Update: Anti-Monopoly vs. Hasbro, TRU et al

[antimonopoly@juno.com (Ralph Anspach)]

             The oral hearing on Anti-Monopoly's appeal of the district
  judge's granting Hasbro summary judgment on the grounds that
  Anti-Monopoly had not made its case that it had been damaged by Hasbro  
  even though the judge assumed for the summary judgment that Hasbro is a
  70% monopolist in the antitrust market and that high barriers to entry
  exist.  The good monopolist theory which is running amok nowadays.
               Extremely important in the hearing was (these are quotes
  from the covering letter with which Carl Person,  the AMI attorney,
  submitted the decision to the appellate court) " the initial decisiion, 
  dated September 25,  1997 by Administrative Judge James P. Timony in the
  Federal Trade Commission, in Matter of Toys' R' Us, determining that TRU
  together with Hasbro,  Mattel and other toy and game manufacturers, 
  inter alia,  conspired
   to have the manufacturers refuse to sell toys and games to Costco and
  other price clubs.  The decision finds the existence of predatory
  practices by Hasbro together with TRU and other manufacturers,  which
  practices are a SUBSET (my underlining) of the predatory practices
  described by appellant in the instant appeal..  (I have capitalized
  "subset" to emphasize that the stealth tactics employed in this case
  preclude the publication of what Anti-Monopoly uncovered through
  discovery. The FTC doesn't know half of what's coming down.)
               Gary Reback led the defense of Monopoly  (yes the same
  anti-microsoft anti-monopoly hero - what's that Shakespeare said about
  lawyers?) and  said nothing about the FTC intitial decision during the
  hearing.  A judge on the panel said he would be sure to read it.
                 Judge Timony's initial decision is well worth studying by
  the list and anyone interested in antitrust.  If it represents evolving
  FTC antitrust policy,  there's still hope for Adam Smith's idea about a
  free market in this country.  Even the Chicago boys might learn something
  from it. 
                  Piecing together what  Anti-Monopoly found out and the
  FTC's initial decision,  it is now clear why Anti-Monopoly and other
  competing products were  excluded from the market.  There was not only a
  competition-killing rebate system,  featuring total sales increase
  rebates and secret,  item by item rebate negotiations,  but also direct
  exclusion. . .
              The conspirators called competing products like
  Anti-Monopoly,  a patented improvement over Monopoly which had been
  stolen from the public domain,  "knock-offs",  and Hasbro pressured TRU
  not to stock these so-called knock-offs.  This was done at the same time 
  that the manufacturers agreed to give up profits by not selling to the
  price clubs in order to protect TRU against competition. 
               Judge Timony also provides the answer to a question which
  was raised in this list before,  namely,  why would a 20% oligpolist like
  TRU have sufficient market power to induce a 70% monopolist like Hasbro
  to give up the lucratice,  growing price club business?  The answer is
  testimony by industry leaders that one cannot enter the national market
  without appearing on the shelves of TRU.  TRU has this leverage;  in
  effect TRU is an "essential facility" in the industry - an argument made
  by Anti-Monopoly and thrown out by the district judge. 
             Anyway,  we have here a great case study  which is magnified
  in importance because it involves Monopoly vs. Anti-Monopoly. Great
  educational material.  It illustrates what happens in antitrust markets
  when firms achieve market power by acquition or growth,  with market
  power reached long before the currently fashionable and fallacious 70% or
  even higher threshhold.  Yes,  folks,   businessmen do talk to each other
  and the fewer the actors in an industry,  the easier it is to conspire
  against the consumer and the free market as that old fossil Adam Smith
  pointed out a long time ago. . 
             This is what happened in the real world. When other specialty
  toy and game chains like Leisure World and Child World went belly-up, 
  TRU's bargaining position became enormously strengthened.  As Hasbro
  testified,  TRU became the gateway to national distribution even though
  it had only 20% of the total retail market. At the same time,  the price
  clubs were beginning to cut seriously into TRU's market.  (This was about
  the time that Anti-Monopoly and other competing products disappeared from
  the mass merchant's orders.) So TRU told Hasbro etc.  that it wouldn't
  buy any item from a manufacturer if the manufacturer also sold the item
  to the price clubs.  Then,  Hasbro worked with  TRU not to buy
  "knock-offs" in return for not selling to the price clubs. RIP
  Anti-Monopoly and other competing products, aka as "knock-offs" by the
  monopolists unwilling to brook competition...               
               
  Ralph Anspach.