Weyerhaeuser, Predatory Bidding, and Error Costs

Posted by D. Daniel Sokol

Keith Hylton of Boston University Law School suggests that Brooke Group remains the gold standard for predatory bidding in his latest article Weyerhaeuser, Predatory Bidding, and Error Costs.

ABSTRACT: In Weyerhaeuser v. Ross-Simmons the Supreme Court held that the predatory pricing standard adopted in Brooke Group also applies to predatory bidding claims, because the two types of predation are "analytically similar". I argue that predatory bidding is likely to be more harmful to consumer welfare than is predatory pricing. Successful input market predation may lead to a "dual market power" outcome in which the firm has market power in both the input and the output market. In spite of the analytical distinction, consideration of error costs leads me to conclude that Brooke Group remains the best standard to apply to predatory bidding claims.