Publications

Antitrust in Distribution and Franchising from Bona Law’s Steve Cernak Now Available

June 15, 2020 | Bona Law PC

Contrary to the belief of many of today’s businesspeople, antitrust law’s coverage of distribution did not start with Amazon or even the Internet. For decades, manufacturers have sold their products to resellers of all types to increase the distribution of their products. Manufacturers always have been interested in how their products, often with their brands, are resold. They often have tried to dictate or influence the pricing and marketing tactics of their resellers.

Since 1890, US federal antitrust law has been there every step of the way, drawing the line between permissible and impermissible restraints. The 2020 edition of Cernak’s Antitrust in Distribution and Franchising summarizes where those lines are today.

In just over one hundred pages, the book provides concise, plain English coverage of all the antitrust topics manufacturers and retailers—and their representatives—need to understand. Businesspeople can quickly get up to speed on potential distribution options. Libraries can provide their users, especially students, an efficient way to start their research. Generalist lawyers can review summaries of the key principles and cases necessary to assist their clients.

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Certificate-of-Need Laws, Evil Trolls, and the Minneapolis Star Tribune

April 29, 2020 | Bona Law PC

Author: Jarod Bona

We do our best to describe antitrust and other legal issues as straightforwardly as possible here. We tend to speak directly and avoid the guarded language that you often see from lawyers elsewhere (a little secret: most big-firm attorneys are afraid of getting in trouble in one way or another).

So, in case there was any doubt, I’ll tell you what I really think of certificate-of-need laws. These are laws, still on the books in many states, that actually require a new healthcare provider that wants to move into a market to get permission from the state to do so (a certificate of need). And, even more bizarre, the existing competitors—who certainly don’t want any more competition—often have a say or a role in whether the new provider receives a certificate of need, which can sometimes take months or years to obtain, if at all.

We hear all the time how important health and safety is: The sanctity of human life. Take care of yourself. Eat well. Exercise. Get your yearly physical. Follow your doctor’s advice.

We also hear complaints from every politician, news agency, and anyone that’s ever paid a medical bill about the costs of health care.

And, although healthcare workers have been heroes both before and during this pandemic, I think we would all agree that there is a lot of room for improvement in healthcare in the United States. I’ve been to the Mayo Clinic in Rochester, Minnesota many times and my son was born there, so I know how good healthcare can be. We have a lot of room to improve healthcare as a country.

I think we can all agree that healthcare is vitally important to us as human beings. That is what I hear the media tell me and what politicians preach all the time. And this makes sense: If you are sick or dying, getting better shoots up the priority list of needs and wants.

Switching gears briefly, here is something that I’ve learned as an antitrust attorney and as a student of economics: Markets with monopolists and markets with less competition have higher prices, lower supply, and lower quality for products and services.

Let’s say you are an evil troll that hates people. Let’s also say that you have the single opportunity to pass legislation in a state to hurt human beings that care about health and healthcare, but you don’t want it to be something that is so obvious that they’d just repeal it after your opportunity passes. You want something that is sneaky bad.

What would you do if you were that evil troll?

You’d pass certificate-of-need laws.

These laws are sneaky bad because it takes a couple steps of reasoning to see how they harm our health and healthcare. By creating the barrier to entry of these certificate-of-need laws, the evil troll can artificially limit the supply of healthcare, decrease its quality, and raise healthcare costs—almost without detection. And by offering the existing monopolist or provider an opportunity to participate in the process, the government agency is much less likely to award the certificate to improve people’s lives. At the very least, if the existing healthcare provider is involved, they will be able to help delay any competition.

Let’s say that you end up with a pandemic and really need a lot of hospital beds or other healthcare all at once. If that happens, the evil troll has won because their certificate-of-need laws are specifically designed to reduce the supply of healthcare, including hospital beds.

Bona Law opposes certificate of need laws and we call for their repeal and challenge. You can read our earlier article about certificate of need laws on this website here.

On April 28, 2020, Aaron Gott and I published an article in the Minneapolis Star Tribune entitled “State Certificate-of-Need Laws for Hospitals Must Go: These anti-competition laws have left us unprepared for the current pandemic, with fewer hospital beds for care.”

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Good News! Concurrences Extends Voting for the 2018 Antitrust Writing Awards Through February 16

February 12, 2018 | Bona Law PC

Do you want to learn about antitrust? If so, now is a great time to do so. Concurrences, an international antitrust website with an outstanding reputation, is accepting votes for their 2018 Antitrust Writing Awards, which will be announced at the Awards Gala Dinner on April 10, 2018 (right before the ABA Antitrust Spring Meeting, where you may find me on a panel).

I haven’t been to the Awards Gala Dinner, but I can only assume it is similar to the Oscars, if the Oscars were run by antitrust lawyers. We can pause for a moment while you try to picture what that might entail.

Back to the Antitrust Writing Awards: A jury of distinguished antitrust experts selected articles from 2017 in several categories: Best Academic Articles, Best Business Articles, Best Soft Law, and Best Newsletters. Within each category are articles in several substantive antitrust and competition areas.

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Takings and the Supreme Court’s Decision in Koontz v. St. Johns River Management District

February 12, 2015 | Bona Law PC

If you read The Antitrust Attorney Blog regularly, you might have noticed that I think that the governments—federal, state, and local—tend to overreach into our business, our pursuits, and our lives. And I have strongly advocated that we apply the federal antitrust laws to counter the bloating influence of governments everywhere into our markets.

You may have also noticed my interest in property and real estate. Part of that is personal—I believe that real-estate investing is a great idea. There are many advantages to it. And my wife and I are real-estate investors. Besides antitrust, my firm offers real-estate litigation (in addition to appeals, business litigation, and challenges to government conduct).

Well, these interests have collided into a massive project that I just completed with Luke A. Wake of the National Federation of Independent (NFIB) Small Business Legal Center. We finished the initial version of a law review article entitled Legislative Exactions After Koontz v. St. Johns River Management District.

Update: We are excited to announce that the Georgetown International Environmental Law Review published our article.

This isn’t the first time that Luke Wake and I have written something together. Last year, we published an antitrust article entitled The Market-Participant Exception to State-Action Immunity. Back when I was with DLA Piper, we also worked on an amicus brief together for the NFIB in the U.S. Supreme Court case of FTC v. Phoebe Putney Health System, Inc. Luke is a rising star in the legal world, so you should remember his name.

Koontz v. St. Johns River Management District

In 2013, the Supreme Court enhanced property rights in the United States when it decided Koontz. It was a sharply split decision that included an expertly written dissent by Justice Elena Kagan, who in my view is coming close to equaling Justice Antonin Scalia as the Supreme Court’s top writer.

As an aside, Justice Kagan (then Professor Kagan) was my Administrative Law professor at Harvard Law School and the wit that you see in her opinions was on full display in class. (She did, by the way, mention one day in class that Justice Scalia was her favorite Justice; I don’t think she meant that from an ideological perspective).

Koontz arose in the context of what is called the unconstitutional conditions doctrine, as applied to Takings law. If you don’t know what a Taking is, you can read this short article distinguishing eminent domain and inverse condemnation (takings).

First, some quick background. In 1987, the Supreme Court held in the case of Nollan v. California Coastal Commission that governments cannot attach conditions to permit requirements unless the condition bears a “nexus” to the impact of the proposed project. In 1994, the Supreme Court in Dolan v. City of Tigard further held that such conditions must also bear a rough proportionality to the harm from the proposed project.

The names of the plaintiffs in these cases conveniently rhyme, so people in the takings arena refer to this doctrine as the Nollan and Dolan requirements.

Here is what happened: Coy Koontz, an entrepreneur in the Orlando, Florida area, sought to develop some property that he held. Sounds reasonable enough. The property was zoned commercial and he sought a permit for its development.

Florida, however, had enacted comprehensive environmental restrictions that required a state agency to review any such applications to determine whether the proposed project will reduce wetlands. So, in this case, Mr. Koontz couldn’t develop his land unless the St. Johns River Management District blessed the project.

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The Antitrust Law Journal, Robert Bork, the European Union, and Google

November 30, 2014 | Bona Law PC

When you are an antitrust lawyer, an exciting day each quarter is the arrival of a fresh issue of the Antitrust Law Journal. I’ve previewed these issues in the past, here and here. Once again, the Antitrust Law Journal has arrived and it looks like a great one.

This issue includes an extensive symposium entitled “Robert Bork and Antitrust Policy.” A superstar collection of authors—including Herbert Hovenkamp, Richard Epstein, William E. Kovacic, Judge Douglas H. Ginsburg and many others—discuss Bork’s contribution to antitrust law. And my fellow summer associate from Gibson Dunn & Crutcher (from more than a few years ago), Adam J. Di Vincenzo, wrote the Editor’s Note.

Outside of the antitrust world, Robert Bork is known primarily for his Senate confirmation hearings after his Supreme Court nomination. For those of you that weren’t paying attention during the 1980s, Bork arrived at the Senate hearings as an exceptionally well-qualified nominee by President Ronald Reagan to the US Supreme Court. But for ideological reasons, they rejected him, beginning the phrase and culture of “Borking” a judicial nominee that, although qualified, may not satisfy political litmus tests. Since that time, of course, judicial nominations have, unfortunately, devolved into ideological warfare.

If you were around during the 1970s, you might also remember that Robert Bork was the acting head of the Department of Justice that fired Special Prosecutor Archibald Cox during the Saturday Night Massacre, arising out of Watergate near end of the Nixon Administration.

But—whatever you think of Robert Bork politically—he is a candidate for the antitrust-law Mount Rushmore. His most famous antitrust contribution is a book called “The Antitrust Paradox: A Policy at War with Itself.” As you can tell from the title, it was written during a time of flux and uncertainty in antitrust (1978).

You can read the outstanding articles in the Antitrust Law Journal for more detail, but in a nutshell, Bork’s major contribution with this book was to help set the goals of antitrust law toward consumer welfare. This more narrow approach contrasted with common temptations to use antitrust law as social policy to, for example, protect certain businesses from large companies. Or to use antitrust law as a means to attack “bigness” for other reasons.

Bork was highly influential in persuading antitrust participants that antitrust is really only concerned with activity that harms competition, which is the premise of the antitrust injury requirement. There is, of course, great debate over what, exactly, is consumer welfare and even whether total welfare is a better goal. And his emphasis on using economics to develop antitrust doctrine is mainstream, but there is plenty of room for debate within that framework.

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The Antitrust Law Journal, Patent Assertion Entities, and Politics

July 27, 2014 | Bona Law PC

As you know, I am a big fan of the Antitrust Law Journal, which is produced by the American Bar Association’s Antitrust Law Section. It is the journal where antitrust lawyering meets antitrust economics and academics. I like to hang out at this intersection.

A couple weeks ago, another issue of the Antitrust Law Journal arrived. I haven’t had a chance to read any of the articles yet—as I’ve been fortunately quite busy—but I skimmed it and it looks like a good one. Let’s review it together.

It is a double symposium issue, which is great because symposium issues can be a bummer if you don’t like the topic. This gives you twice the odds of liking at least some of the articles. The two topics are (1) Patent Assertion Entities, and (2) Politics and Antitrust.

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Government Entities that Compete in Markets Must Face Antitrust Scrutiny

May 16, 2014 | Bona Law PC

A few years ago, now-Chief Justice then-Nominee John Roberts invoked an umpire analogy during his confirmation hearings, explaining that “My job is to call balls and strikes and not to pitch or bat.” I love baseball, so I can appreciate any description that marries law and baseball.

Without getting into the substance of Chief Justice Robert’s point, let’s examine that analogy in a slightly different context:

Let’s say you are in the midst of a serious competitive ballgame. You reach the seventh inning, the score is tied 3 to 3 (good pitching, lots of great defensive plays, maybe a solo home run, and a couple manufactured runs for your team—something for everyone). The umpires have called a good game, but they haven’t been perfect.

You are the home team, so you go out to pitch in the top of the seventh inning. But instead of a batter coming up for the other team, the home plate umpire takes off his mask, grabs a bat and goes up to bat. Well, this is unexpected. Suddenly you are playing against the umpire?

Okay, you are a good pitcher, you can handle it. It is odd, but life is about making adjustments. You wait for a new umpire, but the spot behind the catcher remains vacant. What is going on? You call a time-out and ask.

After hearing the answer, you go back to the mound thinking “this is crazy.” The umpire is, indeed, now competing against you. But there isn’t a new umpire. The original umpire is still the umpire. He will still make the calls, while playing the game.

Pitch one: A fastball right down the middle, an obvious strike. No swing. “Ball One,” you hear from behind the batter’s helmet. That doesn’t seem fair. But, you’ve seen worse calls, so you ready pitch two.

Pitch two: A change-up over the plate. “Ball two.” Now, you are livid. Two strikes, but your hitter is calling the game, so you are behind in the count 2-0. This is the point where you start to ready your bean-ball pitch, but you smartly realize that if you throw at the hitter, the umpire, who is also the hitter, will probably throw you out of the game.

Pitch three: Another fast-ball down the middle. You know he won’t swing. “Ball three.” The umpire-hitter then takes first base. “That was only ball three,” you yell at the foolish ump, who can’t count. You were initially angry, but you see that he made a fool of himself for not being able to count, so your anger subsides a little. You chuckle, while getting ready to throw another pitch.

But then the umpire explains that not only does he still make the calls, but he can also change the rules during the game. So, at least for now, three balls not four balls is a walk. At this point, you let out a string of expletives, articulating that it isn’t really competition if the other side doesn’t have to follow the rules and can change them at will.

So, that was half-way amusing, but what’s the point?

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The Problem with Conduct Remedies for the Comcast-Time Warner Cable Merger

April 16, 2014 | Bona Law PC

Antitrust attorneys do everything that a lawyer can do: They litigate in both courts and agencies; they counsel clients; and they participate in mergers & acquisitions. If you are a young lawyer or law student that can’t decide what type of legal activity you like best, try antitrust and competition law—you can do it all.

In the mergers & acquisitions category, antitrust’s most recent obsession is the deal between Comcast Corp. and Time Warner Cable., Inc.

Competition Policy International (CPI) was kind enough to ask me to write a few words expressing my thoughts, and you can read them here. You can view the other Comcast-TWC articles from the CPI Antitrust Chronicle here.

I won’t go into a lot of detail because you can read the actual article (which is less than five pages), but I thought I’d provide a little introduction into my thinking.

Usually in these circumstances, you will see commentary on one side stating that, of course, the merger should be approved, maybe even “as is.” On the other side, you will read analyses that the world will fall apart if the merger is not blocked forever.

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A New Issue of the Antitrust Law Journal is Out!

January 14, 2014 | Bona Law PC

I was excited to find a brand-new crisp copy of the Antitrust Law Journal at my San Diego office today. That may seem like an odd statement, but I am admittedly a bit of a law nerd, particularly when it comes to antitrust and competition issues.

Many lawyers today have, unfortunately, lost the enthusiasm for law that they once had in law school or early in their careers. I have not. I love legal ideas and arguments, and the deeper I can explore a subject, the better.

What is great about antitrust and competition law is that unlike many areas of practice, it is well-connected to the academic and economic world. Indeed, I believe that to truly excel in this area, an attorney must follow and even participate in the exchange of ideas that might seem academic. The ideas in the Antitrust Law Journal, and antitrust articles in university law journals, for example, quickly infiltrate their way into agency practice and court decisions.

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I Started An Antitrust Blog

December 13, 2013 | Bona Law PC

Welcome. My name is Jarod Bona and this is my new antitrust blog—The Antitrust Attorney Blog. My antitrust and competition practice is global, but I am fortunate to live in Sunny San Diego with my wonderful wife and son. If you’ve never been to San Diego, I highly recommend it.

I am starting this blog to participate in the “market-place of ideas,” primarily on antitrust and competition issues. But I will probably dabble in other areas too, as—like most antitrust lawyers—I do more than just antitrust. Indeed, after my clerkship, I started my career as an appellate attorney in Washington, DC, and I continue to litigate non-antitrust cases in both appellate and trial courts.

I graduated from Harvard Law School in 2001, then clerked in Minneapolis for Judge James B. Loken of the United States Court of Appeals for the Eighth Circuit. I then joined the Appellate and Constitutional Law Group of Gibson Dunn in Washington, DC before moving to California and eventually DLA Piper. I also spent several years in DLA Piper’s Minneapolis office. Update: I now work for my own law firm–Bona Law PC.

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