Innovation and Antitrust Policy

Abstract:     
In this chapter from the forthcoming Oxford Handbook on Antitrust Economics (Roger D. Blair & D. Daniel Sokol eds. 2012), I argue that antitrust can play a limited but non-negligible role in fostering innovation in three principal ways. First, and as a general matter, antitrust promotes innovation when it performs its traditional role of penalizing practices such as horizontal price fixing and other anticompetitive practices that offer no plausible procompetitive justification, even when such practices happen to involve intellectual property rights (IPRs). As a general matter, in other words, antitrust should avoid IP exceptionalism. Second, however, in some limited contexts, antitrust should deviate from this general standard by showing greater leniency toward joint conduct, for example on the part of standard setting organization members, that is intended to make new technology more widely available. Third, in yet more limited contexts, antitrust should deviate from the general standard in the opposite direction, by playing a more aggressive role in circumstances in which the conduct at issue poses even an objectively small risk to future innovation, if that risk (should it come to pass) threatens substantial social harm, and decisionmakers can be confident that the potential procompetitive benefits of tolerating the conduct at issue are only modest. For the most part, however, to the extent patent and other IP laws are perceived as conferring excessive protection or otherwise as undermining, rather than advancing, their stated purpose of promoting the progress of science and the useful arts, reform must come from the IP side, not the antitrust side. Antitrust’s role in promoting innovation is important but nevertheless constrained by the limited reach of the statute and by courts’ competence to second-guess legislative judgments about the appropriate scope of IPRs.

Keywords: antitrust, patents, innovation

working papers series