Thursday, October 23, 2008
The Complement Market/Final Consumer Distinction: Exclusion and Predation in the U.S. Department of Justice Section 2 Report
Posted by D. Daniel Sokol
Tim Brennan of the University of Maryland-Baltimore Department of Public Policy offers his insights on the DOJ Section 2 Report with his paper The Complement Market/Final Consumer Distinction: Exclusion and Predation in the U.S. Department of Justice Section 2 Report.
ABSTRACT: Most competition law falls into one of three categories. The first, cartel behavior, is relatively uncontroversial. The basics of the second, horizontal mergers, are generally accepted, but how best to implement it—efficiency defenses, welfare standards, the need for market definition, or the value of customer testimony—can be hotly contested. The most controversial category is single-firm conduct, called monopolization in the United States and abuse of dominance in much of the rest of the world...
One indicator of the intensity of the controversy is the contrast between the U.S. statute regarding monopolization and the U.S. Department of Justice’s (DOJ) just-released report (“Report”) on single-firm conduct. The statutory description of illegal conduct, Section 2 of the Sherman Act, takes only 43 words:
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.
The Report supplies 181 pages of guidance—not counting an executive summary and appendices—on how to interpret this mere sentence for a statute under which it filed only six cases between 1998 and 2007.