Tuesday, June 24, 2003

Antitrust News: Oliva v. United States

Today we went on the offensive against antitrust, or at least I did individually. Last week a federal court approved an antitrust settlement in United States v. Village Voice Media and NT Media, the so-called "alternative newsweekly" monopoly case. The Justice Department charged the two publishers with illegal market allocation because they--horror of horrors--agreed to shut down money-losing papers in the other guy's market. In antitrust, financial failure is no excuse for denying consumers their right to your product, even when that product is a newspaper distributed free of charge to readers. The DOJ sued and the two publishers--not wanting to lose any more money--quickly settled, agreeding to divest the assets of their closed papers to third-party buyers approved by the government.

This is where I came in: As the antitrust settlement was pending, I filed a comment letter (on behalf of myself and three colleagues at Citizens for Voluntary Trade) and two amicus briefs picking apart the DOJ's weak-even-for-them case. The government dodged every attack, despite the fact they had no actual case law supporting their novel antitrust theory (namely, that there is a distinct market for "alternative newsweeklies" and that readers are injured when denied continued access to a free paper.) The judge, sadly, decided to bury his head in the sand and didn't bother to address my concerns, issuing only a formulaic one-sentence declaration that the settlement was in the "public interest."

Frankly, I've had enough of having rational, pro-individual rights arguments against these ridiculous antitrust settlements getting ignored. That's why today I filed a motion to intervene in the case post-judgment for the purpose of appealing the court's decision to enter the settlement. If this works, I will personally appeal the settlement to the U.S. Court of Appeals for the Sixth Circuit (the same folks that gave us the Michigan affirmative action cases) and try to beat back the antitrust brushfire, at least on this issue.

There are two problems I'm looking to address:

First is the wonderful DOJ tradition of ignoring the law when it comes to approving antitrust settlements. In 1974, Congress reformed the antitrust consent judgment process by requiring any proposed judgment to be subject to at least 60 days for review and public comment. Once that period expires, then the judge is supposed to weight the comments (and the government's replies) and decide for himself whether the judgment is in the "public interest" and should be made final. It's really a simple process, except that the DOJ just can't wait for anything. Many antitrust settlements are executed well before the comment period expires or the judge actually rules. In this case, the abuse of the law was particularly obscene. Village Voice and New Times completed their divestitures to third-parties nearly one month before the public comment period ended. Thus, the public and the court was effectively shut-out of the process, since it's practically impossible to undo a divestiture once it's occurred.

The second problem is a little something we call the First Amendment. Those of us who believe the Constitution means what it says think that the government cannot abridge the freedom of the press. The DOJ believes differently. Much like the University of Michigan law school, the DOJ believes the media should reflect "diversity" by encompassing multiple viewpoints. Of course, there's nothing per se wrong with multiple viewpoints. The problem is the DOJ likes to use antitrust laws to force diversity onto markets where customers and private property owners have already decided otherwise. The most traditional expression of this belief is the "essential facilities" doctrine, which holds the government may violate property rights if doing so will protect the public's "right" to access communication media deemed "essential" to the nation. This doctrine largely applies to television, radio, and cable. In this case, the DOJ wants to apply it to "alternative newsweeklies" because--get this--they provide important "anti-establishment" editorial content.

This case is the first time alternative newspapers have been deemed so "essential" as to justify antitrust regulation. Thus, if the court's judgment stands unaltered, it will open the floodgates to future DOJ (and private) lawsuits against new media producers of all types, including perhaps bloggers. Just imagine the potential lawsuit against the Volokh Conspiracy--the DOJ may require divestiture of some of their members to third-party blogs of the government's choosing. Sure, it sounds farfetched, but not much more so than claiming one can enjoy a "monopoly" over "alternative" media.

A copy of my motion to intervene can be found at this link. More to come as my litigation strategy develops.

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