Less Restrictive Alternatives in Antitrust Law

65 Pages Posted: 3 Oct 2015 Last revised: 3 Jun 2016

Date Written: November 1, 2015

Abstract

Antitrust courts often confront “mixed” conduct that has two contrasting effects, one harmful and the other beneficial. For example, a nationwide agreement not to pay college football players harms the players while benefiting fans of amateur sports. An important tool for analyzing mixed conduct is to compare the action to a hypothesized alternative and to ask whether the alternative action is “less restrictive” and hence less harmful. The less-restrictive-alternative (LRA) test is used widely, from the rule of reason to mergers to monopolization. The test often assumes a particular, narrow form, that the alternative must be dominant: not only less restrictive but also equally effective. In other words, could the benefits have been achieved equally well with less harm?

This Article offers a new account of the LRA test that draws inspiration from constitutional law and other fields. Dominant LRAs offer a shortcut that avoids the difficult tradeoff between increased benefit and increased harm. However, most LRAs are less effective rather than dominant. Such an alternative offers a basis for condemning conduct when the alternative is preferable on balance to the conduct. Balancing in antitrust is not a myth as many believe; instead, a tradeoff of incremental benefit and harm occurs in the assessment of LRAs. The LRA test serves the further function of “smoking out” an inference of anticompetitive effect.

As the Article shows, courts that restrict their analysis to dominant LRAs run a high risk of false negatives, particularly when they also ignore the overall competitive effects of the restraint, as in the recent O’Bannon v. NCAA decision. Finally, the Article proposes best practices in assessing LRAs to minimize the risk of false positives.

Keywords: ancillary effects, less restrictive alternatives, merger-specific efficiencies, narrow tailoring, overinclusiveness, underinclusiveness

JEL Classification: K00, K21, L12, L13

Suggested Citation

Hemphill, C. Scott, Less Restrictive Alternatives in Antitrust Law (November 1, 2015). 116 Columbia Law Review 927 (2016); NYU School of Law, Public Law Research Paper No. 15-48; NYU Law and Economics Research Paper No. 15-20. Available at SSRN: https://ssrn.com/abstract=2668269

C. Scott Hemphill (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

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