Ch22-1 Anti-Trust Law
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Ch22-1 Anti-Trust Law


so this morning we delve into anti-trust law which I dare say you
probably haven’t spent a whole lot of time in
your life studying you probably didn’t have a class on this in highschool there’s really no equivalent in other sections or other classes and to understand this particular topic
you kind of have to go back to why why do we have laws that prevent companies from working together and prevent companies from doing certain
things I in the marketplace if you say that
america has a free market would you agree that we
have a free market system that’s the idea that we have a free
market system some you’d say we have a modified free
market system and that’s amore attic accurate
description up the system that we really have
because a free market system we’re just sorta be with you do it every what you know and that’s
clearly now we have other would have much of a class in business
law if we just say do whatever you want you know abuse or
his class ever you know who probably wouldn’t be able to give you a credit
for that class and the problem that doesn’t exist sort
of extreme libertarian approach what what are some problems with that
were you end up if you have a completely unfettered free
market will it take for it okay see you have price-controls but ultimately so what what’s wrong as is well you’re I thought people were
basically good you know we’re taught that occurred
chicken soup you know you have AP your you’re a good person johnnie you know Johnny grows up becomes a CEO
monopolized company he would he wouldn’t you misuse that
power ranking we trust people min well it seems that the people who
think that man is basically good which sorta throw that idea out the
window when it comes to antitrust law because they assume and spread those that soon as you have that power you
will abuse it alright certainly examples both a long through our history okay so that’s
one aspect the anti-trust law both go be even broader
if we just didn’t have any rules whatsoever that government
business what other kinds of things might happen in society are we better off for that or or or less
well-off for that yeah well okay but what about just basic relationships rate and contracts and employment and
people make promises one day and break in the next and this is no consequence was no one there to be the adult in the
room to say stop it you know you’ve got to honor your
commitments it so week we understand the law has a proper
place in the marketplace is there a point at
which the government can go too far in real regulating these things word you say were some bright lines that
the government shouldn’t cross your thought about that Joe you’re going
into politics but what it wanted a fish with a bright
lines do you think that that the government should never cross on a
constant interfering with business them so the government should give businesses
freedom to make decisions based on their best judgment what they think they
want to do and what they want to do their life in with their business right
that’s what freedoms all about that include I not protect the people
from bad decisions to some extent yes that mean that okay you have the freedom
to make your decisions and reap the consequences both is words the freedom to fail but what about all this business we heard a
few years ago but they’re too big to fail that we have to bail out these companies
you know they’re understand there’s a lot of these lines
in here what we have said you know would have been a perfect systems were lines
will be never and nato actual case comes along and we say well fish but maybe it situation and we shouldn’t do that
antitrust law is fall love that price where we say know what this is a bad situation we
come in and fix it and sometimes the fix is worse than the
situation it was supposedly fixing and other times we feel like me
it didn’t go far enough and so this is a this is an area of law that was established the main statutes
in this in this area came into play in the in
the early nineteen hundred’s and so we’re looking at almost a hundred
and twenty years plus law history over the same statutes Sherman Act in
the Clayton Act I will look at it detail in this chapter
that were passed in the early 1900s and are
still the main laws governing this today now we’ve had lots of case law
we’ve had lots of modifications but to understand sort of the early
history in the eighteen hundreds the only thing you could do was bring a common-law action not your
call back go back a little all one all right we
talked about legal systems the common law is judge made law case
law no statutes were just talking about
basic fairness and equity common sense if it exists the the cases that went before trying to
have consistency and fairness so common law actions will be bright to
restrain trade and regulate economic competition it so people come in and say a this guy
over here is doing business in unfair way or then people started to try to abuse the
system instead get a judge to put their competitor at a business and
thereby create a monopoly order to restrain trade and some other
ways XO case by case by case the Supreme Court
was trying to to craft rules that made sense in every
situation you know that’s kinda hard process in fact the process that the supreme
court was undertaken in the late under its to combat the big companies
backed and low score to industries that were really big about that time history loyal steel railroads right those work are your big three and really
feeling of love each other and so you had some at the time millionaires okay which they say no
millionaires are a dime a dozen now a not necessarily on this campus but I in the real world and so I at the time
to Be a Millionaire was huge and you had your rockefellers and you had your a standard oil on you had your a eleven
brothers and other kinds of people who are just absolutely filthy rich and summer that
came from this this kind of unfair competition and with that kind of wealth with that
kind of power came to power to abuse other companies and keep them out up the
sectors that each company was it and so the Supreme Court is is battling
against that those very powerful forces by the way those guys were not only rich
enough to manipulate business there are also rich enough to manipulate
government and they were absolutely haven’t their guys get elected as
governors as legislators and they even tried to get their guy and as president and so
the supreme court is saying wait a minute somebody’s gotta have some sanity
somebody’s gotta look out for the little guy and so that was the court now what do we
called judges that say here’s a problem in society and we as a
court need to try to go in there and make some rules the pics what do we call those guys now what
socialist now we have a name for could judges like
that your come up in confirmation hearings on liberal comes up when they
say are she’s a what 0 she’s an activist judge right now we
call them in activist we say it would like some season activist judge are we say with
with great to stay and so that’s exactly what the supreme
court what they were making laws left and right in their early warning
apologized for they were doing at a time when it was
still I love fashion for the Supreme Court to do that nowadays just common practice but back in the
late 1800 early 1900 was on her to we call that a legislative
process and the fact is we have a branch of
government that set up to do that it’s not the Supreme Court’s it so
eventually the branch that was supposed to be doing
this figured it out and 1890 passes the Sherman Antitrust
Act okay we’re gonna spent all of today
looking at 1/2 above the Sherman anti-trust Act and
there’s the second half for the Sherman Antitrust Act section 1 section 2 and then in nineteen
forty one little tweak and they come in the
past the Clayton Act in ninety 1940 and what this process did was almost
entirely take the Supreme Court cases about anti-trust and put them in as legislation so they
said this is how we will embody okay that’s a little legal term use
we’re going to embody this group of cases into loss and make it simply stated and and it will give us a the ability to
regulate this per this very important area so
what this the Sherman Antitrust act look like well it fits on one slide and this is the whole deal you notice
that the laws that stand the test of time are not law okay so what’s that mean for
Obamacare well I hope that means what I hope I ed it’s a very long one this a very short
one very simple very to the point and then on top of
that very topic eight its application right because the simpler it is the more
interpretation AK path and the more I difficult that can
be sometimes an application but it sets up very to very basic principles and it says number
one every contract combination or conspiracy they get the three season
there in restraint of trade or commerce
there’s a 4c among the several states or with foreign
nations is hereby declared to be legal and is a felony punishable by a
fine and imprisonment knows what they did
there they made up business practice a crime they made it a felony punishable by find and or imprisonment now say I’m gonna be
a little more careful about what I’m doing and business if they could land me in jail
be defined as bad enough losing my job is bad enough bankrupt in my company is bad enough but
going to jail no backs okay I think I’ll just maybe
avoid that area so they say every contract in restraint
up trade is a cry is a legal and a crime now why would they declare
it to be illegal and a crime why would they declared to
be illegal and a crime well who prosecute crimes we had this chapter already 1.6 muster a
long time ago who prosecutes crimes the state the
government brings those cases if something is illegal in business and
someone was to have a lawsuit about that they believe their injured who brings that case is that the state that brings a private civil action no is
the injured party brings that action it so what this is
saying is either one can file a lawsuit against
the company for this kind of behavior it’s both the
crime and a lawsuit a civil lawsuit it’s
illegal and it’s a crime now what exactly then is illegal or
spend some time analyzing that but what do you think the the things in the first in line with
three saves track operation for trust or conspiracy what do all those things have in common
that were looking for in terms of the types of restraints on
trade that her body her or prohibited in
section number one what’s unique about what a joint effort okay the old it takes two to tango right
it takes two to violate Section one mister mack just doesn’t have the same
link I has arrived going to arrive alright I know the written a song along those
lines it takes to violates first axis sure now I just the
word david guetta art so number one involved two parties UK a violate
Section one in the Sherman Act by yourself internally in your company alright it takes a conspiracy it takes under green mint look at that moment
number two section 2 every person who shall
monopolize or attempt to monopolize or combiner
conspire with any other person or persons to monopolize any part of the trade or commerce among
the several states room for nations shall be deemed guilty up a felony and
some were punished so can you violate Section tell who up the Sherman Act by yourself yes you
can all it takes is eight-percent can you
violate Section through the Sherman Act with an agreement with someone else yes either way you can do it by yourself you
can do it 100 percent you can violate Section two serving act
either way it so what exactly is different well
what’s different is section 1 looks at behaviors that hurt consumers behaviors that hurt consumers we’re
trying to protect a as are we trying to protect small
business that you’re trying to protect in this no sometimes we look at how one big this is behavior is going to affect the
smaller business but they’re not really the perfect done that we’re trying to protect who is the
victim that were alternately trying to protect it’s the consumer it’s the buyer we’re trying to get the best price for the buyer with the
belief in a free market system that if
competition exists and buyers get the best prices we have
the most efficiency in our system it so it’s a economic
theory that says protect the consumer and everything else will work itself out
that will be most prosperous if the consumer gets the best price
possible section what it to have the main
provisions section one requires two or more persons because a person cannot quote contract combiner conspire alone all right miss you have multiple
personality disorder you cannot usually don’t come out both at the same
time so you have to do it written correspondence it gets akward so generally speaking two people are
required and so section 1 is concerned mainly with finding an agreement finding
some collaboration their section 2 applies individual people or
groups of people because it refers to every person so each individual that’s a
part of a scheme or that by themselves schemes to be calm a monopoly and have monopoly power that person is guilty under Section two
violation and we’ll look into an next time we get together at how section
two is violated at what point did we become a monopoly
what is this issue of market power and how do we know when we’ve gotten
their alright because this is kinda hard is it to go love every business set to
be the number one business in their market better P amid review does not your goal your goals we’re number two with I maybe UT jury rethink your CEO ambitions
ito the and so instead everyone wants to be
number one but there’s a fine line between being
number one being the only way on you know getting rid of everyone else
you want so much market share that there’s no room for anyone else that’s a monopoly that attach to cool create that are illegal under Section
two arts the section 1 section 1 regulates two kinds I’ll restraints okay it regulates horizontal those chapters were taking notes can
really help and vertical restraints because we’re gonna look at these on one
slide time but it’s kinda helpful to see the big picture okay I’ll do what I can to try to map
this out as we go through so section 1 regulates horizontal and
vertical restraints will look at each one of those in just seconds and so classifies each kind of business
behavior to weights it says first law is this
behavior a horizontal restraint or vertical
restraint and a number to it says should it be
analyzed as a her say Pe’er St per se violation or should it be considered as a ru love reason violation okay erode breeze so if we give it a per se designation then that means it is so bad and so anti-competitive you can’t ever
do it and if you do is automatically a
violation Sherman Act so per se bad can’t do it never can do it if it’s that kind of
behavior it’s out to the ballpark we’re going to look at a couple of them
that are per se violations just can’t do it now most of the things
we’ll look at most to the business behaviors will look at are not per se violations but rather have been moved into the rule
of reason the rule a brazen says well it might look anti-competitive and it might have the effect I love up her team competition but we’re gonna look and see if it’s reasonable and unless the
restraint on trade is on reasonable they will probably let it
go and so we go from per se which is all
the way to definitely not you can’t do that no way ever to ruled reason which is it’s probably okay unless you just get
carried away and take it too far okay so per se breweries all these are going to be classified
both ways right is a vertical or horizontal is a
per se violation or air audrey’s okay so first ball let’s look at horizontal restraints now me ask you if I’m gonna use this diagram sellers or seller buyer
buyer buyer the bottom is a horizontal restrain going to be if I was to draw a circle
that represent the group of people that were involved
in the horizontal restraint what I draw a circle around all the
seller’s or what I draw a circle around sellers
and buyers follow celebs okay separate yes okay the horrors of the restraint
will be agreements among sellers or by the way could move the circle down at Circle all
the buyers because that to can be sometimes
anti-competitive that restrains competition between rival firms
competing in the same market we say we want to have a free markets so that it foster’s competition that’s one of
the modifiers on free market that we have is conservatives and as Americans I one once a if we’re going to have a free market it
means that we are trying to foster competition and competition means we’re not working
together we’re not working together means that
we’re not sharing information all that much
another people it’s a Weiss white get along with all my competitors
and just wanna be nice you know a really doesn’t work work fish that actually can end up
getting you in trouble you can go too far with how nice you are
okay and sharing information price agreements and so forth you know
what you guys I don’t wanna I wanna go head to head
with you guys you guys can have that market also you stay over there all stay
over here and will be fine you know and and
carving out territorial agreements illegal illegal okay it so horizontal restraints are agreements
between sellers or agreements between buyers at the same level up industry okay so let’s look at a few of those let me just for a second show you
vertical so you can have in your mind a contrast
okay or come back to this but a vertical restraints is when you
start integrating the supply chain you start
wrapping up all the suppliers for you and then start to bring more and
more them in to where nobody else can get the
raw materials that they need in your industry it’s ok vertical restraints are when you
start to integrate your company and have all the raw materials all your
suppliers all your transportation in all your outlets all in the same
chain say well that’s just good business well yeah at some level but ultimately
that can be Sherman Act violations alright so or
czarist rates vertical restraints let’s look at some
horizontal restraints as examples alright so or history number one cool price-fixing price-fixing this is where we have an agreement
remember but just going out with a sticker gonna
labeling prices on goods is not price-fixing okay price takes a is when you get
together with the competition and you say let’s set the price for these items at this level and we’ll
both agree never to price it be low that these are
usually for artificially high prices to keep the
system up sought agreement between competing firms
in the market the set and establish price for the
goods or services they offer we say then this is a per se violation that mean there’s any way we can say
well but it wasn’t an unreasonable but agreement you know I was it was only
for a few cents above the the real cost there market price and so
it’s okay right I mean it was an unreasonable there anyway analyzes according to
reasonableness now it’s a per se violation any
agreement between competing firms about where we’re going to establish the
price and its price fixing now have you noticed what I’ve noticed
that when you drive around town and you go to gas stations like all the
gas station at exactly the same price on oliver days it said maybe sometimes in this town you
might have a stayer like a favorite station you think is always buy
cents lower something but it’s probably not okay how they all end
up with the same price even though they we have this law on the
books is it illegal to drive around and look at the signs is illegal to send one your people into
the store and find out what the other guys are charging I’ll what what’s missing in
that scenario an agreement right there’s no agreement there’s no
negotiation there’s no collaboration it so it requires there to be
communication about it an agreement price-fixing always illegal can’t do it number two groom boycotts alright now brooke group boycott says alright let’s all agree not to sell to that buyer let’s all agree not to use that transportation company let’s all
agree not to buy from that supplier any of
those kinds of agreements between competing firms is called a group boycott and its
illegal you can’t do it so you hear in the news
recently about the I proposed gun control laws right and and what was whether reactions
from some gun dealers what they say about that gun manufacturers action it’s okay fine
government you’re gonna play size limits and call us the bad
guys over so bad guess your biggest cup customer is
government you past so you think we’re so bad fine we’re not gonna sell your goods anymore
group good make your own car guns United
States America all you don’t have a plan it’s too bad
we do pare to bed were evil I I love it it’s great now can Brownian and to us a who makes ar-fifteens I’ll never miss
him Smith & Wesson and the a beretta a sprite I am I Walter us German but HK that that’s no that’s British RSS her always ever gotten a fax can they get
together and say alright let’s agree not to sell to the state of Illinois right no because that’s a big group boycott now
they can personally say I’m not doing business with you right
and if there is someone out there that has treated the entire industry poorly they could all just independently come
to that it a come to that decision that’s not illegal what is illegal is a greedy not to do
business and so this one again per se violation don’t even look at what was it
reasonable is a possible no per se violation the boycott alright number text trade associations trade association on
here yeah what is trade Association good first a trade association is just an industry-specific
organization that we create in order to exchange information and
business practices represent the business interest as a
lobbyist for laws governmental bodies might do advertising
campaigns together I and and look for regulatory standards
to help us in our industry and so let’s say that we were on a tech company and we
create hardware for computers and so are their trade
associations that exists in the computer industry yes okay and what are these for example says to
provide for Exchange Server other information representation up the
business interests before government bodies and so maybe one other things we
go to the government about would be you know what
I you guys are restricting the wireless spectrum and we need that we need it a different the megahertz range to to create more powerful
wireless and we’ve created this network are we need you so we go the government
together and it’s for the good of the industry
that’s fine no problem but what about standards in the tech industry what are some
standards that exist in the technology industry USB you know you guys never lived in the
day when you had to reboot every time you
plug something into your computer alright if I wanted a boy like a game
controller for my computer on time know the serial port which means that
you can plug it in but then you have to reboot before all
recognize that there was no plug and play that was the
new terminology came out with Windows 95 and their own
with sweet you guys left I was a cool new
produce lost we waited that perhaps like three years and finally came out nearby said wow you
don’t have to reboot its USB I said what company makes that
wonderful USB product what company is it that makes US be everybody makes you it wow how did that happen you know if
you’re the government investigators say wait a minute am I supposed to believe that you guys just all independently on
your own without any phone caller ID collaboration what’s are your
competitors in i spose be working together now they’re allowed to work together to
make standards in the industry that are gonna help everyone and so used
to be you know what we have DVD’s and then
what in your mind is the next step up with quality on it on a disc Blu ray rate your any question
in your mind in 2013 that Blu Ray is the definitive high-definition video format okay not none whatsoever right will go back just four years and
that’s not true at all there are two competing formats HD DVD that’s a lotta letters a Blu ray and
actually HD DVD was the better technology had a worse name and lost
because K W ray way as good as the cool name and their own was to be on the Blu ray
RA and so they I they win out and that becomes the
standard but who where was that lot was some
government somewhere that said okay fine we’re gonna go blue ray pasa locks you know we did something
this year on it but no it was the standards bodies better
develop that way a new wireless standard is coming out
that’s going to be you know even faster than a wired network even fasten a gigabit speeds had a how
did it come up with that stuff trade associations perfectly fine to get together share information represent now what’s the Tanger while we’re here I you know her the state of the industry
is a deplorable condition and prices are just way too low today so Invidia an AMD get together and they
say you know let’s let’s keep our graphics cards
prices up a little higher Amir you can make 50 bucks for a gigabit you know come on
this is Noah and so they they get together while they’re there air now that’s a problem that collusion
that could be some the other issues we talk about price fixing and then like trade associations are analyzed under the rule love resend
and so we say you can go too far when you’re together
message but if you’re just together for these
legitimate reasons it’s okay what industry have you seen lacks a advertising for without any specific brand name being
mentioned milk right and who puts out the mill
commercials which company yeah what is that it’s a trade association so
all the farmers all the dairy companies get together they all throw
some money and for the advertising and its generic to the industry what is
their thought process you know what we put different labels on
it weekend say this one comes from happy
cows but at the end of the day milk is broke okay at people are here leader I meet do
you really going to the store it’s a hate the by the of brain look you know know you look at two days
what is it due per cent to one per cent which kinda like what else do you look at no lol okay and
price but what else do you look at the date I hope you look at the date
goodnight to be killed you know it’s important her and by the way little
tip if you have a working a grocery store
was to where you go support from the freshest in the back
this right go for the back some noise millions bars I came back into the back
to get a loaner to grab the last one two more weeks is
still gone in like three days on all have headers but it taste better if it does your
itself I you care about the date you care about
the price you care about to be in the the style that you want to know you call
it the difference we want said dunno those are the horse hola restraints
alright so we have rule reason I’m trade associations price-fixing per
se kar boycott per se alright vertical restraints with
the slide already but this is going to be any kind of
collusion cooperation between solar suppliers
buyers retail outlets transportation levels things like that it so those are anti-competitive
agreements between firms at different levels where
we say listen Supplier you are just going to supply us so all-women I hear about that all the time
that always illegal well remember this isn’t the only thing
we classify them as now was the second thing we look at is a per se rule reason okay what you
gonna find slope review most obvious our rule reason really
these are some the only person is that we have actually have about their so agreement
between firms at different levels vertical strains can can restrain
competition I among firms that occupy occupy the
same level so that’s where all my rivals over here these levels aren’t getting this kind of
deal because of some kind of shenanigans that
I’m pulling I in in those agreements so vertical
restraints that significantly affect competition maybe per se violations but as we look
at specific applications most of them don’t end up in that I by the way the trend is every one of these everyone
agrees including trade associations used to be a per se violation so even though the Sherman Act hasn’t
changed since 1890 earlier when it first came out the application a bit past it so originally although this was
completely prohibited right and ever and the cases came one
after another after another I’ll companies getting absolutely dade for that kind of behavior but over the
years who decides whether or not it’s a per se
violation or rule a reason to how we’re gonna analyzes that’s not in
the law you can see that in the live show you the law in didn’t have that language so who’s
deciding which rules to apply the courts it so over 120 years they’re
chipping away at the the protections at the Sherman
Act by moving everything from per se
category in an hour and analysis into rule reasoned analysis were danza
passing muster so things today are done all the time that in nineteen twenty wanna ban go to
jail stuff okay it’s really getting less and less
regulated and this will be one among territorial customers fractions if the manufacturer says to the sellers
of its products okay I you’re gonna be the dealer in this area and I agree as part of this deal not to make anybody else a dealer within this casualty for this city
alright what’s an industry where you see that cars cars right do you see any sign
dealer across the street from a Nissan dealer usually not okay why because Nissan
makes an agreement with this guy your our guy and so you be the seller in
that area geographically and we will set up anybody else I within your territory well that’s gonna be looked at it’s going to
be looked at but it’s gonna be looked at under the rule reason at so what we’re
looking at is anything that would I won’t be unfairly competitive we’re gonna look
for is a monopoly power also incumbent if there’s a line that there’s a row of
car dealerships like if you go over a Waukesha robot Mike Mike are easily there are 10 or 15 car dealerships rate in a row
every category can imagine is a is your problem for consumers having choice in that scenario really
not I missed we I got all the choices I what is my
choice between one Ford Escort any other Ford Escort dealer and I really that my negotiation point
or am I really looking at you I wanna Ford Escort 2001 Nissan what’s a call or Sentra or do I wanna
Toyota Camry or a Honda Accord it so i’m looking at competition that
way right that’s perfectly fine in my happy
with that you have a lot two choices yes that means that we have done without
the proper permits if it start that the other one start to
disappear and now said all there is is a super
super dealer he’s got all other the brands now we might look at it differently so
that’s where the rule a reason comes in you noticed it’s mushy your to put to
put it in that legal terms per se is nice you’re done you’re out third strike go to jail okay it’s a
mixed metaphor alright so the real reason said it is probably OK will just keep an eye on now had that
kinda where it we just ask is it unreasonable only
write down on the board territorial restrictions will call their roland Burris okay alright number next resale price maintenance okay now resale price maintenance is different
then price-fixing in a resale price maintenance agreement
we have some sort of the contractor agreement between a manufacturer and distributor or
retailer and what’s a manufacturer says this is
got to be the resale price your heard the term MSRP what’s the same for his okay no what BS is important right the S is important and SRP was just
there for again suggested notice was underlined in the in the resale price maintenance
agreement is was something when the manufacturer specifies a retail price which retailers must cell its products very thing wrong with the manufacturer
suggesting the price no they’re saying look they’re
kinda signaling this is what it cost us to make that
print that product if you want to have a healthy margin and
we want to keep the value of the brand up I we all need to kinda shoot for this and
in some industries the MSRP is a laughable job nobody ever
sells it for that it some industries that’s just a
starting point you actually get ’em higher price and that go up by a
previous and you actually pay more then quote the
sticker price MSRP is oftentimes called the sticker
price rate it so you actually pay a premium because
it’s rare and valuable and people wanted I whereas you go to Kohls has anyone
ever paid the amount on the sticker the whole it just third the suggestion okay it’s
what we use the never you know to calculate your
savings you know that’s all it ever did you you spent five dollars a call you
save: four hundred dollars a day you know %uh today the a and so it the
other day it’s a suggestion yes love your requires well it’s gonna be analyzed under the rule
reason that used to be a per se violation we’re gonna find out that now resale
price fixing can be okay if it’s done within limits and Apple has stayed within those right
now is Apple I free I love any kind of anti-trust I litigation or no they have a whole
division army of lawyers that do nothing but
defend them against anti-trust cases okay there suit on it constantly all the time there under a case or two
or four and so Microsoft app every tech company s is
the cost of doing business okay so this used to be a huge no no you
cannot do it and then as recently as 2007 which I
think all if you were alive in 2007 so this
really is a recent development about something happen now a lot of
times the cases that we look at are appeals court cases we’ve actually
very rarely look at Supreme Court cases in these the this way but today we have this
league in creative leather products which games comes out in 07 and changes how we look at resale price
maintenance agreements okay so here you actually have the the companies suing is part love the cheney are there actually the supplier
so we go back to the vertical restraints page and we had the circle
around it then we had the manufactures and this is actually a
reseller right in the it with inside the circle and they’re
complaining about this being imposed upon that now originally they agreed to this right to become a
reseller they agreed that they would sell it for
the price and now their turnaround say well
wait a minute that agreement was illegal it was very straight on trade its resale
price maintenance agreement so the trial court any appeals court
both upheld the law as it had been from 1890
up until 2010 probably six by the time we got to their
and so they just do their job and say well over 130 years a case law there can’t be wrong and so K they said
this surprise maintenance agreement it’s it’s run Supreme Court on the other hand turns
around and says you know what it’s time we looked at this differently
it’s now okay for manufacturers to set minimum
resale prices they leave us any kinda guidance or any
sort of rules along with that is league in creative leather products
the only creator I’ve leather products for other anywhere near having market power I are they the only Supplier a leather products to PSK AES no other options for PSK AES sure it so
Supreme Court says what do we think about this again for a second if we’re talking about a small Supplier it has less than one percent
market share and they want to keep the price in their
goods hi to keep it exclusive know that’s a
strategy that’s a pricing strategy to say you know what we’re gonna be the premium brand we’re
not gonna discount we’re not gonna put our stuff on sale you know what that’s exactly what Apple
thats and they’ve said you know we’re we’re not trying to be
the bargain-basement people will pay for quality if that’s what they want and
we’re good with that and so that people will know that it
just works and that we are committed to it they want their brand so we’re not gonna put our products on
sale period and Supreme Court says you know that that kinda makes sense we’re gonna let
you do that and so as long as there’s not something else
along with it like monopoly power or abuse that the putt consumers then we’re actually gonna let you do
minimum resale pricing so this one has completely flipped since
2007 right okay let’s put that one up and we’re
gonna say that that is actually will just put okay alright nope okay
final whole reason even though we know that
it’s actually gonna be just fine okay think this is the last up the vertical
restraints and it’s called a refusal to deal a refusal to deal unlike a group boycott
a refusal to deal is an action by one firm against another and this is usually
legal unless the firm using the deal the refusing the deal has or is likely to
acquire monopoly power and hurricanes or is likely to have an
anti-competitive affect on a particular market this is where we say Starbucks or
somebody else says okay fine we don’t want you we refuse to
deal with you and so they would say don’t republicans
we don’t want any republicans in here can you do that yeah mustn’t gonna lead to market power
monopoly power it’s kinda the opposite actually refusing to deal with someone to
essentially on political grounds on personal grounds even on business
crafts that’s okay usually usually legal unless we have monopoly power and it
will have an add to compare list that on the market so on this one I’ll just
work special okay special rule here that says its legal
and less you have monopoly power in anticompetitive effect right so Jer diagram look like mine is my summary I’ll section 1 got yours on our straight schedule
vertical restraints I doors are you have price-fixing that’s
a per se reply cuts that’s a per se trade
associations role grease vertical restraints we got the
territorial strawberries and retail price: maintenance agreements Road reason but
probably OK and refusal to deal okay a lesser man up with our data compiled right why because when we talk about
competition which way do we normally look out look verdict that we look horizontally
so if if competition is the goal as long as
the other people in your field have healthy supply chains and their competing against you on a
fair basis those are usually okay there’s a couple
ways you can go wrong but for the most part everything’s fine
don’t confuse in your mind that somehow this says it’s okay to say we won’t serve black
people here we won’t serve disabled people here no
one who knows is panic sir was the company got job offer the on the
Hispanic issue I’m Gino’s in philadelphia okay said that wasn’t Gino’s at the that Philadelphia cheesesteak said you
know these famous cheese steak sandwiches and they said you must order in English and if we can understand you we will not serve you ok well the problem that works they were there
was a cover back last two the Hispanic community and this guy’s
political views about ya to learn English in integrated
society and so forth and so refusal deal had nothing to do with allowing discriminatory practices if you are open to the public as a what’s called a public accommodation
meaning we open doors and whoever comes in then
you have to deal with anyone on a non-discriminatory based by the way most states now and most local communities have said that it is also violating anti-discrimination
laws to refuse to deal with someone on the
basis of sexual orientation and so they’ve added that even though
it’s not been added at the federal level has been added state and local level and so I’mma be a
Christian businessman I don’t wanna deal with that you may
have to at this point there’s no exceptions for
Christian business all rights this my summary II that time visualizing that you have a
different one this I guess a little different way to look at it I next time we get together we will do section 2 at the Sherman Act and I will
do the Clayton Act know the of you I few other recent
developments and how does how in the world does this
work online that becomes very difficult
question and so will try to tackle that next time I have a great day

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