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Corporate & Securities Law

Truth on the Market

Academic commentary on law, business, economics and more.

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Last Entry: April 01, 2011 at 00:51:38

First Annual FTC Microeconomics Conference: November 6-7

Posted on October 23, 2008
I think conferences like this are an effective way to attract talented economists to work on interesting antitrust problems. I can envision a similar event from the Bureau of Competition or policy shops featuring academic research from law and economics scholars...

Antitrust Contests

Posted on October 23, 2008
Director of the FTC Bureau of Economics Michael Baye posted slides of Antitrust Contests from a conference presentation in Stockholm. I am a co-author on the project along with FTC economist Paul Pautler. The paper is an attempt to structurally estimate a Tullock contest model of antitrust litigation using some unique data on [...

“Screw off, John”

Posted on October 21, 2008
Emailed James Heckman in response to fellow the Milton Friedman Institute (MFI) committee member John Cochrane, who had warned Heckman about his publicly expressed views that he was open to considering changing the name of the MFI and that at least some of the now well-cataloged objections to the MFI were rooted in the view [...

Fannie and Freddie as “Greater Fools”

Posted on October 18, 2008
Today’s New York Times features an op-ed by Michigan Law Professor Michael Barr and former Clinton advisor Gene Sperling that (somewhat predictably) blames our current financial mess on a lack of “common sense regulation” and exonerates the Community Reinvestment Act, Fannie Mae, and Freddie Mac...

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Some Links

Posted on October 16, 2008
Henry Manne offers his thoughts on the financial crisis and the increasing role for those who understand markets to play in the new regulatory age Larry Ribstein defends the Illinois no-LSAT admission program Krugman on Krugman A conference on property rights I wish I could attend featuring a keynote from Harold Demsetz, my early frontrunner for the Nobel [...

Reverse Payments Ripe for Cert?

Posted on October 16, 2008
The Federal Circuit came down on the side of rule of reason analysis, and no liability, in a reverse payment case in Cipro (HT: Antitrust Review and Patently-O): Since there was no basis for the district court to confidently predict that the Agreements at issue here would be found to be unlawful under a rule of [...

FTC v. DOJ on Section 2: Just Different Priors?

Posted on October 15, 2008
Turns out the Global Competition Policy issue on Reviewing the DOJ Report on Competition and Monopoly, in addition to the articles I pointed to in this post, has added a few more responses to the Report, the FTC Response, and what the schism might mean for antitrust enforcement over the next several years...

Kieff on Quanta v. LG Electronics

Posted on October 14, 2008
Scott Kieff (Wash U., Hoover Project on Commercialization Innovation) has posted a paper on Quanta v. LG Electronics: Frustrating Patent Deals by Taking Contracting Options off the Table?: The Supreme Court’s unanimous decision in Quanta v. LG Electronics may make it significantly more difficult to structure transactions involving patents...

Abuse of Plaintiff Win Rates as Evidence that Antitrust Law Is Too Lenient

Posted on October 14, 2008
I was recently reading Dean Chemerinsky (Irvine Law) on the Roberts Court at Age 3. One of Chemerinsky’s standard takes when he talks about the Roberts Court is that the Court’s pro-business stance is one of its defining characteristics. Readers of the blog will know that I’ve been critical of Chemerinsky for his [...

Google Yahoo Deal Update

Posted on October 14, 2008
The Wall Street Journal offers an update on the settlement talks with DOJ over the Google-Yahoo deal, which includes some interesting details about possible concessions to get the deal through: In the settlement talks with the government, both companies have discussed concessions...

GCP on the Section 2 Report Schism

Posted on October 13, 2008
Global Competition Policy has a trio of interesting articles on the DOJ Section 2 Report, and FTC response, which I’ve blogged about here and here from Tim Brennan, William Kolasky and Mark Popofsky. The abstract from Popofsky’s article gives a sense of the scope and importance of the issues here: The U...

Krugman Wins

Posted on October 13, 2008
Here’s the announcement. The Prize is for his “analysis of trade activity and location of economic activity.” Tyler Cowen has a lengthy write up with lots of links and information. The WSJ article is here. Here’s Krugman in the NYT: “There was something very beautiful about the old existing trade theory, and its ability to capture [...

A Bad Picture for McCain

Posted on October 11, 2008
SOURCE: The State of the Union (HT: Right Coast).

Nobel Watch

Posted on October 11, 2008
We’re now very close to the Nobel announcement which is expected Monday morning. Tyler Cowen favors Williamson and Tirole because they might want “to bring it down to earth and also they might wish to choose a Frenchman.” Peter Klein favors a prize for organizational economics and, I have a hunch, favors Williamson...

Citigroup, Wachovia, and Wells Fargo: Round Three

Posted on October 10, 2008
For those who have missed it, Citigroup announced almost two weeks ago an agreement in principle with Wachovia to acquire for $2.1 billion Wachovia?s retail banking operations. Four days later, Wells Fargo jumped the deal, announcing a merger agreement signed by both boards for Wells Fargo to acquire all of Wachovia...

Posner’s Definition of a “Private Sector” Response

Posted on October 09, 2008
Many observers have been shocked by the level of government involvement in the U.S. economy in recent days. Among other things, the government has (1) bailed out an insurance company that got “too big to fail,” (2) decided to spend up to $700 billion buying the distressed assets of financial firms (and apparently directly [...

May Treasury Buy Newly Issued Securities of Ailing Financial Firms?

Posted on October 07, 2008
Last week I posted about Lucian Bebchuk’s thoughtful bailout plan, which would have expanded Treasury’s powers to include the ability to make direct investments in ailing financial firms (as opposed to just buying their distressed assets)...

What Did Twombly Do Anyway?

Posted on October 07, 2008
Here is a very interesting empirical paper examining post-Twombly pleading from Martin Redish and Lee Epstein describing the state of affairs at the appellate court level, they write: To briefly summarize the state of the appellate doctrine on the issue: (1) two circuits (the D...

Commissioner Rosch v. Economics, Again

Posted on October 07, 2008
I’ve been critical of the Federal Trade Commission, and particularly Commissioner Rosch, for embracing what I think is a dangerously obsolete view of the role of economics in antitrust. First, it was the Section 2 Report response and before that, it was Commissioner Rosch’s observation that “any kind of economic analyses that require the [...

Everything you wanted to know about the Citigroup-Wachovia-Wells Fargo Debacle

Posted on October 06, 2008
Coverage of the Citigroup-Wachovia-Wells Fargo situation has revealed many fundamental misunderstandings of various aspects of the debacle, such that I wanted to offer my thoughts on a few points that have been curiously misstated: 1. A discussion of ?fiduciary outs? is a bit of a non sequitur here...

Wachovia Complaint and Status Check

Posted on October 05, 2008
The Wachovia and Citigroup litigators have been working overtime this weekend. As I reported earlier, Citigroup convinced New York State Justice Ramos late last night to toll the expiration of the Citigroup-Wachovia exclusivity agreement that was set to expire tomorrow, October 6, 2008...

Wachovia, Wells Fargo, and Citigroup - Score one for Citigroup!

Posted on October 05, 2008
Last last night, a New York judge issued an injunction tolling the termination of Wachovia’s Exclusivity Agreement with Citigroup. In addition, the judge set a show cause hearing date for next Friday to sort out the issue of whether Wachovia’s pending merger with Wells Fargo should be enjoined as a violation of Wachovia’s exclusivity agreement [...

Easterbrook (Gregg, not Frank) Up a Creek

Posted on October 05, 2008
Here?s another reason?as if you needed it?as to why getting a reasonable bailout of the mortgage-backed securities market through Congress was so difficult. Below I reproduce an analysis from Gregg Easterbrook of the Brookings Institute: Supposing we assume the bailout is required, here is what bothers me about the plan so far: Taxpayers don?t get stock, [...

Exclusivity Agreements, the Bailout Act, and Section 126(c)

Posted on October 05, 2008
The Wachovia-Citigroup-Wells Fargo dance continues. Now, however, it seems to involve confusion about Section 126(c) of the newly adopted Emergency Economic Stabilization Act (?EESA?). Allow me to take a stab at clarifying. To bring everyone up to speed, last weekend, after Lehman was allowed to go belly-up and Washington Mutual was seized by the FDIC, the [...

Armen Alchian Plays Prisoners’ Dilemma

Posted on October 05, 2008
Many economists know of the famous repeated prisoners’ dilemma experiments played by famous economists. I recently came across this old post from Brad Delong with an excerpt from Poundstone (1992) which recounts a game between Armen Alchian (who should win the Nobel Prize this year) and Rand economist John Williams...

Hazlett on Net Neutrality and Antitrust

Posted on October 05, 2008
My colleague Tom Hazlett has an interesting piece in the Financial Times chiming in on the network neutrality debate. Hazlett makes the point that if “competitive harm” is the concern, isn’t antitrust the answer rather than regulation of this sort? Hazlett writes: But rather than enforce such [disclosure] rules, the FCC launched regulatory attack by asserting [...

Is This Finally the Year for a UCLA Economics Nobel?

Posted on October 03, 2008
Its a fall ritual here at TOTM. Every fall when the Nobel speculation starts I make a prediction, Geoff bets the field against my prediction, and I lose. But at least I’ve been consistent with my predictions and certainly in my rooting interests...

Citigroup, Wachovia, Wells Fargo, the Exclusivity Agreement, and Specific Performance… and the Huntsman Opinion

Posted on October 03, 2008
On Monday, Citigroup announced that it had reached an agreement in principle to acquire some of Wachovia?s assets. Today, Wachovia announced it was being wholly acquired by Wells Fargo in a stock deal. Citigroup responded with outrage, announcing that Wachovia was in breach of its Exclusivity Agreement with Citigroup...

Coate on Unilateral Effects at the FTC

Posted on October 01, 2008
FTC economist Malcolm Coate has posted Unilateral Effects Under the Guidelines: Models, Merits and Merger Policy to SSRN. Here’s the abstract: This paper models FTC unilateral effects merger policy using a broad sample of 153 investigations undertaken between 1993 and 2005...

Hexion v. Huntsman: Vice Chancellor Lamb’s Must-Read Opinion For Deal Lawyers

Posted on October 01, 2008
On Monday night, Delaware Vice Chancellor Lamb issued an opinion in the epic Hexion v. Huntsman battle, ordering Hexion to perform its obligations under its 2007 agreement to acquire Huntsman. The opinion is well worth reading for deal lawyers ? it offers a good tutorial on how private equity deals can fall apart, how merger [...

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