The Indispensability of Per Se Rules in Budget-Constrained Antitrust Adjudication (formerly Per Se in Itself: How Bans Reduce Error in Antitrust)
63 Pages Posted: 11 Jan 2017 Last revised: 4 Sep 2019
Date Written: January 9, 2017
Scholars agree that the Supreme Court’s embrace of rules of reason—case-by-case analysis of suspect conduct for harm to competition—has led to declines in antitrust enforcement over the past forty years. But many scholars mistakenly suggest that rules of reason have had this effect because the expense of proving harm to competition biases case outcomes in favor of defendants. Instead, rules of reason reduce enforcement because their expense makes it impossible for cash-strapped enforcers to bring cases at all, even under proposed burden-shifting reforms that would give enforcers an even chance of winning rule of reason cases. Because budget-constrained enforcers cannot afford to apply rules of reason, whether biased or not, to all suspect conduct, per se rules are an indispensable part of antitrust policy. The only question is whether the Court should embrace per se rules of illegality, meaning bans, per se rules of legality, meaning exemptions, or a mix of both. Mixing cannot be the best choice for consumers, because the Court must be able to differentiate the relative harmfulness of different categories of suspect conduct in order to decide which kind of per se rule to apply to which category, but the Court treats all suspect conduct as essentially uniform in the risk it poses to consumers. Instead, the Court must embrace bans alone if the Court’s uniform view of suspect conduct is that it is mostly harmful to consumers, or exemptions alone, if the Court’s uniform view of suspect conduct is that it is mostly good for consumers. The Court has never made clear whether it believes suspect conduct to be mostly good or mostly bad. But given that by reducing enforcement the Court’s current policy implicitly endorses the view that suspect conduct is mostly good, the Court cannot continue to avoid explicitly addressing this question.
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