Thursday, July 31, 2003

Rights and Reason: Bush Wants Only Man-And-Woman Marriages

This from the AP:

President Bush says Americans should respect homosexuals, but he wants to make sure marriage is defined strictly as a union between a man and a woman.

Government lawyers are exploring measures to enshrine that definition in the law, the president said Wednesday.

"I believe in the sanctity of marriage. I believe a marriage is between a man and a woman, and I think we ought to codify that one way or the other," he said.

Still, he urged Americans not to ostracize gays.

"I am mindful that we're all sinners, and I caution those who may try to take the speck out of the neighbor's eye when they got a log in their own," the president said, invoking a biblical passage from the Gospel of St. Matthew.

"I think it is very important for our society to respect each individual, to welcome those with good hearts, to be a welcoming country," Bush said.
Sinners? That's like asking someone when did they stop beating their wife.

And what does the President's religious view of gays have to do with anything? The question is whether gays have the individual right to enter into a marriage contract. The president's faith may tell him no, but there is not a shred of reason in this universe that says two consenting adults ought not to be able to define their relationship on their own terms and have that relationship protected under the rule of law.

Wednesday, July 30, 2003

Rights and Reason: Alabama governor says voters have Christian duty to approve big tax increase

This from the AP:

Alabama’s new governor is trying to persuade voters to approve the biggest tax increase in state history by telling them it is their Christian duty. And for a state in the Bible Belt, that might seem like a winning strategy.

Instead, Republican Gov. Bob Riley’s $1.2 billion tax package is alienating even the Christian Coalition and other supporters, who see Riley as a Judas. Riley had consistently opposed new taxes while in Congress.

Riley says the tax increase is needed to erase Alabama’s biggest deficit since the Depression and improve education. The plan also seeks to help the poor by raising the income level at which people have to begin paying state taxes.

Alabama’s threshold for paying state taxes is the lowest in the nation at just $4,600 for a family of four and has been unchanged since 1982.

Riley, a Southern Baptist, says Alabama has taxed its poorest too harshly for too long.

"According to our Christian ethics, we’re supposed to love God, love each other and help take care of the poor," he said. "It is immoral to charge somebody making $5,000 an income tax."
Well, we now at least know that God favors the progressive income tax.

Rights and Reason: Hormel Fights to Defend Spam Name

The AP reports that Hormel Foods is suing a Seattle-based software firm for infringing upon its "Spam" trademark.

SpamArrest, which specializes in blocking junk e-mail or "spam," filed papers to trademark its corporate name early this year. Hormel then sent the company a warning to drop the word "Spam." SpamArrest refused.

"If you ask most people on the street, they're going to say junk e-mail as opposed to the luncheon meat as their first description of what spam is. I think they're overstepping their bounds," said Brian Cartmell, SpamArrest's chief executive.

Cartmell says his company's use of the word has nothing to do with Hormel's product, first produced in 1937. Hormel officials disagree, arguing that the company has carefully protected and invested in the brand name, and that the public could confuse the meat product with the technology company. It filed its challenges in late June.

Hormel acknowledges that its brand name has taken on new meaning, and it outlines on its Web site what it considers acceptable uses of the word.
I think Hormel is well within its rights. To be honest, I'm at a loss as to why "Spam" became synonymous with unsolicited e-mail in the first place. The news editors who first covered Internet jargon should have been sensitive to the fact that "Spam" is a commercial trademark--any good journalism style manual tells you as much for obvious reasons. But, by an attempt to be cute, Hormel’s mark has more or less been dragged through the mud and will likely never come clean.

As far as SpamArrest goes, they can not escape the simple fact that the name "Spam" is property that Hormel has a right to protect. SpamArrest does not have a right to the commercial use of the word “Spam” despite the word’s wide-spread non-commercial use.

It will be interesting to see how the courts rule in light of the recent Victor's Secret case, where it was held that "Victor's Secret" was sufficiently different from "Victoria's Secret" to squelch a trademark infringement suit. Ideas are ethereal things, and yet protecting their value is crucial. This is a case we will be monitoring closely.

Tuesday, July 29, 2003

Humor: Federal Elections

I love the press releases I get:

"According to the Dixie Chicks, only 36 percent of Americans between the ages of 18 through 24 voted in the last presidential election."

I am both heartened and relieved that the Dixie Chicks, in addition to being country music performers, are closely monitoring federal election trends.

Website down

We're working on it. Thanks to those who dropped us a line.

Monday, July 28, 2003

Antitrust News: NCAA Dunked

In what I hope is not a harbinger of future antitrust troubles, the NCAA fell prey this evening to a federal judge in Ohio who struck down a college basketball rule limiting participation in in-season mini-tournaments. ESPN's Andy Katz reports as follows:
College basketball got a rare dose of offseason good news Monday night when an Ohio federal judge rescinded the NCAA's 2-in-4 rule.

That means tournaments such as the Maui Invitational, Great Alaska Shootout, Preseason NIT, Coaches vs. Cancer Classic and any other in-season exempted events are more likely to include at least one to two major-name teams.

In a 38-page ruling, Judge Edmund A. Sargus ruled in favor of the plaintiffs (Gazelle Group, Inc., Worldwide Basketball and Sport Tours, Inc., Sports Tours International, and Sports Promotions, LLC). The lawsuit by the plaintiffs started on Dec. 21, 2000, against the NCAA's 2-in-4 rule that restricted teams to two exempted events in a four-year cycle.

Some schools were grandfathered into the rule and were allowed to play three such events in a four-year cycle. An exempted event is a tournament that counts as only one game on the maximum 28-game schedule for Division I teams.

Sargus said the 2-in-4 rule was in violation of Sections One and Two of the Sherman Act. Sargus said in his ruling that, "The NCAA is hereby permanently enjoined from enforcing the 'two-in-four' rule.'' This means that teams are eligible to play in a certified event on an annual basis, like they were prior to the 2-in-4 rule in 2000. But the NCAA rule limiting teams to one of these events a season is still in place. Teams cannot play in an exempted event in the same season that they go on a foreign trip.

Sargus put off a ruling on this case in July, 2002 to see how the rule would affect the tournaments in Year Three of the legislation.

"Last season was the turning point,'' said Bill Markovits, attorney for the plaintiffs. "The judge was looking to see what would happen and he saw what we predicted, and that was a decrease in output and quality of events.''

Markovits said the NCAA certified 28 events but only 17 were able to go forward because the other 11 couldn't fill their fields with eligible teams. There were 25 events the previous season. The number of exempt games decreased from 251 to 144.
I'll review the judge's full opinion when I can obtain a copy, but for now I would note that there is nothing in the Sherman Act that prevents a private membership association from passing rules for its internal governance. Whether the rule is a good idea--and it's not in my opinion--is not a subject for a federal judge to decide when there's no independent contractual dispute. The tournament organizers were clearly unhappy with the NCAA's rule, but that does not give them the right to use the courts of law to impose their wishes upon another organization.

Antitrust News: Good Riddance

The FTC announced today that Commissioner Sheila Anthony resigned today, effective August 1. That's odd considering Anthony's term expired last September, and she only remained in office because her successor—Pamela Jones Harbour—was not confirmed by the Senate until last week. Technically, Anthony is already out of office, but I guess Harbour needed a few days to transition herself.

In other FTC news, the Commission announced the hiring of two new intellectual property attorneys in a press release titled "FTC Expands Intellectual Property Expertise." Is this an admission the Commission is presently ignorant about intellectual property matters?

Antitrust News: Operatic Overkill

In a rare formal opinion, the Federal Trade Commission upheld antitrust charges against two record companies the Commission's lawyers say engaged in nefarious price-fixing:
Federal regulators upheld charges Monday that two companies illegally fixed prices when they joined forces to sell recordings of the opera stars known as The Three Tenors.

The Federal Trade Commission rejected an appeal by subsidiaries of French corporation Vivendi Universal and supported a June 2002 ruling by an administrative law judge who ordered the companies to stop anticompetitive practices.

The case involves 1998 recordings of the tenors Luciano Pavarotti, Jose Carreras and Placido Domingo performing at the World Cup soccer finals in Paris.

In 1997, Warner Communications Inc. formed a joint venture with PolyGram Music Group, which was later acquired by Vivendi. Warner was to distribute the recordings in the United States, while PloyGram would handle overseas distribution.

The FTC said the two companies feared videos and albums of the 1998 concert wouldn't sell as well as those from the trio's first two World Cup appearances in 1990 and 1994. So the companies agreed to restrict discounts and advertising for the older performances before and after the release of the 1998 recordings, the FTC said.

"Restraints on price discounting and advertising are inherently suspect," FTC Chairman Timothy Muris said in the ruling. He said the agreement between companies sought to deprive consumers of the "vigorous competitive offering of certain products to induce them to choose others."

The FTC voted 5-0 to uphold the ruling against Vivendi's subsidiaries. That ruling found that the agreement with Warner violated federal antitrust law, because the two earlier recordings were not jointly produced by the two companies.
Chairman Muris' 61 page order is itself a virtuoso performance in which he barely hides his prejudicial contempt for the perfectly justified conduct of the two record companies:
Nessun Dorma! – None must sleep!

This Puccini aria, sung by tenor Luciano Pavarotti in the recording at the heart of our case, announces the edict of the Chinese princess Turandot that no one in Peking may sleep until she solves her problem. The princess has made a bad
judgment – agreeing to marry the first suitor who, at peril of death, can answer three riddles. Although this plan once had served her purposes, someone has now answered the riddles, and Turandot is encumbered with a product she neither wants nor can market. She grasps at one last chance to stop the wedding, by guessing the name of the suitor, and will stop at nothing to obtain the information.

Our story takes place not on the opera stage, but in the business world of operatic recordings. The drama is not so stirring, and no one loses his head, at least not literally. The story is troubling, nonetheless. Two recording companies agree to form a joint venture to market a new recording, by three of the world’s foremost singers, and to split the costs and profits. By itself, such an agreement, even by competitors, is often beneficial, because it helps bring a new product to market. Here, however, the story turns dark when it becomes apparent that the new recording will repeat much of the repertoire of existing recordings, diminishing its marketing potential and worrying the recording companies. While other businesses might have worked harder to develop an improved or more distinctive product to attract greater consumer interest, our protagonists chose another route. They agreed to restrict their marketing of competing products that they respectively controlled – products that were clearly outside the joint venture they had formed. They imposed a moratorium on discounting and promotion of those recordings that might otherwise siphon off sales of the new product. We now consider whether such an agreement unreasonably restrains trade in violation of the antitrust laws. We conclude that it does.
Dramatics aside, Muris is saying that a company violates the antitrust laws simply by making a business decision the FTC's lawyers disagree with. In this case, Muris said the companies should have produced a better album with more original material; because they didn't, that constitutes a legal injury to consumers who, depending on how you look at it, have a right to either lower prices or a new Three Tenors album every four years.

Sunday, July 27, 2003

Antitrust News: Safe Harbour Granted

Last Wednesday, the Senate confirmed Pamela Jones Harbour to the Federal Trade Commission by voice vote without debate. That alone tells you how seriously the Senate takes the FTC and its work. Commissioner Harbour will serve a seven-year term retroactive to September 2002, meaning she'll remain in office until well past a potential second Bush presidential term. It also means, given Harbour's Democratic connections, that the new commissioner may be in line to become FTC chairman should the left succeed in toppling Bush next year.

The Constitution: Foreign Presidents

On Wednesday the Senate Judiciary Commitee will hold a hearing on a quirky constitutional amendment proposed by the committee's chairman, Utah Republican Orrin Hatch. The proposed amendment reads as follows:
A person who is a citizen of the United States, who has been for 20 years a citizen of the United States, and who is otherwise eligible to the Office of President, is not ineligible to that Office by reason of not being a native born citizen of the United States.
Under the 1789 Constitution, a foreign-born citizen is ineligible to assume the presidency without exception. This provision was written largely because of concerns that some factions in the new American government would seek to "import" a chief of state from England and install him as a de facto King. That's obviously not a major concern of most Americans today, and with the number of respected foreign-born citizens in political life, it would seem appropriate to reconsider the original Constitution's total ban.

I only wonder why Hatch specified a 20-year period of citizenship. It seems high. The Constitution specifies House members must be citizens for seven years, and Senate members for nine. Following that progression, a president should be qualified after just 11 or 12 years. But this is obviously a detail that can be hashed out in debate.

Antitrust News: A Sticky Injunction

The Justice Department obtained an injunction this week preventing UPM-Kymmene Oyj from acquiring a competitor in the “label stock” industry, that is the adhesive used on peel-and-stick labels. The DOJ claimed the merger of UPM and rival Morgan Adhesive would illegally concentrate 70% of the market with UPM and its remaining major competitor, Avery. The Court’s injunction stops the merger pending an adjudication of the government’s antitrust claims.

This is an all-too-typical antitrust decision, where the Court falsely emphasizes the government’s specious claims over the property rights of the merging companies. The Court admits as much in the final paragraph of its 26-page ruling granting the injunction:
The balance of harms, which is a question I am not required to consider given my view of the merits, is nonetheless a factor which favors the government. A wrongful denial of injunction would, for a year or more, inflict irreparable damage on consumers and, in all probability, leave us with a Raflatac 2nd that could not be divided back into the entities from which it was formed. A wrongful grant of injunction leaves Raflatac no worse off than it is now. Instead of buying market share, they can earn it in the customary way. MACtac’s declining condition will either be reversed or its slack will be taken up by other producers–the existing price competition will be diminished little or not at all. I find the public interest in having competitive markets is served by preventing the merger.

Although “[i]t is regrettable that antitrust cases are decided on the basis of theoretical guesses as to what particular market-structure characteristics portend for competition, . . . to place on the government an insuperable burden of proof is not the answer.” Rockford, 898 F.2d at 1286. “The principles of civil procedure do not require that the plaintiff make an airtight case, only that his case satisfy some minimum threshold of persuasiveness and be better than the defendant’s case.” Id. I find that the government has met this “minimum threshold.”
As with most antitrust cases, due process and reason are turned on its head to satisfy the government’s pathological need to regulate the economy. The most blatant false premise asserted by the Court here is the notion that UPM is “buying market share” rather than earning it “in the customary way”. Even with a larger firm, UPM still has to prove its value to its customers on a daily basis, or risk facing new competitors down the road. The government, however, cannot account for these new competitors, so instead the Justice Department goes after UPM merely on the fear that no such competition will arise.

And even if UPM is doing nothing more than buying market share, so what? In a free market, property owners may buy more property to satisfy their needs. In a regulated antitrust market, however, property itself is a privilege held at the government’s discretion. Thus, UPM is guilty not of harming consumers, but of failing to show proper tribute to government regulators before purchasing a rival firm.

Saturday, July 26, 2003

Sports: Strange but True

Today's proof that Americans aren't as obsessed with politics as the media assumes:
When it gets this close to the trading deadline almost everyone is caught up in the frenzy and becomes obsessed with who is getting whom. Even flight attendants can catch the trading bug.

On the Mets flight from Philadelphia to Montreal Tuesday night -- just hours after the Pirates had traded Kenny Lofton, Aramis Ramirez and Scott Sauerbeck -- there was an excited ruckus in the rear of the Mets charter.

One of the flight attendants came down and asked why they were so happy.

"We got Qusay and Uday," Al Leiter exclaimed.

"I'm sorry," the flight attendant responded, "I don't know baseball. Are they any good?"

The players broke up in laughter.

"It was hysterical," Mike Piazza said. "It spread through the plane in a nano-second."
Given the current state of the Mets, two dead ex-tyrants would actually improve the state of New York's bullpen. Heck, if either Qusay or Uday can pitch middle-relief left-handed, they'd be on a Major League roster already.

Sports: French Etiquette

Dan Lewis is puzzled by the media's rush to (positive) judgment at the Tour de Lance (er, France):
During this year's Tour de France, Lance Armstrong fell because some "fan" all but assaulted him. Jan Ullrich, Armstrong's #1 challenger, stopped and waited for Lance to remount his bike. Most commentators smiled at this exceptional display of sportsmanship.

But was it right? I'm not so sure. Armstrong was the victim here mainly because he's the leader and perhaps because he dons the red, white, and blue. But the rules are the rules (or, perhaps, the umpires are the rules?).

Imagine if moments after the Jeffrey Meier incident, while the umps are calling it a home run, Joe Torre calls out to Derek Jeter to "fix the injustice." Jeter knows what he means, and on the way around the basepaths, clearly -- and I mean runs across the pitcher's mound -- misses second base.

The reaction, at least in New York, would be of utter disgust. And probably rightfully so. But the reaction from Ullrich's concession is across-the-board positive. Why is that?
The answer to Lewis' query is that professional cycling, like most sports, has it own set of quirky "unwritten rules" that exempt athletes from the normal standards of competition. Baseball is perhaps the most notorious abuser of unwritten rules, such as the notion that a player doesn't steal second if his team is ahead by a certain number of runs, or the moronic practice of both benches emptying whenever a fight breaks out on the field. In this case, Ullrich seems to have heeded the customs of pro cycling's well known caste system, which dictates not showing up the race leader in unusual circumstances.

All the same, it's a good thing this didn't happen in the United States. The minute Ullrich finished the race, FTC lawyers no doubt would've slapped him with an "unfair competition" complaint for failing to compete vigorously.

Friday, July 25, 2003

The Culture: NFL Clips Head Lion

While I'm a big fan of NFL Commissioner Paul Tagliabue, he got it wrong on this one:
Detroit Lions president Matt Millen was fined $200,000 by the NFL on Friday for not interviewing any minority candidates before hiring coach Steve Mariucci.

Commissioner Paul Tagliabue sent a letter to Millen informing him of the fine.

After coach Marty Mornhinweg was fired by the Lions in January, Mariucci was the only person interviewed for the job. The team said five minority candidates turned down interviews because it appeared inevitable Mariucci would be hired.

"While certain of the difficulties that you encountered in seeking to schedule interviews with minority candidates were beyond your control, you did not take sufficient steps to satisfy the commitment that you had made,'' Tagliabue wrote.

Tagliabue also has said that future failures to interview minority candidates for a head coaching opening could lead to fines of $500,000 or higher as "conduct detrimental'' to the NFL.
To put this fine in context, three years ago Tagliabue fined Baltimore Ravens linebacker Ray Lewis $250,000 after he pleaded guilty to misdemeanor obstruction of justice in a double-homicide case. Lewis' fine was an NFL record for a non-drug-offense, and Millen's fine may well be a record for an administrative fine. Yet most of us would not equate Millen's offense against political correctness with Lewis' illegal conduct.

Millen is no racist. His failing here was contacting numerous minority candidates for his coaching vacancy—as required by NFL policy—but then being turned down by these same candidates, who believed Millen had already made up his mind to hire Mariucci. This was likely true, but Millen did follow the letter of the NFL rule. He cannot be held responsible for the decisions of the minority candidates not to return his calls.

The $250,000 fine is also an indirect assault on the integrity of Mariucci, since the size of the fine leads an outside observer to believe there was no rational justification for hiring the coach. In fact, Mariucci was superbly qualified, having been (unjustly) fired by the San Francisco 49ers weeks before Millen decided to fire his own lesser-qualified coach, Marty Mornhinweg. It's also important to note that when Millen took over as Lions' president, it was widely reported that he wanted to lure Mariucci away from the 49ers, and that when that didn't pan out, he hired Mornhinweg, then a top Mariucci assistant. So it came as no great surprise than when Mariucci was finally available, Millen seized the opportunity.

The NFL, for its part, expected Millen to lie about his true intentions—hiring Mariucci on the spot—and parade at least one African-American coaching candidte through the Lions' offices. This does not reflect the NFL's commitment to "diversity," but rather the league's aversion to litigation. Tagliabue & Company are scared of a potential lawsuit from race-mongerers like Johnnie Cochran. Not that such a lawsuit would have merit, but there would be costs imposed, both in legal defense and public relations. It's far easier (and more cowardly) for the NFL to fine Millen now as a sacrifice to the Cochrans of the world.

UPDATE: It just struck me that the Lions play in Michigan (duh!) I guess this means John Dingell will be calling for Matt Millen to leve the state immediately.

Antitrust News: Antitrust Chief Says Clear Channel Probe Ongoing

Peter Kaplan of Reuters reports that DOJ antitrust chief Hewitt Pate told a House Judiciary Committee panel that the DOJ is continuing its probes into the largest radio broadcaster and concert promoter in the United States and has "undertaken significant efforts to find additional evidence."

"The Clear Channel matter is one of importance to us," Pate said at an antitrust oversight hearing. "We have an open investigation and we're going to continue to pursue that."

Pate's comments came in response to complaints by Rep. Howard Berman, a Democrat from California, who said attorneys at the department had failed to follow up on antitrust complaints he referred to them more than a year ago.
Antitrust investigations have a vaguely similar tone to the stories one would hear about how informants would operate in the old Communist block. I wonder how the actual thinking of those who request antitrust investigations goes. "I don't like Jones. He's doing to well for himself and I'm not. . . I think that's an antitrust violation. I'll make a call to the DOJ, that will show 'em."

One has to wonder.

Rights and Reason: Lawyers scream about ice cream

The Washington Times reports George Washington University law professor John Banzhaf and and Michael F. Jacobson, executive director of the Center for Science in the Public Interest has sent a warnings to six major ice cream producers this week criticizing ice cream's nutritional value and claiming the producers are in violation of the law.

They sent letters to Baskin-Robbins Inc., Ben & Jerry's Homemade Holdings Inc., Cold Stone Creamery, the Haagen-Dazs Shoppes Inc., TCBY and Friendly Ice Cream Corp., telling the chains to add healthier alternatives and put nutritional facts on their store menu boards or face potential litigation.

"Your failure to disclose such obviously material information as unusually large calorie and saturated-fat loads may violate state consumer-protection laws and/or your common-law duty to disclose material facts, and may invite lawsuits from concerned consumers, legal-action organizations, or even state officials," read one letter addressed to Haagen-Dazs President David Keil.
Beyond all the obvious free will implications, what I find amusing about this story is that Banzhaf hasn't directed his wrath toward his employer.

When I was an editor of a GW student newspaper, one of the beats I sent reports on was GW's food services committee, which listens to student requests about the quality and variety of the food the university offers. Students would always complain about menu options, and there even was a big battle over whether the university should offer Pepsi instead of Coca-Cola products.

And as most of us probably remember, either though our own experience or the experience of one of our roommates, a lot of people gain weight in college. Ever hear of the "freshman 15"? GW sells a lot of food that Banzhaf and his cronies would decry as evil. Yet I never heard anything about Banzhaf being a critic of GW food services, and he was a guy who would send me a press release if he had an itch up his nose.

So why no suit then against GW and other institutional food providers? Is that a little too close to home for our university-employed activist lawyer friend? I wonder.

The Culture: All the Propaganda that's Fit to Print

Reuters loves feet of clay, especially if they are American. I remember reading this in a Reuters story earlier this week:

"Jessica Lynch, the wounded Army private whose ordeal in Iraq was hyped into a media fiction of U.S. heroism, was set for an emotional homecoming on Tuesday . . . Media critics say the TV cameras will not show the return of an injured soldier so much as a reality-TV drama co-produced by U.S. government propaganda and credulous reporters."
Thing is, the bylined reporter didn't write that in her story. Deanna Wrenn, a statehouse reporter for the Charleston Daily Mail, says the story she submitted to Reuters was vastly different.

I would like to make it abundantly clear that somebody at Reuters wrote the story, not me.

I may not be a member of the world's largest multi-media news agency, but I learned at West Virginia University how to report fairly, which is what I thought I was doing for Reuters last week.

Apparently, when Reuters asked me last week if they could use my byline, they weren't talking about the story I wrote for them last week. They were talking about a story I never wrote.

That was the misunderstanding.

By the way, I asked Reuters to remove my byline. They didn't.
Read the rest of Wrenn's column which included the story she actually reported to Reuters.

Thursday, July 24, 2003

Antitrust News: Michigan Attorney General Boasts Taxol Reimbursement Program

Michigan Attorney General Mike Cox sent out a press release boasting about the settlement in drug manufacturer Bristol-Myers Squibb's antitrust suit.

"Patients who are battling cancer should not have to worry about whether they are paying a fair price for their medication," said Cox.

Attorneys General of 31 states, territories and the District of Columbia filed a lawsuit in federal district court in the District of Columbia against drug manufacturer Bristol-Myers Squibb Company alleging that Bristol-Myers Squibb fraudulently obtained patents on its cancer drug Taxol in order to delay the marketing of generic alternatives to Taxol. Bristol-Myers Squibb did the courageous thing and settled, and under the Settlement of the lawsuit, the Bristol-Myers Squibb will be required to provide Taxol free of charge to patients meeting certain financial need criteria, and has agreed to a court order that prohibits the type of conduct that the Attorneys General claim resulted in consumer harm.

What a bizarre case. Just how does patent holding become an antitrust violation? And how does providing Taxol free to poor people have anything to do with the question at hand.

Antitrust isn't about justice. It's about press releases from attorneys general seeking to be governors for providing something for nothing.

Antitrust News: Microsoft Corp. Progressing in Settlement

Ted Bridis of the AP reports that U.S. District Judge Colleen Kollar-Kotelly is pleased with Microsoft's antitrust settlement compliance efforts.

U.S. District Judge Colleen Kollar-Kotelly cautioned the software maker during a court hearing that she will continue to monitor its behavior under the agreement but acknowledged that Microsoft "most certainly has been responsive in many areas, and progress has been made." She set another court hearing for October.

"I am going to watch closely," the judge said.

[. . .]Kollar-Kotelly urged government lawyers to tell her if they believe Microsoft fails to comply with sanctions under the settlement. A Microsoft lawyer, Rick Rule, told the judge that the company has spent "an enormous commitment of resources" to abide by the agreement and that top executives believe compliance "is an important corporate goal."
I wonder how much of a "commitment of resources" it would take to secure the repeal of antitrust. I understand that Microsoft wants to put this case behind it, but speaking from a dollars and cents view, what strategy would have paid off the best for Microsoft--seek the abolition of antitrust, or pay rent to competitors?

I wager it would have paid for Microsoft to push for repeal. Long term, if Microsoft is successful, antitrust will continue to weigh heavily upon it. You just can't "put behind" legalized looting, no matter how good you are.

Wednesday, July 23, 2003

Antitrust News: More Hearings

The House Judiciary Committee's "Task Force on Antitrust" will hear testimony Thursday at 2 p.m. from DOJ antitrust chief Hewitt Pate and FTC Chairman Timothy Muris. I'm loathe to call this an oversight hearing, since Congress generally provides no oversight of either antitrust agency's activities. Indeed, a stated purpose of this hearing is to discuss the new regulations governing telecommunications mergers, which is odd since the agency that adopted those rules—the FCC—is not represented at this hearing.

Incidentally, I've seen reports that the Senate Judiciary Committee's chief counsel is leaving his present post to take a deputy's position at the DOJ's antitrust division. Yet more proof that Congress has no genuine interest in examining abuses by antitrust regulators.

The Culture: Funding Volunteerism

AmeriCorps wants more money to, er, fund volunteerism:
Supporters of AmeriCorps yesterday pleaded with Congress to provide the beleaguered program with an extra $100 million this year after House appropriators rejected a proposal to do so Monday.

The talk among lawmakers on both sides of the aisle, however, was that AmeriCorps will end up getting some of the extra money.

"That's what I hear," said Sen. Tom Harkin, Iowa Democrat, who sits on the Senate Appropriations subcommittee that oversees AmeriCorps. "I hear the White House is going to weigh in and put back some of the money."
You may be wondering why the government needs money to fund volunteers. Under AmeriCorps, a creation of the Clinton administration, one doesn't volunteer for altruistic reasons so much as for money down-the-road. Specifically, an AmeriCorps "volunteer" receives a stipend at the end of their service to be used for education. In other words, AmeriCorps is a glorified scholarship program, and the participants are as much "volunteers" as college football players are amateur "student-athletes."

What gets me about AmeriCorps is not the fact the government is paying people to volunteer, but the fact that people would actually "volunteer" for AmeriCorps programs. It seems morally contradictory. On the one hand, you're preaching to others on the value of "giving back to the community" and so forth, while your real motive is getting the stipend at the end. After all, if you just wanted to volunteer for the sake of volunteering, there are plenty of opportunities to do so without going through a government intermediary.

Then you have the spectacle of charity groups lining up to demand AmeriCorps "volunteers." This completely distorts the marketplace for charitable services. After all, CAC could definitely use some volunteers to assist in our work, but since we're not plugged in to AmeriCorps, we don't enjoy the benefit of obtaining government-recruited and paid "volunteers." We have to persuade people the old-fashioned way to join our cause. Doesn't seem quite fair to me.

Rights & Reason: Lawrence on Obscenity

In the aftermath of Lawrence v. Texas, a lawyer has asked an Ohio judge to strike down that state's prohibition on "pandering obscenity". The lawyer's client, Shawn Jenkins, was arrested in 2001 for selling a sexually explicit videotape at his Cincinnatti store:
"Practically all choices made by consenting adults regarding their own sexual practices [are] a matter of personal liberty and thus beyond the reach of state control," H. Louis Sirkin told Common Pleas Judge Richard A. Niehaus in Cincinnati in presenting his view of the Supreme Court's 6-3 June decision in Lawrence v. Texas.

Judge Niehaus reserved decision on Mr. Sirkin's 15-page motion and allowed the trial of Shawn Jenkins of Cincinnati to enter a second day yesterday.
The prosecutor, not surprisingly, takes a different view:
"It's our position that [the ruling] doesn't apply to the seller in obscenity prosecutions," Mr. Allen said. Mr. Jenkins, he said, runs a store that sells videos and is not a purchaser viewing them at home.

"I can't remember the last time in this county a person was prosecuted for owning an obscene videotape. It's the person who's selling or distributing, or pandering, if you will." This suggests that Mr. Sirkin is distorting the sodomy ruling.
This is an interesting admission: It's illegal to sell obscenity, but not to possess it. What other type of commercial item is this reasoning applied to? Prohibition generally applies equally to the producer and consumer, as is the case with narcotics. And if it is acceptable to possess obscenity, why is the consumer not entitled to take the necessary steps to obtain it? A right is meaningless if it's legally impossible to exercise.

Finally, the standard in Ohio for judging guilt under the obscenity law is whether the questioned material "violates community standards of decency," a standard that is wholly within the jury's discretion to decide. In other words, whether a seller breaks the law comes down to the particular tolerance levels of 12 randomly chosen jurors. This is hardly objective law, and it is unreasonable to expect the jury to carry out a vague (and selectively enforced) government mandate.

Now as to the question of whether Lawrence affects the Ohio law, I'm forced to partially agree with prosecutors because there's nothing in Justice Kennedy's majority opinion that leads me to believe the Supreme Court amended its holdings on pornography regulation in the context of strking down the Texas sodomy ban. The conduct questioned in Lawrence was private, non-commercial conduct; here the question deals with the scope of Ohio's power to regulate commercial transactions. While I believe the Ohio ban is almost certainly unconstitutional on First Amendment grounds (and probably Fourteenth Amendment due process grounds as well), Lawrence does nothing to affect disposition of the Jenkins case one way or the other.

Antitrust News: European Aggression

A priority of U.S. antitrust chiefs Hewitt Pate and Timothy Muris is to expand antitrust's international reach to make their thinking the worldwide standard. For once, Europe is obliging U.S. demands:
July 23 (Bloomberg) -- The European Commission's handling of mergers hasn't been ``too tough,'' even after vetoing deals worth more than $200 billion in four years, the commission's newly appointed chief competition economist said in an interview.

Berlin university professor Lars-Hendrik Roeller, who takes up the newly created post Sept. 1, also cast doubt on cost savings claimed by companies to justify mergers and said a greater voice should be given to consumers.

``You can't say that European competition authorities have been too tough,'' Roeller said in a televised interview with Bloomberg News in Berlin. ``It's less a matter of changing course than of using economic arguments to underpin decisions in individual cases.''

Competition Commissioner Mario Monti created the post as part of an antitrust revamp amid criticism that the European Union's regulatory arm abused its powers in vetoing mergers including General Electric Co.'s $47 billion bid for Honeywell International Inc., the first time the EU killed a U.S.-approved takeover.

Roeller's appointment comes amid a pickup in merger activity worldwide, including aluminum producer Alcan Inc.'s hostile 3.4 billion-euro ($3.9 billion) bid for Pechiney SA -- an attempt to revive a takeover that regulators scuttled in 2000.
It's telling that the EU's response to being charged with abuse of power is to take a position that will encourage greater abuse of power in the future. Only now the EU will hide behind the time-tested U.S. excuse that "we're only violating the rights of companies to 'protect' the consumer." It's also noteworthy that the EU named a professor—a member of Europe's leftist elite—to decide what business practices are acceptable under the antitrust laws. This also mirrors current U.S. thinking, where President Bush named Muris, a George Mason University professor, to head the FTC. There is an unwritten rule that individuals with actual business experience should never assume regulatory positions over business, at least in antitrust.

Roeller's appointment is designed to full people into thinking that decisions will now be made by professional economists rather than trial lawyers. The Muris FTC uses this tactic to great advantage, claiming that every antitrust decision is motivated by "empirical" economic evidence and not political concerns. This is never true, since antitrust only exists for political purposes, and no rational free-market economist could support such policies.

Indeed, the EU's new antitrust economist will focus on a decidedly political goal—forcing "efficiencies" on the market:
Nevertheless, Roeller said the acceptance by the commission of the need to assess so-called ``efficiencies'' in mergers brings the EU merger-review model closer to the U.S.

``The job of the new chief economist is to make this concrete,'' said Roeller. ``The goal of the reform is to focus more on efficiency gains.''

Roeller wants to see a greater focus on consumers when assessing mergers. That's in line with Monti's plans to give special access to consumer groups to antitrust reviews.

``We're not setting policy for companies, we're setting it for consumers,'' he said. ``Mergers only make sense if the consumer benefits, and that only occurs if there are synergies.''

In order to facilitate implementation of new rules governing agreements between companies that fall short of full mergers, the commission will later today issue six new guidelines on economic analysis, the scope of application of the rules and relations with other regulatory bodies.

The commission is also planning to make it easier for consumers to lodge complaints and provide information on suspected cartels. The commission will then have 40 days to inform the complainant of its decision and decide whether to open an investigation.
Once again, this is a case of Europe following the U.S. lead into greater socialism, an unusual twist. Antitrust is certainly consistent with the European belief that individual rights is a convenience subject to the social needs of the state. What's remarkable is that Americans allowed this belief to seep into their culture, even when the FTC and Justice Department openly abuse power in pursuit of "consumer rights."

Foreign Policy: America Versus Americans

Andrew Sullivan makes the following observation:

The more I read emails or talk to anti-war types, I get a sense that 9/11 never really happened. Or if it happened, it meant nothing more than a discrete crime with discrete criminals who alone deserved justice. The notion that it meant that we were and are actually at war with a series of terrorist entities and the tyrannies that support them never truly took hold on the far left (or right). As the months have passed, their complacency and denial have undoubtedly metastasized among others as 9/11 recedes from our collective consciousness and its emotional wound begins to heal. These people, it's worth remembering, believe that the exercise of American military power is almost always more morally problematic than any foreign tyranny or even a serious security threat to the homeland.
Sounds a lot like Leonard Peikoff at his Ford Hall Forum lecture this spring. Except Peikoff levied his charge against most of America.

Tuesday, July 22, 2003

Rights and Reason: We don't want your kind around here

This in from Erin O'Connor at Critical Mass. In a letter dated July, 9th, Michigan Congressman John Dingell has told Ward Connerly, University of California Regent and black anti-affirmative action activist, that he is not welcome in Michigan.

Here is the text of the letter:

Congress of the United States
House of Representatives
Washington, D.C. 20515-2215
July 9, 2003

Mr. Ward Connerly
American Civil Rights Coalition
P.O. Box 188350
Sacramento, CA 95818

Mr. Connerly:

The people of Michigan have a simple message to you: go home and stay there. We do not need you stirring up trouble where none exists.

Michiganders do not take kindly to your ignorant meddling in our affairs. We have no need for itinerant publicity seekers, non-resident troublemakers or self-aggrandizing out-of-state agitators. You have created enough mischief in your own state to last a lifetime.

We reject your “black vs. white” politics that were long ago discarded to the ash heap of history. Your brand of divisive racial politics has no place in Michigan, or in our society. So Mr. Connerly, take your message of hate and fear, division and destruction and leave. Go home and stay there, you’re not welcome here.

With every good wish,

Sincerely yours,


John D. Dingell
Member of Congress
Creepy. Dingell even has the audacity to post the letter on his website. (PDF). Dingell's letterhead has a statement at the bottom saying that his letter was "prepared, published, and mailed at taxpayer expense." I'm sure the taxpayers appreciate that vague threats are being issued on their dime.

While it is commonly held that affirmative action promotes racial diversity, it's plain to see that one of its leading proponents cares little for intellectual diversity.

UPDATE: Here's Ward Connerly's reply

Rights and Reason: Music Industry Wins Approval of Subpoenas

Ted Bridis of the AP reports on the Recording Industry Association of America's efforts to defend against online music piracy.

The music industry has issued at least 871 federal subpoenas against computer users this month suspected of illegally sharing music files on the Internet, with roughly 75 new subpoenas being approved each day, U.S. court officials said Friday.

The effort represents early steps in the music industry's contentious plan to file civil lawsuits aimed at crippling online piracy.
I've heard some people argue that the RIAA's efforts are heavy handed. I don't think so. Part of preserving a property right is the willingness to protect that right from encroachment. The threat against RIAA's members is real. It's high time those who steal be held accountable for their actions.

Monday, July 21, 2003

The Culture: More NCAA Lies

The Bowl Championship Series appears satisfied with the status quo:
Forget about a college football playoff for now.

The committee overseeing changes to the Bowl Championship Series won't consider using a tournament to determine the national champion despite pleas to open up the postseason to more schools.

The BCS Presidential Oversight Committee on Monday directed the six conference commissioners to come up with proposals for changing the BCS without a playoff.

"I'm skeptical a national champion could be determined in a playoff without infringing on a student athlete's welfare," said Penn State president Graham Spanier, a member of the committee.
Spanier's argument is either ignorant or dishonest. The non-revenue football divisions of the NCAA (there are three) all conduct playoffs without any proven adverse effects on the "student-athletes." This arugment was discredited long ago, yet NCAA apologists continue to use it in the vain hope the non-college-administrator world will spontaneously deny logic.

At the same time, a major-college football playoff is a bad idea under the current system. Such a playoff would only stregnthen the NCAA and its morally corrupt principle of "amateurism." As I've said before, the football schools need to take their programs out of the NCAA entirely and form a new for-profit entity that treats the players like the professionals they are. Anything short of that would be capitulation to the NCAA and its feudal masters.

Antitrust News: "Prestige" Price-Fixing

In a victory for middle- and upper-class women, numerous defendants settled a lawsuit alleging price-fixing in the brand-name cosmetics industry:
Estee Lauder, maker of Clinique and Bobbi Brown cosmetics, said it and 13 other companies including Chanel and retailers including Federated and Neiman Marcus agreed to settle a price-fixing lawsuit.
In the settlement, the defendants agreed to provide $175 million in free products to some cosmetics users and as much as $24 million for the plaintiffs' legal costs, Estee Lauder said.

Estee Lauder's portion was $13.5 million, or 6 cents a share, the company said in a regulatory filing.

A source close to one defendant said the free give-away to consumers will take place at retail stores.
Plaintiffs' lawyers filed suit based on their claim that department stores did not vigorously compete in the price of what "prestige" cosmetics. The lawyers inferred price-fixing based on the fact almost all stores charged the same for designer cosmetics. A more rational reading of the market, however, is that brand-name cosmetics are a luxury item with constant demand, making price stability more common than for basic commodities. There are no major legal barriers to entry in the cosmetics market, and plenty of "generics" available to willing consumers. In this case, however, you have privileged customers seeking special treatment via the courts. They want the benefits of "prestige" cosmetics without having to pay the market price.

And note the $24 million in "legal costs" included in this settlement. As usual, the trial bar is the only true beneficiary of antitrust and "competition" laws.

Congress: More Hearings

On Wednesday the Senate's Commerce, Science & Transportation Committee will hold a hearing on "public interest and localism." What does that mean? According to the Committee's description, "Members will hear testimony on the public interest obligations of local broadcasters and the role of broadcasters in the delivery of local news and public affairs programming." In other words, we're in for another round of senators telling broadcasters what they should and should not be airing. I'm so glad the Framers put that First Amendment in the Constitution. Imagine what these hearings would look like without even the facade of protecting the individual right to free speech.

Rights & Reason: Class(room) Warfare

Nothing California's political elite thinks up should surprise us, yet this managed to catch me off-guard:
California's premier university system is considering charging rich students more tuition to offset deep funding cuts resulting from the state's $38 billion budget deficit.

The Board of Regents of the University of California examined a proposal for a surcharge on wealthy students at a meeting Thursday. The university would be the first in the country to target wealthy students with a surcharge.

The proposed fee would force undergraduate students with family incomes exceeding $90,000 to pay as much as $3,000 more to attend one of the university's nine campuses. It is expected to affect 58,194 of the university's 160,000 undergraduate students.
This is yet another byproduct of endorsing "diversity" as a compelling state interest. The supporters of this "surcharge"—in reality, a tax—claim that the state must ensure access to UC for poorer families. This in turn justifies ignoring the federal constitutional rights of wealthier families to be free of arbitrary and harmful government classifications. For those of you unschooled in constitutional niceties—which I take includes anyone at UC—the surcharge proposal runs afoul of the Fourteenth Amendment's Equal Protection Clause as well as the Privileges and Immunities Clause of that same amendment.

Even from a "diversity" standpoint, this is bad policy. After all, does UC really want to teach students the best way for different groups of people to get along is for one group to openly steal from another? Okay, maybe that is a message the school wants to send, but they shouldn't be allowed to do it under color of government power.

Sunday, July 20, 2003

Antitrust News: BCS Politics

This was inevitable:
U.S. Rep. F. James Sensenbrenner says he will schedule a congressional hearing to explore the application of antitrust laws to college sports, including the role of the Bowl Championship Series.

The Wisconsin Republican is chairman of the House Judiciary Committee. A committee spokesman said Friday that Sensenbrenner will hold a hearing after the August congressional recess.

Sensenbrenner also has the support of U.S. Rep. John Conyers (D-Mich.), the ranking Democrat on the committee. In a letter to Sensenbrenner, Conyers said he wanted an investigation into the Bowl Championship Series, and "recent actions by the Atlantic Coast Conference inducing the University of Miami and Virginia Tech to depart the Big East.

Conyers said that, since the founding of the BCS in 1998, "the vast majority of the proceeds and power has been concentrated among 63 schools in six major conferences. Indeed, in the 2002-`03 season, only $5 million of a total BCS revenue of $109 million went to non-BCS colleges.

"This aggregation of power would appear to create a system that favors BCS schools in the six major conferences and largely eliminates the opportunity for other universities to participate in major post-season bowl games and the lucrative pay-out packages . . ."

Conyers added in his letter that the system has left some non-BCS schools with deficits and lower athletic budgets.

"There are also concerns that the disparities created in allocating sports revenues can have a significant, negative impact on Title IX opportunities in college athletics," he said.
Since there is no legislative proposal before Congress on this issue, the Judiciary committee hearing will be nothing more than a political opportunity for whim-worshipping congressmen to join the national sports media's attacks on University of Miami President Donna Shalala and ACC officials. The hearing will not produce anything of substance, since the antitrust laws would have done nothing to prevent or improve the Big East-ACC dispute. Antitrust would only create an additional layer of bureaucracy--the antitrust lawyers--to second-guess the decisions of college administrators. No doubt members of Congress and the media would like this additional bureaucracy, since it would provide an opportunity to impose their will upon college athletics. That does not, however, make it sound public policy.

And as I've noted before, Miami had every contractual right to jump ship from the Big East. This entire public fiasco could have been avoided if Big East members insisted on a stronger exit clause in their organization's constitution. It has always been understood in college sports that a school can switch conferences at-will in the absence of express language in the conference's governing documents. The Big East, however, wants the media (and the courts) to exempt the conference from upholding its contractual duties.

Finally, Rep. Conyers' invocation of Title IX is a red herring. In fact, both the creation of the BCS and Miami's move to the ACC were largely predicated on the need for more revenue to meet existing Title IX requirements. So if anything, Title IX is a cause of the current mess in college football, not a victim.

The Good Life: Aviation Pioneers Gather for Hall Event

James Hannah of the AP quotes actor Harrison Ford who was master of ceremonies at this weekend's National Aviation Hall of Fame homecoming.

"The freedoms that have accrued to mankind, the adventure that has unfolded based on the capacity that powered flight has provided is a very significant event, not just for aviators, but for our civilization, for the planet," Ford told the Dayton Daily News.
Yes, indeed.

Saturday, July 19, 2003

Rights & Reason: Discontent Americans Consider Canada

David Crary of the AP has an article about Americans who move to Canada because they embrace Canada's more socialistic values. The key line for me came here:

At Georgia State, Hodges said some conservative schoolmates have challenged his proposed move to Canada, saying he would be abandoning his homeland.
Abandoning his homeland. That's the conservative's argument for America--do it for your country. Don't sacrifice yourself for foreign socialism--sacrifice yourself for the homeland. Right there is all the proof in the world that the conservatives have nothing to offer. They can neither respect Canada's virtues (such as recognizing homosexual relationships under the law) or defend against its vices (such as massive government intervention in the economy). All they have to offer is nationalism.

I do not fight for my homeland. I fight for my freedom. I know why we as a people ought to be free and I am not going to concede one inch of ground in the battle to advance and defend my rights. Yet when I hear the hollow arguments that pass for the defense of America these days, I truly wonder what my chances are.

Rights & Reason: Nevada, cont.

The unusual en banc U.S. district court in Nevada yesterday dismissed a lawsuit brought in an effort to overrule the Nevada Supreme Court's unconstitutional wirt of mandamus directing the legislature, in essence, to raise taxes. In a per curiam order, the seven-judge district court dismissed the complaint on jurisdictional grounds. The basic problem, the court explained, was that the plaintiffs were seeking a review of the Nevada Supreme Court's order, and federal district courts can only exercise original jurisdiction, not appellate jurisdiction. It is well-settled law that only the United States Supreme Court may review final judgments of state supreme courts.

While I think there are ample federal constitutional grounds for overruling the Nevada Supreme Court order—such as Article IV's Guarantee Clause—the district court was probably correct to decline jurisdiction. A writ of certiorari to the U.S. Supreme Court would be the proper avenue for seeking relief from the Nevada high court's action.

Rights & Reason: The Battle for Seattle

The Washington Times produced this report on the latest attack by terrorist lawyers:
Trial lawyers plan to target school board members in Seattle who voted to extend a soda-machine contract with Coca-Cola Co. in elections this fall.

The board voted 4-3 Thursday night to approve a five-year, exclusive contract with the world's largest nonalcoholic beverage company.

However, it made changes to the deal that somewhat mollified the trial lawyers, who had threatened to sue for contributing to child obesity if the contract were extended.

While lawyers assess the likelihood of lucrative settlements in Seattle, others are researching suits and election campaigns against school boards using similar soft-drink contracts in Dallas, Houston and Boston, said George Washington University law professor John Banzhaf III, who is leading the obesity-litigation efforts similar to ones against tobacco companies.

The changes in the Seattle contract were a starting victory for trial lawyers, Mr. Banzhaf said.

"It's obvious we had a significant impact on the current contract, and it has now become a major issue for school board elections later this fall," said Mr. Banzhaf, who sent a legal notice earlier this month warning members of litigation.

Seattle lawyer Dwight Van Winkle said he may take up the case if he can find appropriate plaintiffs.
It's one thing for Banzhaf and company to raise the propriety of soft drink contracts in the context of a school board election (even an election where they have no vested interest.) It's quite another to use the threat of force to win the argument without democratic debate. That's precisely what happened in Seattle: Rather than wait for an election to persuade the public, the terrorist lawyers went right for the threat of legal action to force an accommodation.

If you need further proof of the Banzhaf Brigade's dishonest motives, consider this: If the school district is forced to defend its actions in court--keeping in mind signing a soft drink contract is not a recognized tort in any U.S. jurisdiction--the enormous costs of such litigation will ultimately be bourne by the school district's financiers, the taxpayers. Thus, Banzhaf is using the threat of judicial action to impose a tax on those communities that disagree with his views on what children should and should not be eating.

And before any trial lawyer sympathizers accuse me of trying to deny anyone their potential day in court, consider the statement above that no actual plaintiff currently exists in Seattle. It is the lawyers that are initiating the threat of action in hopes of obtaining an actual client later when needed. John Banzhaf, of course, has no standing to individually sue anyone in a Washington State court over the Seattle soft drink contract. Thus, he's manipulating the system to expand his personal jurisdiction beyond the express scope of the law. This is precisely the sort of conduct that the professional bars must regulate and stamp out.

Here's a suggestion: Any lawyer that threatens legal action without identifying an actual client should be fined $10,000 for the first offense, and thereafter face loss of their bar license for up to one year for each additional offense. It won't curb all the abuses of terrorist lawyers, but it would be a start, not to mention a signal from the judicial system that they're willing to defend their powers from the abuse of a renegade minority.

Antitrust News: Shifting Agendas

On Thursday I mentioned the efforts of Senate Finance Commitee Chairman Chuck Grassley, Iowa Republican, to invoke the Antitrust Division's intervention in stopping a merger in the pork processing industry. Here now is part of the text of Senator Grassley's letter to Antitrust Division chief Hewitt Pate:
I have very strong reservations about this proposed transaction and the continued trend in concentration in the pork industry. I urge the Antitrust Division to carefully scrutinize this proposal, and consider thoroughly the projected impact on independent producers. This is an issue of extreme importance to a vital economic and social mainstay of my state of Iowa and indeed of our nation - the small, independent producer and family farmer. The Antitrust Division must give mergers and acquisitions in agri-business its foremost attention.

I look forward to hearing from you soon about this issue. So you are aware, I plan to speak with Attorney General Ashcroft about my concerns.
Grassley asks Pate to stop the merger because of the potential social impact on Iowa's small farmers. But this is not a stated objective of the antitrust laws. The Sherman Act, for example, is supposed to prevent "restraints of trade" such as price-fixing. Nowhere in any of the antitrust laws does one find a requirement that company's refrain from impacting "independent" producers and family-owned businesses. Indeed, to state such a goal within the law would render such a statute facially unconstitutional.

In practice, of course, the antitrust laws are often used to take from large companies and give to smaller firms. And that's precisely what Grassley seeks here. But this is not an exercise in law enforcement, but in raw political power.

It's also noteworthy that Grassley claims agribusiness should be the Antitrust Division's "foremost" concern. This demonstrates another key flaw of the antitrust laws—they're unfocused. The Antitrust Division is faced with enforcing a law that, read for plain meaning, effectively bans all acts of commerce in the United States. Lacking the resources or political will to do that, antitrust regulators are left to pick-and-choose targets based on a constantly shifting set of wholly political criteria. Generally the policy preferences of a given Antitrust Division chief will dictate the division's priorities. But that certainly doesn't preclude members of Congress (the controllers of the almighty purse-strings) from trying to get their pet peeves moved to the top of the agenda.

The Courts: Bryant Confesses?

Tonight's "Nightline" featured a panel discussing today's action by Colorado prosecutors charging Kobe Bryant with sexual assault. One panelist, ESPN's Jim Gray, argued that Bryant hasn't been convicted of a crime yet, and that while Bryant did admit today to committing adultery with his alleged victim, Gray said "adultery isn't a crime."

Actually Jim, adultery is a crime in Colorado and most states. Title 18, Section 6-501 of the Colorado Revised Statutes prohibits "[a]ny sexual intercourse by a married person other than with that person's spouse." Of course, the criminal adultery laws have not been enforced for quite some time, but the laws do remain on the books and in force.

Friday, July 18, 2003

Rights and Reason: Senate Bill Blocks Weight-Related Lawsuits

The AP reports on a bill that would put an end to obesity lawsuits:

If too many burgers and fries have left your waistline super-sized, don't expect a sweet pay-off in court, senators said Thursday. A bill would prevent people from suing restaurants and food manufacturers for making them fat.

"I think it's important not to blame poor eating habits on someone else," said Sen. Mitch McConnell, R-Ky., and the sponsor of the bill.

The measure would block lawsuits related to obesity or weight gain, but not suits charging other kinds of injury or fraud. It is similar to one already introduced in the House.

The House held a hearing last month on the relatively new legal trend in which consumers are suing fast food chains like McDonald's and arguing that the food contributed to their obesity.

McConnell, the GOP whip, predicted an uphill battle getting the measure through the Senate.

The Association of Trial Lawyers of America opposes the bill, while the food industry has lobbied for it. Both are big campaign donors.
I figured the trial lawyers would swing for a bill banning stupid lawsuits. And then I snapped out of the alternative universe I was living in.

That there even needs to be a law to check irrationality of the obesity suits is amazing. Anyone, even GW law professor John Banzhaf, ought to be able to grasp that what you put down your gullet has to go somewhere and that you alone bear the responsibility for it.

Stupid News: France Bans the Term 'E-Mail'

Jamey Keaton of the AP reports:

Goodbye "e-mail", the French government says, and hello "courriel" --the term that linguistically sensitive France is now using to refer to electronic mail in official documents.

The Culture Ministry has announced a ban on the use of "e-mail" in all government ministries, documents, publications or Web sites, the latest step to stem an incursion of English words into the French lexicon.
Too bad the French Culture Ministry won't ban "cheese-eating surrender monkeys." The only credible replacement would have to be "the French." This makes the whole "French Fry" renaming fiasco by the Congress look intelligent. Stupid as that was, at least it was in response to a policy disagreement.

What a petty, small place the world can be some days. . .

Antitrust News: Another Surrender

Today comes word from the FTC that yet another physician group--actually an alliance of physicians and hospitals--have settled bogus antitrust charges without putting up a fight. Today's victims are the Maine Health Alliance and the alliance's executive director, William Diggins. The charges are basically the same as in the other physician cases, but here's the FTC summary anyhow:
The Alliance was formed in 1995 by the vast majority of physicians and hospitals in five counties in northeastern Maine to negotiate payor contracts that contained "higher compensation" and more "advantageous" contract terms than the physicians and hospitals could obtain by dealing individually with payors. More than 85% of the physicians on staff at Alliance member hospitals are Alliance members, as are eleven of the sixteen hospitals in the five-county area. The physician and hospital members designated the Alliance as their negotiating agent to contract with payors, and authorized the Alliance to enter into, on their behalf, payor contracts.

Although the Alliance is a nonprofit corporation, and its member hospitals are tax-exempt organizations, a substantial majority of its physician members are for-profit entities. These for-profit physicians play a significant role in the governance of the Alliance and receive pecuniary benefits as a result of their participation. Participating physicians select 11 of the 22 members of the Alliance's Board of Directors and thus exercise substantial authority over the policies and actions of the Alliance. The participating physicians are therefore "members" of the Alliance within the meaning of Section 4 of the FTC Act, which grants the Commission jurisdiction over nonprofit organizations that carry on business for the profit of their members. Because the Alliance engages in substantial activities that confer pecuniary benefits on these for-profit members, its activities engaged in on behalf of the physician and hospital members fall within the Commission's jurisdiction.

Alliance physician and hospital members have refused to contract with payors on an individual basis. Instead, the Alliance's Board of Directors authorized Mr. Diggins to act as a principal negotiating agent with payors on behalf of the collective membership of the Alliance. Mr. Diggins was instrumental in forming the Alliance, coordinating the membership's collective bargaining activity, and negotiating payor contracts on behalf of the collective membership.

As guidance for Mr. Diggins, the Board, in conjunction with its Contracts Committee, compiled written "Contracting Guidelines and Parameters," setting forth price-related and other competitively significant terms that the Alliance required in order to contract with payors. Mr. Diggins reported the details of negotiations with payors to the Board and the Contracts Committee. Based on the recommendations of Mr. Diggins, and the Contracts Committee, the Board decided whether to accept or reject contracts with payors on behalf of the Alliance's physician and hospital members.

The Alliance and Mr. Diggins negotiated higher reimbursement for Alliance physician and hospital members, and more advantageous contract language, than the physicians and hospitals could have achieved through individual contracts with payors. Despite a written Alliance policy allowing members to contract independently of the Alliance, in fact the Alliance and Mr. Diggins encouraged the physician and hospital members to contract only through the Alliance, in order to maintain the Alliance's leverage over payors. Mr. Diggins provided Alliance physician and hospital members with a model letter for them to use to notify payors that they refused to negotiate individually, and that the Alliance would negotiate on their behalf. In response to payors' requests to contract directly with Alliance physician and hospital members, the members directed payors to the Alliance for contracting.

The Alliance's and Mr. Diggins' joint negotiation of fees and other competitively significant terms has not been reasonably related to any efficiency-enhancing integration. Although the Alliance has developed some clinical programs limited primarily to hospital members, none of the Alliance's clinical activities create any significant degree of interdependence among the physician or hospital participants, nor do the activities create sufficiently substantial potential efficiencies.

By orchestrating agreements among Alliance physician members, and hospital members, to deal only on collectively-determined terms, together with refusals to deal with payors that would not meet those terms, respondents have violated Section 5 of the FTC Act.
It's amazing that despite the existence of the FTC's supposedly clear policies on what conduct physicians may not engage in, thousands of doctors have managed to violate the rules across the country, doing so not in backroom conspiracies, but out in the open via contract negotiations. It's even more amazing that these violations of the "law"--which in some cases the FTC claims went on for several years--were never discovered and prosecuted until the current FTC leadership took over in 2001. Indeed, despite the Democrats' affinity for regulation, the Clinton-era FTC was not nearly as obsessed with destroying the financial viability of physicians as Bush-appointed FTC boss Tim Muris is.

Another interesting note: William Diggins was represented by John J. Miles, a partner at Ober Kaler here in Washington. Miles practices exclusively in the field of health care antitrust litigation. Miles was also the defense attorney responsible for Mountain Health Care's self-imposed destruction. In criminal law, an attorney who manages to hand his clients over to the government time-after-time would not have a very good reputation, yet in antitrust precisely the opposite is true. It seems Miles is a respected antitrust lawyer because he can negotiate quick settlements where the government gets everything it wants and the client...well the client saves on the inevitable legal bills defending one's innocence (and rights) would produce.

And it's not like Miles and his brethren have a great incentive to take on the system. After all, if the FTC's unconstitutional actions against physicians ever came to an end, lawyers like Miles wouldn't be able to collect the handsome fees that come with negotiating surrenders.

The Courts: A Tort Reform Idea

Altria, the cigarette manufacturer, is facing bankruptcy because an Illinois trial court forced the company to post a $12 billion bond just so it can appeal a $10 billion tort verdict. High appeal bonds are one tactic employed by trial lawyers and their allies in state legislatures to effectively deny defendants meaningful recourse for fraudulent trial verdicts.

Which leads me to this suggestion: What if plaintiffs' attorneys were required to personally post bond in order to file litigation? Suppose you're putting together a class-action seeking $100 million in damages. If you win, you get the money, but if you lose, you've still forced the defendant to spend millions defending itself. One common tort reform proposal is to adopt the "loser pays" system used in countries such as Britain. That's a good suggestion, but in order to have a true deterrent effect, I think you need to require the plaintiffs' counsel—not necessarily the plaintiffs themselves—to post a bond that would be forfeit if the Court ultimately rules against them. If it's good enough for defendants to secure appeal rights, it's certainly good enough for plaintiffs' attorneys who view the courts not as a protector of individual rights, but as a playground for social science experiments.

The Culture: Blair Comes to D.C.

British Prime Minister Tony Blair addressed Congress yesterday and accepted the Congressional gold medal for his support of the United States. Blair took time during his address to clean-up some lingering "business" between America and Britain:
Mr. Speaker, my thrill on receiving this award was only a little diminished on being told that the first Congressional Gold Medal was awarded to George Washington for what Congress called ``his wise and spirited conduct in getting rid of the British out of Boston.''

On our way down here, Senator Frist was kind enough to show me the fireplace where in 1814 the British had burned the Congress library. I know this is kind of late, but sorry.

Actually, you know, my middle son was studying 18th century history and the American War of Independence and he said to me the other day, you know Lord North, Dad. He was the British Prime Minister who lost us America. So just think, however many mistakes you make, you will never make one that bad.
In a way, the British did America a favor. To replace the lost congressional library, former President Jefferson donated his substantial personal collection, thereby endowing the modern Library of Congress.

Economics: FTC Drinks Up

Lest I'm accused of never saying anything nice about the Federal Trade Commission, Virginia Postrel has a fine New York Times column discussing the Commission's efforts to bust state laws that impair online sales of wine across state lines. The FTC's policy staff has been quite active on the issue of state barriers to online commerce, and much of the FTC's work in this regard should prove valuable towards promoting free-market policies.

Unfortunately, the policy staff's work stands in sharp contrast to the work of the FTC's legal staff—the 120-plus lawyers at the Bureau of Competition—that work daily to ensure a free market will never exist in this country. Maybe Postrel could use her platform as a Times' columnist to spread the word of the FTC's not-so warm-and-fuzzy efforts.

Thursday, July 17, 2003

Fun News: Happy Birthday Skip!

CAC's Skip Oliva celebrates his birthday today. And of course, how does he celebrate--by filing an amicus on the Mountain Healthcare antitrust settlement.

Skip, you are a lion--I'm glad you are on our side!

Antitrust News: Seeking Antitrust Pork

If you wonder why members of Congress don't regularly scrutinize the abuses of antitrust regulators, it's largely because these same members like to use antitrust as a political weapon themselves, as this AP story demonstrates:
Both of Iowa's U.S. senators have asked federal antitrust officials to oppose the sale of Farmland Industries' pork processing division to rival Smithfield Foods.

"Today's (Tuesday's) announcement that Smithfield Foods plans to purchase Farmland Foods is bad news for the future of our nation's independent pork producers and for Iowa," said Sen. Tom Harkin, an Iowa Democrat. "It represents even more economic concentration and vertical integration in an already rapidly consolidating industry."

In a letter sent Tuesday, Sen. Chuck Grassley, an Iowa Republican, asked the antitrust division of the Department of Justice "to carefully scrutinize this proposal and consider the projected impact on independent producers."

Bankrupt Farmland Industries Inc. announced Tuesday that it had agreed to sell its pork unit -- its remaining major business -- to rival Smithfield Foods for $363.5 million. That signaled the end of efforts by the nation's largest agricultural cooperative to rebuild.

With annual sales of about $1.8 billion, Kansas City-based Farmland Foods is the sixth-largest pork producer in the nation. Smithfield Foods is the country's largest pork producer and processor.

"Farmland is a significant buyer of hogs, especially in Iowa and the Midwest," said Harkin, the ranking Democrat on the Senate Agriculture Committee. "With this move, Smithfield is further strengthening its power and leverage over family pork producers."

Grassley, a member of the Judiciary Committee, has sought to have federal regulators more carefully review agribusiness mergers to ensure competition.

"If a Smithfield acquisition of Farmland is allowed, it could shut out the family farmer from fair and open markets. I believe it would have a serious, adverse impact on family farmers and independent producers in Iowa," Grassley said.

Smithfield shares closed Wednesday at $22.86, down 28 cents.
Now if you're the Antitrust Division, do you refuse the "request" of a powerful senator like Chuck Grassley, a man who controls your agency's budget? Even if Grassley's motives are simply to pander to political groups in his state—and that's almost certainly the case—the Justice Department must take the senator seriously. And therein lies the fundamental problem of antitrust: In the end, it's nothing more than a political tool to manipulate marketplace outcomes.

It's also ironic that two senators are lobbying for greater regulation of pork, since what they're proposing is itself "pork" in that they want the government to favor the economic interests of farmers over pork proecssors.

The Courts: Brown to D.C. Circuit

In a welcome bit of news, the White House will nominate California Supreme Court Justice Janet Rogers Brown to the U.S. Court of Appeals for the D.C. Circuit. Justice Brown penned one of the superb dissents last year in Kasky v. Nike, the commercial speech case recently dodged by the U.S. Supreme Court. Brown also has a solid track record of supporting individual rights in her rulings. She strikes me as a conservative outside the Robert Bork-Antonin Scalia mold, which is certainly a good thing. Hopefully Justice Brown will receive a prompt hearing from the Senate Judiciary Committee and a unanimous confirmation.

The Courts: Judge Just Doesn't Give a Damn

Lawyers can be very anal when they want to be, which is most of the time. Judges, however, always get the last laugh:


Pursuant to the modified scheduling order, the parties in this case had until June 25, 2003 to file summary judgment motions. Any electronic document may be e-filed until midnight on the due date. In a scandalous affront to this court’s deadlines, Microsoft did not file its summary judgment motion until 12:04:27 a.m. on June 26, 2003, with some supporting documents trickling in as late as 1:11:15 a.m. I don’t know this personally because I was home sleeping, but that’s what the court’s computer docketing system says, so I’ll accept it as true.

Microsoft’s insouciance so flustered Hyperphrase that nine of its attorneys, namely Mark A. Cameli, Lynn M. Stathas, Andrew W. Earlandson, Raymond P. Niro, Paul K. Vickrey, Raymond P. Niro, Jr., Robert Greenspoon, Matthew G. McAndrews, and William W. Flachsbart, promptly filed a motion to strike the summary judgment motion as untimely. Counsel used bolded italics to make their point, a clear sign of grievous iniquity by one’s foe. True, this court did enter an order on June 20, 2003 ordering the parties not to flyspeck each other, but how could such an order apply to a motion filed almost five minutes late? Microsoft’s temerity was nothing short of a frontal assault on the precept of punctuality so cherished by and vital to this court.

Wounded though this court may be by Microsoft’s four minute and twenty-seven second dereliction of duty, it will transcend the affront and forgive the tardiness. Indeed, to demonstrate the even-handedness of its magnanimity, the court will allow Hyperphrase on some future occasion in this case to e-file a motion four minutes and thirty seconds late, with supporting documents to follow up seventy-two minutes later.

Having spent more than that amount of time on Hyperphrase’s motion, it is now time to move on to the other Gordian problems confronting this court. Plaintiff’s motion to strike is denied.

Entered this 1st day of July, 2003.


Magistrate Judge
Credit to Eugene Volokh for bringing this to my attention.

Antitrust News: Postal Service Must Be More Businesslike, Panel Says

This from Reuters:

The U.S. Postal Service should be overhauled to be more businesslike, and needs to close some facilities and accelerate outsourcing to the private sector, a presidential commission said on Wednesday.

"We believe that the only way this business is going to survive and prosper is if it learns from the commercial business world," said Harry Pearce, a panel co-chairman and chairman of Hughes Electronics Corp., as he released a summary of the group's findings.

The commission was appointed by President Bush last year to examine how the 228-year-old service can further modernize as it faces challenges from electronic mail and package delivery companies.

The bipartisan commission, which includes senior business executives, rejected options for privatization and concluded the postal service should retain its monopoly over collecting and distributing mail to 140 million homes and businesses.

But it said the postal business model, which it said was steeped in bureaucracy and patronage, must become more efficient in everything from setting rates to selling stamps.

The postal service is a company overseen by government that receives federal benefits unavailable to corporate America. For example, it does not pay taxes. The service earned $224 million in the third quarter and is on track to post a profit in 2003. Cost cutting has offset stagnant mail volume.

The commission proposed that the board of governors be replaced by an 11-member corporate-style board of directors.

The panel also sought oversight changes and unprecedented flexibility for management to set postal rates and quickly respond to market changes without political interference.
So the Postal Service should be more businesslike. That will be the day. And aren't monopolies bad for consumers?

I wonder what the commission's take was on USPS v. Flamingo. There, the USPS was being treated just like a business, and the Post Office was none too happy about that.

You can read CAC's amicus to the US Supreme Court on the Flamingo case here.

Wednesday, July 16, 2003

The Courts: Nevada v. Property Rights

Last week the Nevada Supreme Court ordered the Nevada Legislature to ignore the state's constitution and raise taxes in order to fund government-run schools. There's been a budget impasse for some time now over the schools, with the legislature resisting Governor Kenny Guinn's efforts to raise taxes in order to avoid cutting school funds and upsetting the teachers unions (who are the real interested party here, not the students). Guinn asked the Court for a writ compelling the legislature to ignore the Constitution's requirement that a two-thirds vote is necessary to raise taxes.

Eugene Volokh and Rick Henderson have produced excellent posts on this dispute, and I'm especially impressed with Eugene's identification of this case as a matter of property rights v. "education" rights. The Nevada court's ideological error stems largely from this paragraph from their decision:
When a procedural requirement that is general in nature prevents funding for a basic, substantive right, the procedure must yield. Here, the application of the general procedural requirement for a two-thirds majority has prevented the Legislature as a body from performing its obligation to give life to the specific substantive educational rights enunciated in our Constitution.
This is obvious nonsense, since most constitutions and laws are "procedural" requirements designed to protect fundamental individual rights. Government-financed education is not one of these rights, but a social welfare benefit provided by the state at the expense of fundamental property rights. Yet here the Court found that property rights—protected by the two-thirds tax increase rule—is too "general" in nature to withstand the pressure of financing the education system.

The Court could have ordered the legislature to simply cut school funding enough to satisfy current budget resources. But the Court probably figured that would be too hard and unpopular, so they tried to take the easy way out. This may be another example of Sandra Day O'Connor's influence on our judicial system.

All is not lost, however. On Monday, the chief U.S. district judge in Nevada issued a restraining order halting the Nevada Supreme Court's order. This morning, in a procedure I can't recall seeing before, all of the District of Nevada's active judges will hold an en banc hearing via teleconference to review the Nevada Supreme Court's decision.

Volokh and Henderson are squeamish by the thought of using federal constitutional grounds to strike down the Nevada ruling. I have no such qualms. The Nevada Supreme Court acted to deprive Nevada property owners of their substantive right not to be taxed outside the clearly expressed procedure's of the state constitution. To hell with federalist niceties—when a state government violates basic rights, their actions are entitled to no deference from federal authorities who have an independent duty to protect those rights under the federal Constitution. Furthermore, the U.S. Constitution guarantees to every state a republican form of government, a doctrine deliberately breached here by the Nevada court. That confers more than ample authority on the federal courts to remedy this violation.

That said, I do agree with Volokh that there is a political remedy for what happened: boot the Nevada Supreme Court out of office. Nevada provides two such procedures: the legislature can remove a justice for "reasonable cause," a standard far easier to meet than for a regular impeachment; and the voters can submit petitions to force a recall election. Hopefully one of these procedures will be attempted.

Congress: Hospital Hearings

This morning at 11 a.m., the Senate Judiciary Committee is holding a hearing entitled: "Hospital Group Purchasing: Has the Market Become More Open to Competition?” If you're interested in hearing a live webcast of the hearing, you can access the committee's website. If not, come back later and I'll post something if anything interesting comes out at the hearing, though I doubt it will.

Tuesday, July 15, 2003

News of the Off-Beat: Pat Robertson urges 'prayer offensive' against US Supreme Court

This in from AFP:

Prominent US televangelist Pat Robertson launched a "prayer offensive" against the Supreme Court, urging his supporters to pray for the removal of three sitting justices.

"Would you join with me and many others in crying out to our Lord to change the Court?" Robertson asked viewers of his Christian Broadcasting Network.

Robertson and other prominent members of the religious right have condemned the recent Supreme Court ruling, decriminalising gay sex between consenting adults.

They argue that the decision opens the door to bigamy, legalized prostitution, and even incest.

"No culture has ever endured which has turned openly to homosexuality," said Robertson, who described the nine-member Supreme Court as a "non-elected oligarchy" capable of changing the moral fabric of the nation.

But rather than calling for the abolition of the court, Robertson urged his viewers to pray for the retirement of three judges and their replacement by three conservative justices.
Oh, Lordy.

Do you remember when Oral Roberts said if he didn't get 6 million dollars in donations, God was going to call him. Can't we set a sufficiently high enough fundraising goal to get God to call Pat Robertson? Would you join with me and many others in crying out to our Lord on the issue of this annoying man?

Education: Closed Shops

Joanne Jacobs highlights another failure of the government-run education monopoly:
With a few years of experience, an auto mechanic at a dealership can earn $80,000 a year. But high schools are eliminating auto shop classes. The equipment is costly, industrial tech (shop) teachers are hard to find and students' schedules are filled with college-prep classes. Students assume the only way to make a living is to go to college, but many don't have the motivation or the academic skills to earn a college degree. Only about half of students who enroll in college ever earn a degree; most of those who graduate won't be earning $80,000 a year.

Community colleges are picking up the slack. But students often enter with no hands-on skills: They don't know how to change the oil, or how big a 13 mm wrench is. And many can't read well enough to understand the manual or use the diagnostic data on the computer screen. Qualifying for a skilled trade is more demanding than qualifying for most colleges.

Many slacker students, bored and frustrated by college-prep courses, would work much harder on reading and math if they knew what they had to do to get an $80,000-a-year job. But the snobbery of the times tells students they have to sit in a classroom for 16 years -- with or without learning anything -- to earn a living.
There are two factors conspiring against the skilled trades: the teacher unions are dominated by, well, teachers who themselves are the products of many years of (fairly worthless) higher education, contributing to an elitist scorn of tradesmen; and second, schools are often measured by the number of kids they get into college, not the number of kids who find gainful employment. Indeed, the kids who learn a trade and never go to college are likely more successful and financially stable at 25 than the English majors who graduate from the middle of the Ivy League pack.

Antitrust News: Models Unite!

Antitrust class actions always produce some interesting claims. Here's just one example:
NEW YORK (Reuters) - Thousands of models can launch a unified attack on management agencies they say conspired to cheat them by charging inflated commission fees and expenses, a U.S. judge ruled on Tuesday.

U.S. District Judge Harold Baer granted class action status to a complaint against defendants including Elite Model Management and Ford Models Inc. The class is expected to be made up of thousands of models.

The suit, filed in Manhattan federal court, alleges the agencies fixed models' commission rates at 20 percent, twice the 10 percent allowed by state law for employment agencies. The models alleged that the defendants conspired to evade state pricing regulations by calling themselves model management companies.
Here we have an antitrust claim on top of a government price control scheme. This provides further proof that antitrust laws do not serve their stated purpose of protecting the "free" market, since the management agencies are defending an alleged scheme to circumvent government price controls. Certainly such price controls are not "competitive" since they are arbitrarily determined by govermnent authorities outside the marketplace.