Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, May 21, 2015

Recognizing the Limits of Antitrust: The Roberts Court Versus the Enforcement Agencies

Thomas A. Lambert, University of Missouri - School of Law and Alden F. Abbott, Heritage are Recognizing the Limits of Antitrust: The Roberts Court Versus the Enforcement Agencies.

  As Judge Frank Easterbrook famously explained three decades ago, antitrust is an inherently limited body of law. In crafting and enforcing liability rules to combat market power and encourage competition, courts and regulators may err in two directions: they may wrongly forbid output-enhancing behavior or wrongly fail to condemn output-reducing conduct. The social losses from false convictions and false acquittals, taken together, comprise antitrust’s “error costs.” While it may be possible to reduce error costs by making liability rules more nuanced, added complexity raises the “decision costs” incurred by business planners (ex ante) and adjudicators (ex post). In light of all these costs, Easterbrook advocated an approach that would optimize antitrust’s effectiveness: interpret and enforce the antitrust laws so as to minimize the sum of error and decision costs.

This Article assesses the degree to which the U.S. Supreme Court (under the leadership of Chief Justice John Roberts) and the federal enforcement agencies (the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice) have embraced the optimizing, “limits of antitrust” approach Judge Easterbrook advocated. In its decisions addressing vertical restraints, exclusionary conduct, and antitrust enforcement, the Roberts Court has consistently recognized antitrust’s limits and has adopted rules consistent with an optimizing approach. The enforcement agencies, by contrast, have eschewed a limits of antitrust approach, at least with respect to exclusionary conduct, vertical restraints, intellectual property rights, and merger review.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/05/recognizing-the-limits-of-antitrust-the-roberts-court-versus-the-enforcement-agencies.html

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