Author Archive

FTC snares doctors in price fixing trap

The Federal Trade Commission ended its year by prosecuting a 1,900-member physician group in Chicago for price-fixing. Since 2001, the FTC and DOJ have coerced 29 physician groups—some with as few as six members—into signing consent orders that restrict the right of doctors to negotiate contracts.

The FTC and DOJ apply a double standard to doctors and third-party payers. Payers may represent thousands of individual consumers and present doctors with a “take it or leave it” contract offer. But if even a handful of doctors get together to present a counter-offer, it’s a “per se” antitrust violation.

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Hussein executed

Saddam Hussein has been executed, according to numerous media reports. A few hours ago, U.S. District Judge Colleen Kollar-Kotelly of Washington denied a last-minute application for a stay of execution filed by Hussein’s lawyers.

The application was filed at 1 p.m. this afternoon by the law firm of Gilman & Associates, who argued that a stay was justified because Hussein was a named defendant in a civil lawsuit before the D.C. district court, “but his incarceration has prevented him from receiving proper due process notice of his rights to defend himself and his estate.” Military officials said Hussein could not meet with his lawyers to discuss the civil suit until January 4, which obviously is a moot point now.

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U.S. v. Stolt-Nielsen: Unenforceable Contracts

Next week the Justice Department will file its response to a motion to dismiss made by Stolt-Nielsen Transportation Group and its two co-defendants in a criminal antitrust case now pending in Philadelphia. Four years ago, Stolt-Nielsen received amnesty from the DOJ in exchange for cooperating with the Antitrust Division’s price-fixing investigation of the parcel tanker industry. The amnesty was revoked less than three months later, however, after the Division accused Stolt-Nielsen of misrepresenting the timeline of the alleged conspiracy.

The Division had never revoked an amnesty granted under its 1993 Corporate Leniency Policy, and the unprecedented action against Stolt-Nielsen prompted the company to file a lawsuit to enjoin prosecutors from indicting the company. In January 2005, a judge granted the injunction, holding that Stolt-Nielsen did not breach the amnesty agreement. Specifically, the court said the terms of the amnesty agreement—which was drafted by the DOJ—made no reference to any specific timeline.

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Airport Parking, Antitrust & Eminent Domain

For the past three years, Stan Cramer has been fighting to save his parking garage near the Harrisburg International Airport from eminent domain seizure by the airport’s municipal operating authority. The airport wants to eliminate competition with its own parking lots, and when Cramer refused to sell voluntarily, the authority used its powers under Pennsylvania law to take the property by force. Recently, a Pennsylvania judge allowed Cramer’s lawsuit to stop the seizure to proceed to trial.

In a related case, Pennsylvania AG Tom Corbett filed a federal lawsuit last year to stop the airport authority’s seizure on the grounds that it violates federal antitrust law. It’s a strange setup: The Commonwealth of Pennsylvania suing one of its own subdivisions in federal court over the use of power granted by state law. In March, U.S. District Judge Christopher Conner dismissed the AG’s complaint, citing the airport authority’s immunity from federal antitrust lawsuit as a state actor. Conner said the airport’s anti-competitive motives were irrelevant; its actions were clearly authorized by the Pennsylvania legislature.

Corbett appealed the judge’s dismissal to the Third Circuit Court of Appeals. Briefs were filed in October, and a decision on the appeal is expected next year. Meanwhile, new management has taken over at the airport, and they are trying to negotiate a settlement with Cramer.

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Antitrust regulators tout destruction of capital

Last week, the Justice Department’s Antitrust Division issued a triumphant press release touting that 2006 recorded “the second highest level of criminal fines” in Division history. The Division is actually measuring the government’s 2006 fiscal year: From October 2005 through September 2006, the Division obtained criminal fines totaling $472,445,600, a 40% increase over the previous fiscal year. The Division also said that criminal prosecutions of individuals yielded a combined 5,383 days of jail time; and during the first three months of the current fiscal year, an additional 9,135 days of jail time have been imposed.

Thomas Barnett, the head of the Antitrust Division, said more fines for “cartels” and prison sentences for “price fixing” executives created substantial economic benefits:

“Sound enforcement of the antitrust laws ensures that illegal conduct is stopped, procompetitive transactions can proceed, and businesses are able to engage in vigorous competition resulting in lower prices, better quality and more choices for consumers.”

There’s no empirical evidence that any of this is true. Indeed, the DOJ is not legally required to demonstrate the economic effects of antitrust policy. Since price fixing is treated as a “per se” antitrust violation by the courts, it’s legally unnecessary to address such matters. Nevertheless, the Division insists that criminal enforcement improves consumer welfare. That doesn’t make sense if you think about it.

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More Guestblogging

Greetings, Overlawyered readers. I’m your other post-Christmas guestblogger, Skip Oliva. I’m not a lawyer, but I do write about legal subjects. For the past four years, I’ve run the Voluntary Trade Council, a public policy group that focuses on antitrust regulation. I maintain VTC’s weblog as well as write for the Mises Economics Blog. During my stint here I’ll be discussing some of the more interesting antitrust cases from the past year.