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Tilburg Law and Economics Center

TILEC supports and stimulates academic research on the governance of economic activity. It fosters academically path breaking and practically relevant research and aims to be a leading center worldwide.

TILEC Seminar: Barak Orbach (University of Arizona)

Interstate Circuit and (Other) Antitrust Myths
10:45-11:45, M 1003

Barak Orbach is a Professor of Law and the Director of the Business Law Program at the University of Arizona James E. Rogers College of Law, as well as an elected member of the American Law Institute and a Fellow of the American Bar Foundation. Professor Orbach is recognized as a leading scholar of antitrust and regulation. His study of the motion-picture industry is credited for contributing to a change in movie pricing in the United States. He holds undergraduate degrees in law and economics from Tel Aviv University and masters and doctorate degrees in law from Harvard Law School.

Before joining academia, Professor Orbach served as an Advisor for Law & Economics to the Israeli Antitrust Commissioner and as an associate with Cleary, Gottlieb, Steen & Hamilton, New York. Professor Orbach is the author of the leading casebook on regulation, Regulation: Why and How the State Regulates (Foundation Press, 2012). Additionally, he has published over 30 articles, essays, and book chapters.

Interstate Circuit and (Other) Antitrust Myths

Abstract

Interstate Circuit v. United States, 306 U.S. 208 (1939), is one of the U.S. Supreme Court’s most known antitrust opinions. The case involves a powerful movie exhibitor that allegedly orchestrated a cartel of film distributors to raise its competitors’ prices. It is taught in every basic antitrust course in the United States. Numerous judicial opinions, articles, and books summarize the decision. The summaries omit several material facts and, consequently, present an account whose economic logic is unsound and is at odds with rudimentary knowledge of law and history.

This Article contrasts the inability of several generations of judges and antitrust experts to identify the relevant findings stated in Interstate Circuit with the use of the flawed account of the case to develop and teach the law.

Interstate Circuit is a leading precedent in three important antitrust contexts: collusion inference, vertical restraints, and exclusionary practices. It serves as a “seminal case” in several basic concepts related to these contexts: the agreement requirement, the communication requirement, plus factors, conscious parallelism, tacit agreement, hub-and-spoke conspiracies, raising rivals’ costs, and cartel ringmaster. These antitrust concepts are at the heart of antitrust law and have been the source of many controversies. 

The case emerged in an era with several similarities to present days: an industrial revolution transformed the economy, leading to the elimination of jobs and the rise of large business entities with which small businesses could not compete. Interstate Circuit defendants were technological companies that gained control over the motion picture industry.  The Article, thus, studies the formation of a cartel in an industry transforming through an industrial revolution and affected by a deep recession (the Great Depression). It shows that, for about eight decades, judicial and expert depictions of the cartel have persistently neglected relevant factors related to relationships among firms, industry practices, and technological change. The Article evaluates the effects of the broad use of the flawed summary of Interstate Circuit on antitrust law.  

 


When: 27 September 2017 10:45

End date: 27 September 2017 11:45

Where: Montesquieu building