Tuesday, June 28, 2005
Last week, I posted links to articles by Marina Lao and Thomas McGreavey, each making the case for an intent-based, as opposed to an effects-based, approach to antitrust law. Geoffrey A. Manne, a professor at Lewis & Clark Law School, and Marc Williamson, a partner with Latham & Watkins, make the case for the economic effects based approach in Hot Docs and Cold Economics, forthcoming in Arizona Law Review. They make the following point:
While it is beyond dispute that antitrust adjudication is difficult, we show that the regulatory and scholarly effort to bring business documents to bear in proving antitrust cases has a "the light's better over here" feel to it. It is undoubtedly easier to "discover" anticompetitive behavior and relevant markets by inferences from business language than it is from rigorous economic analysis. Not only regulators but also courts (to say nothing of juries) are moved by business rhetoric. However, we contend that business rhetoric bears little relationship to economic reality. Corporate managers are not, generally, economists; nor are they antitrust lawyers. Accounting, accountability, personal incentives and other concerns that do not relate in an obvious way to the maximization of the firm's profits influence the daily operation of business - and the language of business - far more than do underlying economic and legal concepts. Reliance by courts and regulators on accounting information, business characterizations and expressions of intent to demonstrate anticompetitive effect is thus misplaced. The likelihood of error resulting from the use of business documents is substantial. For these reasons, principled antitrust enforcement must rely on evidence of actual economic effect, rather than flawed perceptions of business conduct.