Monday, July 14, 2003

Antitrust News: ARI in a Pickle

It's nice to see the Ayn Rand Institute paying attention to antitrust, but there's just no excuse for presenting misleading information:
Over at the FTC, meanwhile, the agency has been flexing its antitrust muscles to prevent mergers in even the most obscurely defined markets, such as "superpremium ice cream," "jarred pickles," and "food service glassware."
As those of us who follow the FTC know, the agency never tried to prevent a merger in the "jarred pickle" industry. They tried to prevent a merger in the refrigerated jarred pickle industry. In fact, the successfully prevented the merger. There is also a separate market for "shelf-staple" jarred pickles that apparently is not being monopolized by anyone.

Antitrust News: DOJ Speaks on Voice Case

On June 24, I filed a motion to intervene in the federal antitrust case against Village Voice and NT Media for purposes of appealing the settlement forced on the two media companies by the Justice Department. On July 10, the government filed its brief in opposition to my motion.

Because this matter is still pending before the district court, I won't offer extended commentary on the government's position right now, but I will comment on one argument raised by the DOJ. One of my key contentions is that in requiring Village Voice and NT Media to divest assets to third parties before the expiration of the public comment period, the government effectively violated the Tunney Act, since the public and the district court were denied a "meaningful" opportunity to review the settlement. This is purportedly the main reason Congress passed the Tunney Act—avoiding judicial rubber stamping of antitrust settlements—so it's hard to see how Congress would approve of irrevocably altering the status quo to carry out the principal terms of a settlement before the Court can review said terms.

The DOJ's only answer to me is that they needed to act quickly to "restore competiton." But as I've pointed out (twice) now, the Tunney Act provides a mechanism for shortening the review period if extraordinary circumstances warrant. The DOJ never opted to use this mechanism, yet insists the situation was dire. But there's no argument or evidence that demonstrates why "consumers" would not have benefitted had the government waited until the court completed its review of the settlement. We're only talking a period of a few weeks—does the market for "alternative newsweeklies" really evolve that quickly? Doubtful.

In a footnote, the DOJ tries to turn my argument against me, without success:
Moreover, if one adopted the Movant's interpretation of the Tunney Act, it would compromise the usefulness of the consent decree as a viable settlement option in other antitrust contexts. As the United States explained in its Response to Public Comments, it is customary in other Tunney Act proceedings that involve mergers to permit the defendants to merge after the complaint and proposed final judgment are filed, subject to the defendants' obligations under the proposed final judgment to take steps to divest certain specified assets. In these mergers, the defendants are generally allowed to complete the merger prior to the close of the sixty-day comment period and entry of the final judgment by the court.
I assume this is an effort to catch me in a trap: Since I presumably want mergers to go forward (as a capitalist opposed to antitrust), I would not want to force merging firms to hold up consummating their deals longer than necessary. It's a nice try, but the principle here remains constant despite the particulars: If a court has Tunney Act jurisdiction to review a merger settlement, does it not prejudice that court's powers to permit the merger to proceed prior to judicial review? What if the court decides the settlement is weak and the merger should not be permitted to proceed? It's very hard to unscramble the eggs, so to speak, after the fact. Congress presumably wanted to avoid this when they required a statutory public comment period in the first place. But the DOJ views legal deadlines as inconvenient challenged to their unlimited antitrust powers.

Antitrust News: St. Louis Docs "Settle"

Score another FTC victory in the War Against Doctors:
WASHINGTON (Reuters) - U.S. antitrust enforcers said on Friday they had settled antitrust charges against a group of doctors in St. Louis whom they claimed had inflated prices by bargaining collectively with insurers.

The Federal Trade Commission said the 1,500-member Washington University Physician Network agreed to stop negotiating fees with insurers and preferred provider organizations on behalf of members, a practice that violates antitrust laws.

"This group of St. Louis-area physicians engaged in overt price-fixing," said Joe Simons, director of the FTC's competition bureau. "Its conduct was plainly anticompetitive and harmful to consumers, by forcing up prices in the area."

The settlement also bars the doctors from "facilitating exchanges of information among physicians concerning whether, or on what terms, to contract with (an insurer)."

The St. Louis case marks the 10th time during the last 15 months that the commission has charged doctors groups with conspiring to raise fees in violation of U.S. antitrust laws.
Thankfully for the FTC, Reuters didn't actually report on this story, instead simply repeating the FTC's press release. Had Reuters (or any media outlet) looked at the FTC's statements critically, they would have to answer the following questions:

1. Does physician collective negotiating violate the antitrust laws? Contrary to the FTC's claims, it does not. Physicians have the same basic economic rights as any American to act in their own self-interest when voluntarily deciding what conditions to accept a contract offer. The specific antitrust law the FTC enforces only prohibits "unfair" methods or acts of competition. Under no reasonable standard do the acts of physcians like those at Washington University violate this vague prohibition. Indeed, the FTC Act was not enforced against doctors for decades until the FTC, needing some new business to justify their relevancy, started targeting doctors as victims of opportunity.

2. Were consumers harmed? No. The fact that prices rise does not indicate the presence of criminal activity. Prices rise for many reasons, such as inflation, higher costs, and government regulations. The FTC falsely assumes that any price increase must be due to an illegal conspiracy among producers; in none of the recent physician cases did the FTC consider any other factor that might have led to higher prices. And in any case, physicians have the right to ask for more money. Consumers are not legally entitled to a given price level for medical services. That would, in fact, be price fixing.

3. Can the FTC ban doctors from "facilitating exchanges of information" with each other? No, the First Amendment prohibits the government from banning simple acts of speech. The FTC argues, in contrast, that there's an antitrust exception to the First Amendment that permits censorship of speech that may cause "anticompetitive" behavior. But this is circular reasoning. Under this logic, the government could ban individuals from discussing the legalization of marijuana on the grounds that such speech might lead to individuals advocating a position that is contrary to existing law. Of course, that's not a precise analogy, because the doctors did not violate the law in the first place...

Antitrust News: A Rare Occurrence

Once in awhile, the FTC actually quits while they're ahead:
The Federal Trade Commission (FTC) plans to close its antitrust investigation of Vista Health, the joint venture of two Waukegan hospitals, according to Vista attorney Laura Martin.

The FTC began its inquiry after the venture was accused by insurers three years ago of violating antitrust law by seeking substantial rates hikes before fully consolidating the hospitals' operations. The FTC is now acknowledging, Ms. Martin says, that Provena St. Therese Medical Center, one of the hospitals, would have raised rates with or without a merger and that the increases were not as high as those of other merged hospitals under investigation. The other hospital in the venture is Victory Memorial Hospital.
The important fact to take from this story is that insurers went to the FTC to settle what is nothing more than a normal business dispute over prices. Wouldn't it be nice if any business could do that—agree to a price increase then ask federal regulators to undo it because it "violates the antitrust laws"?

Thursday, July 10, 2003

Foreign Policy: This is what tyranny looks like

Andrew Sullivan found these photos of a ransacked Tehran university dorm room.


Antitrust News: S.F. Docs Attacked

A few weeks ago, CAC got word that a new FTC attack against doctors in the San Francisco area was imminent. Today it appears that attack took place, as the Commission announced its latest effort to destroy the economic livelihoods of doctors:
The Federal Trade Commission today issued an administrative complaint against California Pacific Medical Group, Inc., doing business as Brown & Toland, a San Francisco, California physicians' organization, for allegedly fixing the prices and terms under which its doctors would contract with payors to provide services for Preferred Provider Organization (PPO) enrollees. In filing the complaint, the FTC is seeking to prohibit Brown & Toland from unlawfully negotiating PPO contracts with health plans on behalf of its member physicians and to nullify the allegedly anticompetitive existing contracts the group has already negotiated with health plans. Brown & Toland also has organized a network of physicians to contract with Health Maintenance Organizations (HMOs), but the FTC's complaint focuses solely on allegations of price-fixing in connection with PPO contracts.

"The FTC's complaint charges Brown & Toland with orchestrating naked price fixing among its physician members to the detriment of San Francisco consumers," said Joe Simons, Director of the FTC's Bureau of Competition. "While, under certain circumstances, collective price negotiation may be necessary to achieve actual clinical or financial integration among providers, which in turn can benefit consumers, in this case Brown & Toland did not achieve such integration. Simply put, Brown & Toland fixed prices without providing any offsetting consumer benefit, a classic violation of the antitrust laws and the Federal Trade Commission Act."

Brown & Toland is a for-profit multi-specialty independent physicians' association (IPA) with more than 1,500 members providing services in San Francisco. Historically, it has provided physician services to HMO members under capitated agreements with health plans, under which the plans pay a set rate each month for each enrollee for certain services provided by the group's doctors. In 2001, with a subset of its physician members, Brown & Toland formed a PPO network and began negotiating fee-for-service reimbursement rates on behalf of its PPO network members.
This is classic FTC thinking: Physicians chose a financial model that best enables them to reap the fruits of their labors, and the FTC's non-physician staff lawyers decide that's just not acceptable. There is no law that prohibits what the physicians are doing, only the irrational opinions of some piss-ant lawyers holed up at the FTC's headquarters in Washington.

The positive news, if there is any, is that the FTC announced the filing of an administrative complaint, not a settlement. This likely means Brown & Toland declined to surrender immediately, and will for now fight the FTC's false and legally baseless accusations.

Wednesday, July 09, 2003

Foreign Policy: U.S. Needs Int'l Image Makeover

Laurence Arnold of the AP reports more on today's meeting of the National Commission on Terrorist Attacks:

Experts: U.S. Needs Int'l Image Makeover

The United States is less vulnerable to terrorism today because of heightened vigilance but must improve its international relations in order to starve terrorist groups of new recruits, experts said Wednesday.

Scholars on terrorism and al-Qaida told the independent commission studying the Sept. 11 attacks that the United States badly needs an image makeover in the eyes of the world.

"Although we are winning the war against the organization called al-Qaida, we seem to be losing the cultural war," said Mamoun Fandy, senior fellow at the United States Institute of Peace.

Fandy said leaders of other countries, particularly in the Middle East, should be expected to express public gratitude for U.S. help. "Somehow we tolerate Arab leaders telling us something in private rooms and then dealing with their public the way they want to," he said.

Dennis Ross, a peace envoy to the Middle East under former President Clinton (news - web sites), said the United States' choice of friends in the region contributed to the anger and resentment that helped al-Qaida.

"We are resented in no small part because we are seen as using democracy as a tool or weapon against those we don't like, but never against those we do like," said Ross, now director at the Washington Institute for Near East Policy. "We are seen as mouthing the words of democracy but then supporting regimes seen as repressive." He offered Saudi Arabia as one example.
Does this mean yet another makeover show on TLC?

Foreign Policy: Iranian student leaders arrested on riots anniversary after blasting regime

This from AFP:

Three leading Iranian student activists were arrested minutes after holding a press conference to blast the Islamic regime for banning events marking the fourth anniversary of bloody student clashes with security forces.

The arrests were made after activists from the Office to Consolidate Unity (OCU) -- a pro-reform student umbrella group -- said President Mohammad Khatami had failed in his drive for reforms and alleged the hardline-controlled judiciary was trying to prevent freedom of thought.

"Since we believe that Khatami's reforms have come to an end, we wanted to stage a sit-in opposite the UN," the OCU's Reza Ameri-Nassab said moments before he was arrested, adding the gathering was postponed on the advice of supportive MPs.

"But it is not forgotten... our demands are for the immediate release of our eight fellow students from the OCU (arrested during unrest last month) as well as those spelled out in our open letter to Kofi Annan (news - web sites)," he said.

On Tuesday, the OCU wrote to the UN secretary general, denouncing what it said was a "dark chapter" in Iran's history and a "political and social apartheid" that it argued deserved UN investigation.

Ameri-Nassab also said his group had no confidence in Iran's judiciary -- controlled by religious hardliners -- because the institution "is trying to eradicate all sources of independent thought."
I looked up the Iranian constitution--check out these gems:

Article 26 [Freedom of Association]
The formation of parties, societies, political or professional associations, as well as religious societies, whether Islamic or pertaining to one of the recognized religious minorities, is permitted provided they do not violate the principles of independence, freedom, national unity, the criteria of Islam, or the basis of the Islamic Republic. No one may be prevented from participating in the aforementioned groups, or be compelled to participate in them.

Article 27 [Freedom of Assembly]
Public gatherings and marches may be freely held, provided arms are not carried and that they are not detrimental to the fundamental principles of Islam.
Indeed. The students seem willing to lay it all on the line to win their freedom from the principles of Islam. I hope they don't have too.

Foreign Policy: Let's start with philosophy

"To defeat and destroy our enemy, we must understand more than the crimes it already committed. We must understand what drives and motivates it, the source of its power, the resources at its command, its internal strengths and weaknesses." -- Thomas H. KEAN, chairman of the commission investigating the Sept. 11 terrorist attacks.


Antitrust News: A Voice for Liberty?

The Village Voice is indeed a strange creature. As you may know, I'm currently pursuing an independent appeal of the Justice Department's manufactured "alternative newsweekly" antitrust case that involves Village Voice and its chief national competitor, NT Media. This week there's a report in the LA Weekly—a Voice-owned paper that was part of the antitrust dispute—on my efforts:
Remember that antitrust lawsuit?

The one in which the federal government accused the owners of News Times L.A. and the L.A. Weekly of violating antitrust laws by conspiring to divide up markets in L.A. and Cleveland? At last look, prosecutors had declared victory, while the companies admitted no guilt but paid fines. They also submitted to conditions, as part of a settlement, that paved the way for more competition in these two media markets.

In short, the feds think the case is over. So do the newspapers.

But it’s not over for S.M. “Skip” Oliva of Citizens for Voluntary Trade, a Washington, D.C.–based libertarian group. Oliva wants to reopen the case based on his claim that the judge denied adequate time for public comment. Ostensibly, Oliva is taking the side of the newspapers. His group opposes antitrust laws as an abridgment of citizens’ freedom to conduct commerce, and even as a violation of constitutional rights.

In the deal in question, NT Media agreed to shut down New Times L.A., leaving L.A. Weekly as the sole citywide alternative weekly in L.A., while Village Voice Media (the Weekly’s parent) agreed to close its publication in Cleveland, leaving that market to NT’s Cleveland Scene. New Times netted $9 million in the transactions.

When contacted about Oliva’s motion to intervene, one Voice Media executive rolled her eyes and said she expected nothing to come of it, but she quickly added that her reaction was strictly off the record.
This is a somewhat misleading description of what I'm actually doing. I'm not reopening the case, but attempting to appeal it. And I'm not arguing the judge "denied adequate time for public comment". The judge in fact allowed for exactly the amount of public comment time provided for in federal law. My allegation addresses the Justice Department's misconduct in carrying out the judgment itself before the statutory comment period expired. Obviously, this also entails an allegation that the judge abused his discretion in failing to prevent the government's actions, but the principal source of the malfeasance was the DOJ.

As for the alleged reaction of the Voice executive to my motion, if true it's hardly surprising. The Voice didn't even bother to put up a fight. NT Media made several statements proclaiming its innocence and savaging the DOJ for bringing this case, but the Voice has never uttered a word in its own defense.

It's interesting: On the same page as the Weekly's story was displayed, there was a paid advertisement for a law firm that specializes in class-action antitrust lawsuits. The page also teased the Weekly's feature story on the decline of civil liberties under John Ashcroft's Justice Department. It's fairly obvious the Weekly—and its parent company—don't consider the right to engage in economic trade free of government coercion to be a genuine civil liberty.

Tuesday, July 08, 2003

Antitrust/Intellectual Property News: Judge Rules Kazaa Can't Pursue Lawsuit

The AP reports that a U.S. District Court judge has ruled that the distributor of the Kazaa software for sharing songs, movies and other files online cannot pursue an antitrust lawsuit against major recording labels and movie studios.

Sharman Networks made the antitrust claims in January as part of its defense of a copyright infringement suit filed by the entertainment firms.

Sharman argued that music labels and studios conspired to keep authorized and copy-protected versions of their songs and movies off Kazaa. It essentially blamed piracy on the entertainment companies, saying they failed to work with Sharman to create a legal alternative.

U.S. District Judge Stephen V. Wilson dismissed Sharman's claims, which many copyright lawyers had considered a stretch.

In Thursday's ruling, Wilson said that even if the allegations were true, Sharman would not be entitled to damages because it distributes file-sharing software and not online entertainment.

"Sharman Networks was grasping at straws to distract the court from their own improper behavior," said Matthew Oppenheim of the Recording Industry Association of America. "We are pleased that the court recognized what we have said all along--that these claims lacked any merit."
Indeed. In fact, one has to marvel at the hubris of Sharman for filling suit in the first place.

This is a good ruling. Every time an antitrust suit fails, an angel gets its wings.

Antitrust News: Morning Roundup

As I've long maintained, antitrust is first and foremost a means of blaming others for your business failure. Case in point: Texas Commercial Energy is trying to blame their competitors' "market power" for its bankruptcy:
Plano-based Texas Commercial Energy has filed a federal antitrust lawsuit against several electric companies, including a TXU affiliate, claiming that they violated federal and state law by illegally manipulating the Texas electric market and fraudulently inflating prices.

The lawsuit was filed in the Federal District Court in the Southern District of Texas, Corpus Christi Division, where TCE filed for Chapter 11 bankruptcy protection on March 6. TCE is seeking damages in excess of $535 million.

"Texas Commercial Energy is a victim of market power abuses in an energy marketplace that is mandated by Senate Bill 7 to be a level playing field for all participants," said Mike Shirley, president of TCE.

The defendants named in the lawsuit are all participants in the Texas electric market and include affiliates of TXU, Reliant, American Electric Power and Mirant.
If Texas law mandates a "level playing field," what exactly is the point of competition? Indeed, why even have private firms in the energy market if the state knows how best to govern the market?

But even if you do right by your competitors, you still face antitrust suits from your customers, as this story from Europe demonstrates:
Chiron Corp. Monday said it settled antitrust complaints by European blood banks over the pricing of its hepatitis and HIV tests.

Chiron, the Emeryville-based biotechnology company, said the Commission of the European Communities had accepted a joint settlement proposal made by Chiron and its European licensee, F. Hoffmann-La Roche.

In October 2001, the German Red Cross Donation Service and Working Society of Physicians filed a complaint with the commission alleging that Roche's prices for its blood-screening kits were unreasonable and should be prohibited.

The complaint was eventually joined by groups from the Netherlands, the United Kingdom, Finland and Luxembourg.

Chiron said it resolved the complaints by modifying licensing agreements that allow Hoffman-La Roche to use Chiron's technology in hepatitis C and HIV-1 blood-testing kits.
Presumably the settlement decided what was a "reasonable" price. Then again, there was a time when people set a "reasonable" price through voluntary contracts, not coercive litigation.

Monday, July 07, 2003

Antitrust News: Mass. Investigating Microsoft Settlement

Ted Bridis of the AP reports that Massachusetts is investigating whether Microsoft retaliated against a computer maker for promoting a rival operating system in violation of the company's antitrust settlement with the DOJ administration and 18 other states.

Lawyers for the state told the judge in the antitrust case that they were investigating other complaints that Microsoft might have violated the settlement. Microsoft said it was complying fully with the settlement.

In a court filing made public Monday, Massachusetts said that none of the allegations had been resolved and it would "move forward on an enforcement path should its investigations identify provable violations."

Massachusetts is the only state that has not settled its antitrust claims against the software giant. Its lawyers did not specify which computer maker might have suffered retaliation for promoting Linux software. Companies promoting Linux in varying ways have included IBM, Dell Computer Corp. and Sony Corp.

Each of the allegations against Microsoft was based on a complaint or investigative tip, state lawyers wrote.

Microsoft denied it was violating the agreement.

"We are complying fully with all terms of the decree and are working with the appropriate authorities to ensure that this consent decree is implemented," spokesman Jim Desler said.

Massachusetts has argued previously that the government's antitrust settlement was profoundly flawed. It has asked a federal appeals court to instruct the trial judge to impose tougher sanctions than those included in the settlement the judge approved.

The state also complained that its investigation of Microsoft has been hampered by the Justice Department (news - web sites) and some other states enforcing agreements that preclude any of the states from cooperating with Massachusetts.

"The exclusion of Massachusetts has been effective and complete," the state said.

A Justice Department spokeswoman declined to comment.

Massachusetts also told U.S. District Judge Colleen Kollar-Kotelly that it will establish a Web site to solicit complaints about Microsoft's behavior, set up a telephone hot line for complaints, contact technology industry groups and review news coverage of Microsoft to look for leads.
Indeed. Too bad there is not a website that solicits complaints from the victims of antitrust enforcers.

Free Speech: Washington Times Supports Nike Ruling, Denies Logic

I'm at a loss to explain it, but the Washington Times argues that the US Supreme Court's decision in the Nike commercial speech case was a victory for free speech. I sent them the following letter:

Contrary to The Washington Times position that the U.S. Supreme Court's ruling in the Nike commercial-free speech case was a positive decision ("Court gets it right on Nike," Editorial, yesterday), the court's decision was a setback for free speech. In an amicus brief to the court, my organization argued that allowing California anti-globalization activist Marc Kasky's lawsuit against Nike to proceed was a violation of the right of free speech of Nike's shareholders and employees.

Yet, rather than address Mr. Kasky's challenge to free speech directly, the court decided to send the Nike case back to California for trial, even as it admitted that a ruling against Nike would not likely be sustained on appeal. In a victory for anti-corporate crusaders, the court's decision to allow a trial means that at least for now, the right of a corporation to speak in its economic interest is in peril. Yet, just like political speech, which the court protects, economic speech is equally essential to the success of an individual's life. The Constitution should not be interpreted to uphold the sanctity of an individual's right to speak on issues affecting his political interests while simultaneously damning him when he speaks in order to advance his trade.

Until the Supreme Court recognizes the relationship between economic motives, individual rights and the Constitution's protection of all non-fraudulent and non-defamatory speech, whether private or commercial, the threat to free speech remains active. The court had an opportunity to set the record straight. It failed. Rather than be praised for its decision in the Nike case, the court ought to be condemned.
Update: The Times ran my letter in today's edition.

Antitrust News: Blueberries

More proof of antitrust's wide reach:
An antitrust lawsuit alleging price-fixing among four Maine blueberry processors could go to court as soon as October.

The attorney for blueberry grower Nathan Pease of Union has put legal notices in the state's largest newspapers notifying Maine's 500-plus blueberry growers they have until July 23 to exclude themselves from the class-action lawsuit.

Attorney Bill Robitzek of Lewiston said he expects the lawsuit -- which was originally filed three years ago -- to go to trial in Knox County Superior Court in Rockland this fall, possibly in late October or November.

The lawsuit accuses the processors of conspiring to set low field prices for the state's blueberry crop from 1996 through 1999.

The processors in the lawsuit are Jasper Wyman and Son, Cherryfield Foods, Merrill Blueberry Farms and Allen's Blueberry Freezer. They have denied the allegations.
One wonders why the blueberry growers, if they felt they were being cheated, didn't attempt to boycott the processors. Perhaps the reason is they feared an antitrust lawsuit from the processors. Antitrust can sometimes work both ways.

Antitrust News: Microsoft Doesn't Share Well

It shouldn't surprise anyone that the Justice Department is unhappy with Microsoft's compliance with the federal antitrust settlement:
Microsoft has yet to comply with a key provision of its government antitrust settlement, according to a progress report filed yesterday with the judge overseeing the landmark case.

A court order may be necessary "to account for Microsoft's delayed implementation," state and federal prosecutors said.

A Microsoft spokesman said the company is being cooperative and "working through the process."

But the company and government attorneys are haggling over how much Microsoft can charge for technology the company is required to share with competitors.

The report is the first public disclosure of the company's compliance with the November settlement, which largely ended the long-running case.

Government attorneys have already forced Microsoft to be more open when sharing technology.

Now they are trying to get Microsoft to lower the fees it charges to use Windows communication protocols.
One of two things is true: Either the settlement failed to set precise guidelines for what prices Microsoft could charge, or the Government is trying to placate Microsoft rivals who are constantly complaining. Of course, both premises could be true.

Thursday, July 03, 2003

Foreign Policy: Bush Says to Jihadists: Bring It On

Bring it on. The US Occupation Forces in Iraq, your one-stop shopping center for all your martyrdom needs. You want martyrdom, we've got it retail, we've got it wholesale. We've got so much martyrdom we're giving it away.

If you have an AK-47, if you have a beard, and if you can ululate, we've got a martyrdom opportunity for you, Johnny Jihad.

To anyone offended by Bush's tone, or by the idea that he's encouraging attacks on US troops: Would you rather they attacked armed, armored American soldiers in Iraq or would you rather they attacked American civilians in America.

Remember PJ O'Rourke's definition of American foreign policy--the vague feeling by Americans that whatever the government is going to do is probably best done in some other country.

Foreign Policy: Today's Secret Word is Invasion

Why, when people talk about sending armed soldiers into a country without clearing customs, do we shy away from the word "invasion"? Is it an ugly word? If so, it must be because it is an ugly thing, which is understandable--violence, killing, blood, death, etc. But if it is an ugly thing, is it made less ugly by pretending it's not?

Foreign Policy: UN Asks US to Invade--Altruism Explains It All

Today, President George W. Bush is considering an invasion of Liberia. This is not the result of any threat Liberia poses to the United States, real or imagined, imminent or potential, direct or remote. The civil war in Liberia does not threaten the United States, American or world trade routes, US allies, or US access to a crucial resource. It does not threaten an area important to U.S. security. The war doesn't even threaten to "overwhelm our borders with refugees."

The proposed invasion of Liberia has been invited by many of the same groups, people and nations which opposed the US invasion of Iraq as immoral. Their different stands on the two countries appear contradictory, but it is the logical result of applying the moral doctrine of altruism. Altruism is when one helps another without benefit to oneself. Action, to the altruist, is moral only if it is for someone else's benefit. To the altruist, selfishness is the definition and the root of sin. Since Iraq presented a threat to the United States, the invasion of Iraq was a selfish act, and therefore immoral. Since Liberia presents no threat to the United States, the invasion of, excuse me, humanitarian intervention in, Liberia is an unselfish, altruistic act and therefore praiseworthy. Therefore, the United States should sacrifice the blood of our soldiers to impose peace in Liberia.

Foreign Policy: Like Father, Like Son

President Bush, after acting against the threat from Saddam Hussein's Iraq, is considering sending American troops into a war-torn African country on a peacekeeping mission to avert a humanitarian disaster and assist in the construction of a consensus government.

Saturday, June 28, 2003

CAC News: Gone Fishin'

Nick and I will be taking a recess from blogging until Monday, July 7.

Friday, June 27, 2003

Antitrust News: A Win for Corrupt Due Process

An FTC administrative judge, to nobody's surprise, today upheld an FTC complaint:
In an initial decision announced today, Administrative Law Judge (ALJ) D. Michael Chappell upheld administrative complaint allegations that the February 2001 acquisition by Chicago Bridge & Iron Company N.V. (CB&I) of the Water Division and the Engineered Construction Division of Pitt-Des Moines, Inc. (PDM) violated Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act. Judge Chappell found that complaint counsel had established that the effect of CB&I's acquisition of the PDM assets may be to substantially lessen competition in four relevant product markets in the United States in which both CB&I and PDM competed. The order entered by Judge Chappell would require CB&I to divest all of the assets acquired in the acquisition, in order to restore competition as it existed prior to the acquisition. The Judge's initial decision is subject to review by the full Commission, either on its own motion or on appeal by either the respondents or complaint counsel.
Yes, that's right: Appeals of FTC decisions are heard by... the FTC! Is this a great country (for antitrust lawyers) or what?

CAC News: Media Appearance

I'll be appearing once again on the "Steve Czaban Show" tonight just after 9:20 on Fox Sports Radio. Tonight I'll be talking with Steve about the ongoing Big East-ACC litigation.

Lawrence v. Texas: Conservative Lies

Last week I chastised the Washington Times' editorial page for its intellectually dishonest support of prescription drug benefits. Today, I am once again compelled to criticize the Times, this time for their blatantly false reading of the Constitution. In a house editorial published today the Times, not surprisingly, dissents from the Supreme Court's decision yesterday in the Lawrence case:
The Supreme Court turned the Constitution upside down yesterday. In a 6-3 decision, the majority struck down state sodomy laws across the country — a move that is being celebrated as a huge victory for homosexual rights, which it is. The court used the so-called right to privacy to rule against a Texas law prohibiting sex between people of the same sex. In a brazen example of judicial overreach, the court also ruled against all sodomy laws in all states. This is bad law; the Constitution protects the rights of the states to legislate on these matters.
In support of this argument, the Times cites the Tenth Amendment, which states: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." What the Times neglects to mention is the Ninth Amendment, which provides constitutional protection for "unenumerated" rights not otherwise specified in the Constitution itself. Conservatives have long ignored the Ninth Amendment with malicious forethought because they view it as an obstacle towards their goal of using the government to impose private morality via public law.

The Times editorial does not use the phrase "individual rights" once, but it does refer to "states' rights." It's no coincidence that "states' rights" was once used to justify segregation and slavery. Under the federal Constitution, sovereignty is vested with the people; the states are but a convenient mechanism for dividing government power. Since the function of sovereignty, i.e. government, is the protection of individual rights--and only the protection of individual rights--there does not exist any distinct "states' rights" which can overrule the individual's liberties. No matter how big a majority might wish to do so in any given state, the government may not regulate the private consensual sexual conduct of its citizens on the grounds of public morality.

Nor is the Tenth Amendment a barrier to yesterday's ruling, as the Times falsely suggests. The Tenth Amendment only directs that legitimate government power not assigned to the federal government be remitted to the states and communities. The Tenth Amendment does not, however, define the scope of the general powers of government. That's defined by the Constitution itself, including the Ninth Amendment that conservatives so desperately want to ignore.

Rights and Reason: Maine climate change law to be first in nation

The Portland Press Hearld reports that Maine Gov. John Baldacci signed the first a state law in the nation that sets specific goals and a timeline to reduce carbon dioxide emissions.

Maine's law will require the state to develop a "climate change action plan."

The state Department of Environmental Protection will work with state agencies, individuals, businesses and others to come up with ways to reduce carbon dioxide emissions to 1990 levels by 2010, to 10 percent below those levels by 2020 and, eventually, by as much as 80 percent.

The bill's sponsor, state Rep. Ted Koffman, a Democrat from Bar Harbor, said it's important that the DEP will work with others to develop ways to meet the goals.

"We're not mandating a command-and-control approach as to how we're going to get these emissions down," he said. "It could be that in certain cases a regulatory approach would be the most effective and appropriate way of achieving some piece of our overall goal. In other cases, it may be education or technical assistance that is needed."
Oh, please. The article goes on to document the response of Maine's congressional delegation to the new state law:

All four members of Maine's congressional delegation support national measures to reduce greenhouse gas emissions, and U.S. Sen. Olympia Snowe, a Republican, said in a written statement Tuesday that she applauds the state for passing the law.

"The signing of this law should provide impetus for the Senate to consider the Climate Stewardship Act, legislation I co-sponsored to establish a cap-and-trade system to reduce (carbon dioxide) emissions," she said.

Sen. Susan Collins, also a Republican, said in a written statement that "climate change is a serious and growing threat. The most important thing we can do to combat global warming is to take concrete steps to reduce greenhouse gas emissions. That is why I recently joined Senators (Jim) Jeffords and (Joseph) Lieberman to introduce the Clean Power Act."

Snowe also supports that law.

That bill would reduce greenhouse gas emissions from power plants to 1990 levels by 2009.

U.S. Rep. Tom Allen, a Democrat who represents Maine's 1st Congressional District, has consistently pressed for reduction in greenhouse emissions.
It is appalling that there was no opposition to this bill on basis of the scientific claims made by those who believe in man-caused climate change. When 9/11 came, I asked myself where were the mid-East experts to warn us about the growing threat of Islam. Now I find myself asking where are the scientists to warn us about the growing threat of the environmentalists.

Executive Branch: Do Not Call Opens

The FTC won't protect property rights. It won't protect due process under law. It won't even protect logic and common sense. But it will protect you from telemarketers:
The opening of the National Do Not Call Registry, a free service of the federal government developed to give consumers a choice about getting telemarketing calls at home, was announced this morning by President George W. Bush, Federal Trade Commission (FTC) Chairman Timothy J. Muris, and Federal Communications Commission (FCC) Chairman Michael K. Powell.

The National Do Not Call Registry will make it easier and more efficient for consumers to stop getting telemarketing calls they do not want. Consumers can register in two ways: online or by calling a toll-free number. Registration is free and is available in both English and Spanish.

"We're very pleased that beginning today, consumers can make the call on whether to get telemarketing pitches at home," said FTC Chairman Muris. "Registration is free and easy, whether it is done online or by telephone."
Somebody should charge Muris with false and misleading advertising. The Do Not Call list is hardly "free"--telemarketers will bear the brunt of the costs as they are now legally required to periodically purchase copies of the list from the FTC. Congress also appropriated several million dollars to get the registry up-and-running. This is really a tax on the telemarketing industry, or perhaps a "user fee" if you care to look at it that way.

Muris' obssession with the Do Not Call list is matched only by the FCC's Powell gushing like a wannabe-freedom fighter:
"Government is at its best when it empowers individuals to make their own choices," said FCC Chairman Powell. "Consumers wanted more control over their telephones - and we are giving it to them."
Personally, I control my telephone just fine right now. If somebody calls and I don't want to talk to them, I deal with it through an amazing tecnique known as "hanging up."

I won't argue that Do Not Call is the worst thing the FTC has ever come up with. But it may be one of the dumbest.

Rights and Reason: The Prescription Drug Menace

Don Watkins sums up the prescription drug "reform" bill pretty well:
So now GovCo is going to cover most of the costs of prescription drugs. Sounds great, doesn't it? Uh huh.

I'm no economist but I know enough to make the following predictions: subsidizing prescription drugs will increase demand for prescription drugs thus driving up their price. One of two things will then happen -- (1) medicare costs will skyrocket or (2) the government will impose price controls on prescription drugs. Probably there will be some combination of (1) and (2).

Now, anyone who knows anything about history understands that price controls accomplish exactly one thing: they increase demand while restricting supply. In other words, more and more people will want more and more drugs, fewer and fewer of which will be available. Doctors will then feel pressure from GovCo not to prescribe drugs unless they absolutely have to and even that will not be enough to ensure that everyone who needs a particular drug gets it.

Oh yeah, and one more thing: don't expect to see half as many new life-saving drugs reach the market in the coming years. After all, would you spend hundreds of millions of dollars to develop a drug that, if it works and if the FDA approves it, won't make you any money?

That's right. Thanks to this bill, and thanks to the so-called conservatives who passed it, more people are going to want prescription drugs, fewer of which will be available; doctors will be forced to prescribe drugs only when absolutely necessary, which of course is a judgement call resulting in the likelyhood that a lot of people who do need a drug will not get a prescription for it; those who are lucky enough to get a prescription will still have trouble getting it filled; and fewer new drugs will be available as drug companies find they are unable to recoup their R&D costs. Oh, and for the rest of us, we'll be paying for all this and I can promise you: the suppossed $400 billion price tag cited by Congress won't even cover half the cost of the program.
Don is right about price controls. But here's something to keep in mind: price controls need not be imposed by direct fiat. For years, antitrust law has doubled as a crude price control method to impose price limits on physicians. As readers of this website know, the FTC regularly prosecutes doctors under false "unfair competition" claims for the express purpose of ensuring doctors don't get private health plans to pay them at rates too far above the federally-mandated rates for Medicare and Medicaid. Under this theory, the government decides "market" rates, and those who deviate from them are, by definition, acting "anticompetitively."

Aother thing to look for is heightened antitrust scrutiny of pharmaceutical company mergers. The Muris FTC has already been doing this, forcing merging firms to divest certain drug lines to third companies chosen by the Commission. The new prescription drug bill will essentially green-light Muris to attack any merger that might, in the FTC's view, increase drug costs even a little. After all, now that the government will be a major purchaser of such drugs, it's not in the "public interest" for price increases to stand.

Thursday, June 26, 2003

Rights and Reason: Back to the Future

Today's Supreme Court decision in Lawrence overrules the Court's 1986 decision in Bowers v. Hardwick, which had upheld the constitutionality of a Georgia law criminalizing consensual sodomy. Only three of the current nine justices were on the Bowers court. Then associate justice William Rehnquist and Sandra Day O'Connor both voted to support the Georgia law, joining an opinion authored by Byron White and also joined by Chief Justice Warren Burger and Justice Lewis Powell. John Paul Stevens, who joined today's opinion, authored a dissenting opinion in Bowers, and joined another dissent authored by Harry Blackmun which included Thurgood Marshall and William Brennan.

In one sense, then, today's decision was principally a reflection of the change in the court's membership rather than a great sea-change in the jurisprudence governing homosexual sodomy. Lewis Powell and and Byron White, two of the votes to sustain the Georgia law, were replaced, respectively, by Anthony Kennedy and Ruth Bader Ginsburg, who voted to overturn the Texas law. Stephen Breyer succeeded the like-minded Harry Blackmun. The only switch from overturning the law to sustaining it came from Clarence Thomas succeeding Thurgood Marshall.

One lesson to take from this: America benefitted from the Senate's decision in 1986 to reject Robert Bork's Supreme Court nomination. Bork was the first nominee to replace Powell; had he been confirmed, Bork would have almost certainly have voted to uphold the Texas law today. This would not have changed the result of the case, as there were six votes to reverse, but it would have prevented the Court from explicitly overruling Bowers, since Justice O'Connor refused to join that part of today's opinion.

The Culture: Rand on Sports

Frank Hughes of the Tacoma News-Tribune suggests NBA teams should consider the wisdom of Ayn Rand before making their selections in tonight's amateur draft. Hughes specifically chastises NBA officials who fail to integrate properly, instead relying on the adage that a team must take the "best player available":
For the uninformed, the whole "best player available" mindset among NBA general managers came about because of the 1984 draft. Then, the Houston Rockets took Hakeem Olajuwon with the first overall pick. The Portland Trail Blazers already had Clyde Drexler playing shooting guard, so they drafted for need, choosing Sam Bowie instead of Michael Jordan. The Bulls, who didn't have anything on their roster, took Jordan, and the concept of drafting "the best player available" was born.

All because general managers don't want to be labeled as the guy who misses out on the next Michael Jordan.

In all honesty, though, I cover the league, and I don't even know who the Blazers' GM was back then.

I just think it is a foolish way to approach a draft, taking "the best player available." Imagine if the San Antonio Spurs, with the 28th pick, get on the clock and the best player available is some 6-foot-10 dude from the outer reaches of unincorporated Mongolia. Does it really make sense for the Spurs to draft a power forward who clearly is going to get about 3½ minutes a game playing behind two-time MVP Tim Duncan because he is the "best player available"?

Let's take this to another forum. Imagine an architect is putting together his vision of a house, and he takes the "best room available" for each section of the house. No matter that the best living room comes from Buckingham Palace, the best dining room comes from a Saudi Arabian castle and the best master bedroom comes from Wilt Chamberlain's old domicile.

Throw them all together and you get, well, a really big version of the manager's residence in a trailer home park.

Or, Graceland.

No, an architect puts together his vision with a plan. As Ayn Rand said of Howard Roark's sketches in "The Fountainhead": "It was as if the buildings had sprung from the earth and from some living force, complete, unalterably right. Not a line seemed superfluous, not a needed plane was missing. The structures were austere and simple, until one looked at them and realized what work, what complexity of method, what tension of thought had achieved the simplicity. No laws had dictated a single detail."

I can't say I've ever heard of the assembling of an NBA team described in such an eloquent manner, but the point is well taken: "No laws had dictated a single detail."

Indeed, the law of "best player available" should be rescinded.
Hughes makes a good argument, especially given the new "law" which governs the draft--pick the most hyped player available. Most NBA general managers are afraid to pass on an underqualified player who has "upside," a media euphemism for hype. In most businesses, you're expected to hire according to your needs, not according to the demands of outside reporters. No reason the NBA should be any different.

Antitrust News: FTC Ends Nestle Battle

Yesterday the Federal Trade Commission cleared the Nestle-Dreyer's ice cream merger after Nestle agreed to some concessions:
According to the FTC, U.S. consumers spend at retail about $600 million annually for superpremium ice cream. Nestlé and Dreyer's, along with Unilever, the marketer of Ben & Jerry's brand ice cream, account for about 98 percent of superpremium ice cream sales. In June 2002, Nestlé and Dreyer's agreed to combine their ice cream businesses. The purchase of Dreyer's would give Nestlé, alone, about 60 percent of the market. At the time, the deal was valued at about $2.8 billion.

In March 2003, the FTC authorized the staff to seek a preliminary injunction to block the merger of Nestlé and Dreyer's, pending trial. The agency asserted the merger would violate the antitrust laws by eliminating competition and raising prices for superpremium ice cream. Nestlé markets superpremium ice cream under the Häagen-Dazs brand. Dreyer's superpremium ice cream brands include Dreamery, Godiva, under a license with Godiva Chocolatier, Inc., and Starbucks, under a joint venture with Starbucks Corporation.

The proposed order also requires that Dreyer's make its license to manufacture, distribute, and sell Starbucks superpremium ice cream nonexclusive; and allow Mars, Inc., and Ben & Jerry's to terminate their relationships with Dreyer's. To ensure that CoolBrands can operate profitably and provide viable competition, the settlement requires that, for a period not to exceed one year, Nestlé and Dreyer's supply Dreamery, Godiva, and Whole Fruit products to CoolBrands at their production costs. It also requires that they distribute those brands for CoolBrands in any area of the U.S. where Dreyer's previously distributed the products. It requires that they provide technical assistance and administrative services to CoolBrands, as needed, for one year. The settlement requires that Nestlé and Dreyer's provide additional premium ice cream or novelty products to CoolBrands for up to five years to enable CoolBrands to operate profitably while it develops additional distribution arrangements.
As horrible as this settlement sounds, Nestle actually fared pretty well in antitrust terms. When the FTC voted in March to seek a court order blocking the Nestle-Dreyer's deal, FTC staff likely expected the companies to call off their merger, which is what usually happens in such circumstances. Thus, in an odd way this was a victory for Nestle, since the staff--spurred on by FTC Chairman Tim Muris, who has an agenda against Nestle--probably predicted a total victory. Nestle fought back just enough to get most of what they wanted while avoiding an expensive court fight that would have only delayed their merger plans.

Still, this settlement is garbage. The Starbucks concession is frankly bizarre, as it has nothing to do with what the FTC was supposedly upset about, supermarket distribution. And there's still that nagging point that "superpremium ice cream" isn't actually a distinct market. But I'll save my griping over that for the comment letter.

Rights and Reason: Punting on Nike

As Skip reported below, the US Supreme Court voted to dismiss the writ of certiorari in the Nike commercial speech case as "improvidently granted." Failing to provide for the future is a recurring theme with the Court these days.

The Court received 31 amicus curiae briefs on the merits of this case, including the brief submitted by the Center. These briefs were not exercises in billable hours, but an indication of the serious implications of this case upon freedom in America. The Court's justifications for punting on Nike (or more properly, the justifications of those who saw fit to offer a justification--Justices Rehnquist, Scalia and Thomas offered none) are weak at best. Justice Stevens, in his concurring opinion argued that the "novel constitutional questions" were better left to lower courts to sort though first.

Yet the threat to free speech is not weak. As Justice Breyer observed in his dissent,

[...] waiting extracts a heavy First Amendment price. If this suit goes forward, both Nike and other potential speakers, out of reasonable caution or even an excess of caution, may censor their own expression well beyond what the law may constitutionally demand. That is what a "chilling effect" means. It is present here.
We noted as much in our amicus to the Court:

In maintaining the modern commercial speech doctrine, the Court has failed to recognize that individuals value their membership in society largely for the selfish economic benefits that come from free trade with others. In a society that recognizes individual rights, all interactions are voluntary, based on mutual exchange to mutual benefit. It is only in a system of free and un-coerced exchange that individuals can properly trade to mutual benefit. Accordingly, one's political interests and one's economic interests are joined, sharing the same selfish motivation and deserving the same protection.

Yet in failing to protect the speech necessary to defend an individual's economic relationships with others, the Court has relegated self-interested speech to an intellectual ghetto. In the case before the Court, the California Supreme Court holds that because Nike, as a corporation, is acting out of its own economic self-interest, its employees and shareholders ultimately have no right to submit their views to the public. This view is false.
The Supreme Court's dismissal order now means that the case returns to the California courts and certain appeal. See 'ya next term, Marc. . .

Antitrust News: Court Overturns Microsoft Injunction

This from the AP:

A federal appeals court overturned a judge's order that would have forced Microsoft to include competitor Sun Microsystems' Java software in its Windows operating system.

The ruling represents a victory for Microsoft in its drawn-out legal battle with Sun over the Java software.

The unanimous decision Thursday by the three-judge panel of the 4th U.S. Circuit Court of Appeals vacated a December ruling by a federal judge in Baltimore.

Java software is used to create interactive programs on Web sites that users can run regardless of what operating system or Web browser their computer uses.

The injunction would have required the Redmond, Wash.-based software giant to include Sun's Java technology in its Windows XP operating system until the lower court can rule on a lawsuit filed by Sun accusing Microsoft of anticompetitive practices.

Sun's case is one of four private antitrust lawsuits brought after another federal judge ruled in a lawsuit filed by the Justice Department and 18 states that Microsoft acted as an illegal monopoly based on its dominance in desktop operating systems.
I wrote in December that U.S. District Judge J. Frederick Motz's ruling had to be one of the most bizarre we have seen, even in as bizarre a field as antitrust. Bravo to the 4th Circuit for rejecting this unwarranted order.

Rights and Reason: Punting on Nike

In today's other big Supreme Court decision, the justices decided to not decide Nike v. Kasky, a case CAC filed two amicus briefs in supporting reversal of the California Supreme Court's decision to remove a corporation's statements defending itself from the realm of First Amendment protection. In a 6-3 vote accompanied by a one-sentence unsigned order, the Court dismissed the case for lack of jurisdiction. While unusual, such dismissals after oral argument do occur, and to be honest I wasn't completely shocked by this. There were some valid jurisdictional problems in this case, and while CAC felt they did not prevent the Court from addressing the merits of the case, today's decision in no way vindicates the anti-First Amendment position taken by the lower court and Nike's opponent in this case, Marc Kasky.

Nick Provenzo will have more to say on this later, and for now I would just add that Justice Breyer should be complimented for a fine opinion dissenting from the dismissal order.

Rights and Reason: A Kennedy Protects Individual Rights

In a crushing below to the collectivist philosophy of modern "federalism," the U.S. Supreme Court voted 6-3 to hold Texas' criminal ban on consensual gay sex unconstitutional. In one of his finest moments as a member of the high court, Justice Anthony Kennedy authored a superb opinion which struck right to the heart of the issue:
Liberty protects the person from unwarranted government intrusions into a dwelling or other private places. In our tradition the State is not omnipresent in the home. And there are other spheres of our lives and existence, outside the home, where the State should not be a dominant presence. Freedom extends beyond spatial bounds. Liberty presumes an autonomy of self that includes freedom of thought, belief, expression, and certain intimate conduct. The instant case involves liberty of the person both in its spatial and more transcendent dimensions.
More to come on this later, including a discussion of Justice Scalia's dissenting opinion, but suffice to say, today was a very good day for individual rights before the law.

Wednesday, June 25, 2003

The Culture: Geographical Ignorance

I know college basketball players often leave school early, but what excuse does Duke Coach Mike Kryzewski have? In an interview, Coach K talked about how he thought the ACC expanding outside its traditional geographic region was a bad idea:
To me, there's a reason why the United States doesn't have a state in France or Venezuela. We don't belong there. That doesn't mean we don't deal with them. If all of a sudden Georgia is in Venezuela, the people in South America are saying, 'What the heck are these guys doing in here?' And I think we kind of did that. I think there is a lot to be said about your geographic area and that landscape.
To borrow a Buffy line, that's insane troll logic. Ever hear of Alaska and Hawaii, coach? They're not exactly in our geographic area. And indeed, native Hawaiians weren't all that thrilled when the U.S. decided to "expand" (albeit not for football purposes).

Antitrust News: U.S. v. Univision

The regulatory apologists at the American Antitrust Institute recently filed their Tunney Act comments on the Univision acquisition of Hispanic Broadcasting Corporation. They offer this gem:

Consider the following hypothetical. There is a substantial group of Americans who only speak Spanish and whose sources of information are limited to Spanish-speaking TV, Spanish-speaking radio, and Spanish-speaking newspapers. A single corporation by acquisition gains control over all three media. The head of that corporation would be in the position to wield enormous political and economic influence by determining what the Spanish-speaking community will know and believe. He or she could determine what political candidates will gain exposure to the Spanish-speaking electorate and whether that exposure will be positive, negative, or neutral. Being able to sway a substantial part of the Hispanic vote could determine the outcome of local, state, and national elections and the owner of this political power would be in position to make deals with a political party and with an Administration. The same corporation could dramatically influence within the Spanish-speaking community which cultural trends, products and services will be ignored, denigrated or positively portrayed, thereby having a significant impact on the economy. This is the Hypothetical of a Dominating Voice.
Of course, AAI ignores the Reality of the Dominating Regulator. Somehow the actions of businessmen in the free market are a coercive threat, and only the edits antitrust regulators reflect what the market "ought" to do.

Borrowing from AAI's style, a regulator by legislative fiat gains control over every transaction in American business. The head regulator would be in the position to wield enormous political and economic influence by determining what business transactions are allowed and not allowed. The regulator could provide favors to his or her constituency of consumers at the expense of the smaller constituency of businessmen. Being able to sway a substantial part of the vote could determine the outcome of local, state, and national elections and the owner of this political power would be in position to make deals with a political party and with an Administration.

Of course, as we all know, that would never happen.

Rights and Reason: O'Connor's Legacy

There's too much on my plate right now for me to spend a great deal of time ruminating over the affirmative action cases, but I will briefly discuss how the split rulings will impact the judicial legacy of Sandra Day O'Connor. Many conservatives, in the wake of Monday's decisions, have called for O'Connor to announce her retirement so that President Bush may nominate a more principled replacement. I certainly share that sentiment, although it must not be forgotten that it was the president's cowardly decision to overrule Solicitor General Ted Olson in favor of White House Counsel Al Gonzales' "diversity is okay in some circumstances" position that gave O'Connor the political cover she needed to rule as she did. Had General Olson been permitted to file his much stronger draft brief, O'Connor might have well voted in favor of overruling the Michigan Law School's admissions regime.

If O'Connor were to retire when the court adjourns tomorrow, it may well be that her ruling in Grutter v. Bollinger will be remembered as her signature opinion. It's actually rare that an individual justice--rather than a particular court, such as the "Warren Court"--gets remembered for a particular opinion over a body of work. In my mind, there are four such opinions which stand at the pantheon of historical legacies: John Marshall's opinion in Marbury v. Madison, Roger B. Taney's opinion in Dred Scott v. Sanford, Earl Warren's opinion in Brown v. Board of Education, and Harry Blackmun's opinion in Roe v. Wade. Taney's was obviously the most nefarious, Marshall's the most politically important, Warren's the seminal judicial act of the 20th century, and Blackmun's the most controversial in modern times.

Where does O'Connor in Grutter fall? To be fair, she doesn't come close to Taney's level of moral corruption in Dred Scott. Nor does she act in the spirit of the unanimous Warren Court in Brown. This leaves her somewhere between Marbury and Roe, which like Grutter were cases involving the intervention of the court in political disputes.

John Marshall was a great justice and a great politician, and I mean that as a compliment. In Marbury, he was faced with enormous political pressure from Thomas Jefferson (a great American, but not a great politician) to essentially ignore the law. Jefferson's minions were threatening Marshall and his colleagues with impeachment over their disagreements with certain rulings. The easy thing would have been for Marshall to back down. Instead, he fashioned an opinion--one of the first to be a true "opinion of the court" and not a collection of individual explanations--that recognized political reality without becoming a slave to it. This is the kind of thing many modern judges, including O'Connor, could never hope to accomplish, both because of the cultural conservatism of today's courts and the substitution of expediency for genuine principle.

On the other side, you have Blackmun's Roe opinion, a noble effort that produced an ignoble result. Had the Court stuck to the narrow question of whether a state's near-total ban on abortion was constitutional, the justices might have gotten themselves out of the situation without ignoring a major firestorm. Instead, Blackum went for the kill too quickly, and tried to unilaterally rewrite the legislative rules on abortion without basing them in a great deal of facts (such as deciding when life actually begins and how rights should be applied thereto.) While the result of Roe was basically correct, Blackmun's methodology led to legitimate gripes about judicial imperialism.

O'Connor's history suggests she falls closer to Blackmun than Marshall. Indeed, O'Connor's signature opinion prior to Grutter may well have been her collaborative opinion (with Anthony Kennedy and David Souter) in Planned Parenthood v. Casey, the 1992 case which reaffirmed and superseded Roe as the governing standard in abortion cases. There, the unusual triumverate opinion tried to settle the abortion question once-and-for-all by again rewriting the law, only this time doing so in a manner far vaguer than Blackmun did. It might have settled the constitutional question, but politically it just made both sides of the issue even angrier.

This then is my verdict on O'Connor: She's a political judge, and a bad one at that. She turns cases into a matter of settling political disputes rather than settling the law itself. Grutter reflects that ideology perfectly. Had she stuck to the law, the outcome would have been unpopular in some quarters, but the legal issue would have been basically settled. Instead, O'Connor tried to settle the "national debate" over affirmative action by upholding Michigan's policies, then adding her belief that 25 years from now, such policies won't be necessary. No doubt O'Connor believes that we're all just going to stop fighting over the issue until 2028.

If O'Connor or another justice does retire this week, the president must resist his apparent impulse to put another political judge on the Court. That's not to say he shouldn't consider politicians necessarily; I've been an advocate of thinking outside the "elevating appellate judges" box. In fact, one candidate that merits serious consideration is Sen. Mitch McConnell (R-Ky.), one of the few principled defenders of individual rights in the current Senate. I would also not mind elevating Solicitor General Olson. Among the current appellate judges, my preferred candidate would be Ninth Circuit Judge Alex Kozinski.

Antitrust News: States Hold Call on Peoplesoft Deal

Reuters reports that attorney generals from several U.S. states held a conference call on Tuesday to discuss the antitrust implications of Oracle's bid for PeopleSoft.

"I'm encouraged generally by the high level of interest among my fellow attorneys general," Connecticut Attorney General Richard Blumenthal told Reuters. "There have been meaningful talks among the states and they are certainly ongoing and increasing in frequency and depth."

Connecticut, which is in the midst of a $100 million project to update its computer systems with PeopleSoft products, said last week an Oracle takeover of PeopleSoft would cost it "tens of millions of dollars" and asked a judge to block the deal, citing antitrust law.

"We're collecting evidence that confirms the anti-competitive and anti-consumer ramifications of this potential deal," Blumenthal said.

The conference call on Tuesday was "a standard, fact-finding process that typically happens any time there is word of a proposed merger or takeover bid that affects states or state government, as is the case in Texas," Texas Attorney General's Office spokesman Tom Kelley said in a statement.

Texas has not taken any legal action with regard to the deal, and Kelley declined to say how many states participated or provide specifics on the call.
As wrong as antitrust is, I have a hard time having sympaythy for Larry Ellison. How does the old saying go--"live by the gun and you'll go the same way."

Sports: ACC Bows to Virginia Pressure

The Atlantic Coast Conference's expansion plans become more unpredictable each day. Now comes word of yet another new configuration:
After 11/2 months of deliberations, discussions and telephone meetings, the Atlantic Coast Conference stunned nearly everyone last night, extending invitations to Virginia Tech and Miami, according to a source close to the situation. Boston College and Syracuse -- Big East schools that had gone through a formal process to receive invitations -- were not included, the source said.

"It's all new," said a league source, shocked that a proposal that had never been mentioned previously emerged during last night's two-hour conference call among ACC university presidents.

Last night's conference call was one of the closing chapters in a lengthy saga and marked a 180-degree reversal for Virginia Tech. Even last night, according to a university spokesman, Virginia Tech had yet to learn of its invitation from the ACC. And Virginia Tech remains a plaintiff in the lawsuit filed by five Big East schools against the ACC, Miami and Boston College in an attempt to stop expansion, which is scheduled to occur for the 2004-05 season.
So insted of a 12-school, two-division ACC, it now looks like there will be an oddly shaped 11-school conference designed, essentially, to placate Virginia politicians who have pressured the government-run University of Virginia to vote against any expansion that left out Virginia Tech.

This new proposal still leaves the problem of Connecticut's snarling attorney general, Richard Blumenthal, who vows to continue pursuing his state's lawsuit against Miami and the ACC should even one team leave the Big East. Of course, Blumenthal could quickly find himself without allies, as other Big East members are far less likely to continue the litigation if only Miami and Virginia Tech—neither a charter member of the Big East—were to leave. Big East officials are already reported to be eyeing replacements for the schools, a list that includes Louisville, Marquette, and even Xavier.

This is actually a tough situation. On the one hand, Blumenthal is legally obligated to defend the University of Connecticut's interests, and even the departure of Miami alone could have profound financial implications for UConn's rising football program. And when you take out all the idiotic fluff in Blumenthal's lawsuit—such as the antitrust claim—there is one potentially damning charge: Miami President Donna Shalala's continuing status as the Big East's representative to the Bowl Championship Series, the alliance which governs major college football's postseason:
"In addition, in 2002, during the same meeting in which she emphatically committed to Plaintiffs in the strongest terms possible that Miami was committed to the Big East, President Shalala was appointed as the Big East's presidential representative in the BCS. In this position, which she holds to this day and has never resigned, President Shalala receives critical information and acts on behalf of Big East members and is charged to look out for their interests vis a vis other conferences in this vital aspect of the Big East's participation in major college football.
If Shalala was speaking with ACC officials in secret prior to the public announcement of that conference's expansion plans, and she was simultaneously charged with protecting the Big East's BCS interests, there is undoubtedly a conflict of interests, and possibly a tort against the Big East.

Such a claim, if proven, would justify monetary damages against Shalala and Miami, maybe even the ACC, but it does not in my mind justify the relief Blumenthal is ultimately seeking--an injunction preventing Miami or any other Big East school from leaving the conference. Miami still has a right to choose its conference affiliation provided it complies with the Big East's rules for leaving, which only require a monetary payment to the other schools, something Miami has always been prepared to do.

It also can't be ignored that while Blumenthal has to protect UConn's interests, the Connecticut attorney general's overall record as an anti-capitalist regulator can't simply be overlooked. Barely a day goes by where Blumenthal doesn't deliberately attack some company's property rights--such as his recently filed antitrust suit against Oracle--and the attorney general has made it quite clear he believes the free market should give way to an economic system governed by 'enlightened' elites such as himself. For this reason, absent more direct damning evidence aganist Miami, I'm inclined to side with Shalala and the ACC against a known thug like Blumenthal.

Tuesday, June 24, 2003

Antitrust News: Unpublished Mayhem

How many lawyers does it take to get a three-page unpublished opinion? In the antitrust appeal of RJ Reynolds Tobacco Co. v. Philip Morris USA, it took 24 lawyers on the oral arguments and briefs to assist the U.S. Court of Appeals for the Fourth Circuit in producing a brief, unpublished per curiam opinion affirming a lower court's summary dismissal of the underlying claims. Here now is the court's entire opinion:
The plaintiffs, R.J. Reynolds Tobacco Company, Lorillard Tobacco Company, and Brown & Williamson Tobacco Corporation, sued Philip Morris Incorporated in U.S. District Court for the Middle District of North Carolina for alleged violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2; North Carolina General Statutes §§ 75-1, 75-1.1, 75-2, and 75-2.1; and North Carolina common law prohibiting unfair competition. The plaintiffs, who are cigarette manufacturers competing with Philip Morris, base their case on a retail marketing program called "Retail Leaders" that Philip Morris started in 1998. Under Retail Leaders, Philip Morris provides discounts to retailers on its popular Marlboro brand in exchange for the most advantageous display and signage space in retail establishments. This arrangement, the plaintiffs say, restricts the flow of information to consumers, limits the plaintiffs’ abilities to promote their products, insulates Philip Morris from effective competition, and results in higher cigarette prices.

The district court, after considering an exhaustive record that includes extensive data and information about sales, trends, and conditions in the cigarette market for over two decades, granted (in a thorough opinion) Philip Morris’s motion for summary judgment as to all of the plaintiffs’ claims. See R.J. Reynolds Tobacco Co. v. Philip Morris Inc., 199 F. Supp. 2d 362 (M.D.N.C. 2002). The district court concluded that in the period "since [Philip Morris] implemented its challenged Retail Leaders program [in 1998], the cigarette market in the United States remains highly competitive, as evidenced by the general stability of market shares in the light of long-term trends, the profitability of the Plaintiffs, and the ongoing entry and increasing market share of new manufacturers." Id. at 397. We affirm the grant of summary judgment to Philip Morris, and we do so on the reasoning of the district court with one exception. With respect to the plaintiffs’ claim under section 1 of the Sherman Act, we decline to conclude, as did the district court, that Philip Morris lacks market power. We agree, however, with the rest of the district court’s analysis of the section 1 claim. Assuming for the sake of argument that Philip Morris has market power, the plaintiffs did not show that Retail Leaders substantially forecloses competition in the relevant market. See id. at 386-93. Accordingly, as the district court ultimately determined, the plaintiffs’ section 1 claim fails. On the remaining issues, we affirm on the reasoning of the district court without any modification.

The judgment of the district court is affirmed.
You'd think with all the lawsuits the tobacco company faces as an industry, they'd be less inclined to sue each other over petty antitrust claims. Then again, with the government cutting off the tobacco company's revenue at every turn, perhaps this sort of legal canibalism was inevitable.

Antitrust News: Oliva v. United States

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

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

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

There are two problems I'm looking to address:

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

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

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

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

Rights and Reason: The Living Wage is Killing Us

Adam Sparks does a good job reporting on the growing "living wage" movement at Thanks to Joe Carson for the tip.

Rights and Reason: 'A Ruling That Only Goldilocks Could Love'

GW law professor Jonathan Turley weighs in at the LA Times on yesterday's decisions in the affirmative action cases.

Of the two decisions, the undergraduate ruling may have a more lasting effect legally and politically. The decision by Chief Justice William Rehnquist was quite specific in rejecting a system that gave 20 points out of 150 for race--a level of preference viewed as modest by some other programs. This line will now become the focus of the next generation of cases for opponents of affirmative action.

Conversely, Justice Sandra Day O'Connor's decision in the law school case is so generally worded that it may be vulnerable to later reduction or outright rejection. The dissenting justices accuse O'Connor of brushing over past opinions and previously established standards to uphold the Michigan policy. Among these earlier sources are some of O'Connor's own prior opinions that seem to contradict the result in this case.

In this decision, critics say O'Connor was somewhat cavalier in her application of the "strict scrutiny test," which must be satisfied whenever the government uses a race-based classification. O'Connor, they say, accepted certain arguments of the law school uncritically. She is also criticized for not imposing a specific duration for the Michigan program or require that such programs be used only to remedy past discrimination. All of these points are contested by the four dissenting justices. Thus, much of this decision could evaporate with a seemingly innocuous tweaking of one of these elements by a new court majority, should one of the justices retire.

The dissenting justices may have sown the seeds for precisely such a later rematch. In the undergraduate case, these justices left open the question of the precise weight that can be given to race, while ruling that Michigan was clearly excessive in its program. This will trigger countless challenges using the rejected Michigan program as a benchmark.

The court is now in the position of a constitutional Goldilocks: What is too much, too little and just the right weight in an admissions program? The undergraduate case is an invitation for challenges and, as early as 2004, the court could have a new case and, more notably, a new majority.

Monday's decisions will put affirmative action squarely on the agenda for the 2004 presidential election for two obvious reasons: The Bush administration opposed both admissions programs; the decision hangs by a single vote. With four justices expressing staunch opposition that is not likely to diminish with time, the next appointment to the court very likely will dictate the future of affirmative action. This puts the doctrines of affirmative action and abortion rights precariously on the 5-4 bubble.
Even a solid liberal like Jonathan Turley sees that this ruling leaves the pro-racial preferences side on shaky ground. Good. This issue deserves to be revisited.

The big question now is what kind of justice will President Bush nominate to replace the almost inevitable retirees.

Rights and Reason: 'A Resounding Victory For Diversity on Campus'

Lee Bollinger, the former president of the University of Michigan and current president of Columbia University, writes in the Washington Post about yesterday's decisions in the affirmative action cases.

The court's decision, then, suggests that the court knows what the nation knows: that, unfortunately, race still matters in the United States, and that as we as a nation seek to treat all Americans fairly, treat them equitably and as individuals, college and university admissions offices cannot be barred from looking at race. As Justice Harry Blackmun wrote in Bakke, "It would be impossible to arrange an affirmative-action program in a racially neutral way and to have it successful. . . . In order to get beyond racism, we must first take account of race. There is no other way."

. . .

And, finally, it is of the highest importance to recognize that the law school policy can be applied throughout all other colleges and universities. Nothing about this policy makes it peculiarly relevant for admissions decisions regarding law schools. The Michigan undergraduate admissions policy, which the court found flawed, awarded points for race and ethnicity. The only reason for that system was to ensure consistency across many different applications reviewed by many different admissions counselors. Nothing precludes the university from now embracing a non-quantitative method that permits counselors to consider "race" as one among many factors. And that will be true of every college and university admissions program in the country. It is, therefore, misleading and inaccurate to think of what the Supreme Court has done as a "split" or "murky" decision in this area of constitutional law. It is about as clear as constitutional law gets.
It will be interesting to see just how the non-quantitative application of a non-objective standard works in practice. Bollinger and his allies may be cooing now, but as Justice Scalia predicted in his dissent, rather then end the debate, the Court's ruling opened the door for even more litigation over affirmative action.

Monday, June 23, 2003

Humor: Gephardt Issues Order Making Himself President

This just in from

(2003-06-23) -- Just a day after announcing that he would use executive orders to overturn Supreme Court decisions, Rep. Dick Gephardt, D-MO, announced today that he has appointed himself President of the United States, effective immediately.

"I have duly sworn myself in as president," he said. "Instead of having the Chief Justice of the Supreme Court administer the oath of office, I just issued an executive order effective retroactively in advance."

President Gephardt has already issued an executive order making it illegal to "challenge the constitutionality of my reign as president."

Rights and Reason: President Applauds Supreme Court for Recognizing Value of Racial Diversity

The White House issued the following statement this afternoon in support of today's Supreme Court decision on affirmative action:

I applaud the Supreme Court for recognizing the value of diversity on our Nation's campuses. Diversity is one of America's greatest strengths. Today's decisions seek a careful balance between the goal of campus diversity and the fundamental principle of equal treatment under the law.

My Administration will continue to promote policies that expand educational opportunities for Americans from all racial, ethnic, and economic backgrounds. There are innovative and proven ways for colleges and universities to reflect our diversity without using racial quotas. The Court has made clear that colleges and universities must engage in a serious, good faith consideration of workable race-neutral alternatives. I agree that we must look first to these race-neutral approaches to make campuses more welcoming for all students.

Race is a reality in American life. Yet like the Court, I look forward to the day when America will truly be a color-blind society. My Administration will continue to work toward this important goal.
A "careful balance between the goal of campus diversity and the fundamental principle of equal treatment under the law"? That's a Clinton-esq statement if there ever was one. Today's Court decision found no such balance--there is no balance between racial preferences and equal treatment under the law. Race can not both matter and not matter at the same time.

If the President truly looked forward to the day when America will be a color-blind society, he ought to have acknowledged that today's ruling was a big step in the wrong direction.

Rights and Reason: Supreme Court Upholds Race as a Compelling Factor in University Admissions II

In going though today's Supreme Court decision on affirmative action, it was this paragraph in the syllabus in Grutter that made it clear to me why the individual rights side lost:

The Court endorses Justice Powell's view that student body diversity is a compelling state interest that can justify using race in university admissions. The Court defers to the Law School's educational judgment that diversity is essential to its educational mission. The Court's scrutiny of that interest is no less strict for taking into account complex educational judgments in an area that lies primarily within the university's expertise. See, e.g., Bakke, 438 U. S., at 319, n. 53 (opinion of Powell, J.). Attaining a diverse student body is at the heart of the Law School's proper institutional mission, and its "good faith" is "presumed" absent "a showing to the contrary." Id., at 318-319. Enrolling a "critical mass" of minority students simply to assure some specified percentage of a particular group merely because of its race or ethnic origin would be patently unconstitutional. E.g., id., at 307. But the Law School defines its critical mass concept by reference to the substantial, important, and laudable educational benefits that diversity is designed to produce, including cross-racial understanding and the breaking down of racial stereotypes. The Law School's claim is further bolstered by numerous expert studies and reports showing that such diversity promotes learning outcomes and better prepares students for an increasingly diverse workforce, for society, and for the legal profession. Major American businesses have made clear that the skills needed in today's increasingly global marketplace can only be developed through exposure to widely diverse people, cultures, ideas, and viewpoints. High-ranking retired officers and civilian military leaders assert that a highly qualified, racially diverse officer corps is essential to national security. Moreover, because universities, and in particular, law schools, represent the training ground for a large number of the Nation's leaders, Sweatt v. Painter, 339 U. S. 629, 634, the path to leadership must be visibly open to talented and qualified individuals of every race and ethnicity. Thus, the Law School has a compelling interest in attaining a diverse student body. 15-21.
The court responded to the claims of business and military leaders that race is a relevant criteria to judge the qualifications of an individual. Business and military leaders learned this claim at institutions like the University of Michigan, which in its "educational judgment [held] that diversity is essential to its educational mission."

And how did an institution like the University of Michigan come to hold that racial diversity is essential to its education? Because they learned it from philosophers.

Philosophy matters, and it mattered a whole hell of a lot today.

Rights and Reason: Supreme Court Upholds Race as a Compelling Factor in University Admissions

This morning the Supreme Court released its opinion upholding racial diversity as a compelling state interest in the University of Michigan racial preferences cases. We will have more comments after we read through the opinions.

Antitrust News: Status Quo at the FTC

There's been talk in Washington on whether the White House will "consult" with Democrats before making the next Supreme Court appointment, whenever that occurs. Frankly, I'm surprised there's much outrage among Republicans over that suggestion. After all, Democrats get consulted on a wide variety of executive appointments, and in fact even get to make some.

Take the Federal Trade Commission. Under law, no more than three members of the FTC--which functions as a quasi-court akin to the Star Chamber--can be of the same political party. Last September, Commissions Sheila Anthony's term expired, and because she holds a "Democratic" seat, Senate Minority Leader Tom Daschle told the White House who would replace her. Now, the law doesn't require Daschle to be given this power, only that the President not put more than three Republicans on the FTC (in fact, four of the five current FTC commissioners are Clinton appointees, since members serve a seven-year term.) Yet political courtesy seems to trump the Constitution when it comes to given the Senate some nominating power.

Daschle's nominee to replace Anthony is Pamela Jones Harbour, currently an attorney in private practice at Kaye Scholer in New York. For whatever reason, the White House took more than eight months to actually act on Daschle's advice, and the Senate only received the nomination officially on June 12. Harbour should be easily confirmed, given her Democratic support and the inability of Republican senators to provide any scrutiny of the FTC and its work.

Don't get me wrong: Harbour isn't an extremist or some FTC version of Robert Bork. In fact, Harbour's career strongly suggests she's a respected member of the mainstream antitrust establishment. And that's precisely the problem. Her presence on the FTC will simply reaffirm the anti-business, anti-individual rights status quo, and given her Democratic affiliation, she will likely encourage the Commission to lurch in an even more dangerous direction.

The bulk of Harbour's experience was in the New York attorney general's office, a well-known hotbed of activist lawyering. In 11 years there, Harbour rose to the position of deputy attorney general in charge of the public advocacy division. Most of her "victories" came at the expense of private businesses who violated antitrust and other "competition" laws. She argued once before the Supreme Court, in a landmark price-fixing case involving the oil industry.

As antitrust lawyers go, Harbour is successful and well-respected by her colleagues. Again, that's not a good thing in this context. The FTC is already monopolized by lawyers, most of them antitrust specialists. We've seen the results of that approach: Increasing harassment of even small businesses, constant adoption of arbitrary rules to govern whole sectors of the economy, and an institutional culture that is hostile to even the slightest criticism.

Nothing says FTC members have to be antitrust lawyers, or even lawyers at all. Given the Commission's mandate to, in essence, regulate every business in America by fiat, it's not unreasonable to ask that at least one of the commissioners have some practical experience in running a business. None of the current commissioners fit that bill, and neither does Harbour, a careeantitrustst lawyer.

Another interesting facet of Harbour's career: She's a member of New York City's Campaign Finance Board. In her role there, she's supported the Board's efforts to restrict the First Amendment rights of New Yorkers to participate in the political process. For example, the Board has consistenly lobbied (and obtained) greater restrictions on who can contribute, how much they can contribute, and at the same time has tirelessly advocated greater "public"--i.e. government--financing of political campaigns. In 1998, for example, the Board convince the city to quadruple the matching rate of contributions, giving a candidate $4 for every $1 raised from a local contributor. At the same time, the Board shut out more players in the political process by banning organizational contributions, such as those from nonprofit advocacy groups and and political committees. The Board said this was necessary to prevent "the dangers
of corruption" and "erosion of confidence in the democratic process."

I bring this up because, as an FTC commissioner, Harbour will be charged with deciding whether markets are competitive enough. Her work on the Campaign Finance Board suggests she views the free market as inherently anti-competitive, and that government regulators, and not consumers (or voters), should decide who can compete and under what conditions. That's hardly a positive message for the White House to send businesses in the current economic climate, and certainly not at a time when the FTC has become more aggressive in expanding their portfolio and, subsequently, reducing the rights of individuals and businesses.

(It's also ironic that Harbour, the Board member, is concerned with corruption and erosion of the democratic process. Few agencies are as corrupt and anti-democratic as the FTC, which operates largely in secret and generally acts without regard for the rights of American citizens.)

Harbour's by no means the next Hitler or some dangerous radical. But the time for stacking the deck at the FTC with career regulators has to stop. It would be better for the country, and the White House, if Harbour went back to her law offices in New York and the President found a pro-individual rights businessman to take the FTC position and begin waging war on that institution's corrupt culture.