Internationally, AMEX and Visa/Mastercard do have to compete, and the latter have reacted by offering better prices and premium card options. Accordingly, the court finds no error in concluding that innovation has been stunted by harm to competition arising out of exclusionary provisions. Defendants’ arguments: Harm to competition is actually just harm to competitors: Right of refusal to deal: They argue that they have only shut off one network of distribution, the bank-as-issuer system, and they shouldn’t have to open up their distribution network to competitors because there’s no duty to deal. They analogize to Coke excluding Pepsi from using its trucking network to distribute. Court rejects this argument because it conceives of Visa and Mastercard as a single entity, when in reality both are joint ventures owned by consortiums of banks, effectively imposing a restrictive contract term on themselves, which they determine is in their mutual interest, providing there’s disciplined adherence amongst otherwise competing banks, amounting to a horizontal restraint between the banks. Procompetitive benefits: Necessary to “promote cohesion” in a way that promotes competition. Court rejects citing success of international alternative. 2. Competitors’ Exchanges of Information A mere instrument of AT harm: Exchanges of information between competitors are subject to antitrust scrutiny because they may indicate a cartel, may make a market ripe for cartelization, or otherwise facilitate parallel action, all of which can harm consumers. Because the exchange of information is not direct evidence of consumer harm, but requires inference of other circumstances, AT violations based on information exchange is very fact dependent. This is particularly true because exchange of information also facilitates healthier competition, presenting a strong pro-competitive counter-narrative. Parallel action: perfect pricing information in a highly concentrated market with high barriers to entry and relatively inelastic demand can empower those competitors to raises prices, without having to agree in a cartel sense, but with just as much freedom from the competitive forces. Rules of thumb – information exchanges are fine as long as: compiled and distributed through an independent third party; In aggregate form only, so competitors cannot deconstruct and identify specific competitor information; and information should be past information only if your industry is fragmented, and you meet the three prongs, then there’s no problem
Explicit conspiracy? The current/future nature of price info created a likelihood that it would push salaries down, whether or not there was an actual conspiracy (though one suspects there may have been) so it’s a violation. 3. Agreements of Competitors to Restrain their Own Competition------------------- a. Professional Restraints and By-Laws: did this else ware so it’s really just background here. b. Brown/MIT US v. Brown (3d Cir. 1993): Facts: The Ivies and MIT agree not to compete via financial aid for students who have been accepted by multiple institutions in an attempt to move to a need-based aid model in order to expand access to higher education. Public interest defense? No dice (explicitly anyway), but not per se illegal The court distinguishes from superior court trial lawyers on the grounds that the attys in that case stood to gain financially from what could also be construed as a public interest, whereas here there is no financial interest to sully the public interest. For this reason, they do not find per se violation, but go to full rule of reason analysis. Competition on price: It used to be that the most intense price competition was in the fin aid area, especially with regard to minority students. So is this elimination a harm to competition? Surely to those consumers who would otherwise receive competitive financial aid offers. Information-sharing harm: the process of coordinating this agreement required intense information sharing, presenting a danger of cartel-like price increases, as corroborated by the similarity in tuitions and fast-paced increases in tuition. D argued for educational immunity from AT laws: Rejected! We’re non-profit The cost of education is actually mush higher than tuition, the rest being made up by donors Going along with this, the agreement was an attempt to reallocate this pool of money (tuition plus donations) in a more accessible/equitable way For these reasons, it doesn’t make sense to analyze education under normal market assumptions. Court rejects immunity argument. Output limitation? The same number of students will come to these colleges no matter what, so there’s no output limitation, which mitigates the anticompetitive harm and perhaps makes the court more open to the procompetition arguments, weak as they are. Procompetitive benefits: Rejected!