Singing Along: A Comment on Goldberg & Muris on the Three Tenors
Review of Law and Economics, Vol. 1, No. 3, Article 4, December 2005
17 Pages Posted: 29 Jul 2005
Professor Goldberg vigorously attacks the merits of the Commission's "Three Tenors" decision, emphasizing its misplaced reliance on the issue of whether the challenged restraint resides within the boundaries of the firm. Professor Muris defends the Commission's analysis, which was adopted in large part by the D.C. Circuit on appeal, and argues that Professor Goldberg's call for a market power screen for all horizontal restraints ignores the legal costs of rulemaking. I take a third view of the debate. While conceding that the per se rule is properly applied to truly "naked restraints," I argue that the restraint at issue does not fall into this category and that the Commission's analysis relies on an inappropriately narrow view of the ancillary restraints doctrine. In particular, the Commission's analysis explicitly relies on the fact that the restraint occurred after the formation of the joint venture and displays unwarranted hostility towards PolyGram's free-rider defense. Neither antitrust law nor the economic realities of the joint venture support these two features of the Commission's decision, the latter of which was also adopted by the D.C. Circuit. In any event, the facts of the Three Tenors do not support the Commission's conclusion that the moratorium agreement was not ancillary to the joint venture.
Keywords: horizontal restraints, ancillary restraints, joint ventures, three tenors, rule of reason
JEL Classification: K21, L41
Suggested Citation: Suggested Citation