Monday, July 21, 2008
Posted by D. Daniel Sokol
Herb Hovenkamp of the University of Iowa Law School has written on The Antitrust Standard for Unlawful Exclusionary Conduct.
ABSTRACT: This essay considers the general definition of unlawful exclusionary practices under Section 2 of the Sherman Act as acts that: (1) are reasonably capable of creating, enlarging or prolonging monopoly power by impairing the opportunities of rivals; and (2) that either (2a) do not benefit consumers at all, or (2b) are unnecessary for the particular consumer benefits claimed for them, or (2c) produce harms disproportionate to any resulting benefits. An important purpose of this progression of queries is to permit the court to avoid balancing, although balancing certainly cannot be avoided in some close cases. The given definition is very general, in the sense that it does not provide precise tests for specific practices, such as improper patent infringement suits or predatory pricing. Numerous definitions of exclusionary conduct have been proposed that are more focused or more technical, and some of these may be more useful for analyzing specific exclusionary practices than the very general definition offered here. However, as this paper develops, these definitions are also incomplete, in the sense that they do not account for every type of exclusionary conduct that the law of monopolization should condemn. Proof of actual consumer harm is generally unnecessary to the definition, but the challenged conduct must be of a type that the anticipated end result is actual consumer harm. Of course, the private plaintiff must prove the requisite actual or threatened harm to itself. Most importantly, the given definition of monopolizing conduct is flexible and frees the court of doctrinal rigidity, but it requires an extremely careful determination that the defendant has substantial market power.