Twombly, Leegin, and the reshaping of antitrust

Supreme Court Review

Volumn , Issue , 2007, Pages 161-203

  Picker, Randal C ^a,b  

^a UNIVERSITY OF CHICAGO   (United States)

^b ARGONNE NATIONAL LABORATORY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 47049089576     PISSN: 00819557     EISSN: None     Source Type: Book Series    
DOI: 10.1086/655169     Document Type: Review

References (122)

1. And like this article, some will address all four of the cases together. See Joshua D. Wright, The Roberts Court and the Chicago School of Antitrust: The 2006 Term and Beyond, 2 Competition Policy Intl 24 (Aut 2007).
2. Weyerhaeuser Co. v Ross-Simmons Hardwood Lumber Co., Inc., 127 S Ct 1069 (2007).
3. Brooke Group Ltd. v Brown & Williamson Tobacco Corp., 509 US 209 (1993).
4. Patrick Bolton, Joseph F. Brodley, and Michael H. Riordan, Predatory Pricing: Strategic Theory and Legal Policy, 88 Georgetown L J 2239 (1999-2000).
5. United States v AMR Corp., 335 F3d 1109 (10th Cir 2003).
6. Bell Atlantic Corp. v Twombly, 127 S Ct 1955 (2007).
7. Matsushita Elec. Industrial Co. v Zenith Radio Corp., 475 US 574 (1986).
8. Credit Suisse Securities (USA) LLC v Billing, 127 S Ct 2383 (2007).
9. Gordon v New York Stock Exchange, Inc., 422 US 659 (1975).
10. Verizon Communications, Inc. v Law Offices of Curtis V. Trinko, LLP, 540 US 398 (2004).
11. Leegin Creative Leather Products, Inc. v PSKS, Inc., 127 S Ct 2705 (2007).
12. Dr. Miles Medical Co. v John D. Park & Sons Co., 220 US 373 (1911).
13. Continental T.V., Inc. v GTE Sylvania Inc., 433 US 36 (1977);
14. United States v Colgate, 250 US 300 (1919).
15. Dennis Carlton and I address many of these issues - though not the specifics of Credit Suisse - in our forthcoming paper Antitrust and Regulation, in Nancy Rose, ed, Economic Regulation and Its Reform: What Have We Learned? (Chicago, 2008).
16. Weyerhaeuser, 127 S Ct at 1072.
17. Id at 1073.
18. Although the Court recognized that predatory bidding could lead to market power in both the input market and the output market, id at 1076 n 2, the case appears to have been litigated on the premise that Weyerhaeuser was not seeking market power in the finished lumber market.
19. Id at 1073.
20. Brooke Group, 509 US at 223.
21. Id at 222 n 1.
22. Id at 224.
23. For additional commentary on Weyerhaeuser, see John B. Kirkwood, Controlling Above-Cost Predation: An Alternative to Weyerhaeuser and Brooke Group (unpublished manuscript, 2007), online at http://papers.ssrn.com/sol3/ papers.cfm?abstract_id = 1027261;
24. Keith N. Hylton, Weyerhaeuser, Predatory Bidding and Error Costs (Boston University School of Law Working Paper No 08-03, 2008), online at http://papers.ssrn.com/sol3/papers.cfm?abstract _id= 1084106 (arguing that there are distinctions between predatory bidding and predatory pricing but that concerns about court mistakes justify applying the Brooke Group doctrine to cover both);
25. Thomas A. Lambert, Weyerhaeuser and the Search for Antitrust's Holy Grail, 2006-2007 Cato S Ct Rev 277 (arguing that Weyerhaeuser implicitly addresses the circumstances under which a more efficient rival can be excluded consistent with Section 2 of the Sherman Act);
26. Gregory J. Werden, Monopsony and the Sherman Act: Consumer Welfare in a New Light (unpublished manuscript, 2007), online at http://papers.ssrn. com/sol3/papers.cfm ?abstract_id = 975992).
27. The note following 47 USC § 152 provides that "[n]othing in this Act or the amendments made by this Act shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws."
28. See Verizon Communications, Inc. v Law Offices of Curtis V. Trinko, LLP, 540 US 398 (2004).
29. United States v Trans-Missouri Freight Association, 166 US 290 (1897);
30. Carlton and Picker, Antitrust and Regulation (cited in note 14).
31. 15 USC §§ 77p(a), 78bb(a).
32. Gorton v New York Stock Exchange, Inc., 422 US 659 (1975,
33. and United States v National Association of Securities Dealers. Inc., 422 US 694 (1975).
34. Credit Suisse, 127 S Ct at 2392.
35. For additional commentary on Credit Suisse, sec Keith Sharfman, Credit Suisse, Regulatory Immunity, and the Shrinking Scope of Antitrust (unpublished manuscript, 2007), online at http://papers.ssrn.com/sol3/papers. cfm?abstract_id = 997405.
36. Bell Atlantic Corp., 127 S Ct at 1968.
37. For additional commentary on Twombly, see Scott Dodson, Pleading Standards after Bell Atlantic v. Twombly, 93 Va L Rev in Brief 121 (2007) (online at http://www.virginialawreview .org/inbrief/2007/07/09/ dodson.pdf).
38. FRCP 8.
39. FRCP Form 9.
40. Oral Argument Transcript, Bell Atlantic Corp. v Twombly, No 05-1126, *3, 22, 41 (Nov 27, 2006).
41. Bell Atlantic Corp., 127 S Ct at 1970 n 10.
42. United States v Topco Associates, Inc., 405 US 596 (1972).
43. Matsushita Elec. Industrial Co., 475 US at 588
44. (quoting Monsanto Co. v Spray-Rite Service Corp., 465 US 752 (1984)).
45. Bell Atlantic Corp., 127 S Ct at 1977.
46. Id at 1983.
47. Id at 1967-68 no 6.
48. 28 USC § 2072(a).
49. 15 USC § 1312.
50. For additional commentary on Leegin, see Mark D. Bauer, Whither Dr. Miles? (unpublished manuscript, 2007), online at http://papcrs.ssrn. com/sol3/papers.cfm?abstract_id = 1009972);
51. Shubha Ghosh, Vertical Restraints, Competition and the Rule of Reason (unpublished manuscript, 2007), online at http://papers.ssrn.com/ sol3/papers.cfm?abstract_id= 1005380);
52. Lino A. Graglia, Leegin Creative Leather Products, Inc. v. PSKS, Inc.: The Strange Career of the Law of Resale Price Maintenance (University of Texas Law and Economics Research Paper No 115, Nov 2007), online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id= 1028562 ("Strange Career");
53. Barak Y. Orbách, Antitrust Vertical Myopia: The Allure of High Prices (Arizona Legal Studies Discussion Paper No 07-25, Jan 2008), online at http://papers .ssrn.com/sol3/papers.cfm?abstract_id = 1033440;
54. lttai Paldor, Rethinking RPM: Did the Courts Have It Right All Along? (unpublished SJD dissertation, University of Toronto, 2007), online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id = 994750.
55. United States v Socony-Vacuum Oil Co., 310 US 150, 224 n 59 (1940) ("Price-fixing agreements may or may not be aimed at complete elimination of price competition. The group making those agreements may or may not have power to control the market. But the fact that the group cannot control the market prices does not necessarily mean that the agreement as to prices has no utility to the members of the combination. The effectiveness of price-fixing agreements is dependent on many factors, such as competitive tactics, position in the industry, the formula underlying price policies. Whatever economic justification particular price-fixing agreements may be thought to have, the law does not permit an inquiry into their reasonableness. They are all banned because of their actual or potential threat to the central nervous system of the economy.");
56. United States v Trenton Potteries Co., 273 US 392 (1927).
57. 220 US 373 (1911).
58. Dr. Miles, 220 US at 409-10 ("That they are agents, and not buyers, I understand to be conceded, and I do not see how it can be denied. We have nothing before us but the form and the alleged effect of the written instrument, and they are both express that the title to the goods is to remain in the plaintiff until actual sale is permitted by the contract").
59. Id at 404-07.
60. Id at 408 ("As to this, the complainant can fare no better than could the dealers themselves if they formed a combination and endeavored to establish the same restrictions, and thus to achieve the same result, by agreement with each other").
61. United States v Colgate, 250 US 300 (1919).
62. Under the Criminal Appeals Act, the United States was allowed to take a direct appeal to the Court from the district court "from a decision or judgment quashing, setting aside, or sustaining a demurrer to, any indictment, or any count thereof, where such decision or judgment is based upon the invalidity, or construction of the statute upon which the indictment is founded." Act of March 2, 1907, 34 Stat 1246.
63. Graglia, Strange Career at 12 (cited in note 43).
64. As the Court put it, "[i]n the absence of any purpose to create or maintain a monopoly, the act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal; and, of course, he may announce in advance the circumstances under which he will refuse to sell." As for Dr. Miles, "the unlawful combination was effected through contracts which undertook to prevent dealers from freely exercising the right to sell." Colgate, 250 US at 307-08.
65. United States v A. Schrader's Son, Inc., 252 US 85 (1920);
66. Frey & Son, Inc. v Cudahy Packing Co., 256 US 208 (1921);
67. Federal Trade Commission v Beech-Nut Packing Co., 257 US 441 (1922);
68. United States v General Electric Co., 272 US 426 (1926).
69. A. Schrader's Son. Inc., 252 US at 99.
70. Beech-Nut Packing Co., 257 US at 451.
71. Id at 457 ("And to come back to the words of the statute I cannot see how it is unfair competition to say to those to whom the respondent sells and to the world, you can have my goods only on the terms that I propose, when the existence of any competition in dealing with them depends upon the respondent's will. I see no wrong in so doing, and if T did I should not think that it is a wrong within the possible scope of the word unfair").
72. United States v Parke, Davis and Co., 362 US 29 (1960).
73. For discussion of Parke, Davis's history, see http://www.pfizer.com/ about/history/ pfizer_warner_lambert.jsp.
74. Parke, Davis, 362 US at 33.
75. Id at 49, 57.
76. 433 US 36 (1977).
77. White Motor Co. v United States, 372 US 253 (1963).
78. Id at 261, 264.
79. United States v Arnold, Schwinn & Co., 388 US 365 (1967).
80. Id at 382.
81. Continental T.V., Inc. v GTE Sylvania Inc., 433 US 36, 58-59 (1977).
82. Id at 70.
83. Monsanto Co. v Spray-Rite Service Corp., 465 US 752 (1984).
84. State Oil Co. v Kahn, 522 US 3 (1997).
85. See John Case, A Business Transformed: How One CEO Transformed His Entire Company in Order to Make Its Service Indispensable to Its Customers, Inc. Magazine (June 1993).
86. Leegin Creative Leather Products, 127 S Ct at 2711.
87. Id.
88. Maria Halkias, Local Antitrust Fight Goes to D.C, Dallas Morning News (March 25, 2007).
89. Leegin Creative Leather Products, 127 S Ct at 2714.
90. Id at 2715.
91. Id.
92. Id at 2714.
93. Illinois Tool Works Inc. v Independent Ink, Inc., 547 US 28 (2006).
94. Leegin Creative Leather Products, 127 S Ct at 2722.
95. Id at 25.
96. 50 Stat 693 (1937).
97. Consumer Goods Pricing Act of 1975, 89 Stat 801 (Dec 12, 1975).
98. Leegin Creative Leather Products, 127 S Ct at 2729.
99. Id at 2731.
100. Oral Argument Transcript, Leegin Creative Leather Products, Inc. v PSKS, Inc., No 06-480, *15 (March 26, 2007) ("Leegin Transcript").
101. Id at *12.
102. Federal Election Commission v Wisconsin Right to Life, Inc., 127 S Ct 2652 (2007).
103. Business Electronics Corp. v Sharp Electronics Corp., 485 US 717 (1988).
104. Hewlett-Packard started selling calculators using RPN in 1972 and continues to do so today. See RPN, An Introduction to Reverse Polish Notation (available at http:// www.hp.com/calculators/news/rpn.html).
105. Leegin Transcript at *41.
106. At oral argument, Justice Stevens addressed the possibility of a purely horizontal cartel designed to promote interbrand competition. Id at *4-5, 20-21.
107. Monsanto Co. v Spray-Rite Service Corp., 465 US 752, 761 (1984).
108. For discussion of those cases, see Diane Wood Hutchinson, Antitrust 1984: Five Decisions in Search of a Theory, 1984 Supreme Court Review 69.
109. Monsanto Co., 465 US at 768.
110. Jefferson Parish Hospital District No. 2 v Hyde, 466 US 2 (1984).
111. Id at 9.
112. International Salt Co. v United States, 332 US 392 (1947).
113. Jefferson Parish, 466 US at 32 ("Whatever merit the policy arguments against this longstanding construction of the Act might have, Congress, presumably aware of our decisions, has never changed the rule by amending the Act. In such circumstances, our practice usually has been to stand by a settled statutory interpretation and leave the task of modifying the statute's reach to Congress").
114. Id at 35.
115. Copperweld Corp. v Independence Tube Corp., 467 US 752 (1984).
116. Id at 779-82.
117. United States v Yellow Cab Co., 332 US 218 (1947).
118. Copperweld, 467 US at 760 ("Although the Court has expressed approval of the doctrine on a number of occasions, a finding of intra-enterprise conspiracy was in all but perhaps one instance unnecessary to the result").
119. Id at 784.
120. Fifty-one is the number that emerges from the Westlaw search, run on Nov 21, 2007, on the Supreme Court database using the search request "to(29t) and date(after 1983) and sy(antitrust sherman clayton (federal +1 trade +1 commission)."
121. Compare Jacob E. Gersen and Adrian Vermeule, Chevron as a Voting Rule, 116 Yale L J 676 (2007).
122. In antitrust, see, e.g., Illinois Brick Co. v Illinois, 431 US 720, 736 (1977) ("[W]e must bear in mind that considerations of stare decisis weigh heavily in the area of statutory construction, where Congress is free to change this Court's interpretation of its legislation").