Single-Firm Conduct: A Discipline in Search of Itself (Try with Google?)

Posted by D. Daniel Sokol

Roberto Pardolesi, Libera Università degli Studi Sociali (LUISS) Guido Carli and Luca Arnaudo, Libera Università degli Studi Sociali (LUISS) Guido Carli have written on Single-Firm Conduct: A Discipline in Search of Itself (Try with Google?).

ABSTRACT: This paper analyzes US and EU antitrust policies towards abusive unilateral conduct pursued by a dominant firm and strongly criticize them, aiming at finding a more reliable assessment of the basic issues of consumer's exploitation and rival's exclusion. In fact, the discipline of unilateral conduct denounces widespread inconsistencies related to its conceptual foundations. The American side does not recognize exploitation as a form of abusive conduct for the dominant firm: excessive pricing is no issue in the US antitrust environment, and Supreme Court jurisprudence from Trinko to linkLine makes crystal clear that setting a more-than-competitive price not only escapes prohibition, but is the award reserved for the winners of the struggle in the market arena. Article 82 (a) of the EC Treaty forbids the imposition of unfair purchase or selling prices or other unfair trading conditions, but Commission's case law and policy statements (e.g. the 2008 Guidance Paper on Commission enforcement priorities in applying Article 82) have greatly emphasized exclusionary effects, with exploitative effects appearing to be little more than a sideshow. This practical emasculation of the relevant discipline makes little sense either in economic or legal terms, and leaves the overall conceptual picture in a state of complete disarray, with direct consequences on the legal enforcement. The many antitrust issues arising from the Google Books Settlement case are a good occasion to verify the sustainability of the antitrust policy towards single-firm conduct previously discussed: more in details, the risks of future excessive pricing stemming from the approval of the settlement led many commentators, as well as the US Department of Justice, to reconsider the award-of-the-winner theory. The paper also addresses this topic and try to offer a sound overview of it.