Law Commons^™

Criminal Enforcement Of Section 2 Of The Sherman Act: An Empirical Assessment, Daniel A. Crane

Law & Economics Working Papers

The Biden Justice Department has announced that it may begin to bring criminal monopolization cases under Section 2 of the Sherman Act, a practice that the Department has not employed in almost half a century. The Department's leadership has justified this idea by asserting that it used to be common practice for the Antitrust Division to bring such cases. This Article presents the findings of an empirical study of all of the Justice Department's antitrust case filings. It finds that the Justice Depart brought 175 criminal monopolization cases between 1903 and 1977, but that only 20 of these involved unilateral …

Antitrust Liability For False Advertising: A Response To Carrier & Tushnet, Susannah Gagnon, Herbert J. Hovenkamp

All Faculty Scholarship

This reply briefly considers when false advertising can give rise to antitrust liability. The biggest difference between tort and antitrust liability is that the latter requires harm to the market, which is critically dependent on actual consumer response. As a result, the biggest hurdle a private plaintiff faces in turning an act of false advertising into an antitrust offense is proof of causation – to what extent can a decline in purchase volume or other market rejection be specifically attributed to the defendant’s false claims? That requirement dooms the great majority of false advertising claims attacked as violations of the …

Submission Of Robert H. Lande To House Judiciary Antitrust Subcommittee Investigation Of Digital Platforms, Robert H. Lande

All Faculty Scholarship

The House Judiciary Antitrust Subcommittee asked me to submit suggestions concerning the adequacy of existing antitrust laws, enforcement policies, and enforcement levels insofar as they impact the state of competition in the digital marketplace. My submission recommends the following nine reforms:

1. A textualist analysis of the Sherman Act shows that Section 2 actually is a no-fault monopolization statute. At a minimum Congress should enact a strong presumption that every firm with a 67% market share has violated Section 2. This would move the Sherman Act an important step in the right direction, the direction Congress intended in 1890. My …

The Sherman Act Is A No-Fault Monopolization Statute: A Textualist Demonstration, Robert H. Lande, Richard O. Zerbe Jr.

All Faculty Scholarship

The drafters of the Sherman Act originally designed Section 2 to impose

sanctions on all monopolies and attempts to monopolize, regardless whether the

firm had engaged in anticompetitive conduct. This conclusion emerges from the

first ever textualist analysis of the language in the statute, a form of interpretation

originally performed only by Justice Scalia but now increasingly used by the

Supreme Court, including in its recent Bostock decision.

Following Scalia’s methodology, this Article analyzes contemporaneous

dictionaries, legal treatises, and cases and demonstrates that when the Sherman

Act was passed, the word “monopolize” simply meant that someone had acquired

a monopoly. …

The Omega Man Or The Isolation Of U.S. Antitrust Law, Spencer Weber Waller

Faculty Publications & Other Works

There is a classic science fiction novel and film that present a metaphor for the isolation of United States antitrust law in the current global context. Richard Mathiesson's 1954 classic science fiction novel, I am Legend, and the later 1971 film released under the name of The Omega Man starring Charleton Heston, both deal with the fate of Robert Neville, a survivor of a world-wide pandemic who believes he is the last man on Earth.

While I am Legend and The Omega Man are obviously works of fantasy, it nonetheless has resonance for contemporary antitrust debate and discourse. United States …

Whatever Did Happen To The Antitrust Movement?, Herbert J. Hovenkamp

All Faculty Scholarship

Antitrust in the United States today is caught between its pursuit of technical rules designed to define and implement defensible economic goals, and increasing calls for a new antitrust “movement.” The goals of this movement have been variously defined as combating industrial concentration, limiting the economic or political power of large firms, correcting the maldistribution of wealth, control of high profits, increasing wages, or protection of small business. High output and low consumer prices are typically unmentioned.

In the 1960s the great policy historian Richard Hofstadter lamented the passing of the antitrust “movement” as one of the “faded passions of …

Buying Monopoly: Antitrust Limits On Damages For Externally Acquired Patents, Erik N. Hovenkamp, Herbert J. Hovenkamp

All Faculty Scholarship

The “monopoly” authorized by the Patent Act refers to the exclusionary power of individual patents. That is not the same thing as the acquisition of individual patent rights into portfolios that dominate a market, something that the Patent Act never justifies and that the antitrust laws rightfully prohibit.

Most patent assignments are procompetitive and serve to promote the efficient commercialization of patented inventions. However, patent acquisitions may also be used to combine substitute patents from external patentees, giving the acquirer an unearned monopoly position in the relevant technology market. A producer requires only one of the substitutes, but by acquiring …

Troubled Waters Between U.S. And European Antitrust, D. Daniel Sokol

UF Law Faculty Publications

Antitrust is an important area of law and policy for most companies in the world. Having divergent rules across antitrust systems means that the same economic behavior may be treated differently depending on the jurisdiction, leading to disparate outcomes in which one jurisdiction finds illegal behavior (but the other does not) when the underlying behavior may be pro-competitive. This disparate set of outcomes creates a world in which the most stringent antitrust system may produce the global standard. As a result, if the antitrust rules applied are too rigid, they threaten to hurt consumers not merely in the jurisdiction where …

Understanding Online Markets And Antitrust Analysis, D. Daniel Sokol, Jingyuan Ma

UF Law Faculty Publications

Antitrust analysis of online markets is a hot topic around the world. In a number of jurisdictions, online markets already have been subject to antitrust review in merger or conduct cases. In other jurisdictions, these issues are in a nascent stage of policy. A number of lessons can be learned from the cases to date involving online markets with regard to optimal antitrust policy. What these cases tend to share are some basic features as to how online markets work. Some jurisdictions understand the particular dynamics of multi-sided online markets. Other competition authorities sometimes may misidentify these markets. This essay …

Antitrust And Intellectual Property: A Brief Introduction, Keith N. Hylton

Faculty Scholarship

Intellectual property law and antitrust have been described as conflicting bodies of law, and the reason is easy to see. Antitrust law aims to protect consumers from the consequences of monopolization. Intellectual property law seeks to enhance incentives to innovate by granting monopolies in ideas or expressions of ideas. The purpose of this chapter is to explore the purported conflict between antitrust and intellectual property. The chapter is largely descriptive, and focuses on current or developing litigation rather than historical controversies. Many of the modern examples of conflict can be attributed to problems of classification.

Markovits On Defining Monopolization: A Comment, Keith N. Hylton

Faculty Scholarship

In this comment I focus on Richard Markovits’s definition of monopolization in his new book, Economics and the Interpretation and Application of U.S. and E.U. Antitrust Law (Springer 2014), and also his assertion that monopolization is distributively unjust. I agree wholeheartedly with his approach to defining monopolization, though I might alter a few details. However, I think the distributive justice effects of monopolization are ambiguous.

Second-Generation Monopolization: Parallel Exclusion In Derivatives Markets, Felix B. Chang

Faculty Articles and Other Publications

The reluctance of antitrust to condemn parallel exclusion permits oligopolies to be entrenched. This is because parallel exclusion—multiple-firm conduct that inhibits market entrants—cannot satisfy the current strictures of monopolization, which is understood to prohibit single-firm conduct. Yet this is an outdated way of conceptualizing monopolization. An expansion of monopolization—to cover parallel, non-collusive acts by an oligopoly—is due.

To push the law toward recognizing parallel exclusion, this Article examines concentration in the markets for financial derivatives, which are perennially dominated by the same big banks. Even after losses under first-generation antitrust claims, the dominant derivatives dealers have found ways to retain …

Roger Blair And Intellectual Property, Keith N. Hylton

Faculty Scholarship

Although intellectual property is just a sidelight of Roger Blair's work, he has published at least seven articles and coauthored a book on this subject. Blair's work sets out robust economic models that address nearly all of the significant economic issues in intellectual property. Moreover, by using the property rules framework, he has offered a useful counterweight to the reward-to-loss theory that dominates the literature.

Predatory Pricing Under The Areeda-Turner Test, Herbert J. Hovenkamp

All Faculty Scholarship

Few works of legal scholarship have had the impact enjoyed by Areeda and Turner's 1975 article on predatory pricing. Proof of predatory pricing under the Areeda-Turner test requires two things. The plaintiff must show a market structure such that the predator could rationally foresee "recouping the losses through higher profits earned in the absence of competition." This requirement, typically called "recoupment," requires the plaintiff to show that, looking from the beginning of the predation campaign, the predator can reasonably anticipate that the costs of predation will be more than offset by the present value of a future period of monopoly …

Antitrust And The Patent System: A Reexamination, Herbert J. Hovenkamp

All Faculty Scholarship

Since the federal antitrust laws were first passed they have cycled through extreme positions on the relationship between competition law and the patent system. Previous studies of antitrust and patents have generally assumed that patents are valid, discrete, and generally of high quality in the sense that they further innovation. As a result, increasing the returns to patenting increases the incentive to do socially valuable innovation. Further, if the returns to the patentee exceed the social losses caused by increased exclusion, the tradeoff is positive and antitrust should not interfere. If a patent does nothing to further innovation, however, then …

Innovation And Optimal Punishment, With Antitrust Applications, Keith N. Hylton, Haizhen Lin

Faculty Scholarship

This article modifies the optimal punishment analysis by incorporating investment incentives with external benefits. In the models examined, the recommendation that the optimal penalty should internalize the marginal social harm is no longer valid. We focus on antitrust applications. In light of the benefits from innovation, the optimal policy will punish monopolizing firms more leniently than suggested in the standard static model. It may be optimal not to punish the monopolizing firm at all, or to reward the firm rather than punish it. We examine the precise balance between penalty and reward in the optimal punishment scheme.

Defining Unreasonably Exclusionary Conduct: The 'Exclusion Of A Competitive Rival' Approach, Thom Lambert

Faculty Publications

Unreasonably exclusionary conduct, the element common to monopolization and attempted monopolization offenses under Section 2 of the Sherman Act, remains essentially undefined. Federal courts, including the U.S. Supreme Court, have purported to define the term, but the definitions they have offered are so indeterminate as to be, in the words of one prominent commentator, “not just vague but vacuous.” Seeking to fill the void left by the courts, antitrust scholars have in recent years proposed four universal definitions of unreasonably exclusionary conduct. Each, however, is deficient: One would fail to deter a substantial amount of anticompetitive conduct, and the other …

Antitrust Energy, D. Daniel Sokol, Barak Orbach

UF Law Faculty Publications

Marking the centennial anniversary of Standard Oil Co. v. United States, we argue that much of the critique of antitrust enforcement and the skepticism about its social significance suffer from “Nirvana fallacy” — comparing existing and feasible policies to ideal normative policies, and concluding that the existing and feasible ones are inherently inefficient because of their imperfections. Antitrust law and policy have always been and will always be imperfect. However, they are alive and kicking. The antitrust discipline is vibrant, evolving, and global. This essay introduces a number of important innovations in scholarship related to Standard Oil and its modern …

Antitrust, Innovation, And Product Design In Platform Markets: Microsoft And Intel, William H. Page, Seldon J. Childers

UF Law Faculty Publications

The Antitrust Division’s Microsoft case and the Federal Trade Commission’s Intel case both rested on claims that antitrust intervention was necessary to preserve innovation in technological platforms at the heart of the personal computer. Yet, because those very platforms support markets that are among the most innovative in the American economy, injudicious intervention might well have jeopardized the very innovation that antitrust should promote. In this article, we review the role of platforms in technological innovation and consider how antitrust standards should apply to them. We then examine how Microsoft resolved antitrust issues affecting platform design at various stages of …

Standard Oil And U.S. Steel: Predation And Collusion In The Law Of Monopolization And Mergers, William H. Page

UF Law Faculty Publications

The Supreme Court’s 1911 decision in Standard Oil gave us embryonic versions of two foundational standards of liability under the Sherman Act: the rule of reason under Section 1 and the monopoly power/exclusionary conduct test under Section 2. But a case filed later in 1911, United States v. United States Steel Corporation, shaped the understanding of Standard Oil’s standards of liability for decades. U.S. Steel, eventually decided by the Supreme Court in 1920, upheld the 1901 merger that created "the Corporation," as U.S. Steel was known. The majority found that the efforts of the Corporation and its …

American And European Monopolization Law: A Doctrinal And Empirical Comparison, Keith N. Hylton, Haizhen Lin

Faculty Scholarship

This paper focuses on the differences between Article 82 and Section 2, reflecting largely on the American experience. We start with a discussion of the American experience and use that as a background from which to examine the European law on monopolies. American law is more conservative (less interventionist), reflecting the error cost analysis that is increasingly common in American courts. The second half of this paper provides an empirical comparison of the American and European regimes. Although a preliminary empirical examination suggests that the scope of a country’s monopolization law is inversely related to its degree of trade dependence, …

As Antitrust Case Ends, Microsoft Is Victorious In Defeat, Norman Hawker, Robert H. Lande

All Faculty Scholarship

As the final judgment in the celebrated Microsoft case ends, this piece very briefly assesses the impact of its remedy. When evaluated in terms of its most important goals, the remedy has proven to be a failure. Microsoft's monopoly power in the PC operating systems market is now as great as it was when the case was brought in 1998 or the remedy was ordered in 2002. The article also very briefly discusses the implications of this remedy for Google and AT&T.

Appropriate Liability Rules For Tying And Bundled Discounting, Thom Lambert

Faculty Publications

This article asserts a comprehensive response to Elhauge’s provocative arguments. With respect to tying, the article shows that governing Supreme Court precedent does not deem the non-foreclosure “power” effects of the practice to be anticompetitive and that those effects are unlikely to reduce social welfare in the long run, especially after accounting for dynamic efficiencies. With respect to bundled discounting, the article shows that Elhauge’s proposed liability rule is both inapposite to consumer harm and inadministrable and that both “linked” market foreclosure and a form of below-cost pricing are necessary for anticompetitive harm and should therefore be prerequisites to antitrust …

The Roberts Court And The Limits Of Antitrust, Thom Lambert

Faculty Publications

This article first describes the fundamental limits of antitrust and the decision-theoretic approach such limits inspire. It then analyzes the Roberts Court’s antitrust decisions, explaining how each coheres with the decision-theoretic model. Finally, it predicts how the Court will address three issues likely to come before it in the future: tying, loyalty rebates, and bundled discounts.

Framing Franchise Antitrust Litigation: The Legacy Of Kodak And Queen City Pizza, Randy D. Gordon

Faculty Scholarship

A decade ago, many antitrust commentators were predicting a “revival” of franchise antitrust claims flowing in the wake of Eastman Kodak Co. v. Image Technical Services, Inc. The thinking was that Kodak’s recognition of a claim for monopolization of an “aftermarket” for parts and services separate from each other and from a primary product might be extended to cover franchise relationships in which the franchisee is required to purchase fungible products from its franchisor, even though those products could be purchased elsewhere on more favorable terms. Fairly quickly, though, the Third Circuit decided Queen City Pizza, Inc. v. Domino’s Pizza, …

The Intel And Microsoft Settlements, Robert H. Lande

All Faculty Scholarship

This article briefly compares and contrasts the recent U.S. Federal Trade Commission's antitrust settlement with Intel, and the antitrust cases brought against Microsoft. The article praises the FTC's settlement with Intel, and predicts that history will judge it very favorably compared to the settlement by the U.S. Department of Justice of its antitrust case against Microsoft.

Unilateral, Anticompetitive Acquisitions Of Dominance Or Monopoly Power, Avishalom Tor

Journal Articles

The prohibition of certain types of anticompetitive unilateral conduct by firms possessing a substantial degree of market power is a cornerstone of competition law regimes worldwide. Yet notwithstanding the social costs of monopoly modern legal regimes refrain from prohibiting it outright. Instead, competition laws prohibit monopolies or dominant firms from engaging in those types of anticompetitive conduct that amount to monopolizing or an abuse of dominant position. Importantly, anticompetitive conduct can take place both on the road to monopoly and, later on, once substantial market power has been achieved. Legal regimes nevertheless tend either to ignore or pay only limited …

Preserving A Political Bargain: The Political Economy Of The Non-Interventionist Challenge To Monopolization Enforcement, Jonathan Baker

Articles in Law Reviews & Other Academic Journals

The antitrust rules governing exclusionary conduct by dominant firms are among the most controversial in U.S. competition policy. During the first decade of the twenty-first century, they were debated in three arenas, involving legal policy, economic policy, and politics. In each arena, the dispute mainly arose as criticism of traditional standards by advocates of less intervention. Viewed through a political economy lens, the controversy can be understood as a potential challenge to an informal political bargain reached during the 1940s by which competition was adopted as national economic policy in preference to regulation or laissez-faire. From this perspective, and applying …

The Law And Economics Of Monopolization Standards, Keith N. Hylton

Faculty Scholarship

Monopolization, the restriction of competition by a dominant firm, is regulated in roughly half of the world’s nations. The two most famous laws regulating monopolization are Section 2 of the Sherman Act, in the United States, and Article 82 of the European Community Treaty. Both laws have been understood as prohibiting ‘abuses’ of monopoly power.

Introduction: Expansion And Contraction In Monopolization Law, Michael S. Gal, Spencer Weber Waller, Avishalom Tor

Journal Articles

This article introduces a special symposium issue of the Antitrust Law Journal based on a conference on monopolization. It argues that monopolization law has been experiencing simultaneous expansion and contraction processes that are not wholly contradictory but at least partly complementary. Specifically, the authors suggest that the contraction of monopolization law in the United States and the EU might serve to facilitate its expansion and increased importance worldwide, providing other antitrust regimes with more focused and effective tools to address the challenges involved in regulating dominant firms. Moreover, monopolization law's increased reach internationally also has made its refinement and rationalization …