Uniltaeral, Anticompetitive Acquisitions of Dominance or Monopoly Power

Abstract

The prohibition of certain types of anticompetitive unilateral conduct by firms possessing a substantial degree of market power is a cornerstone of competition law regimes worldwide. Yet notwithstanding the social costs of monopoly modern legal regimes refrain from prohibiting it outright. Instead, competition laws prohibit monopolies or dominant firms from engaging in those types of anticompetitive conduct that amount to "monopolizing" or an "abuse of dominant position." Importantly, anticompetitive conduct can take place both on the road to monopoly and, later on, once substantial market power has been achieved. Legal regimes nevertheless tend either to ignore or pay only limited attention to the unilateral conduct of firms lacking substantial market power.

This Article argues, however, that such conduct merits legal attention where it led or would lead if unstopped to the acquisition of substantial market power. Specifically, competition law regimes that fail to incorporate an appropriately-designed unilateral conduct liability in this area are unable to address some increasingly important classes of potentially harmful unilateral practices, such as those that concern cheap exclusion, multi-product (but not necessarily dominant) firms, network tipping effects, and more. This failure, moreover, may lead to distortions in other areas of unilateral conduct policy in these regimes that seek to compensate for the absence of any liability for the conduct of non-dominant firms. The analysis concludes by drawing together the lessons from the critical evaluation of the EU and the U.S. approaches for the appropriate design of unilateral conduct regimes worldwide.

Keywords: Unilateral conduct, Competition, Antitrust, Monopolization, Single-firm conduct

JEL Classification: D42, D43, K21, L40, L42