Defining Exclusionary Conduct Under Section 2: The Case for Non-Universal Standards

INTERNATIONAL ANTITRUST LAW & POLICY, Barry Hawk, ed., Ch. 19, pp. 481-516, Juris Publishing, Forthcoming

36 Pages Posted: 6 Apr 2007  

Marina Lao

Seton Hall School of Law

Abstract

Recent antitrust cases, such as Trinko, Microsoft, LePage's, and AMR, have focused attention on the uncertain "exclusionary conduct" doctrine under section 2 of the Sherman Act, leading to a renewed debate on the appropriate legal standards to define such conduct, and the proposal of several competing liability standards. Most of the proposed tests offer a single standard to govern all exclusionary conduct.

Although the idea of a universal test is attractive initially, for reasons addressed in the paper, the application of any single standard to all allegedly exclusionary conduct would lead to dangers of either false positives or false negatives, and would necessarily either overdeter competitive conduct or underdeter anticompetitive conduct. This paper discusses the three main proposed tests - the "no economic sense" variant of the "profit sacrifice" test, the "excluding equally efficient competitor" test, and the consumer welfare test - and explains that, while each of these tests may be effective for some types of exclusionary conduct, it would be inappropriate as a universal test.

This paper proposes, instead, a workable and theoretically reasonable approach that uses different tests for different types of exclusionary conduct. The challenge in fashioning a non-universal approach is to ensure coherence and practicality, and minimize uncertainty. This paper offers a theoretically based and workable method for accomplishing that. The approach takes into account a few factors relevant to how tolerant or intolerant an antitrust rule should be: false positives and false negatives; expected benefits from antitrust remedy; and overdeterrence and underdeterrence. Finally, the paper addresses a few objections that are likely to be made to a non-universal approach.

Keywords: antitrust, exclusionary conduct, Sherman Act, monopolization, sacrifice test, no economic sense test, consumer welfare test, equally efficient rival

JEL Classification: K21, L12, L40, L41

Suggested Citation

Lao, Marina, Defining Exclusionary Conduct Under Section 2: The Case for Non-Universal Standards. INTERNATIONAL ANTITRUST LAW & POLICY, Barry Hawk, ed., Ch. 19, pp. 481-516, Juris Publishing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=977986

Marina L. Lao (Contact Author)

Seton Hall School of Law ( email )

One Newark Center
Newark, NJ 07102-5210
United States

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