The Rule of Reason and the Goals of Antitrust: An Economic Approach

34 Pages Posted: 14 Apr 2012 Last revised: 23 Sep 2015

See all articles by Roger D. Blair

Roger D. Blair

University of Florida

D. Daniel Sokol

USC Gould School of Law; USC Marshall School of Business

Date Written: April 9, 2012

Abstract

In this paper, we discuss the problem of the rule of reason and the welfare standard in antitrust. We begin with the Introduction (Section I), which provides an overview of the problem. In Section II, we review the Supreme Court’s guidance on the standard for conducting a rule of reason analysis. Put simply, the Supreme Court has failed to identify clearly what standard to use in conducting a rule of reason inquiry. After a careful — albeit selective — reading of Supreme Court opinions it is simply not clear. While a case can be made for total welfare as the guiding principle of a rule of reason analysis, which is the standard that we advocate, an argument also can be made, based upon case law, for consumer welfare. In most simple cases, the antitrust welfare standard does not matter. Beyond these simple cases, however, there are more complicated cases for which the welfare standard does matter. The article introduces the first set of complications in Section III where we analyze the need to weigh efficiencies that are accompanied by increased market power flowing from joint ventures or mergers. In Section IV, we turn our attention to the creation of countervailing power through joint ventures or mergers. In Section V, we turn our attention to restraints that have no apparent total welfare effects, but do have pronounced distributive effects. Finally, we close the article with some concluding comments in Section VI regarding how to solve the policy dilemma of the implementation of proper goal of antitrust.

Keywords: rule of reason, antitrust, competition law, competition policy, Bork, total welfare, consumer welfare, mergers, joint ventures, monopsony, two part pricing, collussion, buyer power, efficiency, all or nothing offers

JEL Classification: K21, L10, L40, L41, L42, D61

Suggested Citation

Blair, Roger D. and Sokol, D. Daniel, The Rule of Reason and the Goals of Antitrust: An Economic Approach (April 9, 2012). Antitrust Law Journal , Vol. 78, No. 2, 2012, Minnesota Legal Studies Research Paper No. 13-04, Available at SSRN: https://ssrn.com/abstract=2039337 or http://dx.doi.org/10.2139/ssrn.2039337

Roger D. Blair

University of Florida ( email )

342 Matherly Hall
Gainesville, FL 32611-7140
United States
352-392-0179 (Phone)
352-392-7860 (Fax)

D. Daniel Sokol (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

USC Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

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