16 May 2012

Neepery-Spiced Link Sausages

I'm tied up with family stuff today, but there are a couple of significant sausages of dubious origin to note:

  • In the consolidated private (not DoJ) lawsuits against Apple and a group of publishers attacking the agency model e-book RPMA as a conspiracy in restraint of trade, Judge Cote has denied the defendants' motions to dismiss (PDF). I particularly recommend reviewing pages 23 through 29 and 52 through 55 of Judge Cote's opinion, as it describes in greater detail the underlying conceptual problem with the AAR's position that I described yesterday: That this is not a Rule of Reason case. Her summary after a few more twists in the minutiae of antitrust doctrine more than adequately sums up the position, accepting (as she must) all of the allegations in the complaint as true for the moment:

    Apple and the Publisher Defendants’ agreement in restraint of trade is unlawful per se because it is, at root, a horizontal price restraint. “A horizontal cartel among competing manufacturers or competing retailers that decreases output or reduces competition in order to increase price is, and ought to be, per se unlawful.” The [consolidated amended complaint] claims that the Agency Agreements emerged from a horizontal agreement among the Publisher Defendants and reduced competition among retailers in order to raise prices. It is therefore unnecessary to subject this trade restraint to a rule of reason analysis.

    The agreement among Apple and the Publisher Defendants is a horizontal restraint because, as with the toy manufacturers in Toys “R” Us, the “only condition on which” a publisher would agree to Apple’s terms “was if it could be sure its competitors were doing the same thing.” Unlike those vertical restraints that are subject to the rule of reason, this agreement “has nothing to do with enhancing efficiencies of distribution from the manufacturer's point of view.” Rather, it has everything to do with coordinating a horizontal agreement among publishers to raise prices, and eliminating horizontal price competition among Apple’s competitors at the retail level. “That is a horizontal agreement.”

    In re Electronic Book Antitrust Litigation, No. MD-[20]11-2293 (S.D.N.Y. 15 May 2012), slip op. at 35–36 (citations omitted).

    This is an unusually clear opinion in an antitrust matter. Antitrust opinions tend to get bogged down very quickly in industry-specific business practices. It is also unusually clear in another respect: Judge Cote understands the interplay between the rules of civil procedure and the theories of antitrust to make confident, clear statements not hedged with irrelevancies. Even if you don't care at all about publishing (then why are you here?), this opinion is worth reading as a model for good communication of technical legal doctrine.

  • And that link sausage leads, in a rather tasty way, to this one: Monopolies over expression being improperly extended to monopolies over knowledge. This is a classic example of the club-and-public-goods problem for something that, even economically, can't really be called a "good" (because it has no fixed characteristics). What's really fun is trying to get permission to reprint a table of results from an Elsevier journal... a problem that made me eliminate a part of chapter 28 because they wanted high three figures for that one table of factual data.