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Friday, June 27, 2008

False Positives in Identifying Liability for Exclusionary Conduct: Conceptual Error, Business Reality, and Aspen

Posted by D. Daniel Sokol

Carstensen Peter Carstensen of the University of Wisconsin Law School has posted False Positives in Identifying Liability for Exclusionary Conduct: Conceptual Error, Business Reality, and Aspen.

ABSTRACT: The decisions in Aspen and Trinko point the law of monopolization in different directions. Aspen offered a nuanced standard that focused on balancing the risks to competition from exclusionary conduct against the potential legitimate business needs of a monopolist to engage in such behavior. Trinko, in contrast, celebrates the right of the monopolist to exploit the market by excluding competition in the interest of, apparently, encouraging technological innovation rewarded by monopoly profits. Moreover, the case expresses great concern about false-positive decisions finding violations when in fact none exist. The Trinko Court and supportive commentators assume that such decisions are common and very harmful to economic efficiency.

This Paper argues that Aspen and the cases following it provide the better approach to exclusionary monopolistic conduct. Monopoly is economically undesirable from both static and dynamic perspectives. The concern for false positives rests on incorrect and implausible assumptions while false negatives in fact create a more serious risk to the competitive process. Hence, the law of monopolization should embrace the stricter scrutiny mandated by Aspen, or if there are real risks of inefficient results, monopoly law should return to its historic mission of dissipating the monopoly power itself by dissolution of the monopolist or some other remedy that would in fact eliminate the undesirable and unnecessary
monopoly power.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/06/false-positives.html

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