Hot Docs vs. Cold Economics

50 Pages Posted: 14 Mar 2005

See all articles by Geoffrey A. Manne

Geoffrey A. Manne

International Center for Law & Economics (ICLE)

Marc Williamson

Latham & Watkins - Washington, D.C. Office


In this article we examine the use of business documents to prove antitrust violations. Such usage has long occurred in the courts and regulatory agencies. More recently, there has been a scholarly effort to justify the use of such documents and the rhetoric they contain in antitrust analysis. But despite this usage and in the face of this justification, we demonstrate that business documents provide a faulty foundation for proving economic injury under the antitrust laws.

We identify three classes of business documents that are used by courts and regulators in antitrust analysis: Accounting documents, market definition documents, and intent documents. We conclude that each is problematic. Accounting information is sufficiently disconnected from underlying economic reality that it presents a distorted and unreliable picture of economic consequences. Businesses characterize markets for myriad reasons, most having nothing to do with elasticity, the criterion of market definition relevant to the antitrust laws. Likewise, corporate actors express intentions and motivations for rhetorical purposes, not necessarily because they possess the capacity to achieve their "intended" effect.

While it is beyond dispute that antitrust adjudication is difficult, we show that the regulatory and scholarly effort to bring business documents to bear in proving antitrust cases has a "the light's better over here" feel to it. It is undoubtedly easier to "discover" anticompetitive behavior and relevant markets by inferences from business language than it is from rigorous economic analysis. Not only regulators but also courts (to say nothing of juries) are moved by business rhetoric. However, we contend that business rhetoric bears little relationship to economic reality. Corporate managers are not, generally, economists; nor are they antitrust lawyers. Accounting, accountability, personal incentives and other concerns that do not relate in an obvious way to the maximization of the firm's profits influence the daily operation of business - and the language of business - far more than do underlying economic and legal concepts. Reliance by courts and regulators on accounting information, business characterizations and expressions of intent to demonstrate anticompetitive effect is thus misplaced. The likelihood of error resulting from the use of business documents is substantial. For these reasons, principled antitrust enforcement must rely on evidence of actual economic effect, rather than flawed perceptions of business conduct.

Keywords: antitrust enforcement, firm behavior

JEL Classification: K21, L20, L40

Suggested Citation

Manne, Geoffrey and Williamson, E. Marcellus, Hot Docs vs. Cold Economics. Available at SSRN:

Geoffrey Manne (Contact Author)

International Center for Law & Economics (ICLE) ( email )

1104 NW 15th Ave.
Suite 300
Portland, OR 97209
United States
503-770-0076 (Phone)


E. Marcellus Williamson

Latham & Watkins - Washington, D.C. Office ( email )

555 - 11th Street, N.W.
Suite 1000
Washington, DC 20004-1304
United States

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