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                                  Brief of *Amici Curiae* Professors and Scholars in Law and Economics in Support of the Petitioners, Pacific Bell Telephone Co. v. linkLine Communications, Inc.
# Brief of *Amici Curiae* Professors and Scholars in Law and Economics in Support of the Petitioners, Pacific Bell Telephone Co. v. linkLine Communications, Inc.
 **J. Gregory Sidak & Robert H. Bork****Abstract**
The linkLine price squeeze case from the Ninth Circuit is the most important antitrust case that the Supreme Court could take during the Fall 2007 Term. Amici are professors and scholars in law and economics who have taught, or have conducted research on, antitrust law and the economics of industrial organization. They include William J. Baumol, Robert H. Bork, George Daly, Harold Demsetz, Kenneth G. Elzinga, Gerald Faulhaber, Franklin M. Fisher, Charles J. Goetz, Robert Hahn, Jerry A. Hausman, Thomas M. Jorde, Robert E. Litan, Paul W. MacAvoy, J. Gregory Sidak, Pablo T. Spiller, and Daniel F. Spulber.
We agree with the petitioners that the Ninth Circuit has generated an inescapable conflict among circuits, and that the Ninth Circuit’s opinion below is incompatible with this Court’s reasoning in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 127 S. Ct. 1069 (2007), and Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993). We agree with Judge Gould’s dissent in linkLine that Trinko “takes the issues of wholesale pricing out of the case,” such that the plaintiffs’ only possible remaining theory of harm would be predatory pricing at the retail level – which the plaintiffs did not allege. linkLine Commc’ns Inc. v. Pac. Bell Tel. Co. d/b/a/ AT&T Cal., Inc., No. 05-56023, 2007 U.S. App. LEXIS 21719, at \*28-29 (9th Cir. Sept. 11, 2007) (Gould, J., dissenting). We also agree with Judge Ginsburg’s opinion for the D.C. Circuit in Covad Communications Co. v. Bell Atlantic Corp., 398 F.3d 666 (D.C. Cir. 2005), which in turn embraces the conclusion of the Areeda-Hovenkamp treatise that “‘it makes no sense to prohibit a predatory price squeeze in circumstances where the integrated monopolist is free to refuse to deal.’” Id. at 673-74 (quoting 3A Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 767c3, at 129-30 (2d ed. 2002)). The existence of a rule like linkLine has a pervasive impact on business behavior that, at the margin, affects competition and consumers. This deleterious effect extends beyond the telecommunications industry to affect all firms that do business in the Ninth Circuit. These reasons justify granting certiorari in linkLine and reversing the Ninth Circuit’s decision.
In our minds, an even larger reason than those described above makes it imperative that the Court take this case. The Ninth Circuit’s decision in linkLine implicates the normative foundation of modern Sherman Act jurisprudence: that antitrust law exists to advance consumer welfare. We have three points to make.
First, any rule of price-squeeze liability that threatens liability based on the claim that the difference between a firm’s upstream and downstream prices leaves downstream rivals insufficient margin substitutes a rule of competitor welfare for consumer welfare.
Second, properly understood, a price squeeze is a regulatory issue, which makes sense only as a rule of price regulation in an industry already subject to duties to deal and to control by institutionally competent regulators. Attempting to implement regulatory policy through section 2 of the Sherman Act is ill-advised, both because it makes no sense for courts to re-regulate deregulated or lightly regulated industries, and because courts lack the institutional competence to implement regulation.
Third, the Ninth Circuit’s rule is of pressing concern precisely because it will deter efficiency-enhancing conduct and competitive pricing. Vertical integration and partial integration are ubiquitous, and firms need to be able to make decisions about such integration without the threat of liability. Vertically integrated firms likewise need to be free to cut retail prices (as long as the prices are not predatory) without concern for rivals – the point of Brooke Group. Moreover, the Ninth Circuit’s standard is so vague and open-ended that it creates uncertainty and invites litigation; it also permits imposition of liability based on apparently subjective evaluation of disputed and hard-to-prove facts, which will lead to a substantial risk of false positives.
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Bell v. linkLine: Brief of Amici Curiae | Gregory Sidak
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                                  Should Antitrust Consent Decrees Regulate Post-Merger Pricing?
# Should Antitrust Consent Decrees Regulate Post-Merger Pricing?
 **Farrell Malone & J. Gregory Sidak****Abstract**
Competitors proposing to merge sometimes propose price regulation in a consent decree as a condition of receiving merger approval. Antitrust enforcement agencies in the United States have been reluctant to use such price-regulating decrees, as they suffer from practical problems in implementation. It is less recognized, however, that the use of consent decrees to regulate post-merger prices may be unlawful. Such decrees exceed the scope of antitrust law and blur the distinction between the legislative power to regulate prices and the executive power to enforce the antitrust laws. Despite the willingness of merging parties to accept price regulation in consent decrees, economic and constitutional considerations counsel against antitrust enforcement agencies adopting this practice.
Consent Decrees Regulate Post-Merger Pricing? | Sidak
                                  The Future of the Postal Monopoly: American and European Perspectives After the Presidential Commission and Flamingo Industries
# The Future of the Postal Monopoly: American and European Perspectives After the Presidential Commission and Flamingo Industries
 **Damien Geradin & J. Gregory Sidak****Abstract**
In December 2002, President Bush established the Presidential Commission on the United States Postal Service for the purpose of proposing how government provision of mail delivery services might be reformed or transformed. The Commission reported in July 2003 that the Postal Service should not be privatized but rather should remain a public entity that would increasingly be run like a commercial enterprise. In 2004, however, the Supreme Court moved the Postal Service farther away from being a true commercial enterprise when it held in the Flamingo Industries case that the agency is immune from antitrust law. In this article, we argue that the Postal Service already operates like a commercialized governmental enterprise and that pursuing that path even further would increase rather than decrease the problems faced by the U.S. postal sector.
Although we support privatization, that option may not be politically feasible. Consequently, we examine how postal reform might proceed incrementally in the form of an improved government agency. That approach would entail two broad principles for postal reform. The first is to define the Postal Service’s mission in terms of remedying conditions of market failure. That goal encompasses universal service, quality of service, and reasonableness of rates. The second broad principle is to avoid competitive distortions through the pricing and product offerings of the Postal Service. This principle entails avoiding government production in markets that are or can be served satisfactorily by private firms, as well as avoiding discrimination among mailers and among competitors in secondary markets. We then present specific recommendations that would advance these two broad goals if the Postal Service remains an agency of the federal government. Those recommendations encompass costing, universal service, rate design and mail classification, the postal monopoly, and market entry and exit — as well as legislative reversal of Flamingo Industries.
Future of Postal Monopoly in the U.S. & EU | Greg Sidak