We round up the most significant appellate decisions relevant to commercial litigation each week.

Here you go–Commercial Roundup for the couple of weeks ending September 14, 2023

We round up the most significant appellate decisions relevant to commercial litigation each week.

This late-summer edition of Commercial Roundup features a notable ruling on personal jurisdiction, a pair of False Claims Act decisions, a couple of opinions tossing class certification orders, a 2-1 split in a securities fraud case (the dissent has the better end of it), a rare victory for plaintiffs in an action for unlawful maintenance of a monopoly, a broadening of RICO to cover loss of wages as injury to “business”, an en banc extension of Title VII to discriminatory time off rules, approval of a way to defeat removal post-removal, and some patent and insurance matters. Enjoy!

The near-term prospects for significantly boosting antitrust enforcement appropriations look doubtful.

As I mentioned last month in Antitrust Enforcers Must Have More Funding, the Antitrust Division in the Department of Justice and the Federal Trade Commission need a boost of $340 million from current funding just to return them (in constant dollars) to 1979 levels–about $100 million for the Antitrust Division and $240 million for the FTC. 

Yet these big numbers understate enforcers’ resource needs for multiple reasons, including:

  • the tougher doctrinal standards in the wake of Robert Bork’s 1978 The Antitrust Paradox,
  • greater concentration of markets,
  • rising litigation costs,
  • the need for new digital and AI competencies, and
  • bigger disparities between corporate and public resources. 

A serious effort to restore the U.S economy to the competitive vigor of the 1970s would therefore require a funding rise that almost doubles the $53 million that the Senate Appropriations Committee proposed (in S. 2321) for the Antitrust Division and 12 times the $20 million it earmarked for the Federal Trade Commission (in S. 2309).

When you consider that S. 2309 would give the FTC only 12.5 percent of the $160 million boost it requested, S. 2321’s promise of more than half the $99,821,000 increase the Antitrust Division sought might look generous. But S. 2321 also transfers $50 million of the Antitrust Division’s money to another part of the Department of Justice, the Justice Operations, Management, and Accountability (JOM) segment, which houses DOJ’s top leadership, including the Attorney General.

Does that mean the Antitrust Division will fare even worse under the Senate appropriations bills than the FTC, with the Division getting only 3 percent of its request for a $99.8 million funding increase?

I suspect it does. For fiscal 2024, JOM requested a $67.5 million funding boost–to $212.5 million from $145 million–but S. 2321 actually cuts JOM’s appropriation by $5 million to $140 million. The $50 million transfer from the Antitrust Division would bring JOM’s appropriations to $190 million, still $22.5 million short of JOM’s ask. While Attorney General Merrill Garland might send some of the funds to the AD, doing so would shortchange JOM. That seems unlikely.

S. 2321 offers some hope of a further boost for the Antitrust Division, which appears to have received less harsh criticism for its pro-enforcement stance than the FTC has. Under the Senate bill, if Hart-Scott-Rodino (HSR) pre-merger notification fees exceed $278 million in fiscal 2024, the excess would go to the Antitrust Division. But the Attorney General—not the Antitrust Division—would have to “submit a spending plan” to the House and Senate appropriations committees before making the funds available to the AD. 

Although S. 2321 grants authority for using any fees above $278 million without further approval of the appropriations committees or of Congress itself—under the Chadra case from 1983, Congress may not reserve a right to veto post-appropriation uses of funds—the availability of any extra funds will depend on the number and size of merger deals requiring HSR scrutiny during fiscal 2024 and on the Attorney General’s priorities for the Antitrust Division.

Now for the bad news.

The House Appropriations Committee’s spending bills propose spending cuts for antitrust enforcers. They would fund the Antitrust Division at $192.8 million and the FTC at $376.5 million—$32.2 million and $53.4 million, respectively, below their appropriations for fiscal 2023.

While the Senate funding bills do not suggest hostility to a more assertive enforcement posture, the House’s proposals do. With the Senate bills giving antitrust appropriations a low priority, the enforcement agencies will need to make do in fiscal 2024 with fewer resources than they had almost half a century ago.

Any significant rise must await the outcome of the 2024 election.

We round up the most significant appellate decisions relevant to commercial litigation each week.

Welcome to the Commercial Roundup for July 26, 2023. With the U.S Supreme Court and the highest courts of New York and Texas on hiatus, the Supreme Court of Delaware and nine of the 13 U.S. Courts of Appeals supplied the commercial decisions that Roundup has cut into little pieces for you to sample.

Bonus content:

Two writers who cover antitrust issues asked me to comment on a Northern District of California judge’s July 11th ruling that the Federal Trade Commission hadn’t met its burden of proving grounds for a preliminary injunction against Microsoft’s $69 billion deal to buy Activision Blizzard. The deal promised to catapult Microsoft into second place in the U.S. video game market behind Sony.

To prepare for the interviews, I wrote down my main thoughts about the ruling. Below I share them with you.

  1. The court’s approach to the case—the legal standard it applied and the merger-friendly way it framed the underlying factual story—determined the outcome.
  2. Its approach to the law rejected the FTC’s positions and adopted Microsoft’s. The court interpreted the Clayton Act’s key language–“may be substantially to lessen competition”–to mean “will probably substantially lessen competition”. It also ruled that, to meet the “will probably” test, the FTC had to prove both that Microsoft would have the “ability” to foreclose competition in a relevant market and that it would have the “incentive” to foreclose it. 
  3. The court also accepted Microsoft’s framing of the dispute and version of the facts. The court started by allowing Microsoft to continue changing deal terms after the FTC developed painstaking economic evidence focusing on the original deal terms. That enabled Microsoft to control the narrative of the case. It also put the FTC in the position of constantly adjusting its economic analysis to take account of the changes.
  4. Controlling the narrative mattered enormously. Without the shifting of deal terms, the government would have told a story about preventing a merger that aimed to further enlarge an already huge company for the purpose of entrenching it in consolidating markets. But because of the court’s indulgence, Microsoft could change the story into one of an aspiring competitor selflessly willing to pay even more out of a desire to go toe to toe with archenemy Sony, the biggest player.
  5. Microsoft could thus spring a case different from the one the FTC had prepared to try. The resulting need for the FTC to make late-breaking updates to its proof–especially its economic modeling–likely explains the court’s surprising testiness about the FTC’s arguments (the court’s opinion said “the FTC insists” 10 times but “Defendants insist” only once).
  6. The dynamic may also have put the court in the position of viewing its job not as deciding whether to block a potentially anticompetitive combination but as helping Microsoft find a way to make the same deal meet legal standards.
  7. The court’s analysis appears to reflect a background assumption, common since Robert Bork’s The Antitrust Paradox came out in 1978, that increasing aggregations of economic power, without more, has no bad consequences that antitrust law has any proper concern with. 
  8. A court’s preexisting belief that big companies’ acquisitions have only benign effects on competition may explain its inclination to hold enforcers to higher standards of proof.

The FTC has filed a notice of appeal of the decision to the Ninth Circuit, which has docketed the case under no. 23-15992.

We round up the most significant appellate decisions relevant to commercial litigation each week.

Welcome to The Commercial Roundup for July 13, 2023. While the pace of new opinions has slowed, it has not stopped. And this issue includes the end of the Supreme Court’s 2022-23 Term.

Washington DC. September 20, 1987

Robert Bork said that serving on the U.S. Supreme Court “would be an intellectual feast”.[1]

Abstract, arcane, and avid for tricky math, the technocratic approach Bork advocated in The Antitrust Paradox: A Policy at War with Itself  has all but devoured the faintly-beating populist heart of antitrust law.

As a result, Paradox has for the 45 years since its 1978 debut made antitrust enforcement actions increasingly costly to bring, far harder to win, and challenging for even competition experts to understand. 

In an economy that has grown 1,000 percent since 1978, suffers from far greater concentration of markets, and brims with ever more gigantic firms, antitrust agencies need more resources (in terms of today’s dollars) than they did then.

Yet they have less. That must change.[2]

Continue Reading Antitrust enforcers must have more funding
We round up the most significant appellate decisions relevant to commercial litigation each week.

Welcome to The Contingency‘s Commercial Roundup for June 28!

Since our last issue, much has happened, not least FeedSpot’s recognition of The Contingency as one of the 30 Best Antitrust Law Blogs and Websites.

Continue Reading Commercial Roundup – June 28, 2023

Last month, the American Antitrust Institute and three economists moved to file amicus briefs in favor of an economic model that quantifies what Google describes as “happiness”. AAI and the economists seek to support opinion evidence in antitrust litigation against Google, In re Google Play Store Antitrust Litig., No. 3:21-md-02981-JD (N.D. Cal.), pending before U.S. District Judge James Donato. You can read the amicus briefs here and here and Google’s opposition here.

Do people have a “property” interest in “happiness”? Does the Clayton Act require them to?

The opinion evidence comes from a professor, Marc Rysman, who heads the Department of Economics at Boston University. Dr. Rysman created an economic model that the plaintiffs hope to use to quantify the losses they claim consumers sustained due to anticompetitive conduct by Google. The plaintiffs allege that Google misused its monopoly power in the market for apps using the Android operating system for smart phones and tablets. Google moved to exclude the Dr. Rysman’s opinions, and the amici join the plaintiffs in opposing Google’s motion.

The debate, according to Google, boils down to whether Dr. Rysman’s model measures injury to “property” under Section 4 of the Clayton Act or to mere “happiness”. 15 U.S.C. § 15(a). The plaintiffs say the model provides a reasonable estimate of the lower prices consumers would have paid for the apps in a “but-for world” that would have existed if Google had not thwarted development of better apps. Damages, plaintiffs assert, equal the difference between the apps’ lower prices in the but-for world (without Google’s anticompetitive conduct) and the higher actual prices consumers paid (in the less competitive actual world). Google contends that Dr. Rysman attempts to value consumers’ loss of “happiness” rather than of “property” and depends on “abstractions” that lack grounding in real-world observations.

Google’s position strikes me as cute if not twee. Everyone agrees that antitrust laws aim to prevent losses to innovation (e.g., more variety in goods and services) and to quality (greater durability, better functionality, more pleasing appearance, and the like) through injunctive relief. Google claims that antitrust laws don’t provide a damages remedy after the losses have come to pass because consumers who would have paid less in the but-for world (without anticompetitive conduct) lack a “property” interest in what amounts to keeping more of their money.

The idea of quantifying losses to innovation and quality has an unfamiliar feel. Damages experts usually focus on measuring the price effects of price-fixing. But economics and econometrics should enable damages experts to use their long-standing principles and tools to produce reasonable estimates of the dollar value of greater variety and higher quality.

While existing antitrust doctrine has treated demonstration of price effects as almost essential to liability and damages, Dr. Rysman’s model offers a way to quantify those effects in the but-for world, where anticompetitive conduct does not exist. If successful, that kind of innovation will have price effects of its own–on the value of antitrust claims. No wonder Google opposes it.

We round up the most significant appellate decisions relevant to commercial litigation each week.