The Antitrust Duty to Deal in the Age of Big Tech

Yale Law Journal (2022 Forthcoming)

79 Pages Posted: 22 Jul 2021 Last revised: 8 Oct 2021

See all articles by Erik Hovenkamp

Erik Hovenkamp

University of Southern California School of Law

Date Written: August 5, 2021

Abstract

The antitrust duty to deal is perhaps the most confounding and controversial form of antitrust intervention. It is sought in situations where a monopolist controls a critical input (or “essential facility”) and unilaterally refuses to sell access to rivals. Courts have substantially narrowed the doctrine in recent decades. However, the rise of dominant platforms like Google, Facebook, and Amazon has provoked intense debate over whether the antitrust duty to deal needs a revival. Many such platforms are accused of refusing to deal with (or discriminating against) rivals in adjacent markets.

The debate centers mainly on what a plaintiff should have to show to trigger a duty to deal. However, I argue that this overlooks the most pressing problem, which is not the standard of liability but rather its domain—the set of cases in which it must be applied. At present, this domain is far too broad, conjoining two very different lines of cases that have no business being evaluated under a common standard. In one line of cases, the defendant’s refusal raises substantially the same theory of harm as tying or related vertical restraints. However, formalistic legal doctrine prevents plaintiffs from challenging them as such. As a result, these cases almost never receive meaningful scrutiny. This is problematic, because a large majority of meritorious refusal-to-deal cases fall into this category, as do almost all cases involving dominant platforms.

In a separate line of cases, intervention is much harder to justify on economic policy grounds, as it carries a serious risk of chilling investment in valuable new technologies. Courts often acknowledge this investment concern in dicta, but the operative liability standard—which focuses myopically on exclusion—ignores it. This has led to a major internal contradiction: courts are emphatic that a duty to deal is almost never warranted, but simple economic arguments show that the refusals in these cases are routinely exclusionary in precisely the sense that the law purports to condemn. This inconsistency has spurred courts to erect suffocating proof requirements, which now do most of the heavy lifting in practice. These rules bear little logical connection to exclusion, although they excel at preventing overbroad liability. The problem is that they also kill off all the meritorious cases.

This paper argues that any effective reform must begin by disentangling these distinct lines of cases. Subjecting them to different liability standards would help to address many of the key concerns raised on both sides of the debate. The justifications for this approach are manifold. First, it protects investment incentives without needlessly stifling enforcement in meritorious cases. Second, it naturally limits antitrust scrutiny to cases in which intervention is most likely to be administrable. Third, it is exactly analogous to the way antitrust already treats other forms of unilateral conduct. Finally, this approach would allow for meaningful antitrust scrutiny of unilateral conduct by dominant platforms—an objective that has recently received bipartisan support in Congress—while remaining faithful to core antitrust principles.

Keywords: Antitrust, refusal to deal, essential facilities, duty to deal, platforms, competition policy, vertical restraints

JEL Classification: L40, L41, L50, K21

Suggested Citation

Hovenkamp, Erik, The Antitrust Duty to Deal in the Age of Big Tech (August 5, 2021). Yale Law Journal (2022 Forthcoming), Available at SSRN: https://ssrn.com/abstract=3889774 or http://dx.doi.org/10.2139/ssrn.3889774

Erik Hovenkamp (Contact Author)

University of Southern California School of Law ( email )

Los Angeles, CA 90089
United States

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