Aspen Skiing and Trinko: Antitrust Intent and 'Sacrifice'
38 Pages Posted: 14 Nov 2005 Last revised: 14 Jul 2009
Date Written: January 30, 2005
This paper takes a critical look at Trinko and makes a few central arguments. It contends that the Trinko Court's reading of Aspen and the law on unilateral refusals to deal is unduly narrow. While Aspen treated the defendant's sacrifice of short-run profits simply as an objective indicator of intent, Trinko came very close to endorsing a sacrifice test, which would treat profit sacrifice as a necessary, but insufficient, condition for exclusionary conduct. Trinko's approach may well be understandable from a policy perspective, given the FCC's pervasive regulation of the challenged activity. However, it would be a mistake to apply it outside of the regulatory setting in which the case arose. The sacrifice test that found approval in Trinko is fundamentally flawed because not all predation involves sacrifice, and profit sacrifice is not the only measure of consumer harm.
Aspen's intent inquiry, with sacrifice being merely one factor, is preferable because intent evidence can inform and improve the functionality of an economic analysis. Empirical data and economic theory alone are seldom adequate for the determination of anticompetitive effect. Chicago models do not resemble real-world markets and often cannot be easily applied because of the lack of useful data. Post-Chicago theories, though more realistic, are nuanced and indeterminate, and their application would in fact benefit from the consideration of intent. To the extent that economic tools alone cannot distinguish between exclusionary and procompetitive conduct, this paper argues, intent evidence can help provide clues and even serve as a proxy for effect.
The intent evidence in Aspen was objective; thus, the case does not address the relevance of subjective intent in non-price Section 2 cases. This paper recognizes that most courts and commentators tend to reject the use of subjective intent evidence on the basis of its unreliability and the difficulty of distinguishing between good and bad intent. It argues, however, that these objections are overstated. The paper observes that juries are routinely asked to evaluate the significance of subjective statements in a variety of cases, and there is no reason to believe that they are more vulnerable to being misled in antitrust litigation than in other cases. As long as the statements carry certain indicia of credibility and appropriate jury instructions are given, they can be helpful in explaining ambiguous business strategies and their effects. In short, this paper makes a case for considering intent, including subjective intent, and for rejecting a sacrifice test as the exclusive standard for the determination of Section 2 liability.
Keywords: sacrifice, refusal to deal, intent, monopolization, anticompetitive effects
JEL Classification: L41, L51, K21, L12
Suggested Citation: Suggested Citation