Tuesday, April 8, 2008
Posted by D. Daniel Sokol
ABSTRACT: Enforcement officials and commentators have suggested that there is a growing consensus within the antitrust community on appropriate standards for single-firm conduct. My purpose in this paper is to review that contention and consider its applicability for the antitrust treatment of bundled discounts.
At the start of the recent Department of Justice--Federal Trade Commission hearings on this subject, Chairman Majoras of the FTC stated that, "we start with some substantial consensus about core underlying principles and factors that should underlie any evaluation of unilateral conduct." While acknowledging that there may be differences over details, she was "optimistic" that there was wide agreement on most of the single-firm conduct issues that her agency faced. The extent to which this optimism is well-founded is the subject of this paper.
Single-firm conduct issues are adjudicated under Section II of the Sherman Act which condemns monopolizing conduct. This conduct is invariably evaluated under a Rule of Reason, and current enforcement officials remind us that it is often difficult to distinguish pro-competitive actions from their anti-competitive and exclusionary counterparts. The critical issue is where to draw the line between these two types of conduct.
A major problem that contributes to the ongoing debate over Section II issues is that the presence of monopoly power by itself does not violate the antitrust laws even though actions taken to create, preserve or extend that power are generally considered to violate this provision. The distinction between pre-existing monopoly power and current actions taken on its behalf is another reason why enforcement decisions are particularly difficult.