Three Topics of Presentation

1. Three Topics of Presentation • What Are the Antitrust Laws and Why Do They Matter to Small Businesses? • How Can IBAs Facilitate Enforcement of the Antitrust Laws? • What Political Issues Are Hindering Enforcement of the Antitrust Laws?

2. Sherman Act (1890) • Section 1: “Every contract, combination ... or conspiracy, in restraint of trade or commerce … is declared to be illegal.” • Section 2: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize … shall be deemed guilty …”

3. Supplier Supplier Supplier Manufacturer Manufacturer Manufacturer Distributor Distributor Distributor Retailer Retailer Retailer HORIZONTAL Section 1 Horizontal Agreement v. Vertical Agreements VERTICAL

4. Section 1 HORIZONTAL AGREEMENTS VERTICAL AGREEMENTS Between Sellers/Buyers Sometimes Unlawful Common Examples Exclusive Dealing Resale Price Maintenance • Between Competitors • AutomaticallyUnlawful • Common Examples • Price-Fixing • Output Restriction • Market Allocation

5. Section 2: Monopoly • Section 2 does not punish businesses that obtain a monopoly by producing a superior product or operating more efficiently. • Section 2 only punishes businesses that acquire a monopoly by eliminating competition. • Examples of Unlawful Conduct • Predatory Pricing • Exclusive Dealing Agreement

6. Injury to Small Businesses • Small Businesses are primary victims of antitrust violations. • Small Businesses pay higher prices for supplies. • Small Businesses are excluded from markets.

7. Enforcing the Antitrust Laws

8. Two Ways to Enforce Antitrust Laws • Government • DOJ and FTC prosecute antitrust cases • Can impose civil penalties or criminal convictions • All money recovered goes to government • Private Lawsuits • Money recovered goes to injured parties • Can recover treble damages • Can obtain injunctive relief

9. Class Actions • Most antitrust cases are Class Actions: • There are many victims of antitrust violations • Only cost-effective to litigate as class action • Victims are commonly impacted • Contingency Fees: Lawyers that prosecute antitrust class actions are only paid if they succeed in recovering money for the class.

10. Why IBAs Should Facilitate Litigation • Reason 1: Encouraging meritorious antitrust class actions protects small businesses, supports local communities and is consistent with the mission of IBAs. • Reason 2: Some IBAs can collect a portion of the attorneys’ fees recovered in successful antitrust class actions.

11. IBAs Can Share Attorneys’ Fees • Lawyers are prohibited from sharing attorneys’ fees with nonlawyers. • But since 2007, 30 states have amended their ethics rules to permit lawyers to share attorneys’ fees with nonprofits that recommend their services. • AL, AZ, AS, CO, DE, DC, ID, IL, KS, ME, MD, MI, MN, MS, MA, NE, NV, NH, NJ, NM, NC, ND, OK, OR, PA, RI, SD, TN, VT, WI.

12. Cohen Milstein Sellers & Toll • CMST is the only firm in the country developing fee-sharing relationships with nonprofits. • CMST has built fee-sharing relationship with dozens of nonprofits, including Public Citizen, Green America, BALLE networks, IBAs. • The firm is genuinely committed to social justice. • “The most effective law firm in the United States for lawsuits with a strong social and political component.” Legal Times • CMST awards 5% of fees to nonprofits that facilitate development of antitrust cases.

13. Two Ways for IBAs to Facilitate Antitrust Cases and Share Fees (1) Refer potential antitrust cases. • IBAs and their members are uniquely positioned to learn of antitrust abuses. (2) Refer small businesses to serve as plaintiffs in particular cases. • Interested IBAs are informed of potential cases and decide whether to inform their members. • Businesses pay nothing to be a plaintiff, and can recover substantial monies.

14. Political Issues Obstructing Antitrust Enforcement

15. First Issue: Appointments • Appointments of Judges • Most antitrust cases are filed in federal courts • There are 94 federal district courts; 12 Circuit Courts of Appeals; 1 Supreme Court • Appointed by the president; confirmed by Senate • Appointments of Agency Directors • DOJ and FTC • Appointed by the president; confirmed by Senate

16. Second Issue: Pleading Standards • Pleading standards govern access to justice. • In 2007, Supreme Court raised the pleading standards from “possible” to “probable.” • Courts have used this ruling to dismiss many viable antitrust cases. • House Democrats introduced “Open Access to Courts Act” in 2009 to turn back the clock but Chamber of Commerce defeated the bill.

17. Third Issue: Arbitration • In 2011, Supreme Court held that arbitration provisions which prohibit class actions are enforceable. • Concern is that companies will include such arbitration provisions in all contracts and eliminate class actions. • Two possible solutions: • Arbitration Fairness Act prohibits mandatory arbitration of consumer, employment and civil rights claims. • Newly created Consumer Finance Protection Bureau has the authority to ban harmful arbitration provisions.

18. How IBAs Can Help Politically • Work with civic groups in Washington to support legislation that strengthens antitrust enforcement. • Public Citizen, American Antitrust Institute, American Association for Justice • Support candidates that believe in antitrust enforcement and class actions. • President appoints all federal judges • Congress presides over legislation