1995, 70 Antitrust & Trade Reg. Rep. (BNA) 299, 300-01 (Mar. 14, 1995). In one significant case, the Division obtained a settlement of its challenge of Microsoft's acquisition of Intuit, Inc. See Microsoft Halts Merger With Intuit; Prospect of Lengthy Antitrust Trial Is Key, Wash. Post, May 21, 1995, at Al. The FTC reported 35 "challenges of anticompetitive mergers" during fiscal year 1995; this "figure represents the high-water mark for number of mergers challenged since at least 1980." See Pitofsky Reports That FTG's 1995 Record Evidences Tough Enforcement of Core Laws, 69 Antitrust & Trade Reg. Rep. (BNA) 566 (Nov. 16, 1995).
80. See, e.g., Jan Crawford Greenburg, Minding The Business of Big Business; Chief of Federal Antitrust Division Carves Own Niche, Chi. Trib., Nov. 12, 1995, at 1; Barry Meier, New Teeth at the F.T.C. (Fangs to Some), N. Y. Times, Apr. 25, 1996, at D1.
81. See, e.g., Jan Crawford Greenburg, Minding The Business of Big Business; Chief of Federal Antitrust Division Carves Own Niche, Chi. Trib., Nov. 12, 1995, at 1; Barry Meier, New Teeth at the F.T.C. (Fangs to Some), N. Y. Times, Apr. 25, 1996, at D1.
82. See Krattenmaker & Pitofsky, supra note 64, at 211 (cited in Brodley, supra note 24, at 4 n.2, 9 nn.30-31); Robert Pitofsky, Proposals for Revised United States Merger Enforcement in a Global Economy, 81 Geo. L.J. 195, 197-99 (1992) (cited in Brodley, supra note 24, at 10 n.34).
83. See Pitofsky, supra note 70, at 198 (arguing that "tighter enforcement [of mergers] . . . is justified"); Meier, supra note 69, at D1 (noting that Pitofsky is "eager to push antitrust regulation").
84. Brodley, supra note 24, at 4.
85. See id. at 4; see also id. at 9 n.29 (stating that "the plight of private litigants has worsened in recent years").
86. Id. at 10.
87. See id. at 21.
88. So, for example, the courts allow more relaxed standards of proof of the amount of damages for certain harms to assure that a wrongdoer who has caused antitrust injury does not go unpunished. "[A] defendant whose wrongful conduct has rendered difficult the ascertainment of the precise damages suffered by the plaintiff, is not entitled to complain that they cannot be measured with the same exactness and precision as would otherwise be possible." Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 379 (1927). On proof of damages generally, see generally Roger D. Blair & William H. Page, "Speculative" Antitrust Damages, 70 Wash. L. Rev. 423 (1995). Similarly, courts have adopted theoretically imperfect measures of antitrust harm, like the overcharge in price-fixing cases, because they are practical to prove. See generally Jeffrey L. Harrison, The Lost Profits Measure of Damages in Price Enhancement Cases, 64 Minn. L. Rev. 751 (1980).
89. So, for example, the courts allow more relaxed standards of proof of the amount of damages for certain harms to assure that a wrongdoer who has caused antitrust injury does not go unpunished. "[A] defendant whose wrongful conduct has rendered difficult the ascertainment of the precise damages suffered by the plaintiff, is not entitled to complain that they cannot be measured with the same exactness and precision as would otherwise be possible." Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 379 (1927). On proof of damages generally, see generally Roger D. Blair & William H. Page, "Speculative" Antitrust Damages, 70 Wash. L. Rev. 423 (1995). Similarly, courts have adopted theoretically imperfect measures of antitrust harm, like the overcharge in price-fixing cases, because they are practical to prove. See generally Jeffrey L. Harrison, The Lost Profits Measure of Damages in Price Enhancement Cases, 64 Minn. L. Rev. 751 (1980).
90. Although Associated General Contractors v. California State Council of Carpenters implied that antitrust injury is one of several factors in the standing inquiry, 459 U.S. 519, 532-34 (1983), Cargill made clear that antitrust injury is an essential first step before applying any of the other standing actors. Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 110 n.5 (1986) ("A showing of antitrust injury is necessary, but not always sufficient, to establish standing under § 4, because a party may have suffered antitrust injury but may not be a proper plaintiff under § 4 for other reasons."). Virtually every circuit now explicitly recognizes this two-step inquiry. See, e.g., Balaklaw v. Lovell, 14 F.3d 793, 798 n.9 (2d Cir. 1994): As a necessary first step, courts must determine whether the plaintiff suffered an antitrust injury. If the answer to that question is yes, they must then determine whether any of the other factors, largely relating to the directness and identifiability of the plaintiff's injury, prevent the plaintiff from being an efficient enforcer of the antitrust laws. See also Section of Antitrust Law, American Bar Association, Proving Antitrust Damages: Legal and Economic Issues 6-8 n.5 (William H. Page ed., 1996) (collecting cases applying this two-step inquiry).
91. See Page, supra note 1, at 1483-85. For judicial application, see for example, Greater Rockford Energy & Tech. Corp. v. Shell Oil Co., 998 F.2d 391 (7th Cir. 1993): Antitrust injury involves a causation requirement in order to define the class of potential plaintiffs eligible to bring suit. . . . Standing, on the other hand, examines the connection between the asserted wrongdoing and the claimed injury to limit the class of potential plaintiffs to those who are in the best position to vindicate the antitrust infraction. Id. at 395 (citations omitted); Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1449 (11th Cir. 1991) ("First, a court should determine whether the plaintiff suffered 'antitrust injury'; second, the court should determine whether the plaintiff is an efficient enforcer of the antitrust laws.").
92. Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), which Professor Brodley cites, is an illustration of this standing requirement See Brodley, supra note 24, at 21. Illinois Brick denied standing to indirect purchasers from a cartel because, among other reasons, dividing the right to recover for the overcharge among direct and indirect purchasers would needlessly complicate antitrust litigation and raise a risk of duplicative recovery. See Illinois Brick, 431 U.S. at 736-46. The Court considered the issue of effective enforcement, but only in the context of limiting the right to recover to a subset of those who have suffered antitrust injury. See id. at 746-47.
93. See Brodley, supra note 24, at 34-38.
94. See William H. Page, Optimal Antitrust Penalties and Competitors' Injury, 88 Mich. L. Rev. 2151, 2162 (1990) ("[C]ompetitors are a reliable and knowledgeable class of antitrust plaintiffs," but their harms "are antitrust injury only if they are proportional to the social cost, the deadweight loss from increased monopoly power.").
95. See Brodley, supra note 24, at 11-12.
96. After Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990), for example, it is unlikely that private plaintiffs will often challenge vertical maximum price-fixing. ARCO itself involved a suit by competitors of the dealers on whom ARCO had imposed maximum vertical prices. The Court concluded that the competitors did not suffer antitrust injury unless the maximum prices were predatory. ARCO, 495 U.S. at 337-38. The issue of suits by the dealers who are subject to maximum price fixing is more complex. Caribe BMW, Inc. v. BMW, A.G., 19 F.3d 745 (1st Cir. 1994) (Breyer, J.) permits suits by dealers, but only if they can show that the agreement inhibited them from selling to consumers who preferred high-quality service at a high price. See id. at 754. But see Khan v. State Oil Co., 93 F.3d 1358, 1362-63 (7th Cir. 1996) (Posner, C.J.) (allowing suits by dealers on the grounds that no efficiency rationale supports the rule against vertical maximum price fixing).
97. Pub. L. No. 94-435, 90 Stat. 1383 (1976) (codified as amended in 15 U.S.C. § 18a (1994)).
98. See James W. Mullenix, The Premerger Notification Program at the Federal Trade Commission, 57 Antitrust L.J. 125, 127-30 (1988).
99. The first Supreme Court decision to recognize private enforcement was Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477 (1977), which made it subject to the antitrust injury doctrine. For an early review of the policy issues associated with private enforcement of the antimerger law, see Section of Antitrust Law, American Bar Association, Monograph No. 1, Mergers and the Private Antitrust Suit The Private Enforcement of Section 7 of the Clayton Act Policy and Law 51-56 (1977).
100. See Brodley, supra note 24, at 28-30.
101. See id. at 30.
102. Id. at 21 n.77.
103. See id. at 29-30.
104. See infra Parts V & VI.
105. See Brodley, supra note 24, at 50.
106. See id. at 70.
107. See id. at 33, 69.
108. See 2A James Wm. Moore, Moore's Federal Practice ¶ 11.02[3.-1] (2d ed. 1995). Although Rule 11 establishes an independent requirement that the complaint not be presented "for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation," (Fed. R. Civ. P. 11(b)(2)), compliance with the requirement typically turns on whether the pleading is "frivolous." See Moore, supra, ¶ 11.02[3.-2]. In any event, establishing improper purpose in a competitor suit would be extremely difficult
109. See Brodley, supra note 24, at 32, 69; Lopatka & Mongoven, supra note 12, at 159.
110. See Lopatka & Mongoven, supra note 12, at 158-59.
111. See Brodley, supra note 24, at 32, 69.
112. See id. at 69.
113. For some evidence of the length of merger trials, see Lopatka & Mongoven, supra note 12, at 169 (reporting that the average length of time between the filing of the complaint and the district court's decision on the merits in cases brought by the Antitrust Division in which preliminary relief was requested was about seven months).
114. See Page & Blair, supra note 24, at 120-21.
115. See Brodley, supra note 24, at 14.
116. See id. at 15.
117. See id.
118. See William H. Page, Legal Realism and the Shaping of Modem Antitrust, 44 Emory L.J. 1, 23-42 (1995).
119. Individual choice was viewed as the mechanism by which competition functioned. Coercive interference in these choices reduced competition. See FTC v. Texaco, Inc., 393 U.S. 223, 229-30 (1968) (Black, J.) ("To the extent that dealers are induced to select the sponsored brand in order to maintain the good favor of the oil company. . . the competitive market is adversely affected."). A producer's coercive Imposition of maximum resale prices on its dealers was itself a reduction in competition. See Albrecht v. Herald Co., 390 U.S. 145, 149, 150 n.6 (1968) ("The combination with retailers arose because their acquiescence in the suggested prices was secured by threats of termination . . . ."). Consequently, any lost profits from these prices were compensable.
120. See Page, supra note 105, at 5051.
121. The Court typically assesses the anticompetitive effect of a restraint by examining its effect on price and output See, e.g., Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 289-90 (1985); NCAA v. Board of Regents of U. of Okla., 468 U.S. 85, 10304 (1984); Broadcast Music, Inc. v. CBS, 441 U.S. 1, 19-20 (1979).
122. See Brodley, supra note 24, at 14.
123. Atlantic Richfield Co. v. USA Petroleum, 495 U.S. 328, 342 (1990) (quoting Arizona v. Maricopa County Med. Soc'y, 457 U.S. 332, 344 (1982)).
124. Justice Brennan made this point dear in ARCO when he wrote that "[l]ow prices benefit consumers regardless of how they are set, and so long as they are above predatory levels, they do not threaten competition." ARCO, 495 U.S. at 340.
125. Community Publishers, Inc. v. Donrey Corp., 892 F. Supp. 1146, 1167 (W.D. Ark. 1995).
126. "'[P]roof of a per se violation and of antitrust injury are distinct matters that must be shown independently.'" ARCO, 495 U.S. at 344 (quoting Phillip Areeda & Herbert Hovenkamp, Antitrust Law 330 (Supp. 1989)).
127. See ARCO, 495 U.S. at 332.
128. "Although all antitrust violations, under both the per se rule and rule-of-reason analysis, 'distort' the market, not every loss stemming from a violation counts as antitrust injury." ARCO, 495 U.S. at 340 n.8.
129. Professor Brodley mistakenly attributes this position to Page. See Brodley, supra note 24, at 13 n.49.
130. See Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 119 n.15 (1986). Brodley argues that Cargill should not be read to require proof of a post-merger Sherman Act violation, only "a threat of injury from the anticompetitive effects the Clayton Act aims to prevent - for example, oligopolistic price coordination." See Brodley, supra note 24, at 20 n.76. While we agree with Professor Brodley that Cargill does not impose a literal requirement of proof of a Sherman Act violation, we disagree about what constitutes a threat of injury to rivals from anticompetitive effects of mergers. See infra Part VI.
131. See Brodley, supra note 24, at 51.
132. See id. at 53.
133. See id.
134. Were Professor Brodley's argument adopted, Snyder and Kauper's interpretation of Tasty Baking Co. v. Ralston Purina, Inc., 653 F. Supp. 1250 (E.D. Pa. 1987), would be borne out: "The lesson for competitor plaintiffs is clear. Allegations of anticompetitive exclusion, if properly framed, will satisfy the antitrust injury requirement The question then becomes one of proof and, for all practical purposes, the case must proceed to the merits." Snyder & Kauper, supra note 15, at 585. Professor Brodley endorses the Tasty Baking reasoning. See Brodley, supra note 24, at 47, 61-62.
135. Professor Brodley suggests that a competitor in a concentrated market must "constrain its actions in deference to the predatory power of its rivals." See Brodley, supra note 24, at 50. It is not clear why a firm faced with exclusionary power would constrain its actions. It is more likely that the firm would adopt aggressive counter-measures to thwart the exclusionary tactic. See generally Donald J. Boudreaux, Turning Back the Antitrust Clock: Nonprice Predation in Theory and Practice, 13 Regulation 45 (1990).
136. When a cartel controls less than 100% of the market, it must take the nonconspiring fringe firm's output as given and set its profit-maximizing price accordingly. The fringe firms produce at marginal cost, taking the cartel's price as the market price. For analysis of exclusion in such cases, see Page, supra note 81, at 2153-60.
137. For example, Professor Brodley asserts that "[c]artel theory teaches that effective collusion requires the ability to punish or exclude deviants and new entrants" and that "the power to punish deviating rivals is essential to effective collusion." Brodley, supra note 24, at 51. He thus apparently draws no distinction between recalcitrant members of a cartel and fringe competitors.
138. See id. at 51 (quoting Department of Justice & Federal Trade Commission Horizontal Merger Guidelines, 62 Antitrust & Trade Reg. Rep. (BNA) No. 1559, § 2.1, at 5-9 (Supp. 1992) [hereinafter Guidelines]).
139. Guidelines, supra note 125, § 2.12, at 5-9 to -10 (emphasis added).
140. See Brodley, supra note 24, at 51.
141. Professor Brodley unmistakably asserts that punishment inflicted on a deviating cartel member constitutes antitrust injury. See id. at 52. But it is not altogether clear whether he is arguing that punishment in the form of loss of cartel profits suffices or only punishment in the form of increasing the firm's costs qualifies as antitrust injury. Brodley refers to the firm's "pro-competitive conduct" as provoking "an exclusionary response," and he previously described the exercise of "exclusionary market power" as raising the costs of rivals or placing rivals at another harmful disadvantage. See id. at 51-52.
142. For analysis of the economics of dominant firm pricing and the harm to competitors from exclusion, see generally Page, supra note 81.
143. See also Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 243 (1993) (holding that recoupment of the costs of a predatory pricing campaign through future oligopoly pricing was not proven and, consequently, no predatory pricing was shown).
144. See Brodley, supra note 24, at 5354.
145. See id. at 54 ("Nonprice predation provides a more plausible and legally acceptable setting for predatory conduct because it is not subject to the objection that the predatory strategy may impose higher costs on the predator than the prey."). He mentions the following as examples of nonprice predation: raising rivals' costs or reducing the demand for the rival product by such stratagems as exclusive dealing; foreclosure of essential inputs; driving up common input costs; refusing to engage in mutually profitable joint marketing; predatory system design, which makes components produced by rivals incompatible with the system; predatory product innovation, which prevents or reduces the demand for the rival's product but is otherwise nonoptimal; predatory vertical restraints, with which a dominant upstream producer induces the exit of a more efficient rival by extending its market power to the downstream market and then engages in exclusive dealing; and penalty contracts, which are long-term contracts designed to deter entry or to capture economic rent from a lower cost producer entered into by a monopolistic supplier and its customers. Id. (citations omitted). For further discussion of nonprice predation and the problems it poses, see John E. Lopatka & William H. Page, Posner's Program for the Antitrust Division: A Twenty-Five Year Perspective, 48 SMU L. Rev. 1713, 1731-38 (1995).
146. See Malcolm B. Coate & Andrew N. Kleit, Exclusion, Collusion, or Confusion?: The Underpinnings of Raising Rivals' Costs, 16 Res. L. & Econ. 73, 89 (1994) (detailing the necessary conditions for nonprice predation to be a rational strategy and concluding that it "will prove profitable for the predator only in limited circumstances").
147. See Brodley, supra note 24, at 51-53.
148. Such a scenario is possible. See, e.g., Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 783 (7th Cir. 1994) (Posner, C.J.) (holding that harm to an excluded cartel member other than mere loss of cartel profits would be antitrust injury).
149. See Brodley, supra note 24, at 53.
150. Professor Brodley recognizes this point. See id. at 53. As the Supreme Court noted in Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986), predatory pricing is more difficult when attempted by a cartel than by a dominant firm, because of the inherent problems of coordinating the necessary price and output decisions. The same holds true for nonprice predation.
151. Professor Brodley cites favorably, R. C. Bigelow, Inc. v. Unilever, 867 F.2d 102, 111 (2d Cir. 1989), which recognized a presumption that dominant firms will engage in exclusionary practices. See Brodley, supra note 24, at 63-64. But the Bigelow presumption is of dubious vitality after ARCO. See Community Publishers, Inc. v. Donrey Corp., 892 F. Supp. 1146, 1167 n.16 (W.D. Ark. 1995) ("Facts other than market share must be known before a market can realistically be judged susceptible to predation.").
152. See United States v. United States Steel Corp., 251 U.S. 417, 451 (1920) (holding that U.S. Steel did not violate the antitrust laws by achieving a dominant position without engaging in exclusionary tactics); Richard A. Posner, Antitrust Law. An Economic Perspective 29 (1976) (asserting that U.S. Steel's market power declined over time because the firm priced like a dominant firm and did not attempt to exclude competitors).
153. See Coate & Kleit, supra note 133, at 89.
154. See, e.g., Posner, supra note 139, at 96-97.
155. See Brodley, supra note 24, at 55.
156. See, e.g., Peter G. Bryant & E. Woodrow Eckard, Price Fixing: The Probability of Getting Caught, 73 Rev. Econ. & Stat. 531, 531-36 (1991) (estimating that 13-17% of cartels are detected).
157. The phrase "raising rivals' costs" (or "raise rivals' costs") (the most prominent theory of nonprice predation) appears in only six federal court opinions in the WESTLAW "ALLFEDS" database, and in none of these is the concept a basis for a finding of liability. Multistate Legal Studies, Inc. v. Harcourt Brace Jovanovich Legal and Prof'l Publications, Inc., 63 F.3d 1540 (10th Cir. 1995); United States v. Western Elec. Co., 993 F.2d 1572 (D.C. Cir. 1993); National Org. for Women v. Scheidler, 968 F.2d 612 (7th Cir. 1992); Premier Elec. Constr. Co. v. National Elec. Contractors Ass'n, 814 F.2d 358 (7th Cir. 1987); Ball Mem'l Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325 (7th Cir. 1986); Viacom Int'l, Inc. v. Tele-Communications, Inc., 1994-2 Trade Gas. (CCH) ¶ 70,809 (S.D.N.Y. Oct 12, 1994).
158. See Brodley, supra note 24, at 55.
159. 472 U.S. 585 (1985).
160. See Brodley, supra note 24, at 66.
161. Aspen Skiing, 472 U.S. at 587 n.2.
162. See id. at 588 n.3.
163. See id. at 588 n.4.
164. See id. at 589.
165. See id.
166. See Brodley, supra note 24, at 66.
167. Aspen Skiing, 472 U.S. at 590 n.8.
168. The record in Aspen includes data through the 1980-81 season. See Joint Appendix at 183, Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) (No. 84-510). But we could find no data pertaining to years before 1973. This omission is not surprising, since the case focused on conduct in 1977 through 1981, and the defendant argued that events more than 10 years earlier were "irrelevant to the present antitrust claim." See Reply Brief for Petitioner at 2, Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) (No. 84-510).
169. Petitioner's Reply Brief at 2, Aspen Skiing (No. 84-510).
170. See id.
171. See id.
172. See Brodley, supra note 24, at 67-68.
173. Aspen Skiing, 472 U.S. at 589.
174. See id. at 590, 592.
175. Ski Co. argued that its withdrawal from the interchangeable ticket arrangement was a response to Highland's free riding on Ski Co.'s investments in national promotion of the area and therefore was not exclusionary. See Petitioner's Brief at 25, Aspen Skiing (No. 84510); see also Frank H. Easterbrook, On Identifying Exclusionary Conduct, 61 Notre Dame L. Rev. 972, 975-76 (1986) (suggesting that Ski Co. may have been acting efficiently to stop Highlands's free riding).
176. The interchangeable ticket may have facilitated a price fixing agreement In 1975 the Colorado Attorney General filed a complaint against Ski Co. and Highlands, claiming that they had fixed prices during negotiations over the ticket; the case was settled two years later by a consent decree that required the parties to set their own prices unilaterally before negotiating the ticket's terms. See Aspen Skiing, 472 U.S. at 591 n.9. The operator of Buttermilk may have refused to participate in the cartel in 1964; if so, Ski Co. may have purchased Buttermilk at a premium to maintain the supercompetitive profits. Such an acquisition would have been anticompetitive, but Highlands would have had no incentive to block it Either the merger would have preserved the cartel or it would have produced a dominant firm that unilaterally set a price that permitted Highlands to continue earning economic rents.
177. See id. at 598.