Tuesday, June 17, 2003

The Courts: Defining "International Law"

I despise Robert Bork's political philosophy, but he makes a good argument against the proliferation of "international law" in today's Wall Street Journal:
Courts also look to the writings of scholars for evidence of what international law is. Compared with 1789, we now have a plethora, one might say a surfeit, of professors of international law, and they, by and large, support the notion that the law of nations deals with individuals and corporations as well as nations. They also seek aggressively to expand what international law covers, everything from the right to a healthy environment to the right to organize and bargain collectively in all countries. So much for sovereignty.

There could be no more anti-democratic way to make international law than to rest it upon the opinions of professors. That process is not only anti-constitutional and undemocratic, it is class oriented. The professoriat in social matters is well to the left of the American public; the international law they claim exists is not one Congress would define under its constitutional power. Judge Robb, concurring in Tel-Oren, put it well: courts "ought not to serve as debating clubs for professors willing to argue over what is or what is not an accepted violation of international law."

That is not the worst of it. When American courts undertake to decide what is lawful and what is unlawful in foreign countries, they risk interfering with the foreign relations of the U.S. There is certain to be resentment when a foreign nation is told by an American court that actions their courts allow are nevertheless illegal. In many of these cases, of course, there is no possibility that damages will be paid, though there may be when American corporations are held liable under a vague and constantly evolving customary international law. But a judgment that international law has been violated constitutes a propaganda victory for one view of appropriate world-wide social policy. That is a misuse of our courts to award professors and advocacy groups a moral and legal legitimacy that is not rightly theirs.
As leftist groups find their objectives thwarted at the ballot box and in traditional American common law, they are more frequently seeking refuge behind "international law," a term which practically speaking means the socialist policies of European elitists.

Rights & Reason: Resisting Educational Tyranny

The latest battle in the cultural war between the state education monopoly and individualists is taking place in Waltham, Mass., and things may get worse before they get better:
Two homeschooled teen-agers in Waltham, Mass., have consistently refused to take a mandatory assessment test demanded by the local school district, and their parents have backed up the kids' decision – a six-year stance that culminated in an early-morning standoff with government and law-enforcement officials outside their home.

According to a report in the MetroWest Daily News, social workers from the Department of Social Services and police officers confronted the family at 7:45 a.m. Thursday, demanding that George, 15, and Nyssa, 13, complete a standardized test.

As they have done in the past, the children refused to go, even though the government now has legal custody of them.

"There have been threats all along. Most families fall to that bullying by the state and the legal system," dad George Bryant Sr. told the paper. "But this has been a six-year battle between the Waltham Public Schools and our family over who is in control of the education of our children. In the end, the law of this state will protect us."

DSS worker Susan Etscovitz tried to use the fact that the Bryants technically don't have custody of their own children in her plea.

"We have legal custody of the children and we will do with them as we see fit," Etscovitz told the Bryants, according to the Daily News. "They are minors and they do what we tell them to do."

Four police officers were also at the scene and attempted to coax the Bryants into complying with the DSS worker.

One of the law-enforcement officers told the paper: "We will not physically remove the children."

According to the report, the Bryants contend that no government entity has the legal right to force their children to take standardized tests, even though DSS workers have threatened to take their children from them.
There is no other way to say it: The state’s actions here crossed the line from merely abusing power to outright tyranny. Ms. Etscoivitz’s statement makes it perfectly clear the state’s principal interest here is exerting force over the minds of the Bryants and their children without any regard for the objective merit of the state’s pretextual goal. The Bryants are completely right in defying the state’s demands, and they should continue do so by any rational means available (which means I’m not suggesting they precipitate a Waco-like siege.) Indeed, if they voluntarily allowed their children to be coerced by the state into taking these tests, the Bryants themselves would be committing moral treason against their children, and the Bryants appear to understand this.

Mrs. Bryant made a statement that particularly impressed me. She said that her children’s education was their “intellectual property.” That’s an important identification, and one we don’t hear about much. The educational debate in this country, more often than not, treats children as mere pawns or property (as Etscovitz’s statement demonstrates.) Educational policy is directed towards appeasing politicians and teachers unions. Politicians want standardized tests, while unions seek control over as many students as possible to enhance their bargaining power with school districts. Little of this policy has anything to do with teaching children to become rational adults.

Viewed in this light, the Bryants should be applauded for their courageous, principled, and moral stand. The state’s goal here is to harm the education of the Bryants’ children; that is to say, it’s an effort by the government to destroy the educational process these children have learned under, despite their merits or successes. This is not simply a random state action, but a deliberate attack on the principles of individualism and, ultimately, on the mind itself.

The question is how will this situation resolve itself. If the Bryants continue to defy the state’s tyranny, will the state respond with force by removing the children against their will? I know that if I were a police officer caught in the middle, I would not obey such an order. We all remember the horrifying images of Elizan Gonzalez being forcibly taken and shipped back to Cuba. If such a thing were to happen to two American teenagers in the name of standardized testing, I suspect the public’s reaction would be substantially more inflamed.

Rights & Reason: Intellectual Dishonesty at the (Washington) Times

We've all been paying so much attention to the institutional dishonesty at the New York Times, that it appears an outbreak of intellectual dishonesty at the Washington Times, at least on the issue of government-funded prescription drugs. The Times editorial page supports President Bush's effort to create a new entitlement for subsidizing drug costs for most Americans, and in doing so makes an argument which can only be described as bizarre. Compounding this new pro-entitlement mentality was an editorial today attacking the Wall Street Journal, which stands squarely behind capitalism:
We read with interest yesterday's Wall Street Journal editorial on prescription-drug legislation developing on Capitol Hill. From top to bottom, from the theoretical to the practical, Journal editors skewered the Republican direction as bad policy and politics. Their opposition to new entitlements and ever-bigger government is principled — and we agree in large part on their textbook distrust of the welfare state — but the Journal missed the mark on a few aspects of this specific issue. In 2000, George W. Bush campaigned, and in last year's election a majority of Republican House and Senate candidates promised, to deliver a prescription-drug law. A medicine subsidy for seniors is an example of politicians keeping their promises to voters.

It is important to emphasize that Republican support for a prescription-drug entitlement is not a cynical and expensive attempt to buy votes. The new policy would improve the lives of millions of Americans no longer in the workforce whose budgets are squeezed by the rising price of prescriptions
This is a breathtaking position coming from one of the nation's premier conservative newspapers, and may it be an indicator of just how morally and ethically bankrupt modern conservatism has become. Not once in its editorial today did the Times argue why a prescription drug entitlement would be good (or moral) policy—only why it would be good politics. The editorial's concluding paragraph removes any doubt where the Times' interest lay:
Seventy-five percent of voters think prescription drugs for seniors are a good use of taxpayer funds. In a country with a representative form of government, that counts for a lot. However, the political machinations do pay off, with good policy in the short-term and promise for real reform down the road. If Republicans pass a prescription-drug bill and win increased seats in Congress, they will have a more solid base that can be used to reinvent the failing health-care system along more market-oriented lines. That promise alone is worth the price of the current legislation.
Does anyone seriously believe this? Certainly, what principled free-market voter would want to give the Republicans greater political clout when—with the White House and both houses of Congress already in their hands—the GOP committed itself to an expansion of the federal government's role in healthcare that is far more likely lead down the path of Canadian-style socialize medicine than a restoration of the pre-1960s free market in healthcare. The Times is being cynical if they think principled voters are that stupid.

In contrast, yesterday's Wall Street Journal editorial—the one that was too principled for the Times editors—makes simple yet compelling arguments:
Let's start with the amusing irony that the supporters of this giant new prescription drug benefit are many of the same folks who were only recently moaning that a $350 billion tax cut would break the budget. That tax cut will at least help the economy grow. But the new Medicare entitlement is nothing more than a wealth transfer (from younger workers to retirees) estimated to cost $400 billion over 10 years, and everyone knows even that is understated.

The real pig in the Medicare python doesn't hit until the Baby Boomers retire. Social Security and Medicare Trustee Tom Saving told us last week that the "present value" of the Senate [prescription drug] plan—the value of the entire future obligation in today's dollars—is something like two-thirds the size of the current $3.8 trillion in debt held by the public.
The Journal editorial also notes that many employers who sponsor health plans with better prescription drug benefits will drop those benefits once they figure out the government will now pick up the tab. That's why they call it an "entitlement" after all; it's something you can receive without having to earn. And as the Journal correctly states, that makes this issue moral as well as practical:
A universal drug benefit is neither necessary nor morally justifiable. Some 76% of seniors already have some prescription drug coverage. The average Medicare beneficiary spends an affordable $999 a year out of pocket on prescription drugs, and less than %% have out of pocket expenses over $4,000.

The Times, of course, has no answer for these facts, since they're entire argument is political: It's popular with voters, so Bush should do it so he can bolster his re-election, and maybe then we can actually reform the system. But what the Times ignores, from a policy perspective, is how creating any prescription drug entitlement will inevitably lead to government price controls. We saw this after Medicaid and Medicare were created: Without spending caps, beneficiaries tried to milk the government's coffers for all they could. When policymakers figured that out, their response was not to abandon or "reform" the entitlement program, but to shift the blame to service providers (i.e., doctors) by arbitrarily restricting their income. This is why you have doctors leaving the healthcare system in droves. Medicare and Medicaid's reimbursement structure restricts their income by replacing the marketplace with government mandates. And thanks to the antitrust laws, physicians are effectively barred from stopping allegedly private health plans from setting their fee levels too far above the Medicaid-Medicare rates (which the FTC now considers "market price.")

This is the objective reality we face with prescription drugs if we enact even the Senate plan. The Times should be smart enough to know this, but apparently they have so little trust in their Republican friends that they must genuinely believe the GOP cannot retain power without giving seniors additional entitlements. Of course, even that notion has been disproven: We've had five straights Republican House majorities without a prescription drug benefit, and President Bush didn't exactly make this issue the centerpiece of his 2000 campaign. For all the attention it generates, the majority of Americans will not lash out at the Republicans if the current Congress fails to enact prescription drug legislation.

Tony Blankley, the Times' editorial page editor, needs to seriously reconsider his position on this issue. For two days straight now, the Times has run intellectually dishonest editorials that could not withstand even a minimal amount of rational scrutiny. Blankley needs to decide whether his paper's credibility is more important than his influence with Karl Rove and other GOP pragmatists.

Monday, June 16, 2003

Rights & Reason: Group Self-Respect?

American conservatives are up in arms over a recent ruling by the Ontario Court of Appeal which redefined the common law concept of marraige to, in essence, require the legal recognition of gay unions. I won't comment on the merits of this decision right now, since I've not had a chance to review the case and the relevant Canadian constitutional documents. But on first glance, I noticed a passage cited from a Canadian Supreme Court opinion which merit some general comments:
Human dignity means that an individual or group feels self-respect and self-worth. It is concerned with physical and psychological integrity and empowerment. Human dignity is harmed by unfair treatment premised upon personal traits or circumstances which do not relate to individual needs, capacities, or merits. It is enhanced by laws which are sensitive to the needs, capacities, and merits of different individuals, taking into account the context underlying their differences. Human dignity is harmed when individuals and groups are marginalized, ignored, or devalued, and is enhanced when laws recognize the full place of all individuals and groups within Canadian society.
The phrase "individual or group" makes this passage highly suspect. A group cannot, rationally speaking, enjoy "self-respect and self-worth," since those are concepts exclusive to, well, the "self" or individual. One cannot claim self-respect based solely on the actions or thoughts of a group. This is how one comes to believe in anti-concepts like "diversity." Objective law is concerned only with individual rights, and permits groups to form as individuals dictate, taking into account whatever factors they value. Some groups are based on ideas (i.e. Objectivists, Communists, et al.) while others are based on more superficial characteristics (i.e. race). It is not the state's place to promote group self-respect or self-esteem, just as it is not the state's place to prevent every act which may harm "human dignity."

Of course, when you accept the state as being a social engineer, as most Canadians do, nonsense like the Supreme Court passage cited above make perfect sense. But far from promoting individual human rights, this kind of muddled, almost non-conceptual thinking accomplishes precisely the opposite. As the Court appears to see it, government must enforce egalitarian values upon all individuals and "groups," lest anyone in society think they're better than anyone else, even on merit or capacity.

Antitrust News: The PeopleSoft Rorschach Test

PeopleSoft, a software company recently targeted for a possible hostile takeover by Oracle, took out a full page advertisement in today's Wall Street Journal to explain that their Board rejected Oracle's offer, among other reasons, because such a merger might not pass antitrust merger. The operative word is "might," as there's hardly a consensus as to whether PeopleSoft-Oracle pose all that grave a threat to "competition":
According to academics and antitrust attorneys, Oracle's $5.1 billion tender offer for PeopleSoft could indeed trigger a lengthy review in the U.S. and Europe, as PeopleSoft's board argued Thursday morning when it rejected the $16- a-share bid.

But these experts found little in the prospective combination that would lead regulators to block the combination of the two software makers.

Antitrust examiners look at whether a merger will bring higher prices to customers or restrict choice and the ability of new competitors to enter a business. Many experts agree the extensive news coverage of Oracle's tender offer will leave regulators with little choice but to conduct a thorough inspection.

"In some sense, (PeopleSoft) might be making a self-fulfilling prophesy," says Andy Klevorn, a partner and antitrust attorney at Eimer Stahl Klevorn & Stolberg, referring to company's claim of a lengthy process. Regulators "will take a good look at this given the level of publicity."
In other words, like all antitrust cases, everything is subject to the whim of federal regulators. Since there's no objective way to determine whether a merger is "anticompetitive," you're essentially gambling when you submit your merger review paperwork to the FTC and DOJ. That alone should tell you why antitrust laws need to be abolished immediately.

Antitrust News: And Then There Was One...

Microsoft had a busy day. First they settled state antitrust claims in North Carolina, then they managed to get West Virginia to drop their appeal of the federal antitrust settlement:
West Virginia's attorney general has agreed a settlement that would end his appeal of the landmark Microsoft Corp. MSFT.O antitrust settlement, leaving Massachusetts as the final hold-out pushing for stricter sanctions, the software giant said on Monday.
West Virginia Attorney General Darrell McGraw agreed to drop out of the appeal as part of a broad agreement that would also settle suits filed under state laws by state authorities and class action attorneys in West Virginia, Microsoft said.

Massachusetts and West Virginia had asked a federal appeals court to strike down the settlement deal and impose more stringent sanctions against Microsoft.

Last year, a lower court judge approved the settlement deal between Microsoft, the U.S. Justice Department and other states that had joined the case.

Sunday, June 15, 2003

CAC News: It's All About Price

The Rule of Reason is listed on Blogshares at $47.36 a share, at least as of today. We're down from our peak price of $59.40 on June 10, but I'd still say we're not doing that bad.

Rights & Reason: The Star-Chamber Mentality

John Samples of Cato has an excellent column in today's Washington Times on the subject of administrative agency abuse:
The Star Chamber Court of England stands as a symbol of arbitrary government. It operated outside the normal processes that guarded the liberty of an English subject even under the monarchy. Eschewing trial by jury, the Star Chamber arbitrarily imposed punishments like imprisonment, fines, the pillory, whipping, branding and mutilation. Parliament closed the infamous institution in 1641 but the memory of its misdeeds should never die.

In 1983, the chairman of the ABA's Administrative Law Section in congressional testimony likened the Federal Election Commission to the Star Chamber Court. The ensuing 20 years have shown the accuracy of that depiction.

The FEC oversees the regulation of American elections. No task could be more central or potentially more dangerous for a nation dedicated to self-government and the rule of law. If abused, the power of the FEC could be used to punish Americans who seek to participate in politics. Critics of the agency will scoff and say the FEC is a "toothless tiger" that is too gentle on those charged with violating election laws. If only that were true.

Defendants before the FEC have few due-process safeguards. When a complaint comes before the FEC, its general counsel makes the case against the alleged lawbreaker who has no right to appear before the commission. The general counsel gives the commission a report that summarizes and criticizes the legal arguments of the accused and answers any questions from the commissioners. This report is not given to the accused even though it may contain new arguments or information. The accused also has no right to see the documents that were the basis of the general counsel's case. The FEC does not have to reveal the witnesses against a defendant, or allow that defendant to attend witness depositions, much less provide an opportunity for cross-examination.

The FEC has long said that the normal rights accorded Americans should not apply at its agency because if an enforcement action were taken to federal court, the normal rule of law standards would apply. That is strange reasoning indeed. An enforcement agency whose work implicates vital rights should be free to ignore the rule of law during a protracted investigation because a court might later honor the rights of a citizen? This justification for exempting the FEC from the rule of law suggests the agency is arrogantly out of control.
Administrative agencies that combine regulatory and judicial functions—the FEC, FTC, and FCC, to name a few—are inherently unconstitutional. Not only do such agencies violate the Constitution's separation of powers by, in essence, combining the executive, legislative, and judicial powers of government, but as Samples eloquently describes, the very nature of agency proceedings compels regulators to ignore due process rights. No agency could function if it had to actually adhere to the standards of the independent judiciary.

The political culture has obviously become accustomed to this unconstitutional form of government-by-Star Chambers. What's more appalling is how the so-called academics—like the beloved Judge Richard Posner—have bought into this. Pragmatists like Posner disfavor reducing the power of agencies on the grounds that it would simply increase the work of the courts, and that agencies composed of "experts" are far better suited toward regulatory matters in the first place. This philosophy is rampant within the federal judiciary, most of which (with some notable exceptions) defers to agency judgments as infallible despite evidence to the contrary. For all the talk of judicial activism on the bench, Americans should really be debating the issue of judicial laziness—judges who put the interests of regulators over the constitutional principle of individual rights.

Saturday, June 14, 2003

Antitrust News: Black Friday, Part II

The Senate confirmed R. Hewitt Pate as the new assistant attorney general for antitrust yesterday by a 77-0 vote. Pate had been the acting head of the Antitrust Division, and there was unfortunately never any serious scrutiny by the Senate of Pate's nomination.

As Pate was being confirmed, he announced the DOJ's latest antitrust attack, this time on a private trade association:
The Department of Justice today reached a settlement with the National Council on Problem Gambling, Inc. (NCPG) that will free NCPG state affiliates to sell problem gambling products or services outside of their home states.

The Department filed a civil antitrust complaint in the U.S. District Court for the District of Columbia alleging that the NCPG violated Section 1 of the Sherman Act by facilitating an unlawful territorial allocation to prevent its state affiliates from selling problem gambling products or services outside of their home states. At the same time, the Department filed a consent decree that, if approved by the court, would resolve the lawsuit.

"Consumers—the governmental and individual entities—purchasing problem gambling services, as well as those who use these services, will benefit from the competition that this decree will restore," said R. Hewitt Pate, Acting Assistant Attorney General in charge of the Antitrust Division.

The NCPG, a national trade association whose membership includes 34 state affiliates, assists compulsive gamblers and their families through education, advocacy, information and referrals to self-help groups and lobbies Congress for funding of problem gambling programs. The NCPG's board of directors is controlled by the state affiliates, which as a group have a majority of the seats. The NCPG does not create the services offered by its affiliates, but rather each of the NCPG state affiliates independently creates and markets problem gambling services, such as training and certification programs workshops and telephone help-lines.

The Department noted that while many associations have legitimate, pro-competitive territorial allocations, in this case, the NCPG was not designing a distribution system to enhance economic efficiency.

According to the Department's complaint, since 1995, the NCPG facilitated a territorial allocation agreement on behalf of its state affiliates to prevent problem gambling service providers from crossing state lines to compete. The Complaint alleges that problem gambling service providers were threatened with sanctions or loss of their NCPG membership for bidding outside of their territory. As a result, competition among the state affiliates was curtailed, and consumers were deprived of the benefits of free and open competition.
Nothing in the Sherman Act requires a private association to "enhance economic efficiency." That's simply a DOJ policy mandate which permits government lawyers to second-guess private business decisions. NCPG enjoyed no cartel or political power—i.e. the power to use force—to compel acceptance of its policies. Like all associations, members are presumed to act together for their mutual self-benefit. If any state affiliate felt their interests weren't being served, they presumably were free to leave. Likewise, the association was free not to associate with individuals not amenable to their policies.

Frankly, I'm getting tired of repeating these arguments, but I'll continue to do so until the government gets it right. Unfortunately the members of the U.S. Senate are under the illusion that capitalism can't exist without antitrust. It makes you wonder how the Founding Fathers drove the English tyrants out. After all, America's revolutionary leaders didn't enjoy the enlightened wisdom of antitrust lawyers to guide them.

Antitrust News: Black Friday

Friday the 13th proved an unlucky today for opponents of antitrust:

First we have news that the seven-year antitrust extortion against the music industry came crashing to an end as a federal judge approved a multi-million dollar class action settlement:
A federal judge approved a settlement agreement Friday in a music antitrust lawsuit that will result in more than 3.5 million consumers receiving nearly $13 each.

Judge D. Brock Hornby issued a 51-page ruling in the case that began in 1996 when attorneys general across the country began investigating whether distributors and retailers had conspired to inflate CD prices.

"This settlement will put cash in the hands of millions of consumers and music CDs in libraries and schools throughout the country, and will ensure that the challenged distributor/retailer practices will not resume," Hornby wrote.

The ruling, however, does not stipulate exactly how much consumers will receive or when the checks will be distributed. More than 3.5 million consumers filed claims, now estimated at $12.63 each.

Hornby asked lawyers to present him with a report by the end of the month on how much it will cost to distribute the checks and how much each check will be.

He also deferred ruling on a plan on how millions of CDs will be distributed to the schools and libraries.

The lawsuit, signed by the attorneys general of 43 states and territories and consolidated in Portland in October 2000, accused major record labels and large music retailers facing competition from discounters like Target and Wal-Mart of conspiring to set minimum music prices.

The defendants - Sony Music Entertainment, EMI Music Distribution, Warner-Elektra-Atlantic Corp., Universal Music Group and Bertelsmann Music Group, and retailers Tower Records, Musicland Stores and Transworld Entertainment - deny any wrongdoing. Attorneys representing the companies declined to testify in court.

Of the total settlement, $75.7 million would be distributed in the form of 5.6 million music CDs sent to libraries and schools throughout the nation.

The proposed cash settlement in the case totals $67.3 million, with roughly $44 million to be distributed to the public. The remaining cash will go toward distribution costs and legal fees.
With all the recent antitrust settlement money going towards schools, one wonders if antitrust isn't simply some elaborate scheme cooked up by the teacher unions.

Second, the vitamin wars took a nasty turn, as a jury in Washington yesterday awarded $147 million in damages against a number of producers of B-4:
The 11-member jury ruled in favor of plaintiffs who accused Mitsui and a subsidiary, along with two smaller companies, of taking part in a broad cartel that inflated the price of vitamin B-4 between 1988 and 1998, a spokeswoman for the presiding judge said.

Mitsui sells vitamin B-4 and owns an Ohio-based subsidiary called Bioproducts that manufactures the supplement used in animal and pet feeds, among other things.

The defendants will also be responsible for expenses and attorneys fees.

Mitsui has denied it had any role in the vitamin conspiracy and refused to be part of a billion-dollar, industry settlement of class-action charges against vitamin manufacturers in 1999.

Mitsui's attorney, Sutton Keany, said he will ask the judge to set aside the verdict based on the argument that the case never should have gone before a jury because it was too complex and the evidence was insufficient.
Now, while I'm obviously sympathetic to Mitsui on the merits, arguing this shouldn't have gone before the jury is a cop-out. True, many civil juries act irrationally, but arguing that the case was too "complex" for them is patronizing. Antitrust laws aren't complex, just recklessly and unconstitutionally vague. A rational juror would have seen that and vindicated Mitsui appropriately. That the jury chose to award the plaintiffs damages they were not legally or morally entitled to is simply a reflection of our corrupt legal culture, not the intellectual capacity of the jurors.

Finally, the U.S. Court of Appeals for the Sixth Circuit yesterday affirmed a summary judgment in an antitrust proceeding against various drug manufacturers over a non-compete agreement between the two companies. District Judge Louis Oberdorfer, sitting by designation and writing for the Sixth Circuit, states the case as follows:
This antitrust case arises out of an agreement entered into by the defendants, Hoescht Marion Roussel, Inc., the manufacturer of the prescription drug Cardizem CD, and Andrx Pharmaceuticals, Inc., then a potential manufacturer of a generic version of that drug. The agreement provided, in essence, that Andrx, in exchange for quarterly payments of $10 million, would refrain from marketing its generic version of Cardizem CD even after it had received FDA approval. The plaintiffs are direct and indirect purchasers of Cardizem CD who filed complaints challenging the Agreement as a violation of federal and state antitrust laws. After denying the defendants' motions to dismiss, and granting the plaintiffs' motions for partial summary judgment, the district court certified [the following question] for interlocutory appeal:
* * *
In determining whether Plaintiffs' motions for partial judgment were properly granted, whether the Defendants' September 24, 1997 Agreement constitutes a restraint of trade that is illegal per se under section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, and under the corresponding state antitrust laws at issue in this litigation.

[Answer]: Yes. The Agreement whereby HMR paid Andrx $40 million per year not to enter the United States market for Cardizem CD and its generic equivalents is a horizontal market allocation agreement and, as such, is per se illegal under the Sherman Act and under the corresponding state antitrust laws. Accordingly, the district court properly granted summary judgment for the plaintiffs on the issue of whether the Agreement was per se illegal.
It's a testament to just how little the judicial culture cares about individual rights today that a company could be found in violation of the law without a full trial on the merits. I understand why summary judgment is used in some circumstances, but here the company was entitled to at least present a defense at trial. But such is the power of the antitrust laws, where judges and lawyers are permitted to second-guess business decisions without the niceties of due process. Granted, due process would have mattered little in the end, despite the fact Andrx had every right to enter into a voluntary agreement with a competitor.

If you read the caption of the Sixth Circuit opinion, you'll see numerous state attorneys general and interests groups as plaintiffs or supporting amici. Like most antitrust cases, Andrx was taregeted for purely political reasons—people wanted the drugs Andrx and HMR rightfully owned, and thus any action to deny the people their entitlement must be an antitrust violation.

Friday, June 13, 2003

The Courts: Pragmatism Run Amok

Yale law professor Jack Balkin has endorsed Seventh Circuit Judge Richard Posner as a possible successor to Chief Justice William Rehnquist (who, as of this moment at least, isn't retiring). Balkin makes a superficially compelling case:
For those of you who are unfamiliar with contemporary legal scholarship, Posner, who joined the 7th circuit in the early 1980's, is one of the most important legal scholars of his generation, and has written an endless supply of articles and books on virtually every legal subject imaginable, all the while continuing to produce a steady stream of extremely well written appellate opinions, which have made him perhaps the most influential lower court judge living today. He is a man of supreme intelligence, boundless energy and enormous learning. It is impossible for me to list the number of contributions he has made to legal scholarship. The quality of his accomplishments is such that he would grace the Court, and not the other way around. It would be fitting too, for him to be able to finally take a seat on the same court as his acknowledged idol and role model, Oliver Wendell Holmes, Jr.

I don't dispute any of this. Posner is indeed a formidable mind and extremely influential, both with other judges and the overall community. But there's one big problem: Posner's intellectualism is a mere cover for his anti-individual rights ideology. At his core, Posner believes the principal mission of government is not to protect individual rights, but to balance the whims and desires of competing interest groups. He is a pragmatist in the purest (and least flattering) sense of the term. It's not that many of his rulings aren't good, it's just that he often employs an unsound intellectual approach to reach his result.

Of course, I could make the same criticism about dozens, if not hundreds, of federal judges. And therein lies much of the problem with the debate over who to put on the Supreme Court. Seven of the current nine justices are themselves former court of appeals judges like Posner. Intermediate appellate judges are not always the greatest legal minds, and that makes them more susceptible to the hard-core pragmatism of a Richard Posner. Look at the last four Supreme Court justices appointed: David Souter, Clarence Thomas, Stephen Breyer, and Ruth Bader Ginsburg. Three of these justices form the core of the Court's current pragmatist elite, while the fourth, Clarence Thomas, was appointed principally because of his race, and although he's emerged as a fine justice overall, he places some scary limits on the protection of individual rights, such as last Term's case where Thomas opined an opinion essentially permitting unlimited drug testing of students in government schools. All four, of course, were also intermediate appellate judges before being promoted.

One of the criticisms I've had of the makeup of agencies like the Federal Trade Commission is that the membership is monopolized by a self-appointed elite from within the legal community. A similar criticism may be justified of the Supreme Court. Appellate judges are not inclined towards issuing principle-based decisions; instead, they seek pragmatic remedies limited to isolated facts of the case. What's needed to lead the Court in the post-Rehnquist age is not some cloistered academic or pragmatist appellate judge, but an individual with both solid legal experience and an understanding of how principles operate in the real world, by which I mean the economic marketplace. Especially given the law's increasing hostility towards individual rights in the economic sphere, the next chief justice in particular must possess a solid working knowledge of the business world and how it needs to interact with the law.

Several months ago, I half-jokingly suggested the next chief justice should be Paul Tagliabue, the commissioner of the National Football League. Before being elected to his present post in 1989, Tagliabue was the NFL's chief counsel on antitrust and other matters. He was among the chief lawyers who defended the league from a number of unfounded antitrust actions in the 1980s. Now, I have no idea if Tagliabue would want the job, or even if his judicial ideology is fully compatible with an individual rights theory of government. What I am suggesting, however, is that the White House needs to think outside the box for its next Supreme Court appoinment, and consider the ideological consequences beyond mere short-term political strategy. Nominating someone like Tagliabue—a lawyer who became a successful CEO in a hostile legal climate—would serve as a major shock to the self-appointed appellate elite who believe only they are capable of telling the rest of us what the law should be.

Another reason to back Chief Justice Tagliabue: The Supreme Court in recent years has become more fractured and divided, at times unable to produce a unified opinion in key cases. Given Tagliabue's track record getting 32 NFL owners to work together—no small feat, given they're all wealthy individuals with competing agendas—I would think getting eight Supreme Court colleagues to work together better would be a walk in the park.

Antitrust News: The Credit Wars Continue

The downside of settling a major antitrust lawsuit without going to trial? Others will quickly follow (and file) suit:
Best Buy Co. is suing Visa and Mastercard for allegedly violating antitrust and unfair business practices laws regarding plastic card payments.

Best Buy contends Visa and MasterCard's rules unfairly force it to accept their check cards and prepaid cards if it also chooses to accept their credit cards. The company claims that system forces it to pay high prices for taking check and prepaid cards and harms competition.

Visa and MasterCard have agreed to pay $3 billion to thousands of retailers to settle a 1996 lawsuit that accused the credit card companies of abusing their market power in charging high merchant fees. But Best Buy and a handful of other retailers opted out of that class-action lawsuit to pursue their own claims.
The Visa-Master Card cases is a textbook example of the flaw in antitrust thinking. Prior to the rise of Visa and Master Card, there was no such thing as nationally-accepted credit cards. Credit itself was originally a concept where individual store owners would allow customers to purchase goods now and pay later. Department stores became the initial issuer of plastic credit cards in the mid-20th century. Visa and Master Card came along later as an alliance of banks that formed a national network to process credit orders. Individual banks issue the cards, while Visa and Master Card maintain the infrastructure necessary to ensure compatibility from merchant-to-merchant.

Without Visa and Master Card—and their allegedly "monopolistic" fee practices—many of today's large retailers would not exist. Imagine running Wal-Mart, a lead plaintiff in the class-action settlement, without any bank-financed credit cards. The stores may complain about high credit-processing fees, but the price they would pay without Visa and Master Card are far higher, both in terms of sales and administration.

The problem however, as it always seems to be in antitrust, is that success breeds a sense of entitlement among the consumer base. Because Visa and Master Card have created incredibly effective networks, the retailers now seem to view credit card processing as a form of public utility—something that they're entitled to use regardless of ability or desire to pay. The Justice Department, in continuing their own antitrust case against Visa and Master Card, wholeheartedly subscribe to this theory as well. The potential fear, then, is that government regulators will seek to increase their direct control over credit card processing to the point where it does become a quasi-public utility, a la the telephone companies.

I'm not sure Visa and Master Card have quite figured that out yet. They appear to be writing off these antitrust suits as a cost of doing business, a common attitude among large corporations. But at some point they may come to understand their survival is at stake. Hopefully that realization won't come too late.

Thursday, June 12, 2003

Rights & Reason: Getting it Right

Mike Walters, writing in the Texas A&M University student newspaper, demolishes the moral foundation of the Telecommunications Act of 1996, the law which forces the local Bell companies to lease their infrastructure to competitors:
The Telecommunications Act of 1996 is a more subtle type of antitrust law, which claims to promote competition and eliminate the possibility of an emerging monopoly through government intervention. A common misconception is that the government has to protect its citizens from big business through the prevention of monopolies. This is completely unnecessary in a capitalist economy. Any company that manages to drive away competition cannot set prices as high as it likes. Were a company foolish enough to raise prices excessively, a free society allows for the emergence of new competition that is encouraged to charge a fair price, meeting immediate success by providing a cheaper alternative to the abusive monopoly.

Even if such a built-in safeguard did not exist, one must ask about the cost of enacting anti-monopoly legislation. Would it be moral to let the government intervene on a situation in fear that a company that has sole reign in a market will act oppressively? In his essay, "Antitrust," Alan Greenspan writes, "The effective purpose, the hidden intent, and the actual practice of the antitrust laws in the United States have led to the condemnation of the productive and efficient members of our society because they are productive and efficient."
Greenspan, of course, wrote those words more than 30 years ago, and he's long since exchanged genuine free market principles for the power of the Federal Reserve Board. In any case, Walters gets it exactly right. He not only identifies the practical failures of antitrust, but its moral ones as well:
America boasts the fact that it is a country in which its citizens are free to work hard to achieve their goals, dreams and happiness. Is there some sort of "fine print" on the Declaration of Independence that says the pursuit of liberty and happiness exists for everybody but a successful businesses? Instead, it says only a few lines afterward "That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it."

Evil is not to be tolerated in a just society, and if our government allows economic success to be a punishable offense, it is the public's privilege and obligation to alter the government by pushing for the abolishment of such legislation.
The most difficult aspect of education people about the antitrust laws is getting them to understand that the core supporters of antitrust—regulators, lawyers, academics, et al.—are not simply misguided individuals, but proponents of an evil, anti-human philosophy that will ultimately reinstitute feudal serfdom in this country. Nice to see some folks, like Mr. Walters, are still able to recognize their enemies for what they are.

Rights & Reason: Persecuting Martha

Corey Smith, a lawyer at the Justice Department's tax division, penned a remarkable letter to the Washington Times, which appears in today's edition. In his letter, Smith, apparently acting on his own accord, manages to confirm several suspicious many of us have had about the Martha Stewart case. This was not his intent, as his letter clearly is meant to rally support for the prosecution and challenge its critics.

Smith asserts that Stewart was not guilty of insider trading, but of lying to investigators. Nothing insidious about that statement alone. But what Smith says next proves highly troubling:
After weathering the 1998 Clinton-Lewinsky debacle, where it was proven beyond any doubt that our country's chief law enforcement official, President Clinton, lied repeatedly under oath, I do not think we should tolerate lying and obstruction of justice by those in the public eye. What better way to mend the wounds of 1998 by instituting a zero tolerance policy for obstruction of justice by public figures?
There are two implications of this statement. First, Smith essentially refutes his own colleague—the U.S. attorney prosecuting Stewart—who said this wasn't about who Stewart was, but what she did. Smith, in contrast, says Martha was rightly targeted for special treatment, i.e. "zero tolerance", because she is a public figure. The second implication is that the DOJ may be targeting Martha because she's a Democrat, and Republican DOJ officials may be extracting a measure of revenge aganist a high-profile Democratic Party donor like Stewart. Granted, I'm inferring quite a bit, but Smith opened the door.

Smith also makes an interesting admission. He says: "[i]nsider trading is a complicated area of criminal law, and it is not always clear who can be charged with it." That's a heck of a thing to say if you represent the Justice Department, which is trying to enforce this law. Smith's concluding paragraph, however, makes it clear that he thinks non-objectivity is no barrier to successful law enforcement:
Our system of justice is largely a voluntary one. Investigators and prosecutors depend on witness compunction, or fear, to tell the truth, especially under oath. The resources do not exist to punish everyone who intentionally misleads every criminal investigator. If a healthy respect for the truth does not permeate our society, the administration of justice becomes impossible. Setting an example through the use of a public persona such as Martha Stewart is a good idea. Her prevarications should be punished, no matter how innocuous the underlying crime.
Once agani, Smith all but says Martha Stewart was targeted for political reasons. "Setting an example" is what political tyrants do to their opponents; it is not the official policy of a government charged with protecting individual rights. Obviously the DOJ has limited resources and sometimes must prioritize certain investigations and cases. But then why is Martha Stewart such a priority? If her underlying offense was "innocous," and there's no direct evidence her actions violated the individual rights of others, then why spend the money to try this case, especially given the fact Stewart is willing to fight the DOJ all the way?

Oh, right. This isn't about Martha Stewart. It's about the nation atoning for Bill Clinton. I guess putting Martha Stewart in jail will heal the nation's political wounds.

The Culture: Conceding Premises

Richard Rahn of Cato is a fine columnist, but he slipped up in an otherwise fine op-ed this morning on European efforts to eliminate "tax competition":
Most people understand that when businessmen get together to limit competition, the public interest is rarely served, and the same is true of government bureaucrats. EU officials convinced their bureaucratic lackeys at the Organization for Economic Cooperation and Development (OECD) to develop the concept of "harmful tax competition" to justify trying to force all of the world's countries to jack up their tax rates to French-like levels.
Um, Richard, there is a difference. Private businessmen, in general, cannot force individuals to purchase their products and services as a matter of law. Furthermore, a business' products are its private property until a buyer voluntarily negotiates for their purchase. Governments do not negotiate—they simply confiscate.

Wednesday, June 11, 2003

Antitrust News: Nestle Shakedown Nears Completion

FTC staff attorneys have apparently reached a final agreement with Nestle over the company's acquisition of Dreyer's ice cream. I first discussed this case on March 5, just after the FTC's five commissioners voted to block the deal unless concessions were made. Those concessions now appear to include divesting several ice cream brands to CoolBrands International, a Canadian ice cream producer, and several distribution assets.

Obviously the FTC's actions here were outrageous. FTC staff invented an artificial market—"superpremium ice cream"—as a pretext for fulfilling FTC Chairman Tim Muris' existing vendetta against Nestle, which he simply thinks is too big and successful a company. But a share of the blame must also be assigned to CoolBrands, which is playing the part of a war profiteer here. CoolBrands is acquiring a number of product lines it did not earn in the market, but rather received as a gift from government regulators. How the FTC can claim this is "protecting the free market" is beyond my comprehension.

FTC News: Oversight Day

The House Commerce Committee is holding an FTC oversight hearing today entitled "positioning the Commission for the twenty-first century." If that's the committee's goal, perhaps we could start by requiring the FTC to abandon its 19th-century German philosophy and try considering some pro-capitalist theories for once. Then there's the option of recognizing the FTC is an unnecessary and destructive entity, and abolishing the thing altogether.

On a more contextual note, four of the five FTC commissioners are testifying today. The fifth, Sheila Foster Anthony (sister of the late Vince Foster) is presumably absent because her term expired last September, although she continues to serve until President Bush nominates her replacement. Since the FTC is required to have at least two members from each party, and Anthony is a Democratic appointment, the White House is supposed to consult with Senate Minority Leader Tom Daschle on the new commissioner.

Daschle did his job, sort of. Last October, he recommended Bush name Pamela Jones Harbour, a career antitrust lawyer (big shock), to succeed Anthony. More than eight months later, there is still no word from the White House on whether they'll nominate Harbour or pick someone else. Add to that there's a second FTC vacancy looming this fall. Perhaps the administration will actually consider putting someone other than an antitrust lawyer in one or both positions. After all, if the FTC is regulating business, shouldn't at least one businessman be on the Commission? Why should antitrust lawyers enjoy a, ahem, monopoly on FTC positions.

The Culture: Educational Monopolists Rally

If the FTC is looking for something useful to do with its antitrust machinery, perhaps they could consider taking action against David Imig, president of the American Association of Colleges of Teachers of Education, who deliberately sabotaged a government program designed to break his group's stranglehold on teacher certification:
The head of a national teacher-college association circulated a copy of a confidential teacher-certification exam, undermining a Bush administration initiative to certify professionals without education degrees as teachers.

Education leaders said David G. Imig, president of the American Association of Colleges of Teacher Education, distributed the exam at a March 17 meeting hosted by the Carnegie Foundation for the Advancement of Teaching in Palo Alto, Calif.

The exam was being confidentially field-tested for the American Board for Certification of Teacher Excellence, also known simply as the American Board.

Mr. Imig declined to tell The Times how he obtained the exam.

Suzanne M. Wilson, a Carnegie senior scholar and education professor at Michigan State University who attended the meeting, said Mr. Imig circulated the exam to rally criticism.

"It wasn't good. ... The test for [the American Board] had running through its bones the ideology of traditionalists ... the framework of direct instruction," she said.
AACTE, you see, supports only "progressive" education methods, the same methods that have failed for more than 30 years to educate an increasingly larger number of government-school students. Imig and his colleagues oppose education based on rational methods, and the only way such nonsense can continue to be the norm is if they prevent any genuine competition from taking hold. Hence Imig's decision to sabotage the alternative-certification test.

This was not a cost-free action either:
Mr. Imig's use of the stolen American Board field-test, developed by ACT Inc. of Iowa City, forced the American Board to scuttle the test and sever its relationship with the ACT, which lost $1.2 million because the test was compromised.
Unfortunately, ACT will not pursue legal action against Imig, nor will the other groups and agencies injured take any action. That's simply an outrage. This nation will use its full political force to persecute Martha Stewart and Microsoft, but it won't lift a finger against a group of thugs who seek to sabotage even small steps towards restoring the free market for education and saving the nation's children from the cognitive death that awaits them in government schools.

The Culture: Monopsonies against Monopoly

There are two major unions representing actors and other media artists: the Screen Actors Guild and the American Federation of Television and Radio Artists. For years, there's been a movement to merge the two unions together, a cause which once again has picked up steam. Nothing wrong with that, certainly. If two voluntary groups decide it's in their self-interest to join forces, then we should wish them the best of luck.

Of course, the reason SAG and AFTRA are looking to merge at this time is interesting:
The Screen Actors Guild and the American Federation of Television and Radio Artists -- which are pushing to consolidate -- issued a joint statement using the FCC action as solid evidence that their unions need to merge for self-protection.

"Today's ruling by the FCC makes the consolidation of SAG and AFTRA even more urgent and necessary," Melissa Gilbert, SAG's national president, and John Connolly, her counterpart at AFTRA, said in their joint release. "The FCC has voted 'yes' to giving media companies even more power. Now, actors, broadcasters and recording artists must respond to this action by voting 'YES' for new power of our own. We must approve consolidation so that we can match strength with strength.

"By joining together, our members will have a stronger, more effective union with the clout to fight for more jobs and higher wages," Gilbert and Connolly stressed. "That's why it's no surprise the media conglomerates don't want us to consolidate. Our members know employers will not look out for our best interests, and the employer agenda should not be a factor in deciding our future."
SAG and AFTRA vigorously opposed the FCC's recent reregulation vote, which is interesting considering their own merger proposal. Gilbert and Connolly said the FCC was "giving media companies even more power," as if somehow the media companies didn't earn their rightful economic power in the marketplace despite arbitrary government restrictions. Keep in mind, as labor unions, SAG and AFTRA can essentially compel the studios to collectively bargain with them, a function of law giving labor unions special political power not available to the general public. SAG and AFTRA can also, pursuant to collective bargaining, force their contract terms on non-union members who seek to work as actors and artists.

And frankly, given that there are many wealthy members of SAG and AFTRA, you'd think that if they were that concerned about the media companies' power, some of them would get together and buy their own movie studio or television network.

Antitrust News: Half-Measures, continued

Picking up from Nick's post below, the thing that struck me about yesterday's D.C. Council hearing on physician antitrust is how little the main players—the local medical society and the councilmembers present—actually knew about the impact of antitrust on the medical profession. Since the council first considered a limited antitrust exemption for doctors four years ago, the FTC and Justice Department have become far more aggressive in pursuing physicians. One reason for this, I suspect, is that healthcare costs have been rising faster in the past few years, a point alluded to by a managed-care group lobbyist at yesterday's hearing. This increases the pressure on government officials, unwilling to admit the fundamental flaw of government-run healthcare, to find scapegoats, and the FTC in particular has carved out a fine niche for itself bullying doctor groups and, in effect, stealing their lunch money.

The Republican councilmember Nick talked about, David Catania, actually managed to personify the difficulty in pursuing the physician antitrust issue. Catania is by no means a bad guy; he's been a fairly consistent champion of lower taxes, not an easy task in the District, and most of his initiatives have been pro-business. But on the physician antitrust issue he was clearly ignorant. At the outset, he dismissed the physicians' concerns as a case of "wealthy people" arguing with other wealthy people, that is the health plans. This completely misses the point. Physicians generally do not seek to form labor union cartels; such structures tend to subsidize and promote mediocrity, as we've seen from many AFL-CIO unions that enjoy coercive power to force collective bargaining under the law. What doctors do want, however, is the ability to assert their economic interests against unilateral and unreasonable "efficiency measures" imposed by HMOs with the government's blessing.

One example: A healthcare management consultant recently told me that the physicians in her group were taking a financial bath on child vaccinations. Any pediatrician obviously will have to provide multiple vaccinations to their patients. Indeed, it's required by law in many cases. But the HMO the doctors dealt with wouldn't reimburse the physicians for the full cost of the vaccine; hence they were losing money on every patient for providing that particular service. Such is the nature of the "diagnosis-related group" structure of managed care; each procedure is assigned an arbitrary reimbursement value which need not conform to market realities.

Under antitrust law, it is illegal for independent physicians to get together and say to the insurer, "you need to raise our reimbursements for vaccines so we're not losing money." Indeed, it's arguably illegal for the physicians to have a conversation with one another about the issue, lest the HMO finds out and runs to the FTC. This is the principal reason why physicians are seeking an antitrust exemption. As the head of the D.C. Medical Society said yesterday, this is about the "financial viability" of physician practices, not a case of physicians seeking some unwarranted special favor from the government.

Councilmember Catania, however, appeared too blinded by his own prejudices to seriously consider the facts. He said it was an ineviatble fact of "human nature" that physicians would form price-fixing cartels and hold the District's insurance companies (and by extension, the city's Medicaid program) hostage to their supposedly insatiable greed.

But let's look at the bright side. The D.C. Council passed the limited antitrust exemption there years ago (only to be thwarted by the then-federal control board, which was basically corrupted by the insurance industry's lobbyists) and there is good reason to believe the exemption can pass now. Councilmember Phil Mendelson, a Democrat and the current bill's chief sponsor, provided a solid defense of the physicians yesterday. I was particularly impressed when he derided the use of the "loaded term" of "price-fixing" to smear the doctors' desire to exercise their right to collective negotiations. That shows Mendelson understands that antitrust, at its core, is an exercise in political power, not protecting the free-market.

Tuesday, June 10, 2003

Antitrust News: Take No Half-Measures Protecting Doctors from Antitrust

Today I provided oral testimony to the District of Columbia Council Committee on Consumer and Regulatory Affairs on The Physicians Joint Negotiating Act of 2003. As I indicated in my testimony, the bill before the Council
[i]s an implicit confession that the current regime has failed. Yet rather than address the source of that failure—which is a cornucopia of price control schemes over health care—this bill, in key areas, simply repackages that failure and tries to sell it as an improvement. Rather than acknowledge and protect the freedom of doctors to negotiate their own price terms, this bill subjects them to yet another set of complex and onerous regulations. To subject the exercise of a doctor’s legitimate rights to regulatory approval effectively denies these rights. Specifically, the bill denies doctors the unrestricted right to collectively negotiate price and compensation terms with health plans. Only if the health plan possesses a certain market share—a figure that has a history of being arbitrarily manipulated by hostile regulators—are doctors permitted to enjoy even limited rights to control their economic destiny.
I argued that the Council ought to pass a modified version of the current bill that eliminates the distinction between collectively negotiating the terms of patient care—which the current bill exempts fully—and negotiating price and compensation terms. A doctor’s right to negotiate price and compensation terms should not be assigned to a regulatory ghetto, but should instead be affirmed proudly as the cornerstone of the doctor-patient relationship.

I spoke after representatives of the Medical Society of the District of Columbia and a team of lobbyists for the health insurance industry. Unfortunately the one member of the Council who was most enthusiastic to use antitrust to limit doctor's economic rights (typically enough, a Republican) left early on other business, I was not able to refute his position directly to his face. His view was that since the District has a mandate to provide the poor with medical services and had a finite budget to do this, anything that raises prices is reflexively bad. Other members of the Council seemed to understand that artificial barriers on price would reduce the supply of doctors, but were reluctant to constantly integrate this fact with a position that would fully protect doctor’s rights.

The Council was interested in CAC's analyses of FTC antitrust enforcement efforts and we will endeavor to provide it with further analyses. We'll also seek private meetings with council members to brief them more fully on our position.

The most important achievement of the day was we made friends with the DC Medical Society. While from their perspective, even limited reform is a step in the right direction, they appreciated that our position fully protects doctors. We intend to educate them on our efforts against the FTC’s reign of terror against doctors and we are looking forward to working with them mounting a defense.

All in all, a good day. I know Skip will want to weigh in on this further, so I yield the floor to my honorable colleague.

Monday, June 09, 2003

Antitrust News: Daily Roundup

First, we have news of Oracle raising antitrust concerns:
The chief executive of J.D. Edwards on Monday said Oracle's hostile bid for his company's intended acquirer PeopleSoft would ``drive out'' competition from a key area of business software and raise ``serious anti-trust issues.''

Robert Dutkowsky, J.D. Edwards' president and chief executive, said that Oracle's hostile bid would require an extensive review by antitrust regulators in the United States and European Union because it would eliminate PeopleSoft as one of Oracle's biggest rivals. A week ago, PeopleSoft had said it intended to buy Denver-based J.D. Edwards in a stock deal now valued at around $1.84 billion.
Oracle, of course, was a major instigator of the Microsoft antitrust case. Turnabout may not be fair play here—antitrust is wrong, regardless of circumstance—but there is a powerful lesson here. When you use antitrust against a rival, the day will likely come when someone will use antitrust against you. It's a vicious cycle with no long-term winners, at least in a free-market context.

Second, we have the latest in the long-running vitamin antitrust wars:
Organizations in Tennessee will split $5.6 million as part of a national settlement with vitamin manufacturers who allegedly engaged in price-fixing.

The Tennessee money, which represents the largest antitrust settlement in the state's history, will go to 75 organizations who'll use it to improve health and nutrition.

The alleged price-fixing pushed up costs for vitamin tablets as well as cereal, meat and baby food enriched with vitamins.

"We are pleased so many Tennesseans will benefit from such an unfortunate situation," Tennessee Attorney General Paul Summers says.
Funny how the money from these large antitrust settlements never go to the actual victims. Perhaps that's because there were no actual victims. After all, the vitamin companies never forced anyone to pay a particular price for their products.

Finally, some good news—the government actually admitted they were wrong for once:
Antitrust enforcers Monday recommended that the government abolish key regulations on airline computer reservations systems (CRS), saying they have failed to foster competition in the industry.

The Justice Department advised the Transportation Department, which is weighing the matter, that the long-standing rules may have imposed unnecessary costs on consumers and should not be extended after they expire next January.

Justice officials recommended that transportation regulators abandon price regulations that require reservation systems to charge all airlines the same prices for the same services. They argue that the price rules have not led to competitive CRS fees and may have hurt the ability of some airlines to negotiate lower ones.

There are four CRS companies operating in the United States, and airlines remain heavily dependent on them to sell tickets, even though Internet sales have become more popular. CRS operations provide the essential link between airlines and travel agents.
Yup, government price controls never benefit consumers. Hardly a shocking discovery. Of course, the antitrust regulators continue to believe price controls will work on other areas of the economy, such as physician services.

Foreign Policy: Iran

This from the AP:

"The language of threats and force won't work against Iran. It will only backfire," [Iranian foreign Ministry spokesman Hamid Reza Asefi] told a press conference.
True. Iran is the worlds most notorious sponsor of terrorism. Threats will not mollify its mullahs.

Here's to hoping for the 2nd Iranian revolution.

Rights & Reason: There They Go Again

I'm beginning to feel like we're in "Groundhog Day." The FTC announced its latest violation of the Constitution this morning:
A nonprofit corporation representing approximately 1,000 participating physicians in the Dallas/Fort Worth, Texas metropolitan area has agreed to settle Federal Trade Commission charges that collective bargaining on behalf of its members has led to decreased competition and increased prices for the provision of medical services to the area's consumers. Under the terms of the proposed consent order reached with the Commission and announced today, Southwest Physician Associates (SPA) will be barred from jointly negotiating fees and other competitively significant terms on behalf of its physicians, unless certain conditions are met.

"The FTC remains committed to stopping fee-fixing and other forms of anticompetitive conduct among health care industry participants," said Joe Simons, Director of the FTC's Bureau of Competition. "We believe that SPA's actions were in violation of the law and caused consumers to pay illegally inflated prices for medical services."
There comes a point when you have recognize that the FTC is not simply a group of people who hold different opinions from your own, but committed enemies of freedom. Indeed, I'm beginning to think we're dealing with sociopaths—people who enjoy exercising power over others for the sheer enjoyment of it. No rational person can support the FTC's actions in these cases, certainly no person who claims to live under the principles of the Declaration of Independence and a government under the Constitution of the United States.

Perhaps it's time the nation's physicians take a lesson from Martha Stewart. When the government falsely charges you with committing a crime, the answer is not to surrender and cower in fear, but to hold your head high and publicly proclaim your innocence. Heck, after she's acquitted, maybe Martha would consider joining CAC as an advisor on how to stand up to prosecutorial tyranny. We'd love to have her.

Sunday, June 08, 2003

Rights & Reason: Bush Conflicted on Health Care?

President Bush's plan to force taxpayers to provide prescription drugs for the elderly has an interesting feature. In exchange for adding a prescription drug entitlement to Medicare, the White House plan would encourage seniors to get out of Medicare altogether and join a preferred-provider organization. PPOs are networks of doctors and health care providers that contract with insurance plans to provide care at a discounted rate.

Why is this interesting? Because while the president and congressional leaders seek to subsidize PPO operations, the Justice Department's Antitrust Division (helped by the FTC) is doing what they can to undermine PPOs. Mountain Health Care, a North Carolina PPO, was forcibly dissolved by the DOJ after government lawyers complained the group was "collectively bargaining" with health plans. Of course, that's precisely the point of a PPO, but the Antitrust Division felt that Mountain was simply too big—i.e., it had too many physicians in the network—and that if allowed to continue operating, the government felt Mountain would ultimately monopolize the market and harm consumers. There was no evidence to support these arguments, of course, but the antitrust laws do not require the government to prove much of anything beyond a hypothetical "injury" to consumer welfare.

This is even more interesting when you consider a case on the Supreme Court's fall docket, an antitrust claim against the U.S. Postal Service. There, the Justice Department claims that permitting such antitrust suits would undermine the Postal Service's government-mandated objectives. Funny how it's okay for the antitrust laws to thwart some arbitrary government objectives, but not others. Apparently the Bush administration can't achieve internal consistency even among its own bureaucrats.

Saturday, June 07, 2003

Antitrust News: Doctors Win One in the Ninth

Yesterday the U.S. Court of Appeals for the Ninth Circuit gave the nation’s doctors some good news on the antitrust front. While hardly an unconditional validation that physicians enjoy the same individual rights as any other citizen, the three-judge panel’s unanimous ruling in International Healthcare Management v. Hawaii Coalition for Health nevertheless makes a good-faith effort to put some limits on the ability of government-supported HMOs to force doctors to act against their will.

The case arises from a 1997 contract negotiation between Blue Cross/Blue Shield and physicians in Hawaii. That year, the Hawaii Medical Association and several independent physician groups formed a “consortium” with the Hawaii Coalition for Health, a consumer group composed principally of physicians. This consortium basically reviewed the Blue Cross contract proposal and issues recommendations, which individual physicians were completely free to accept or reject in deciding whether to sign the Blue Cross proposal.

International Healthcare Management, another provider network and competitor with Blue Cross, entered the market in 1998 and began offering contracts to physicians. The consortium once again provided a review and advisory role. The consortium also entered discussions with IHM about certain elements of their proposal, although apparently not about actual reimbursement levels. In any case, in June 1998, the consortium sent out an “alert” to its members, notifying them of ongoing problems with the IHM proposal. In the aftermath of this “alert,” several hundred physicians still agreed to join IHM’s network, though apparently not enough. IHM ceased its recruiting efforts and sued the various participants in the consortium for violating the Sherman Act.

The trial judge found no evidence to support IHM’s Sherman Act claims, and granted the consortium’s request for summary judgment in their favor. On appeal to the Ninth Circuit, IHM argued “that the district court erroneously held that it is lawful for physician associations to negotiate with health plans on behalf of their competing physician members.” This is a very broad claim, encompassing not just negotiations over prices, but essentially any discussion among “competing” physicians. In recent FTC and Justice Department cases, the government has actually pursued a similar goal, although they usually hide that fact by concurrently (and often falsely) alleging price-fixing. Here, IHM argued price-fixing could be inferred from the consortium’s activities. Thankfully, the Ninth Circuit found that inference was not a substitute for evidence, and that none of the alleged consortium activities came close to violating the Sherman Act. Even the “alert” that was issued contained no specific information regarding price terms, and in fact the alert came after Hawaii’s state insurance commissioner urged physicians to delay considering the IHM contract until certain non-price issues could be cleared up. Thus, the Ninth Circuit, in an opinion authored by Circuit Judge Pamela Ann Rymer, affirmed the lower court’s summary judgment, finding no reversible error.

The heart of the Ninth Circuit’s opinion deals with the scope of the “per se rule,” the doctrine under which a particular class of activity is illegal under the antitrust laws regardless of context. In physician cases, HMOs and government antitrust enforcers have sought to impose a very wide definition of “per se,” to the point, as noted above, where the mere act of communication among competing physicians is sufficient to justify an antitrust charge. It is, for all intents and purposes, a slipper slope argument: If competing doctors have a legal right to talk to one another about HMO contract terms, they will inevitable conspire to “fix prices” and harm consumers.

The Ninth Circuit wisely chose not to adopt this all-encompassing view of “per se.” Instead they maintained what is supposed to be the correct judicial standard; namely, that “[p]er se categories are not to be expanded indiscriminately to new factual situations.” The consortium members correctly claimed “that it was entitled to express its opinions and to share information about health care plans, whether or not its opinions carried weight and regardless of market effects.” The per se rule only extends to overt acts of price-fixing, not mere discussions among “competing” individuals. Nor did the appellate court accept IHM’s assertion that patient welfare would be harmed by permitting physicians to exchange thoughts on proposed contracts: “Disseminating information that fosters rational business decisions is pro-competitive.”

In short, this case was a total vindication of the Hawaii physicians’ position, although the scope of the ruling did not break much new ground in terms of expanding protection of individual rights. The Ninth Circuit simply prevented HMOs from further eroding what little protections currently remain. Nevertheless, this decision should be greeted warmly, because it provides a useful tool in refuting the federal government’s own claims in favor of expanding the “per se” rule to effectively silence physicians who attempt to speak with one another about managed care contracts. This also demonstrates why it is essential to get physician antitrust prosecutions out of the unilateral control of the FTC and DOJ and into the courts, because independent judges tend to hold antitrust prosecutors to at least minimal standards of rationality.

The Executive Branch: Continuing the Monopoly

On his last day in office, the director of the Office of Management and Budget capitulated on one of his priority items, ending the government's monopoly on government printing jobs:
The Government Printing Office will continue its century-old monopoly on federal agencies’ printing jobs, under an agreement the Bush administration announced Friday. The agreement ends outgoing Office of Management and Budget Director Mitch Daniels’ year-long quest to let agencies avoid using the printing office as their middle man.

Daniels agreed to let the printing office keep its monopoly. He even agreed to curtail or eliminate current executive branch printing operations that do some of agencies’ printing work in-house. In return, GPO chief Bruce James agreed to set up a Web-based ordering system that will let government buyers deal directly with private printers, which will negotiate discounted overarching agreements with the printing office. The system is modeled after the General Services Administration’s supply schedules. The printing office will collect a 3 percent rebate from printers to fund the cost of the system.

“It gives agencies more freedom and flexibility in selecting printers,” James said.

To be fair, Daniels didn't exactly surrender. There were legal questions as to whether the Executive Branch could unilaterally end the GPO printing monopoly without congressional authorization. But yesterday's decision is still a let-down if you ran a Kinko's in D.C. and were looking to steal some of the GPO's business from the Interior Department.

Maybe if the Supreme Court rules the Postal Service can be sued under the antitrust laws, we can go after the GPO next. Heck, I'm a consumer of government documents, and I certainly feel injured by this monopoly...

The Economy: It Takes Money to Create Money

Unemployment figures are at a nine-year high of 6.1%. A major reason for this: companies aren't making enough money:
Richard Yamarone, economist with Argus Research Corp., said the financial markets are mistaken to see signs of recovery in yesterday's report, which showed a marked downtrend in hiring that he expects to continue for the rest of the year.

"Businesses cannot spend what they don't have," he said. "Anemic economic growth will not be sufficient enough to provide the necessary gains in corporate profitability, which are needed to fuel greater business investment and new hiring."
This should come as shock to Capitol Hill legislators, who respond to bad economic news by calling for the government to further reduce corporate profitability by, just to name a few examples, extending government unemployment benefits, threatening U.S. companies that lower their tax burden by incorporating abroad, and creating new government entitlements such as prescription drug benefits. All that money comes from somewhere, and it's usually businesses, since they're the ones generating the wealth in the first place.

Antitrust News: Raining on Seattle's Newspapers

The Seattle Post-Intelligencer reports on, er, the Seattle Post-Intelligencer:
The U.S. Justice Department has entered the fray between Seattle's two daily newspapers, acknowledging yesterday that it is investigating whether the unwinding of their joint operating agreement would violate antitrust laws.

The federal agency, which approved the original agreement between The Seattle Times and the Seattle Post-Intelligencer more than 20 years ago, will "look at all relevant evidence," said a Justice Department spokeswoman, Christine Jacobs.

The Justice Department has already started gathering information about the situation. Rowland Thompson, executive director of Allied Daily Newspapers of Washington, a trade group whose members include both Seattle papers, said Justice Department attorney Maurice Stucke contacted him Thursday. Stucke and another federal attorney, Carol Bell, are leading the investigation, a Justice Department staff member in Washington, D.C., said.

"He's doing a full community background check, as far as I can tell, about what public sentiment is and how people view the two papers, and if there are community groups that have a position on it," Thompson said.

Under the joint operating agreement, or JOA, The Times handles printing, advertising, production and circulation for the P-I, in exchange for a larger percentage of the papers' joint profits. The JOA, originally intended to keep the P-I from failing, began in 1983 and was revised in 1999.

The Seattle Times Co. moved in late April to end the JOA after what it said were three years of financial losses at The Times.

The P-I, owned by The Hearst Corp., had filed suit the day before, claiming that The Times has no right to end the agreement because its losses were the result of extraordinary circumstances and didn't demonstrate that the JOA is untenable. An end to the agreement could lead to the P-I's closure. A hearing is set for July 18.
One of the more disturbing trends in federal antitrust regulation is the government's efforts to interfere with private disputes that can easily be managed through the civil courts. We've already seen this with Rambus, a corporation that was hauled before the FTC after a federal appellate court cleared the technology company in its private dispute with industry competitors. Like the Rambus case, there is no benefit to federal antitrust intervention in this dispute between the Seattle newspapers. Indeed, it will simply increase the costs of all parties involved, meaning taxpayers will see their money squandered, while the two newspapers are forced to deplete their financial resources accommodating nosy Antitrust Division attorneys.

Rights and Reason: Bush Calls for Innovation in Medicare

President Bush made the following statement about Medicare during his weekly presidential radio address:

"Today, doctors routinely treat their patients with prescription drugs, preventive care and groundbreaking medical devices — but Medicare coverage has not kept pace with these changes. Our goal is to give seniors the best, most innovative care.

"This will require a strong, up-to-date Medicare system that relies on innovation and competition, not bureaucratic rules and regulations," he said.
Hmmm. Replace the word "Medicare" with "medical" and we would have license to bring the free market back to health care. If President Bush really wants "innovation and competition" and "bureaucratic rules and regulations," he would do just that.

It's amazing though that the people of the land of the free and the home of the brave are so afraid of their freedom that they would never demand the immediate abolition of government boondoggles like Medicare as a simple matter of principle. That's the power of altruism though--if you belive that need is a claim on the life of another, you will never be open to the manifest defects that the practical application of altruism produces.

Friday, June 06, 2003

Antitrust News: Comcast's refusal to air rivals ads criticized

This from USA Today:

A U.S. congressman has asked the Justice Department to examine whether cable giant Comcast's refusal to air some DSL advertisements by rival Qwest Communications is anti-competitive.

Rep. Rick Boucher, D-Va., spurred by Qwest's complaints, wrote in a May 19 letter to the agency's antitrust unit that ''Comcast's discriminatory advertising practices should be closely examined and . . . disallowed.'' Boucher, a veteran on telecom policy, said in an interview that the consumer impact ''can be very real if this practice becomes more pervasive.'' He has not heard from Justice, which did not comment.

For months, Qwest has complained to Comcast, the No. 1 cable operator, that it unfairly restricts or refuses ads. They vie for broadband customers in many markets.

Comcast says it runs DSL ads that are pitched as part of a bundle of communications services. It doesn't accept DSL-only ads.

Three other big cable operators, Cox, Charter and Adelphia, say the decision to run rival ads is made case by case. Cable operators have long refused DSL ads, arguing that the First Amendment protects that right -- and that phone companies can reach customers via local TV, radio and billboards. Critics warn antitrust concerns might come into play as cable firms consolidate.
How totaly obnoxious. I've drafted the follwing letter to Rep. Boucher:

Dear Rep. Boucher:

I read with interest USA Today’s coverage of your letter to the Department of Justice calling for an antitrust investigation of Comcast Corporation for refusing to air DSL advertisements by rival Qwest Communications.

There is a certain degree of irony in your call for antitrust investigation of Comcast. I doubt you feel obligated to use your campaign apparatus to communicate the views of your political opponents, yet you seem to have no compunction in demanding Comcast use its assets to communicate the message of its business rivals. It would seem you believe that you have the right to un-coerced control of the organization you have built, but not Comcast.

Our organization has closely monitored the antitrust enforcement efforts of the Department of Justice and Federal Trade Commission for over five years. We have observed first hand antitrust law’s use in attacking great firms, such as Microsoft, for attempting to improve its products, and simple individuals, like Ms. Marcia Brauchler, a Colorado woman earning less than $30,000 a year, but who was accused of being a monopolist by FTC antitrust enforcers because she allegedly violated its shifting mandates as she helped physicians negotiate their contracts with health plans. As long as antitrust law denies the rights of a businessman to complete control of his work and property, it is a law open to wholesale abuse.

Your position on the Comcast case ought to have been that Comcast has every right to control its communication network, and is under no obligation to service the parasitical needs of its business rivals. Yet by your letter, you have turned a simple business question into a political question. I challenge you to reconcile your position with the principle of individual rights. Every individual has a right to pursue his own self-interest in the market. To claim otherwise is to say that we are a nation of surfs obligated to serve the whims of our neighbors. I would hope your vision of America is more profound than that.

Respectfully Submitted,

Nicholas Provenzo
What are the odds of Boucher reconciling his position with the principle of individual rights? Probably a lot better if he received a host of letters like mine.

Antitrust News: A Merger is Cleared

From the Associated Press:
ScanSoft Inc.'s $132 million acquisition of SpeechWorks International Inc. received antitrust clearance from the U.S. Justice Department, the company said Friday.

Shares of both companies rose on the news.

ScanSoft shares traded at $6.16, up 26 cents, or 4 percent, Friday morning on the Nasdaq Stock Market.

SpeechWorks shares traded at $5.17, up 25 cents, or 5 percent, Friday morning on the Nasdaq.

ScanSoft said the deal must still be approved by shareholders of both companies, who will vote at special meetings after the registration statement filing with the Securities and Exchange Commission.

The acquisition has already received unanimous approval from both companies' boards, and ScanSoft said it expects the deal to close sometime in August.

ScanSoft, based in Peabody, Mass., makes software that scans paper documents and turns them into digital computer files. Its acquisition of SpeechWorks, which makes speech recognition and text-to-speech programs, will add to SpeechWorks line of voice-related programs.
ScanSoft had to pay a $125,000 "filing fee" with the Justice Department in order to obtain consideration and clearance for their acquisition of SpeechWorks. That's in addition to the thousands of dollars in legal costs and man-hours spent actually preparing and filing the forms. All so the government could say they weren't violating the law.

The Culture: A Victory for Hootie

Sportsblogger Dan Lewis points out an interesting secondary effect of the deposing of Howell Raines:
With the resignation of Howell Raines from the NY Times, and with the Masters having come and gone, I'm willing to bet that Augusta has weathered the firestorm. Perhaps we'll get to see if the controvery was a real one, or a newsroom/editorial-driven one.
I don't have much to add on the topic of Raines' resignation, although I would note that if I were a tabloid editor, my headline this morning would have read "HOWELL'S 'RAINE' OF ERROR ENDS," or something to that effect. It seems only fitting.

Antitrust News: Blumenthal Takes on the ACC

The complaint in University of Connecticut v. University of Miami is now available online. Just as I predicted last night on the radio, Connecticut Attorney General Richard Blumenthal has brought an antitrust-related claim to stop the "Shalala Three" from defecting to the ACC. Most of the complaint, to be fair, is your garden variety tort claims, but one count argues UConn was injured by the defendants' violation of Connecticut's "unfair competition" law. Of course, that claim is wholly unrelated to the rest of the claim, much of which appears to present triable questions of fact and law.

Sports Law: Let the Lawsuits Commence

Just hours after I warned of the litigation train-wreck, five Big East Conference schools sued the University of Miami and Boston College to prevent them from joining the ACC. The Associated Press reports:
The lawsuit, filed in state Superior Court in Hartford, Conn., says Miami and Boston College professed loyalty to their conference while concocting a "deliberate scheme to destroy the Big East and abscond with the collective value of all that has been invested and created in the Big East."

Big East schools went ahead with millions of dollars in renovations and upgrades under the assumption they would be part of a healthy conference for years to come, the lawsuit contends.

The lawsuit was filed by Pittsburgh, Connecticut, West Virginia, Virginia Tech and Rutgers against the ACC, Miami and Boston College. Syracuse is part of the potential ACC expansion but was not included in the lawsuit because plaintiffs said they found no evidence the school made promises to stay in the Big East.

The ACC did not immediately return phone messages seeking comment.

The five Big East schools are suing for financial damages and want an injunction to prevent Miami and Boston College from leaving.
I suspect if this lawsuit proceeds, it will have to be removed to federal court, since it's unlikely a Connecticut state court can sustain jurisdiction over all the parties. Technicalities aside, the suit itself marks the beginning of what could be a protracted litigation war for control of college football. This is what happens when you abandon capitalist principle for altruist ideals.

Rights & Reason: The Cult of Amateurism

During my national radio appearance on Steve Czaban's show last night, Steve and I discussed the antitrust implications of the Atlantic Coast Conference's expansion via the acquisition of three Big East Conference teams. For years, the debate in college football has been over creating a single playoff tournament to replace the myriad of bowl games and bowl alliances. As I explained last night, and in today's Initium, you'll never see a genuine playoff unless you take two wretched concepts out of play: amateurism and antitrust.

Thursday, June 05, 2003

Antitrust News: The Vitamin Wars Continue

From the Justice Department's Antitrust Division:
A federal grand jury in Dallas today indicted the former president of DuCoa, L.P., based in Highland, Illinois, with participating in a nationwide conspiracy to fix prices, rig bids and allocate customers in the choline chloride industry, the Department of Justice announced.

Choline chloride, commonly known as vitamin B4, which is sold by manufacturers and resellers to customers in the animal nutrition industry, is administered to animals to ensure their proper growth and development.

According to the indictment filed today in U. S. District Court in Dallas, Daniel T. Rose of Highland, Illinois, agreed with his co-conspirators to suppress and eliminate competition in the choline chloride market in the United States from approximately August 1997 through September 29, 1998.

"This is the eighth prosecution involving choline chloride and the 30th case arising from the long running vitamins investigation being conducted by the Division's Dallas Field Office," said R. Hewitt Pate, Acting Assistant Attorney General in charge of the Antitrust Division.

Rose is charged with participating in meetings and conversations with his co-conspirators to discuss the prices and volume of choline chloride, agreeing to set choline chloride prices, agreeing to allocate choline chloride customers and rigging bids for contracts to supply choline chloride.

Rose is charged with violating Section One of the Sherman Act, which carries a maximum penalty of three years in prison and a fine of $350,000. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fine.
By coincidence, Attorney General John Ashcroft testified before the House Judiciary Committee today, where he asked for additional powers to fight terrorist organizations. For example, he wants the ability to hold terrorist suspects indefinitely, something which is unlikely to win Ashcroft any new friends in the civil liberties crowd. And given the DOJ's propensity to squander taxpayer funds on things like stopping "price fixing" in the vitamin industry and punishing Martha Stewart for having a conversation with her stockbroker, it's becoming more apparent that Ashcroft's opponents have taken the ethical and moral high ground. The Justice Department simply has no core principles when it comes to individual rights and civil liberties. This is not a partisan problem—the Democrats were just as unprincipled when they ran the DOJ under Janet Reno. And indeed, it's not even completely the DOJ's fault. Congress keeps expanding the range of federal "crimes" to combat every minor interest group complaint. The result is a DOJ that's faced with too many laws to enforce and not enough resources. The result is selective prosecution of easy (or popular) targets, which is hardly anyone's idea of equal justice under law.