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A Geographic Market Power Test for Sherman Act Jurisdiction

52 Pages Posted: 13 Dec 2002  

D. Bruce Johnsen

George Mason University - School of Law; PERC - Property and Environment Research Center

Moin A. Yahya

University of Alberta - Faculty of Law

Date Written: October 2002

Abstract

This paper develops a clear and substantively reasoned test for Sherman Act jurisdiction based on the interstate exercise of market power. According to this test, to establish jurisdiction under the Act the plaintiff must allege that, if successful, the defendants' conduct is reasonably likely to raise prices "in more states than one." Local trade restraints that cannot plausibly be alleged to raise prices outside the home state therefore lie beyond the reach of the Sherman Act. The geographic market power test resolves a number of troubling anomalies in the case law on Sherman Act jurisdiction. It also takes seriously the Act's acknowledged goal of promoting consumer welfare and preserves the states' role as laboratories for political competition in our federal system of dual sovereignty.

Suggested Citation

Johnsen, D. Bruce and Yahya, Moin A., A Geographic Market Power Test for Sherman Act Jurisdiction (October 2002). George Mason Law & Economics Research Paper No. 02-032. Available at SSRN: https://ssrn.com/abstract=351460 or http://dx.doi.org/10.2139/ssrn.351460

D. Bruce Johnsen (Contact Author)

George Mason University - School of Law ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8066 (Phone)
703-993-8088 (Fax)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Moin A. Yahya

University of Alberta - Faculty of Law ( email )

Edmonton, Alberta T6G 2H5
Canada
780-492-4445 (Phone)
780-492-4924 (Fax)

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