Available here. Here’s an excerpt:
It turns out that it is a very difficult business to identify the few cases when low prices and aggressive competition might perversely end up harming consumers in the long run rather than simply making them better off. And the cost of erroneous antitrust enforcement, such as mistakenly condemning Intel’s discounting practices on the view that they “might” harm competition in the future, can have important negative consequences throughout the economy as other firms learn that aggressive competition might get them a phone call from the Justice Department or the FTC–or a dawn raid from the European Commission.
In announcing a new direction for the administration’s antitrust agenda, Varney was refreshingly explicit in her rationale and made clear that in the new DOJ the existence of possible harm alone would be enough–and that she and her staff will recognize anti-competitive conduct when they see it, without inadvertently deterring beneficial conduct. One hundred years of legal and economic thinking in antitrust suggests that this task will be much more difficult than Varney and the new Antitrust Division are expecting. Unfortunately, the political harm from deterring what might have been valuable business behavior is negligible, as un-attempted innovation and unrealized efficiencies rarely show up on the political balance sheet.
The irony of the new approach is that it puts the new administration on a collision course with the law. The previous DOJ, whatever its shortcomings, reflected an honest effort to adopt an enforcement strategy that was likely to find success given the existing monopolization law developed independently by the courts. The new strategy, so far as one can tell, seeks to pressure the courts to change the law in order to meet the desires of the new administration. In the end, either the Antitrust Division will fail, or the courts will bend in a way that unsettles the law. But either way, this week’s events in Europe and the U.S. portend a tough road ahead for the world’s most successful companies.
Keith N. Hylton is the Honorable Paul J. Liacos Professor of Law, Boston University. Geoffrey A. Manne is executive director of the International Center for Law and Economics and Lecturer in Law at Lewis and Clark Law School. Joshua D. Wright is co-director of the Antitrust Research Center at the International Center for Law and Economics and assistant professor of law at George Mason University School of Law.
