DOJ and Single Firm Conduction
Monday, September 8th, 2008Earlier today, the Department of Justice (without the FTC) released a massive, 215 page, report that, in DOJ’s own words “examines whether and when specific types of single-firm conduct may or may not violate Section 2 of the Sherman Act by harming competition and consumer welfare.” It will take us (and everyone else) some time to digest all 215 pages but DOJ’s press release included these “observations” from the report:
- No single test for determining whether conduct is anticompetitivesuch as the effects-balancing, profit-sacrifice, no-economic-sense, equally efficient competitor, or disproportionality testsworks well in all cases. The Department encourages the continuing development of conduct-specific tests and safe harbors;
Vague or overly inclusive prohibitions against single-firm conduct are particularly likely to undermine economic growth and to harm consumers. In contrast, Section 2 prohibitions that are based on clear and objective criteria, and that are carefully tailored to conduct likely to harm the competitive process, are likely to increase economic growth and to benefit consumers. Businesses are better able to comply with the law and avoid violations; antitrust enforcers can more easily identify and prove violations; effective and administrable remedies are more likely to be available; and aggressive but beneficial competition is less likely to be deterred; The appropriate measure of cost in relation to predatory-pricing claims should identify loss-creating sales that could force an equally efficient rival out of the market, and such a measure should be administrable by businesses and the courts. In most cases, the best cost measure likely will be average avoidable cost; The historical hostility of the law to the practice of tying is unjustified, and the qualified rule of per se illegality applicable to tying is inconsistent with the U.S. Supreme Court’s modern antitrust decisions and should be abandoned; Bundled discounting, although a common practice that frequently benefits consumers, can potentially harm competition in two different ways. Accordingly, depending on particular facts, either an analysis similar to predatory pricing is appropriate or an analysis similar to tying is appropriate; Antitrust liability for mere unilateral, unconditional refusals to deal with rivals should not play a meaningful role in Section 2 enforcement because compelling access is likely to harm long-term competition and courts are ill suited to be market regulators; Exclusive-dealing arrangements foreclosing less than 30 percent of existing customers or effective distribution should not be illegal ….
Barak Orbach of the University of Arizona is in the process of creating
Steve Hannaford, the man behind the 








