The Hidden Rules of a Modest Antitrust
63 Pages Posted: 11 Jan 2017 Last revised: 2 Feb 2020
Date Written: January 9, 2017
The reason for which the Supreme Court’s embrace of rules of reason—case-by-case analysis of suspect conduct for harm to consumers—has greatly reduced antitrust enforcement over the past forty years is not that rules of reason are biased, but rather that rules of reason are too expensive for cash-strapped agencies to enforce at all. Which means that for the most part enforcers have not actually been applying rules of reason over the past forty years. To pay for a few costly rule-of-reason cases, enforcers have instead been applying a broad rule of per se legality to suspect conduct. Has this sub-rosa rule of per se legality been good for consumers? That depends on whether the Court believes that most suspect conduct is ultimately good for consumers, or bad. If the Court believes that most suspect conduct is good, then allowing enforcers to engage in self-help non-enforcement in order to keep budgets balanced is good policy, if not good law. But if the Court believes that most suspect conduct is bad for consumers, then the Court must bring back the inexpensive-to-enforce per se rules of illegality that characterized mid-twentieth-century antitrust law. Either way, however, the Court’s current failure explicitly to recognize that an antitrust enforcement apparatus of modest means is incapable of delivering upon the idealism of case-by-case inquiries into consumer harm is intolerable. For the gap it creates between the careful adjudication described by the courts and the non-enforcement of actual practice makes a mockery of the law. The Court must come to terms with the fact that scarcity requires that antitrust law, like all other areas of law, be primarily a law of per se rules, and that a deliberate choice must be made by the Court either to rule suspect conduct legal per se, or per se illegal.
Keywords: antitrust, error costs, false positives, false negaltives, per se rule, rule of reason, adjudication, legal error, law and economics
JEL Classification: D02, D81, K21, K42
Suggested Citation: Suggested Citation