The Antitrust Enterprise: Principle and Execution PDF
Preview The Antitrust Enterprise: Principle and Execution
The Antitrust Enterprise The Antitrust Enterprise Principle and Execution Herbert Hovenkamp HARVARD UNIVERSITY PRESS Cambridge,Massachusetts London,England Copyright©2005bythePresidentandFellowsofHarvardCollege Allrightsreserved PrintedintheUnitedStatesofAmerica FirstHarvardUniversityPresspaperbackedition,2008 LibraryofCongressCataloging-in-PublicationData Hovenkamp,Herbert,1948– Theantitrustenterprise:principleandexecution/HerbertHovenkamp p. cm. Includesbibliographicalreferencesandindex. ISBN978-0-674-01897-6(cloth : alk.paper) ISBN978-0-674-02741-1(pbk.) 1.Competition—UnitedStates. 2.Antitrustlaw—Economicaspects— UnitedStates. I.Title. HF1414.H682005 343.73′0721—dc22 2005050362 Contents Preface vii Introduction 1 I LIMITS AND POSSIBILITIES 11 1 TheLegalandEconomicStructure oftheAntitrustLaws 13 2 TheDesignofAntitrustRules 31 3 ThePromisesandHazardsofPrivate AntitrustEnforcement 57 4 ExpertTestimonyandthePredicament ofAntitrustFactFinding 77 II TRADITIONAL ANTITRUST RULES 93 5 UnreasonableExercisesofMarketPower 95 6 CombinationsofCompetitors 125 7 DominantFirmsandExclusionaryPractices 150 8 AntitrustandDistribution 181 9 TheNationalPolicyonBusinessMergers 207 III REGULATION, INNOVATION, AND CONNECTIVITY 225 10 AntitrustunderRegulationandDeregulation 227 11 TheConflictbetweenAntitrustand IntellectualPropertyRights 249 vi Contents 12 NetworkIndustriesandComputerPlatform Monopoly 277 Epilogue:AntitrustReform 305 Notes 315 Index 363 Preface The operating principles of every discipline must periodically be reex- amined. Too much mischief results when the everyday rules of the law loseconnectiontotheirfoundationsandacquirealifeoftheirown.This bookoriginatedinmanylawschoolandeconomicsclassesandseminars devoted to the effective administration of the antitrust laws. More than any other forum, classroom encounters have challenged me to identify antitrust’smostfundamentalandrealisticaspirations. Ihavetoomanyintellectualdebtstolisthere,butImustmentionone. PhillipE.Areedawasmyseniorcoauthorfornearlyfifteenyearspriorto his untimely death in 1995. He helped me to understand and make or- deroutofthisdiscipline,toappreciateitssignificantlimitations,andto articulateanddefineitsrules.Hislife’swork,themultivolumeAntitrust Law treatise that he and Donald F. Turner began in the 1970s, has now becomemylife’sworkaswell. IamalsoindebtedtotheUniversityofIowa—andparticularlytothe two deans under whom I have served, N. William Hines and Carolyn Jones—foramplesupportofmyresearch.Finally,andgratefully,Idedi- catethisbooktomyfather,BertHovenkamp. Introduction Afterdecadesofdebate,todayweenjoymoreconsensusaboutthegoals oftheantitrustlawsthanatanytimeinthelasthalfcentury.Bycontrast, antitrust’s rules for decision making remain unfocused and imprecise. Fewpeopledisputethatantitrust’scoremissionisprotectingconsumers’ righttothelowprices,innovation,anddiverseproductionthatcompeti- tion promises. Articulating the means to achieve this end is a different matter. Policy makers continue to dispute questions about the robust- ness of markets; about the extent to which strategic business behavior existsandwhetherantitrustcandomuchaboutit;aboutwherethemost protectionisneededandwhatformitshouldtake;aboutthespecialrole ofantitrustinregulatedorderegulatedindustries;andabouttheproper relationshipbetweenantitrustandinnovation.1 The modern debate over basic antitrust goals began during the era whenEarlWarrenwasChiefJusticeoftheSupremeCourt(1953–1969). Under Warren antitrust cases became relatively easy for plaintiffs to bringandwin,andtheywerehighlylikelytogotojurytrialsunlessfear- ful defendants settled out of court. But too often the protected class seemedtobesmallbusinessratherthanconsumers.Indeed,manyWar- ren-eradecisionscondemnedconductpreciselybecauseitreducedcosts or generated more desirable products.2 Such practices harm rivals un- abletomatchthem,buttheybenefitconsumers.Ontopofthat,Warren Court antitrust was highly distrustful of markets, suspicious of innova- tion and the intellectual property laws, and convinced that aggressive antitrust remedies would make the economic world a better place. The result, wrote Robert H. Bork, the most influential critic of Warren-era 1
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