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Recognizing the Limits of Antitrust: The Roberts Court Versus the Enforcement Agencies

Journal of Competition Law and Economics, Forthcoming

University of Missouri School of Law Legal Studies Research Paper No. 2015-09

59 Pages Posted: 21 Apr 2015  

Thomas A. Lambert

University of Missouri - School of Law

Alden F. Abbott

Government of the United States of America - Federal Trade Commission

Date Written: April 20, 2015

Abstract

As Judge Frank Easterbrook famously explained three decades ago, antitrust is an inherently limited body of law. In crafting and enforcing liability rules to combat market power and encourage competition, courts and regulators may err in two directions: they may wrongly forbid output-enhancing behavior or wrongly fail to condemn output-reducing conduct. The social losses from false convictions and false acquittals, taken together, comprise antitrust’s “error costs.” While it may be possible to reduce error costs by making liability rules more nuanced, added complexity raises the “decision costs” incurred by business planners (ex ante) and adjudicators (ex post). In light of all these costs, Easterbrook advocated an approach that would optimize antitrust’s effectiveness: interpret and enforce the antitrust laws so as to minimize the sum of error and decision costs.

This Article assesses the degree to which the U.S. Supreme Court (under the leadership of Chief Justice John Roberts) and the federal enforcement agencies (the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice) have embraced the optimizing, “limits of antitrust” approach Judge Easterbrook advocated. In its decisions addressing vertical restraints, exclusionary conduct, and antitrust enforcement, the Roberts Court has consistently recognized antitrust’s limits and has adopted rules consistent with an optimizing approach. The enforcement agencies, by contrast, have eschewed a limits of antitrust approach, at least with respect to exclusionary conduct, vertical restraints, intellectual property rights, and merger review.

Keywords: Easterbrook, antitrust, market, markets, competition, Roberts, FTC, Department of Justice, DOJ, vertical, exclusionary, merger, intellectual property

JEL Classification: K21, L40

Suggested Citation

Lambert, Thomas A. and Abbott, Alden F., Recognizing the Limits of Antitrust: The Roberts Court Versus the Enforcement Agencies (April 20, 2015). Journal of Competition Law and Economics, Forthcoming; University of Missouri School of Law Legal Studies Research Paper No. 2015-09. Available at SSRN: https://ssrn.com/abstract=2596660

Thomas Andrew Lambert (Contact Author)

University of Missouri - School of Law ( email )

Missouri Avenue & Conley Avenue
Columbia, MO 65211
United States

Alden F. Abbott

Government of the United States of America - Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

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