Did T.R. pull his antitrust punches?

Blawgletter has speculated that antitrust enforcement runs in cycles (see here).  More support for the guess comes today from the pages of San Jose Mercury News (article here):

"Right now from a business perspective, it appears frankly that there has been a retreat from Section 2 enforcement," said Tom McCoy, executive vice president of legal affairs at AMD of Sunnyvale, referring to the part of the Sherman Act that prohibits monopolization.

McCoy [also] said he believed that Section 2 violations "are not getting the same kind of energetic enforcement and investigation" as they have in the past.

AMD of course has a bone to pick with its larger rival Intel, but the question arises anyway:  do current antitrust enforcers equate bigger with better? 

Barry Barnett

Monopoly shnopoly — subscriptions still free.

 
Would President Homer Simpson subject
new federal rules to political oversight?

In episode 229 of The Simpsons, the local newspaper replaces its retiring food critic with Homer Simpson.  Homer’s new power so corrupts him that he slams a dinner theatre performance of King Lear.  Another negative notice prompts pizzeria owner Luigi to say that "Homer, he’s out of control. He gave me a bad review.  So my friend put a horse head on the bed. He ate the head and gave it a bad review! True story."

Homer doesn’t handle the criticism well, declaring that "I’m Homer Simpson, the most powerful food critic in town, who will never get his comeuppance. You hear me (shakes fist at sky). No comeuppance!"

Blawgletter now knows how Homer felt.  In a recent comment on Blawgletter’s "Does Politics Improve Regulation?" and his own blog posting, Professor Gavin Kennedy, an eminent British economist and authority on Adam Smith, gently points out that the author of The Wealth of Nations actually favored some kinds of "meddling with market forces".  Then he slides a bare bodkin through Blawgletter’s ribs (or so he imagines), noting that, "[i]f the other lawyer knows the difference between the two versions of Adam Smith, he might be delighted for Barry to carry on speaking along the lines of his Blog and await his opportunity to put up an expert witness who does know the difference."  Ouch!

But Blawgletter and Professor Kennedy will part as friends after all.  For Blawgletter intended to highlight the contrast between those who believe that market forces can do no wrong (and who therefore denounce any government regulation) and those who argue that market forces can do great harm by, for example, creating monopolies, fixing prices, polluting air and water, selling unsafe products, producing vast inequality, and practicing frauds.  Smith, as Professor Kennedy takes pains to illustrate, approved of government intervention to mitigate at least some of these market failures.

Blawgletter never said otherwise.  No comeuppance!

Which brings us back to the question Blawgletter asked — can we trust politics to strike the right regulatory balance between the good and the bad that market forces can do?

Barry Barnett

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Economist Adam Smith during
his regrettable long-hair phase.

At least since college, Blawgletter has admired the exquisite contradictions of government regulation, which business trial lawyers encounter all the time.  Economic theory, on the one hand, teaches that any meddling with market forces — whether by bureaucrats or private monopolists — hurts overall "consumer welfare", the Holy Grail of economics ever since Adam Smith published The Wealth of Nations (1776). 

A problem with the theory, on the other hand, results from the sad fact that we don’t live in perfect world, in which perfect competition holds sway.  No, things like the sugar tariff on imports of sweet, sweet sucrose; congressional subsidies for ethanol; and, yes, licensing requirements for lawyers assure that we pay more than we should for all kinds of stuff.

But do we really overpay for the things we want or need?  Or does the political process give us the imperfect competition (and prices) that we want and deserve? 

Last week, the administration answered yes to both questions when it issued an executive order that requires federal agencies to justify regulations to political appointees.  The spokesman for the White House, per the NYT, described the directive as a "classic good-government measure that will make federal agencies more open and accountable."

What do y’all think?  Will requiring a political okay for regulations increase consumer welfare?  Do we want to make agencies "more open and accountable" to us?  Blawgletter wants to know.

Barry Barnett

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The First Circuit holds that debtors can’t rescind their loans on a class-wide basis under the Truth in Lending Act.  If you want to rescind, the court concludes, you must do it individually.  Opinion here.

Barry Barnett

Subscribe now.  You can always rescind later.

Well, duh.

Did Blawgletter say painless?  We meant less painful.  Sorry.  It still will hurt.

Partly because employees of business litigants can copy electronic files an almost infinite number of times and put them on many media (servers, local disk drives, floppy disks, USB drives, CDs, DVDs, PDAs, and so forth) in lots of physical locations, only some at the workplace.  The same document could show up in many nooks or just one cranny.  Like the hero Ash in Pokemon, diligent trial counsel has gotta catch them all.

Now comes news that computer network designers have started figuring out how to keep all electronic documents in one, accessible location and to prevent copying to other media and places.  That should really help.  Details as they become available.

Barry Barnett

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Patent bully?

Qualcomm, Inc., holds lots of patents relating to digital processor technology, an essential ingredient in wireless telephones.  Qualcomm in fact annually earns more than $2 billion in profit from royalty payments on its 1,900-plus patents.

A recent article highlights complaints about Qualcomm’s litigiousness.  "Even their best customers hate their guts", someone said.

The article also notes that Qualcomm expects legal expenses will double (to $200) million in 2007.  That amounts to a 10 percent contingent fee — which Blawgletter sees as a terrific deal for Qualcomm’s shareholders.

Barry Barnett

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Sowing wind may cause whirlwind.

Blawgletter admits to a fine obsession with the notion of risk, largely because every business case that goes to trial involves it.  That includes "litigation risk" — the irreducible chance that something may go horribly wrong.  Plaintiffs lawyers count on litigation risk when demanding supersize settlements (and accepting littler ones), and defense lawyers embrace it when justifying their hourly fees. 

Blawgletter also concedes an affection for biblical analogies.  Look!  Here one comes now: 

The minor prophet Hosea, in the Bible book that carries his name, used a marvelous phrase to evoke the risk of bad behavior.  Writing about a sinful and idolatrous Israel and prophesying Yahweh’s eventual reaction, Hosea said that "they have sown the wind and will reap the whirlwind."  Hosea 8:7.  Israel of course didn’t want to stir up a rampaging whirlwind; it wanted a pleasant breeze.  Hosea nonetheless predicted that Israel’s high-risk conduct would meet a bad end.

In business cases, as in ancient Israel, taking unnecessary risks invites negative outcomes.  Make sure therefore not to provoke the risk god in litigation without good cause and or disproportionately to your needs.  Else the risk god may smite you with a mighty tornado of a bad verdict.

Barry Barnett

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Stock painting of flying spaghetti monster.  Photo of
arbitragation monster currently unavailable.

Texas Lawyer comes out next Monday with an article on the 11-5 en banc decision in Positive Software Systems, Inc. v. New Century Mortgage Co., No. 04-11432 (5th Cir. Jan. 18, 2007).  (See previous post with link to opinions here.)  Too bad you need a subscription to see the article, but you can read a blurb here.

The Global Arbitration Review published its own article on the Fifth Circuit’s ruling — and doesn’t require a subscription!

You don’t need a subscription to read Blawgletter either, by the way, but you can subscribe (here or here) for free.

Barry Barnett

Note:  I represent a party to the Positive Software v. New Century case.

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