September 15, 2008
Does the Rule of Reason Violate the Rule of Law?
Posted by D. Daniel Sokol
ABSTRACT: In the past few years, the Supreme Court has been more active in deciding antitrust issues. The Court's choice of legal standards affects future market behavior and the incentives for individuals and organizations to engage in productive activity. Despites its increased activity, the Court never assesses the deficiencies of its rule-of-reason standard under rule-of-law principles. This assessment is critical. This article analyzes the standard's significant deficiencies, and how these deficiencies adversely affect antitrust enforcement and competition policy generally. Perfect compliance with rule-of-law ideals, however, may be unobtainable and undesirable, so the Article recommends several improvements to reorient the rule of reason closer to rule-of-law ideals.
I provided Maurice some comments on this paper in an earlier draft. This paper is a fun read, particularly in some of the footnotes. My favorite is fn 216:
President Nixon in 1971 discussed intimidating the nation's three major television networks by keeping the constant threat of an antitrust suit hanging over them. In a July 2, 1971 taped recorded discussion, aide Charles W. Colson told Nixon that whether filing an antitrust case against ABC, NBC and CBS ―is good or not is perhaps not the major political consideration. But keeping this case in a pending status gives us one hell of a club on an economic issue that means a great deal to those three networks ... something of a sword of Damocles." Nixon responded, ―Our gain is more important than the economic gain. We don't give a goddam about the economic gain. Our game here is solely political. ... As far as screwing them is concerned, I'm very glad to do it.
―If the threat of screwing them is going to help us more with their programming than doing it, then keep the threat," said Nixon. ―Don't screw them now. [Otherwise] they'll figure that we're done." As for the antitrust actions, the White House kept the DOJ from filing suit until April 1972, when the government accused the networks of restraining trade and monopolizing prime-time entertainment with their own programs. The suits were dismissed without prejudice in 1974 after the government was unable to identify the requested documents.
September 15, 2008 | Permalink
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