Antitrust Law and Economic Theory: Finding a Balance

50 Pages Posted: 18 Apr 2013

See all articles by Edward D. Cavanagh

Edward D. Cavanagh

St. John's University - School of Law

Date Written: April 2013

Abstract

Over the past forty years, the federal courts have relied more and more on economic theory to inform their antitrust analyses. Economic theory has indeed provided into antitrust issues and assisted the courts in reaching rational outcomes. At the same time, infusion of economic evidence into antitrust cases has made these cases more complex, lengthier, more expensive to litigate and less predictable.

This article argues that courts need to restore the balance between facts and economic theory in undertaking antitrust analysis. The problem is not that judges and juries cannot reach good outcomes in antitrust cases but rather that courts have become too reliant on economic theory in deciding antitrust issues. Just as courts of an earlier generation became too enamored of per se rules in antitrust cases, some courts today have become too enamored of economic theory in addressing and resolving antitrust issues. Some courts have lost sight of basic antitrust goals and have gotten bogged down in arcane economic tests - relevant market and proof of common impact in class action cases are two examples - which have become obstacles to, instead of tools for, resolution of antitrust disputes. Antitrust is a body of law enacted by Congress and construed by the courts; antitrust is not a compendium of the latest thinking in economic theory. The role of the courts is not to decree economic policy but rather to implement antitrust policies enacted by Congress. Antitrust has always been a fact-specific enterprise, and courts need to restore the proper balance between fact finding and economic theory by confining economic theory to those areas where it assists antitrust analysis and discarding theory where it gets in the way. In short, we need a return to simple, predictable and administrable - but informed - antitrust rules.

Suggested Citation

Cavanagh, Edward D., Antitrust Law and Economic Theory: Finding a Balance (April 2013). Forthcoming in the Fall of 2013, Loyola University Chicago Law Journal. Available at SSRN: https://ssrn.com/abstract=2253309

Edward D. Cavanagh (Contact Author)

St. John's University - School of Law ( email )

8000 Utopia Parkway
Jamaica, NY 11439
United States

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