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Saturday, May 17, 2003 :::

Rights & Reason: Sullivan puts pragmatism over principle

Andrew Sullivan is a fine writer, but sometimes he says things that are just plain stupid:

The president may not want to endorse gay marriage; but there are concrete measures he could take to strike a centrist position. The most obvious would be to endorse the Employment Non-Discrimination Act, which would give gays the same workplace protections as other minorities. 88 percent of the country endorses this. It's a simple case of workplace fairness. It doesn't involve any approval of homosexual sex, since this is about public workplaces. It could and should exempt religious groups. And it would be a huge sign to the center of the country that Bush is actually an inclusive and compassionate president. I've had my libertarian doubts about such laws in the past; but I cannot see any reason why they should apply to every other group - including religious denominations - but not to gays.

Violating the rights of business owners to choose their own employees is not a �libertarian� issue, but a basic question of individual rights. And if such �non-discrimination� laws are justified for certain businesses, then why are they not okay for religious groups? Contrary to Sullvan�s definition, private businesses are not �public workplaces.� This is the same language used by those who would justify smoking bans in restaurants and oppressive zoning laws. It is not the kind of thing that should be advanced in the name of protecting the rights of gays or any other self-proclaimed group within society.

Statements like Sullivan�s do nothing more than play into the hands of irrational bigots like Rick Santorum by turning the issue away from protecting individual rights to using the government as a means of shoving �tolerance� down people�s throats. Let me be clear: The government has no right to legislate the private sexual behavior of consenting adults. But at the same time, the government also has no right to legislate the private business practices of employers, no matter how distasteful they seem to 88% of the electorate.

::: posted by Skip Oliva at 1:58 AM | link | donate |

Friday, May 16, 2003 :::

FTC news: the Institute of Store Planners

Today I filed public comments in the FTC's latest settlement, this time against that well-known cartel (*cough*), the Institute of Store Planners. I began my comments by outlining the facts of the case:

On Thursday, April 17, 2003, the Federal Trade Commission (FTC) announced a proposed consent order (proposed order) with the Institute of Store Planners (ISP), a New York-based association composed of approximately 860 members. ISP�s members include various professionals who design and construct retail store interiors. ISP maintains a voluntary ethics code which is the subject of the FTC�s complaint and proposed order.

The complaint alleges three provisions of the ISP ethics code violate Section 5 of the FTC Act, which generally prohibit �unfair methods of competition.� The challenged provisions, according to the complaint, are as follows:

�a member shall not render professional services without compensation.�

�a member shall not knowingly compete with another member on the basis of professional charges, or use donations as a device for obtaining professional advantage.�

�a member shall not offer his services in a competition except as provided by such competition codes as the Institute may establish.�

The FTC claims these statements, taken alone and without context, injured the legal rights of consumers by �discouraging and restricting price competition,� thus depriving consumers of �the benefit of free and open competition among store planners.�

The proposed order addresses the FTC�s concerns by forcing ISP to amend its ethics code and other governing documents to reflect FTC viewpoints. Specifically, the order prohibits ISP from �[r]egulating, restricting, impeding, declaring unethical or unprofessional, interfering with or advising against price competition by its members, including, but not limited to, the provision of free or discounted services or restricting members from offering their services in a competition unless they conform to rules or regulations established by ISP.�

My first objection dealt with the FTC's failure to establish any consumer injury:

The FTC alleges the mere existence of certain provisions of ISP�s ethics code constitutes a legal harm to consumers. The Commission�s complaint states ISP engaged in �unfair competition� under the FTC Act by �discouraging and restricting price competition among store planners,� and by denying consumers �the benefit of free and open competition among store planners.� Both of these statements are false. ISP never restricted legitimate competition among its members, and consumers suffered no demonstrable injury.

Since the FTC refuses to provide any context for ISP�s ethics code (or even a complete copy of the code itself), the public is left with little useful information to assess the Commission�s claims of anticompetitive behavior. Nevertheless, CVT�s independent investigation into ISP�s affairs turned up some useful information. CVT has determined that ISP�s ethics code was never intended, or applied, as an agreement to restrict competition in any manner. Rather, ISP adopted its current ethics code in the 1960�s as a means to advise members on how to avoid potentially illegal activities. The code is purely advisory in nature, and has never been enforced with respect to the provisions now challenged by the FTC. Any suggestion by the Commission to the contrary is simply untrue.

But even if the FTC had established some consumer injury�which in antitrust-speak means that prices went up�the punishment imposed on ISP in this case could not overcome an inconvenient constitutional barrier:

In case the FTC needs reminding, the First Amendment forbids the federal government from �abridging the freedom of speech, or of the press; or the right of the people to peaceably to assemble.� The amendment applies to all agencies and instruments of the government, including the FTC, and no affirmative grant of power under the Constitution can be interpreted so as to override, restrict, or impede the First Amendment�s protections. This includes Congress�s power to regulate interstate commerce under Article I, Section 8, which power Congress created the FTC under. Thus, the FTC cannot suspend the First Amendment simply be alleging ISP engaged in �unfair competition� or acted to injure consumers. The antitrust laws are not a license to censor private acts of speech.

Yet censorship is the explicit function of the proposed consent order. ISP is forbidden from so much as �declaring unethical or unprofessional� certain acts the FTC considers sacrosanct. The effect of this is to criminalize the opinions of those who disagree with the FTC, since the Commission is essentially restricting the fundamental liberty rights of ISP and its members. Such acts go far beyond the government�s constitutional power, and they even exceed the intent and scope of the FTC Act. ISP�s members did not commit fraud or engage in false advertising, actions which might justly incur the FTC�s wrath. Instead, ISP is being targeted for forming an opinion on ethical matters, and having the nerve to actually say it out loud. In this sense, the FTC is not just assaulting First Amendment liberties, but the basic ability of individuals to think and act upon their mind�s judgment. Such vicious assaults may have had a place in Saddam Hussein�s Iraq or the Torquemada�s Inquisition, but not in 21st Century America.

Next, I discussed other recent cases where the FTC forcibly rewrote the ethics codes of private association. Obviously there's a pattern at work here, and it's not "protecting consumers" from these codes. The FTC's actual agenda was something far more pedestrian�protecting their own budget:

In the FTC�s recent annual review, the Commission tried to spin their attack on private ethics codes as a noble cause:

The FTC pursued significant investigations involving the rules of conduct for various professional associations. Agreements among professionals that limit competition among themselves, often under the guise of professional association by-laws or codes of conduct, harm consumers much like �smoke-filled room� conspiracies.

This paragraph is utter nonsense. All three of the recent professional association cases involved ethics codes that were publicly known for years, if not decades. The FTC never presented any evidence which shows these organizations did anything behind closed doors in an underhanded manner. If anything, it is the FTC which operates as a �smoke-filled room� conspiracy by routinely coercing defendants into signing consent orders, then presenting the public with an inaccurate view of the persecuted groups. Beyond that, the FTC takes every precaution to avoid having to explain their actions. For example, the FTC has never responded to CVT�s comments opposing the NAA and AICHAW settlements. Nor has the Commission, in this case or the two previous ones, provided even basic evidence to establish any consumer was harmed by the respondents� allegedly illegal conduct.

It seems that this case, and the other �smoke-filled room� cases, is nothing more than a smoke-screen for the FTC�s real agenda, which is protecting the agency�s budget from congressional scrutiny. According to the FTC�s own �Performance Review,� the Commission has a quota of �45 to 70 nonmerger investigations� per year. This means the FTC is tying their own success rate to the number of businesses successfully prosecuted for antitrust violations. Meeting this quota allows the FTC to justify current funding levels to congressional appropriators, and allows the Commission to claim a substantial record of accomplishment to the public at-large.

But as demonstrated in this case, the FTC�s �accomplishment� reflects little more than the Commission�s ability to coerce respondents into signing a consent order. As the FTC itself admits: �A law enforcement agency that prevails in every litigated matter may do so because it pursue only the cases that are easiest to win.� Here, the FTC pursued a small professional society in an industry of limited scope and influence, and effectively bullied said group into renouncing their First Amendment rights. This is not the proper mission of a law enforcement agency, and it certainly is not the actions of a government that is supposed to uphold individual rights as society�s basic organizing principle.

Today was the final day for filing comments, and the FTC will likely issue a final order in the next two weeks. But that won't be the last we hear of this issue; I've already heard that several other professional associations are under investigation by the FTC over provisions in their ethics codes.

::: posted by Skip Oliva at 6:33 PM | link | donate |

FTC news: Continuing to dodge responsibility

After filing a number of comment letters with the FTC, I became curious about just how much the Commission was spending on these various settlements. In January, I filed a Freedom of Information Act (FOIA) request with the FTC asking for some budget information. Specifically, I wanted to know how much of the FTC�s annual budget (about $140 million) goes directly to the Bureau of Competition, the Commission�s antitrust enforcement arm. In addition, I asked how much the Bureau spent on seven specific cases that I filed comments in. I thought this was a fairly routine request, given that budget information is considered a legitimate public record.

Apparently that�s just too much accountability for the FTC. While the Commission did give me budget information for the Bureau of Competition (about $31.7 million annually) and five of the cases I requested, FTC staff decided to withhold disclosing the spending on two cases, those involving the National Academy of Arbitrators (NAA) and MSC Software Corporation. The FTC said both figures were exempt from FOIA disclosure because it constituted �information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings.�

This explanation, known as FOIA exemption 7(A), is intended to prevent individuals from using FOIA to get around normal discovery rules in contested proceedings. For example, a company under investigation by a federal agency cannot use FOIA to obtain records related to their investigation. Such requests could reasonably interfere with the agency. But that has nothing to do with my FOIA request, which simply asked for an aggregate spending level on two cases that have already been deemed closed by the commission. Even if the cases are still pending, releasing budget information for previous fiscal years would not prejudice any current activities.

On these grounds, I appealed the denial of the NAA and MSC budget figures to the FTC general counsel, William Kovacic. Earlier this week, Kovacic partially granted my appeal:

Dear Mr. Oliva:

This responds to your recent Freedom of Information Act ("FOIA") appeal, which was received in this office on April 14, 2003. By letter dated January 31, 2003, you had requested access to: 1) line-item budgets for the Bureau of Competition for fiscal years 2000, 2001, and 2002; and 2) records detailing the Bureau of Competition's expenditures in relation to seven specific matters during this same time frame. By letter dated March 27, 2003, Ms. Joan Fina granted your request in part, providing you with a one-page table reflecting the "dollars used" in FY 2000, FY 2001, and FY 2002, on five of the seven matters you specified. Citing FOIA Exemption 7(A), 5 U.S.C. � 552(b)(7)(A), she redacted from this chart the figures reflecting dollars spent on the other two specified matters. You have appealed this determination. Because I agree that the material that Ms. Fina withheld was protected by Exemption 7(A), I am denying your appeal.

The information that you requested about the MSC Software Corporation matter, Docket No. 9299, was, and continues to be, protected by FOIA Exemption 7(A), which protects information compiled for law enforcement purposes the release of which could reasonably be expected to interfere with enforcement proceedings. See Robbins Tire & Rubber Co. v. NLRB, 437 U.S. 214 (1978). With respect to the National Academy of Arbitrators matter, File No. 0110242, however, I am exercising my discretion to release the redacted figures because, according to the attorneys assigned to that matter, very recent developments have made it less likely that releasing this information could reasonably be expected to interfere with the case. Thus, while it is clear that this material was exempt at the time of Ms. Fina's determination on your FOIA request, it appears to no longer be exempt.

It�s not clear what the �very recent developments� were in the NAA case, though I heard that FTC staff was looking into prosecuting a sister group of NAA�s. As for MSC, it�s completely unclear to me why this is still considered a pending matter. That aside, the Kovacic�s letter denying my access to MSC�s budget figure has no basis in law, at least none that Kovacic provided in his letter. The FTC cites one case, Robbins Tire v. NLRB, but this decision has nothing to do with my request. Robbins Tire involved the subject of a National Labor Relations Board investigation trying to obtain witness statements in a pending case. The NLRB had a justifiable interest in withholding information that could be used to undermine their case�they were probably concerned that Robbins Tire would try and intimidate or interfere with witnesses.

Budget figures are a completely different animal. The cornerstone of government power is the ability to tax the people and spend their money on public affairs. Congress is granted the exclusive power of appropriations for this very reason. Every agency of the Executive Branch has an obligation to maintain open, honest books, and to make financial records available for public inspection. Even in national security matters, the people are aware of the aggregate amount being spent, even if specific line-items are classified. But nothing the FTC touches even remotely deals with national security. Indeed, the FTC acts a civil law enforcement agency most of the time, as they were in the NAA and MSC cases. Thus, the FTC has no excuse for not turning over the numbers I requested.

(Incidentally, the NAA case�which involved forcing a group to delete three sentences from their ethics code�cost the FTC (and the taxpayers) $24,319. And that was one of the cheaper settlements.)

On Monday, I will send Mr. Kovacic a letter giving him one last chance to release the MSC budget figures. If he fails to do so, I will file a lawsuit to compel the FTC to turn this information over. The FTC�s days of evading public scrutiny are over.

And by the way, lawsuits aren't free, so if any of you want to help me stick it to the FTC, consider becoming a CAC contributor.

::: posted by Skip Oliva at 6:13 PM | link | donate |

Food for thought: The Internet is a bathroom wall

Eugene Volokh notes Eric Zorn's view that the Internet is basically a bathroom wall:

Consider: Anyone can write anything on a bathroom wall. There's little accountability on a bathroom wall. It's hard to tell who wrote what on a bathroom wall. Truth looks just like rumor on a bathroom wall. Great stuff is interspersed with awful, stupid stuff on a bathroom wall.

Most people know instinctively not to offer as verification or a point of information the phrase "Well, you know, I read on the bathroom wall that. . ." Yet far too many seem willing to lace their discourse and communications with "facts" gleaned from bulletin boards, e-mail and Web sites.

The sad fact, which I've noted in many posts over the past year (and even setting aside egregious examples like the Jayson Blair affair), is that most media turn out to be a bathroom wall, too. An exaggeration, but less of an exaggeration that I'd like it to be.

One's credibility does not depend on the medium in which one communicates, it depends on their objectivity. One's association with others who have already established their credibility lends an imprimatur that one might not have otherwise, but the process of objectivity is the primary process, and its understanding its workings is oft neglected, if not outright ignored. To focus on mediums to the exclusion of how objectivity makes a person credible in the first place is not far removed from focusing on trees to the exclusion of the forest. The real question I ask is why aren't there more truthful people out there?

For example, for all the brouhaha over the Jayson Blair scandal at the New York Times, I haven't seen any one effectively take on what led a bright young reporter to think for even an instant that he could be utterly non-objective (i.e. make s&$% up) and not destroy his career. I know what it's like to blind myself to facts, but to engage in outright fakery, I can't comprehend it. The truth is out there. Reporting on it is not that hard. Other then time, how difficult is it to follow your subjects? To come to understand what is relevant and irrelevant for your audience? To focus on the primaries of a story?

In my job, I try to convince people that certain principles are better and truer than others. If I lied once, I'd be dead. On the contrary, I have to be able to make ever more complex identifications and intergrations, or I fail in my mission. And every time I come up short, it hurts me, and often in the worst way. The process of objectivity is a life-saver, whatever one's field.

I don't care where I hear an idea or a fact. If I decide it's relevant to me, all I can ask myself is, "Is it true?" The better I am able to answer that question, the better off I am. It's that simple, and that complex.

::: posted by Nicholas Provenzo at 1:50 PM | link | donate |

Rights & Reason: Bill Clinton's interns never had this problem...

The Washington Times' John McCaslin reports on a new form of housing discrimination:

"Greetings from Snellville, Georgia!" Chuck and Linda Moseley write to Washington landlord Peter Kelley, whose name is listed in a directory of apartments on Capitol Hill.

"Our son is a rising senior at the University of Georgia. He has been chosen as a full-time Intern for [Georgia Republican] Congressman John Linder beginning Sept. 1, 2003, and ending Dec. 12, 2003. Please advise availability and any additional information you require. We will not be able to visit D.C. until after June 5, 2003 due to his classes. Thank you for your time."

Nice enough letter from the proud parents.

"Hello Moseleys," Mr. Kelley writes back. "Thank you for contacting us about your son staying at the Loj during his internship. I'm usually very encouraging of young people doing congressional internships and staying here while they do them.

"However, I do have to say that as a full-time employee of an environmental group, and as someone personally quite alarmed about the direction that Congress and the president are taking with the environment, I have concerns about Rep. Linder's record.

"He has a 5 percent score on the League of Conservation Voters environmental scorecard, and his Web site lists the following votes, all of which I deeply disagree with: Voted NO on raising CAFE standards, incentives for alternative fuels (Aug 2001); Voted NO on prohibiting oil drilling & development in ANWR (Aug 2001); Voted NO on starting implementation of Kyoto Protocol (Jun 2000).

"I am torn," concludes Mr. Kelley, "because I hope that your son will have a wonderful experience in Washington and I know that working for any congressman, even one with Rep. Linder's views, will be an invaluable experience that he will treasure his entire career.

"However, I would not feel right about having someone stay at our place who was working to advance views such as these, which I believe amount to abandoning our responsibility to future generations. And so I must decline your request for a room here."

McCaslin reports several lawyers have offered to file a lawsuit on the Moseleys over Kelley's "housing discrimination." Now, one can berate Kelley for his tying a housing rental to the occupant's political views, but in the end it's his property and his mistake to make. I wonder if Rep. Linder, a good conservative Republican, will rise to the defense of property rights, or whether he'll explout his intern's ploy for political purposes. Sadly, my money would have to go on the latter.

::: posted by Skip Oliva at 1:40 PM | link | donate |

Politics: The foul smell of jock taxes

As part of the District of Columbia's desperate plea for the Montreal Expos, D.C. Delegate Eleanor Holmes Norton has introduced legislation which would permit the District government to impose a special tax on any income "derived from services rendered within the District as a member of a professional baseball team." In other words, anyone who plays Major League Baseball within D.C.'s borders will get a special income tax surcharge�perhaps as high as 20%�for each day they spend in the city. The District will then presumably use this money to help defray the costs of publicly financing a new baseball stadium.

Major League Baseball is not happy about this idea, nor obviously is the players union. I sympathize with the union on this, but the baseball owners have no standing to complain here. After all, these same owners are demanding D.C. foot the entire bill for a new stadium via taxpayer funding. If it's not okay to tax their players, why is it any more acceptable to have all city residents�most of whom have no use for baseball�pay extra sales taxes?

Of course, once you take the D.C. government's position that private property rights are subservient to the interests of city leaders, it becomes a race to the bottom to see whose rights get more violated. In the end, everybody loses under that system.

::: posted by Skip Oliva at 1:35 PM | link | donate |

Rights & Reason: VMI shall rise again...

Virginia Attorney General Jerry Kilgore has asked the full U.S. Court of Appeals for the 4th Circuit to review a panel's decision declaring the Virginia Military Institute's "supper prayer" unconstitutional. I discussed the panel's opinion earlier at this post, and nothing in General Kilgore's statement announcing the petition for rehearing changes my opposition to VMI's practice:

"By arguably treating the mere hearing of prayer as tantamount to participating in it, the decision jeopardizes prayer in any governmental setting," Kilgore wrote in the petition to the Court. "For example, in this Court -- as in the Supreme Court -- each session begins with a brief invocation. No one is required to close his eyes or bow her head. If hearing -- or standing -- is the same as participating, it is difficult to explain how these invocations could be constitutional."

Kilgore pointed out that the U.S. Supreme Court never has addressed the constitutionality of prayer in university or military college settings -- only the question of school-sponsored prayer in kindergarten through 12th grade.

"It is not just the military colleges that will be affected," Kilgore wrote. "By implicitly equating institutions of higher education with grades K-through-12, the panel opinion is written in terms so sweeping as to jeopardize the ability of any public college to include an invocation or benediction at any ceremony -- including graduation ceremonies."

The Supreme Court's "invocation" is nothing more than a brief proclamation that "God save the United States and this Honorable Court." It is not a participatory prayer or an attempt at proselytization. The VMI supper prayer was both of those things, and it took place within the inherently coercive environment of a state-run military college. That the prayer is unconstitutional as practiced by VMI should not even be a topic of serious debate. I understand Kilgore has political reasons for pursuing this matter�such as boosting his support among conservatives for his 2005 gubernatorial campaign�but even he realizes the 4th Circuit will likely not rehear this case.

::: posted by Skip Oliva at 1:26 PM | link | donate |

Stuff we love: 'Court Gives Bryco/Jennings the (Index) Finger'

Capitalism Magazine eviscerates a recent anti-gun lawsuit in California. Which makes me ask, who is Carter Laren and how did he get to be so cool? I never even thought to have include my pistol in my Capitalism Magazine head shot.

::: posted by Nicholas Provenzo at 1:18 PM | link | donate |

Antitrust News: Microsoft II

When is an antitrust settlement not worth the paper it is printed on. When you're Microsoft.

Six months after a federal settlement was ordered to remedy Microsoft Corp.'s anti-competitive conduct, two states, several business rivals and some users still say the software company wields too much power in the marketplace.

Attorneys General Thomas Reilly of Massachusetts and Darrell McGraw of West Virginia are continuing the battle for tough antitrust remedies after the U.S. District Court for the District of Columbia approved the settlement last year. In a brief filed with the U.S. Court of Appeals for the D.C. Circuit last week, the states argued that the remedies do not stop Microsoft's illegal conduct, restore competitive conditions or deny the Redmond, Wash., software company the fruits of its anti-competitive behavior.

A key sticking point for critics is that the remedy does not require Microsoft to unbundle middleware code from the Windows operating system but allows only users and PC manufacturers to remove the middleware icon from the desktop. Critics also said the API and protocol disclosure leave too much discretion to Microsoft to define terms.

Microsoft settled with the government, but it has never seen the benefit of that settlement. It's still being hauled to court as a matter of course, be it by the ravenous state AG's, class action litigants, or whatever other form of parasite with a law degree and a nose for the unearned.

::: posted by Nicholas Provenzo at 9:05 AM | link | donate |

Antitrust News: Microsoft

The EU is after Microsoft yet again, this time for competing head-to-head with Linux:

The European Commission is considering whether to order Microsoft to hand over internal memos revealed in the International Herald Tribune and New York Times newspapers that describe sales practices the European regulator suspects may break its antitrust rules, people close to the Commission said Thursday.

The sister newspapers reported that Microsoft's top salesman, Orlando Ayala, last July circulated a confidential memo to senior executives of the company around the world laying out a strategy to offer big discounts to governments and institutions, and in some cases to offer the company's software for free.

Ayala is reported to have told colleagues that the aim of the strategy is to dissuade clients from switching to rival PC operating system providers -- and especially to Linux, the open source software platform which is starting to steal market share from Microsoft in the server software market.

"Under NO circumstances lose to Linux," Ayala is reported to have written in the memo dated July 16, 2002.

Most discounting is viewed as normal competitive business behavior, but European Union antitrust law prohibits companies that dominate their markets from offering big discounts if their main aim is to exclude rivals, or if the discounts are only offered to certain clients. [InfoWorld]

Gee, and I though antitrust encouraged competition.

::: posted by Nicholas Provenzo at 8:55 AM | link | donate |

Thursday, May 15, 2003 :::

Antitrust news: copper

Beware Big Copper:

Manipulation in the copper market may be as old as the market itself, but traders and analysts say the antitrust probe launched this week into a possible cartel in concentrates might lead nowhere and ultimately just reflect market dynamics.

Even though copper has a colorful history of scandal, the red metal is no more ripe for trading shenanigans than other commodities, nor does it hold any intrinsic quality lending itself to price-doctoring, they said.

Canadian, U.S. and European competition regulators are investigating allegations of price fixing of copper concentrate, the mined product refined into metal.

European regulators have recently conducted "raids" on numerous copper companies. I'm a little unclear as to how such a raid operates. Are there restraint-of-trade-sniffing dogs who can located price-fixing agreements?

::: posted by Skip Oliva at 8:19 PM | link | donate |

Antitrust news: jet fuel

Antitrust law isn't just for airlines. Airports can now join in on the fun as well:

Development of the last 15 acres at Boca Raton Airport continues to taxi, its takeoff hampered by years of litigation, political snafus - and now charges of antitrust violations.

It's the latest strike in the air assault between Premier Aviation of Boca Raton, which in 2000 signed a 35-year lease with the Boca Raton Airport Authority to develop a fixed-base operator, and Boca Aviation, currently the only FBO at the airport.

On April 23, Premier lawyer Gerald Richman filed two antitrust lawsuits against Boca Aviation in the U.S. District Court for the Southern District of Florida. Premier Aviation, the plaintiff for one of the complaints, claims Boca Aviation "currently enjoys and is illegally seeking to protect a longstanding and unbridled monopoly over the sale of jet fuel, aviation gas and related aviation services at Boca Raton Airport, and has instituted sham litigation to maintain its practices."

In the second complaint, the plaintiffs are David S. Blue and S. Brent Blue, who claim that Boca Aviation "has enjoyed inflated profits that result directly from being the sole fixed-base operator at the airport since 1984."

Richman said he is seeking a class status and plans to file a motion for certification within 90 days. He deferred a request for further detail about the plaintiffs or their business to an associate who was not available.

"An anticompetitive environment is against public policy," said Richman, a partner in the West Palm Beach-based law firm Richman Greer Weil Brumbaugh Mirabito & Christensen. "Boca Aviation wants to maintain its monopoly. Period."

Mark Wantshouse, president of Boca Aviation, views the lawsuits as a gambit to sway public opinion. In 30 percent to 40 percent of U.S. airports, there is only one fixed-base operator, he said. "These are frivolous lawsuits only made as defamations of Boca Aviation for public relations reasons," he said.

If his company has been practicing monopolistic pricing, Wantshouse reasoned, then pilots and other airport users would have repeatedly logged complaints with airport manager Ken Day. But Day has never contacted Boca Aviation about such complaints, Wantshouse said.

I particularly love the statement "[a]n anticompetitive environment is against public policy." Lots of monopolies exist under public policy: the Postal Service, Amtrak, and, well, government-run airports.

::: posted by Skip Oliva at 8:05 PM | link | donate |

China Threatens to Execute SARS Spreaders

From the AP:

The SARS emergency worsened in Taiwan, which had its biggest one-day jump in cases Thursday, while China threatened possible execution for people who cause death or injury by deliberately spreading the disease.

The warning by China's Supreme Court, reported by the official Xinhua News Agency, appeared to be an effort to force compliance with quarantines and other restrictions. It cited existing laws with tough penalties, including a possible death penalty for even nonviolent offenses.

So this is how a dictatorship deals with a public health crisis.

China may not be the Maoist state it once was, but when push comes to shove, it is still all too willing to engage in bloodletting to preserve myth that the Communist Party provides stability for the Chinese people.

UPDATE: But then again, perhaps I am too harsh on our Chinese friends. After all, the FTC is willing to prosecute doctors under antitrust to preserve the myth that the goverment provides low prices and innovation for Americans.

Sure, it ain't the death penalty, but then again, the US ain't China.

::: posted by Nicholas Provenzo at 11:52 AM | link | donate |

Wednesday, May 14, 2003 :::

Antitrust news: 3M

Forget Microsoft, 3M is the new hot monopolist:

A California court has been asked to decide a sticky legal question: whether an alleged scheme by technology giant 3M Co. to control the market for transparent tape cost the state's consumers millions of dollars.

The lawsuit, filed Tuesday in Los Angeles Superior Court, draws on the same allegations made against 3M in a 1997 federal anti-trust action by LePage's Co., its main competitor in the $800-million U.S. cellophane tape market.

In 1999, a federal jury in Philadelphia awarded $68.4 million in damages plus interest to LePage's, which is owned by privately held Conros Corp. of Toronto, and ordered 3M to dismantle a retail incentive program aimed at boosting tape sales.

In March, a U.S. appeals court upheld the verdict, but 3M -- whose products range from sandpaper and industrial adhesives to drugs and Post-It notes -- said it will ask the U.S. Supreme Court to review the decision.

LePage's president Navin Chandaria said he, too, planned to return to court to ask for sanctions against 3M, alleging the $16 billion company has found "legal ways of doing the same thing to violate the spirit of the law."

A spokesman for 3M had no immediate comment.

The California class action by tape consumer Elaine Culotti accuses 3M of violating the state's anti-trust and unfair business practices laws to protect its monopoly and restrict the availability of cheaper tape brands statewide.

Culotti's lawsuit contends that 3M accomplished this by offering rebates and lump-sum cash payments to retailers who agreed to buy several 3M lines and to meet retail sales goals.

Kmart, Staples, Sam's Club and other retailers who accepted the incentives canceled their tape purchases from LePage's and Tesa Tuck Inc. to meet 3M's sales targets and avoid losing the price breaks, the lawsuit alleged.

"What 3M did to LePage's had an impact on consumers in California -- namely, lack of consumer choice and increased prices for Scotch tape," Culotti's attorney Kevin Roddy said.

The California lawsuit contemplates a class of "hundreds of thousands of consumers" and damages in the millions, he said.

CAC plans to file an amicus brief in support of 3M's forthcoming Supreme Court petition. Contrary LePage's assertion above, 3M is not violating "the spirit of the law." Indeed, 3M's underlying conduct�utilizing its wide product line to increase tape sales�is not illegal under the Sherman Act or any other law. The trial jury and the Third Circuit decided to invent new law on the fly by deciding to punish 3M simply for acting in its economic self-interest. What the article above omits is the fact that LePage's still dominates the so-called "store brand" tape market, the market which they based their antitrust lawsuit on (3M dominates its own "Scotch" brand, which is a redundant statement since Scotch is a trademark.) LePage's sued to avoid having to compete in the marketplace. The resulting jury verdict was based on nothing more than speculation: If 3M is allowed to compete, LePage's might lose market share. This new private lawsuit is based on this same non-objective legal theory.

::: posted by Skip Oliva at 9:18 PM | link | donate |

The race police strike again

Looks like baseball's antitrust exemption doesn't exempt individual teams from arbitrary "affirmative action" policies:

Baseball commissioner Bud Selig is investigating whether the Florida Marlins followed minority-hiring guidelines when they replaced manager Jeff Torborg with Jack McKeon.

"Bud's looking into it," Bob DuPuy, baseball's chief operating officer, said Tuesday.

In 1999, Selig sent a letter to teams requiring them to notify him about certain job vacancies, including manager. Teams are to provide a list of minority candidates, and the commissioner's office reviews the names before anyone is hired.

The Marlins could be fined if it's determined they failed to follow Selig's guidelines. He has the power to fine teams up to $2 million.

McKeon is white, in case you hadn't figured it out. He was recently hired to replace Torborg. Reports suggest McKeon was the only candidate actually considered. Given that this was a mid-season hiring, this should come as no great surprise to anyone. Most teams would have a candidate in mind when firing their manager while the season is actually going on. It's not an ideal time for an open-ended national search.

The commissioner shouldn't be exercising any control over individual franchise hiring decisions. I'm amazed the normally independent baseball owners would allow Selig to fine them for not placating the Jesse Jacksons of the world.

::: posted by Skip Oliva at 9:21 AM | link | donate |

It's a Byrd! It's a Plane! It's an Institute for Advanced Flexible Manufacturing!

This bit yesterday in Best of the Web Today brought me to tears:

Craig Bozman of Rockville, Md., in a letter to the editor of the Washington Post, lists some of the government facilities in West Virginia that are named for the state's (and the nation's) senior senator:

The Robert C. Byrd Highway; the Robert C. Byrd Locks and Dam; the Robert C. Byrd Institute; the Robert C. Byrd Life Long Learning Center; the Robert C. Byrd Honors Scholarship Program; the Robert C. Byrd Green Bank Telescope; the Robert C. Byrd Institute for Advanced Flexible Manufacturing; the Robert C. Byrd Federal Courthouse; the Robert C. Byrd Health Sciences Center; the Robert C. Byrd Academic and Technology Center; the Robert C. Byrd United Technical Center; the Robert C. Byrd Federal Building; the Robert C. Byrd Drive; the Robert C. Byrd Hilltop Office Complex; the Robert C. Byrd Library; the Robert C. Byrd Learning Resource Center; and the Robert C. Byrd Rural Health Center.

Last week Byrd accused President Bush of "flamboyant showmanship" after the president gave a speech on the USS Robert C.--whoops, make that the USS Abraham Lincoln.

And then there was this in today's Best of the Web:

Yet another commentator is experiencing psychosomatic symptoms purportedly brought on by President Bush's speech on the USS Lincoln. Here's San Francisco Chronicle columnist Jon Carroll:

I have not commented on the George Bush aircraft carrier photo-op fiasco until now because, quite candidly, the level of manipulation and cynicism gave me the vapors. I had to lie down on the daybed and have wet cats thrown at me for many hours before I was sentient again.

If only he'd start penning his column while sentient.

::: posted by Nicholas Provenzo at 12:47 AM | link | donate |

Tuesday, May 13, 2003 :::

Affirmative action and the N.Y. Times

I haven't spent a great deal of time considering the downfall of Jayson Blair, the New York Times' lying reporter. A number of conservative pundits want to treat Blair's story as a parable on the evils of affirmative action, since Blair was an African-American hired under a Times "diversity" initiative. I'm not convinced that this is a race story. Diversity surely can lead to inferior quality, be it in business or academia, but the problem at the New York Times seems to run much deeper. I suspect Cynthia Cotts, the perceptive media reporter for the Village Voice, is close to the truth:

One Times veteran suggests Blair received excess favor not so much because he was black, but because he was green. According to this source, Blair is typical of the latest crop of reporters anointed by the [Howell] Raines administration. "They're young, they're energetic, they say the right things, they kiss ass�but they don't have the skills to do the jobs they're handed," says the source. "This kind of favoritism is repulsive to people who have been there awhile."

Other insiders say the Blair case is symptomatic of a deeper issue: The Times newsroom does not operate as a meritocracy. Instead, sources say, Raines and [managing editor Gerald] Boyd pick their favorites for whatever reasons and become so invested in showcasing these reporters that they turn a blind eye to their flaws, which are said to range variously from inexperience and laziness to intellectual dishonesty and a high volume of factual errors.

Raines is a whim-worshipping autocrat who lacks the integrity to edit a tabloid, much less a major metropolitan daily. The great thing about the Internet-age, however, is that self-proclaimed authorities like the New York Times are becoming less relevant by the hour. Hopefully the Blair scandal will elevate the Times' decline into irrelevancy.

::: posted by Skip Oliva at 5:26 PM | link | donate |

BudPAC

Major League Baseball has its own political action committee:

Baseball, which is the only sport with a PAC, formed the committee last year, when the House and Senate judiciary committees were considering legislation to partially rescind the sport's antitrust exemption. Among other things, that exemption has allowed baseball to prevent teams from moving from city to city, as has happened in other sports.

Baseball lobbied to preserve the exemption and made contributions to judiciary committee members in both houses of Congress. It also dropped plans to eliminate two teams, which had sparked the bill. The legislation never made it out of committee.

The sport is also working to preserve its copyrights on the Internet, an issue that comes under the jurisdiction of the House and Senate commerce committees. A majority of the PAC's contributions went to members who sit on either judiciary or commerce.

Baseball Commissioner Bud Selig exercises control over the PAC. This will no doubt lead several anti-Selig sportswriters to renew their call for repealing the antitrust exemption. Selig opponents, however, should be mindful of the dangers of granting politicians more leverage over baseball's affairs:

Selig's predecessor, Fay Vincent, who was forced out as commissioner in 1992, said Congress has real power over the sport. He said Senate pressure in the 1980s led baseball to award expansion franchises to Denver and Miami in 1991.

"I don't think baseball would have expanded had it not been for the Senate, which really pushed very hard for teams in Colorado and Florida," Vincent said.

He recalled that senators, especially from those two states, threatened to push legislation rescinding baseball's antitrust exemption.

Baseball's over-expansion has been far worse for the sport's economic health than the antitrust exemption. It's forced the game to dilute its talent pool to the point of further exaggerating the gap between the high-income and low-income franchises. These are not things politicians consider, however, when they make their grand denounciations of the antitrust exemption; to members of Congress, baseball is simply another convenient political whipping boy.

::: posted by Skip Oliva at 4:57 PM | link | donate |

Antitrust news: American Airlines

Everyone knows airlines need more revenue to stay afloat right now. Everyone, that is, except the Department of Justice:

The Justice Department is scrutinizing the $10-per-round-trip fare increases made by the nation's largest airlines to determine whether carriers violated an antitrust ruling enacted nearly a decade ago.

At issue is the way in which airlines make fare changes that do not go into effect immediately, raising the possibility that they could signal future pricing plans to competitors.

"We are looking into it," Gina Talamona, a spokeswoman at the department's antitrust division, said Monday.

On Thursday, American Airlines raised non-sale fares on its North American routes by $10 per round trip starting June 1. United, dominant carrier at Denver International Airport, matched the increase the next day, and eight other carriers had fallen in line by late Monday.

The industry raised fares in anticipation of the government's upcoming four-month suspension of security fees, which amount to $2.50 per flight segment, maxing out at $10 per round trip.

"Airlines were faced with two choices: give consumers up to a $10 round-trip break, or raise fares," said Jamie Baker, J.P. Morgan's airline analyst. "Not surprisingly, the industry chose the latter."

Analysts and executives have said for months that the industry, which lost $3.5 billion in the first quarter, needs to find ways to boost revenue even as it struggles to cut costs. Fares have been kept extremely low to lure anxious and penny-pinching travelers back to the skies.

Under a 1993 Justice Department mandate, airlines cannot announce planned fare hikes. This amounts to price-fixing under antitrust doctrine, the same way doctors can never, never, never discuss prices among themselves without runnning afoul of FTC or DOJ regulators. In the current situation, American claims they've already implemented their fare hikes through computer reservation systems, thus rendering their behavior acceptable under the 1993 rules. Of course, that doesn't mean a damn thing. When antitrust regulators don't like a business practice, they simply change their rules after the fact. It may not be constitutional, but most folks look the other way because it, cough, "benefits consumers." As if air travelers enjoy a constitutional right to be spared a $10 fare hike on round trips from New York to Chicago.

::: posted by Skip Oliva at 1:05 PM | link | donate |

Monday, May 12, 2003 :::

MasterCard attacked again

Just a week after settling its last antitrust attack, MasterCard is on the defensive once again:

Paycom Billing Services, Inc., an Internet Payment Service Provider, processing credit card and check transactions for Internet merchants, filed a multi-million dollar lawsuit today in Federal Court in Los Angeles against MasterCard International for antitrust violations, fraud and other issues.

Paycom's suit alleges that MasterCard has established monopolistic rules that allow it unreasonable discretion to dominate Internet merchants, and it has exercised this power to illegally impose fines and penalties in the millions of dollars.

Former Federal Prosecutors for the US Department of Justice, William McD. Miller and Richard P. Crane, Jr. of the Los Angeles law firm Musick, Peeler & Garrett LLP and Dennis M. P. Ehling, filed the lawsuit on behalf of the Plaintiff. Mr. Crane stated, "A United States Federal District Court has already determined that MasterCard is a monopoly. MasterCard's continued unfair dealings and the imposition of baseless fines, penalties and fees on Internet merchants, such as Paycom, simply prove the abusive control that one
finds in a monopoly."

This is yet another example of the parasitic, entitlement mentality that dominates antitrust law. Paycom's business model is based on processing credit card transactions. Thus, without MasterCard's large, well-developed credit card network, businesses like Paycom wouldn't even exist in the first place. Yet now Paycom is attacking its benefactor for being "monopolistic."

The way Paycom's lawyers see it, MasterCard is some sort of public resource that their clients are entitled to use at their discretion. MasterCard, I presume, sees their network as their private property, hence they get to determine the terms of its use. MasterCard does charge Paycom more to process transactions than traditional "bricks and mortar" businesses, but there are numerous business justifications for this practice, such as the higher security costs of online transactions and the relative instability of many Internet retailers.

Paycom's federal complaint can be found at this link.

::: posted by Skip Oliva at 10:21 PM | link | donate |

The Antitrust Action Center

We've just launched what we are calling our "Antitrust Action Center." This part of our website will become ground zero in the Center's defense of the productive, and will feature cases we are monitoring and taking action on. It also will be where you can help us by engaging in your own intellecual activism.

::: posted by Nicholas Provenzo at 6:50 PM | link | donate |

Fun with market definition

As Nick mentioned below, I've been following a Justice Department antitrust case involving the supposed market for "alternative newsweekly" publications. Today I filed a second amicus brief with the federal court overseeing the proposed Village Voice-New Times settlement. Among the topics I discuss is the government�s seemingly vague market definition:

�Alternative Newsweekly� means a publication (such as the Cleveland Scene or LA Weekly) that possesses more than one of the following attributes: (i) it is published in a geographic area served by one or more daily newspapers to which residents turn as their primary source or sources of printed news; (ii) it is published weekly (or less frequently), and at least 24 times annually; (iii) it is distributed free of charge; (iv) it is not owned by a daily newspaper publishing company; and (v) it is a general interest publication that does not focus exclusively on one specific topic, such as music, entertainment, religion, the environment, or a political party or organization.

Under these criteria, the DOJ concluded that Village Voice and New Times were �monopolizing� the geographic markets of Los Angeles and Cleveland, respectively. But that�s not exactly true. The definition says a �publication� need to meet only �more than one� of the five characteristics mentioned.

Take this blog, for example. This is a publication, albeit an electronic one. It is distributed free of charge. It is not owned by a daily newspaper publisher. It is a general interest publication not fixated on any one topic. That�s three of the five. And this blog is accessible in Cleveland and Los Angeles. That should, in theory, make this blog (and every other blog in the country) a direct competitor of the �alternative newsweekly� papers put out by Village Voice and New Times.

And there are other publications which fill similar markets to the well-known �alternative newsweekly� papers, such as college newspapers. Yet none of these choices were included in the DOJ�s marketplace definition in this case. Then again, it�s probably a good thing the DOJ didn�t take their market definition that seriously. By gerrymandering an �alternative newsweekly� market, the DOJ simply undermines their own credibility.

::: posted by Skip Oliva at 6:44 PM | link | donate |

First Amendment Follies

Skip Oliva reports that the Justice Department now appears to believe the First Amendment does not apply to individuals, or at least not to individual corporations. This novel legal theory is being peddled before a federal judge in Ohio overseeing the DOJ�s antitrust settlement with Village Voice Media and New Times Media, two national publishers of �alternative newsweeklys.�

Read Skip's essay at Initium.

::: posted by Nicholas Provenzo at 1:19 PM | link | donate |

Sunday, May 11, 2003 :::

I don't want to talk about this...

One of the nice things about the blogosphere is that when you don't have the time (or stomach) to blog about a story, you can get somebody else to deal with it. That's just what I did with a story about Jesse Jackson and his latest tirade. Thanks, John!

::: posted by Skip Oliva at 10:23 AM | link | donate |

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