Rethinking Foreclosure Analysis in Antitrust Law: From Standard Stations to Google

Abstract

Foreclosure is a prominent concept in the antitrust laws and across economics. In the world of exclusionary conduct—foreclosure is the concept. But, despite its prominence in antitrust law and economics—including taking center stage in the Department of Justice’s complaint against Google—it is still a relatively unsettled area of the law. Foreclosure does not enjoy a commonly understood definition. There is no agreed upon method for measuring it. And there is no well-settled threshold at which antitrust concerns are triggered. In short, foreclosure analysis is a mess. As the last major law-defining case on exclusive dealing, Tampa Electric, nears its sixtieth birthday, the black letter law of naive foreclosure has an increasingly unbearable disconnect with modern economic antitrust methods. Courts are left with relatively little guidance as to how to understand the competitive effects of a world with and without the contracts being challenged—and the naïve approach is precisely of zero help on that question. Courts have adapted on their own to bridge the gap between the foreclosure analysis in the early cases—built from discredited foreclosure theory—and modern economics by adopting process-based foreclosure inquiries. This is the future of foreclosure, and the sooner we get there, the better.

Keywords: Forclosure, antitrust, economics, exclusionary conduct, Tampa Electric, Standard Stations, DOJ complaint, Google

JEL Classification: K2, K21, K23, K42