Economic Formalism in Antitrust Decisionmaking
38 Pages Posted: 30 Mar 2005
The article argues that in its recent antitrust decisions the Supreme Court has relied too heavily on abstract economic theory in determining whether a particular business practice is likely to injure competition. It does so by first outlining the limitations of formal reasoning as a tool of statutory construction, and then drawing an analogy between the Court's reasoning in Lochner v. New York, 198 U.S. 45 (1905), frequently cited as a classic example of legal formalism, and its reasoning in recent antitrust opinions. The article focuses on the Court's most recent decisions in three areas of antitrust law: vertical price fixing, tying arrangements, and predatory pricing. In each of these areas, it is argued, the Court has permitted formal reasoning based on economic principles to displace analysis of the facts in determining competitive effect, and has reached decisions that are at odds with legislative history and congressional purpose. For example, after the Court's decision in Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), predatory pricing claims under the antitrust laws are no longer viable - a result clearly at odds with the legislative history of the Robinson-Patman Act, and arguably the Sherman Act as well. The Court's reliance on economic theory as an infallible guide rather than as a helpful tool in antitrust analysis has constrained the reach of antitrust legislation not only in the three areas that are the main focus of the article, but in virtually all areas of antitrust.
Keywords: Antitrust, Law and Economics, Trade Regulation
JEL Classification: K21
Suggested Citation: Suggested Citation