ABA Competition Law and Policy, Forthcoming
27 Pages Posted: 3 Oct 2005
As a general matter, firms in a market can charge higher prices and earn greater profits if they coordinate their actions rather than compete with one another. However, even in the best of circumstances, perfect coordination does not take place automatically and, in many circumstances, it can be quite difficult to achieve, for reasons completely independent of the threat of antitrust prosecution. At the most general level, we can think of "facilitating practices" as any actions taken by would-be competitors in a market to enable them to better coordinate their actions. However, over the past twenty-five years or so, the term "facilitating practices" has taken on a somewhat narrower meaning as we set aside those practices, such as the archetypical hotel room meeting, which satisfy the classical definition of "agreement" under Section 1 of the Sherman Act. In effect, the modern concept of facilitating practices reflects an effort to bring within the reach of the antitrust laws some conduct which has the effect of making coordination easier and more effective yet which does not resemble the traditional Section 1 agreement. The chapter sets out the notion of facilitating practices as an economic matter and discusses some of the leading cases that utilize or at least invoke the concept. The chapter concludes with a discussion of the utility and likely future use of the concept under U.S. antitrust law.
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