U.S. Antitrust Enforcement and Error Costs: The Supreme Court and the Obama Administration

Alden Abbott —  21 September 2015

My article with Thom Lambert arguing that the Supreme Court – but not the Obama Administration – has substantially adopted an error cost approach to antitrust enforcement, appears in the newly released September 2015 issue of the Journal of Competition Law and Economics.  To whet your appetite, I am providing the abstract:

In his seminal 1984 article, The Limits of Antitrust, Judge Frank Easterbrook proposed that courts and enforcers adopt a simple set of screening rules for application in antitrust cases, in order to minimize error and decision costs and thereby maximize antitrust’s social value. Over time, federal courts in general—and the U.S. Supreme Court in particular, under Chief Justice Roberts—have in substantial part adopted Easterbrook’s “limits of antitrust” approach, thereby helping to reduce costly antitrust uncertainty. Recently, however, antitrust enforcers in the Obama Administration (unlike their predecessors in the Reagan, Bush, and Clinton Administrations) have been less attuned to this approach, and have undertaken initiatives that reduce clarity and predictability in antitrust enforcement. Regardless of the cause of the diverging stances on the limits of antitrust, two things are clear. First, recent enforcement agency policies are severely at odds with the philosophy that informs Supreme Court antitrust jurisprudence. Second, if the agencies do not reverse course, acknowledge antitrust’s limits, and seek to optimize the law in light of those limits, consumers will suffer.

Let us hope that error cost considerations figure more prominently in antitrust enforcement under the next Administration.

Alden Abbott

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I am a Senior Legal Fellow at the Heritage Foundation. I write on antitrust, domestic and international regulatory policy, and law and economics. I am an Adjunct Faculty Member at George Mason Law School.