4 posts

Tiebreaker: An Antitrust Analysis of Esports

By Max Miroff

Electronic sports (esports) offers a novel case study in how antitrust analysis should approach multi-sided markets that rely on the ability of numerous entities to access intellectual property (IP). A game publisher’s IP in its game allows for permissible monopolization, but also creates opportunities for anticompetitive IP misuse. Tournament organizers, teams, players, broadcasters, spectators, and advertisers all need access to publishers’ IP to participate in esports markets. As publishers vertically integrate into the downstream market for esports content in their games, they rationally seek to minimize competitive pressure from other entities in the market. A publisher can do this by using its IP monopoly in its game to dominate the downstream esports market in its game by, for example, refusing to license broadcast rights to independent tournament organizers. This Note argues that in order to promote consumer welfare through market competition, antitrust law should restrict game publishers from using IP rights in their games to monopolize the downstream esports market for those games. Because multi-sided markets which rely on access to IP and blur the lines between producer, intermediary, and consumer are likely to grow, the stakes for effective antitrust analysis in these markets will only continue to climb.

Part I introduces the esports industry and overviews how antitrust law can be used to shape more competitive markets for the benefit of esports consumers. Part II provides an economic analysis of esports in order to define antitrust-relevant esports markets in which enforcement could be appropriate. Part III outlines the structure of a tying claim against publishers that use their IP monopoly over their games to acquire or maintain a monopoly over esports content produced with their games. Part IV contends that a publisher’s IP rights should not insulate it from liability for downstream anticompetitive behavior. Part V argues that antitrust enforcement would be superior both to the creation of an independent esports governance body, because such enforcement would facilitate market solutions rather than top-down rulemaking, and to the creation of a fair use exemption for esports, because such an exemption would be comparatively overbroad.

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Operationalizing the Third Prong of the Federal Trade Commission’s 2015 Statement Regarding “Unfair Methods of Competition”

By Harris S. Rothman

Courts have long held that the Federal Trade Commission’s authority to prohibit “unfair methods of competition” embraces not only the enforcement of the prohibitions of the Sherman and Clayton Acts, but also a “standalone” mandate to challenge practices that violate the spirit but not the letter of these laws. In a 2015 Statement, the Commission announced that it “is less likely to challenge an act or practice as an unfair method of competition on a standalone basis if enforcement of the Sherman Act or Clayton Act is sufficient to address the competitive harm arising from the act or practice.” The meaning of the “sufficient to address” condition is not immediately obvious, and the statement’s critics have pointed to it as just one respect in which the statement is unhelpfully vague. Despite a recent surge in scholarship arguing that the Clayton and Sherman Acts as applied are insufficient to promote the original goals of antitrust law, scholars have not devoted extensive analysis to the interpretation of the third prong’s language.

This Note argues that the third prong reflects the Commission’s determination that the most appropriate use of standalone authority is to fill gaps in the “traditional” antitrust regime of the Sherman and Clayton Acts. The Note proceeds to propose a decision-making framework that the Commission could use to actuate that interpretation. Part II introduces the basic policies of the antitrust laws and the provisions of the Sherman, Clayton, and Federal Trade Commission Acts. Part III reviews the scope of the Commission’s standalone authority under Section 5 of the FTC Act. Part IV analyzes the third prong of the Commission’s 2015 Statement, and argues that it is best interpreted as favoring gap-filling uses of standalone authority relative to other applications. It then develops a framework to guide the Commission in identifying legitimate gaps in the antitrust regime, identifies circumstances in which standalone enforcement may be most appropriate outside of such gaps, and demonstrates how the Commission might apply the framework in weighing a standalone complaint against Google’s allegedly anticompetitive implementation of “Universal Search.”

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Measuring the Impact of Mergers on Labor Markets

By Aryeh Mellman

While the Department of Justice (DOJ) traditionally reviews mergers solely in terms of their impacts of prices for consumers, the antitrust laws were enacted to deal with broader socio-political problems like industrial concentration as well as prices. A new line of research on labor market concentration suggests an additional area of concern for antitrust law, noting that even as mergers decrease prices, they can increase labor market concentration, keeping wages low for employees of merging companies.

This Note analyzes a merger through the lens of its predicted impact on wages, rather than prices. Part II lays out the evolution of antitrust law and merger review from its early multifaceted socio-political focus to its current narrow economic angle. Part III then questions whether the price-focused consumer welfare standard is as complete as it appears to be. Next, Part IV reviews the literature on labor market concentration and demonstrates how the tools that measure concentration in the product market can easily do the same in the labor market. Part V conducts a retrospective empirical analysis of a past merger, assessing whether it would have passed DOJ muster had the agency considered its effect on wages. Finally, Part VI suggests possible changes to the merger review process in light of the research and case study.

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Molecule Size Doesn’t Matter: The Case for Harmonizing Antitrust Treatment of Pay-for-Delay Agreements

By Morgan Marmaro

With notoriously the most-expensive drug prices in the world, the United States has failed to use all of the tools in its shed to combat the unending upwards trend. One such important tool is U.S. antitrust law that targets companies that improperly charge monopoly and supracompetitive prices long past their original patent’s expiration. Some companies have found a way to game the regulatory approval system by suing would-be generic competitors and then, under the guise of settlement, paying them to delay their market entry — allowing a brand drug manufacturer to maintain their monopoly prices and continue raking in large profits. The Actavis Supreme Court found these agreements involving reverse payments — also known as pay-for-delay — can violate antitrust laws even in light of the existing patents. This Note argues that in an ongoing case, In re Humira that examines reverse payments between biologic drug companies, the district court was right to engage in an Actavis analysis but did so improperly. In re Humira provides a prime opportunity to strengthen and clarify U.S. jurisprudence on reverse payments and market allocations to reduce ambiguity in an evolving pharmaceutical sphere: biologics and biosimilars. This Note further argues that to harmonize the antitrust treatment of pharmaceuticals — small molecule and biologic — both clear judicial standards and legislation are needed.

This Note proceeds in four parts. Part II discusses various forms of antitrust abuses that arise in the pharmaceutical sphere and that often accompany reverse payment agreements. It follows with the relevant legal and regulatory backgrounds of small and large molecule drugs. Part III then considers the consequences of lax antitrust scrutiny on pharmaceuticals and finishes with an in-depth examination of the In re Humira litigation. Lastly, Part IV proposes a two-fold solution, legal and legislative, to the problems posed by Actavis’s lack of legal clarity. Ultimately, the purpose of this Note is to demonstrate that the way a drug is manufactured, approved, or allowed to compete does not alter the application of antitrust law seeking to rid the market of collusive agreements between rivals.

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