Antitrust and Professional Rules: A Framework for Analysis

This Article discusses whether antitrust laws can apply to rules of professional conduct and ethics. The author examines various economic theories relating to the regulation of professions, both by the government and through self-regulation. The Article discusses the viewpoints of scholars who are suspicious of private codes of ethics for professionals based on antitrust theory. It also explains the theory of economic capture, and examines the views of scholars who fear capture of the government by professional associations. The author sets out both anticompetitive and procompetitive theories of professional rules, and suggests a method of analysis for distinguishing anticompetitive rules from procompetitive ones. He concludes that the rules of professional associations are inviting antitrust targets

Res Ipsa Loquitur: Reducing Confusion of Creating Bias?

The so-called doctrine of res ipsa loquitur has been a mystery since its birth more than a century ago. This Article helps solve the mystery. In practical effect, res ipsa loquirtur, though usually thought of as a tort doctrine, functions as a rule of trial practice that allows jurors to rely on circumstantial evidence surrounding an accident to find the defendant liable. Standard jury instructions in negligence cases, however, fail to inform jurors that they are permitted to rely upon circumstantial evidence in reaching a verdict. Why, then, is another, more specific circumstantial evidence charge necessary or desirable? We describe and evaluate the arguments that have been made in support of and in opposition to the res ipsa instruction. One theory is that jurors are confused in performing their task when given only standard instructions; the charge, therefore, clarifies their task, thereby improving the quality of their decisionmaking. A competing theory is that the instruction biases jurors in favor of plaintiffs, thereby degrading the quality of the decisionmaking. Our theoretical analysis concludes that the boas explanation is stronger. We reach this conclusion by applying for the first-time modern learning on cognition to the res ipsa instruction. To support our theoretical conclusion, we report the results of experiments designed o determine the effects of the instruction. All these experiments were intended first to confirm that the res ipsa instruction has an effect and second to confirm or refute our theoretical conclusion that the instruction biases rather than clarifies. While the empirical results did not demonstrate bias, they also failed to show the absence of bias. Moreover, we found no evidence that the instruction reduces confusion. Our conclusion is that the charge has no positive effect, and either may create a bias or, at best, is meaningless

State Action and the Meaning of Agreement Under Sherman Act: An Approach to Hybrid Restraints

Antitrust observers are familiar with the two-part Midcal test for the immunity of state regulation from federal antitrust laws: the state must clearly articulate its policy to displace competition and must actively supervise any private conduct pursuant to the policy. But state action need not meet these requirements if it is unilateral and therefore does not conflict with Section 1. Only if a state-authorized restraint is hybrid, combining state and private action in a way that resembles aprohibited agreement, need the restraint satisfy Midcal. In this article, John Lopatka and Bill Page examine the history andcurrent importance of the distinction between unilateral and hybrid restraints. Although the Supreme Court\u27s precedents are not entirely consistent, the authors argue that a unilateral restraint is one in which governmental actors define the extent of consumer harm, while a hybrid restraint is one in which the government empowers private actors to exercise discretion as to the nature or level of consumer injury in a way that closely resembles an antitrust violation. They examine the emergence of this principle in the context of state restraints that are analogous to resale price maintenance. They then examine recent appellate decisions characterizing horizontal restraints as hybrid. In this part, the authors argue that antitrust law reaches not only state authorized express collusion but state practices that significantly facilitate tacit collusion and serve no competitively benign purpose

Monopolization, Innovation, and Consumer Welfare

While most commentators and the enforcement agencies voice support for the consumer welfare standard, substantial disagreement exists over when economic theory justifies a presumption of consumer injury. Virtually all would subscribe to the theoretical prediction that an effective cartel will likely inflict consumer injury by reducing output and thus increasing prices. But the academic and judicial consensus disappears when the theory at issue predicts that a practice -- a merger or a predatory pricing campaign, for example -- will harm consumers in the future through some complex sequence of events. In our view, the desire to protect innovation is legitimate, but its specific applications in the Microsoft and Intel cases proposal jeopardize consumer interests. The courts use the notion of harm to innovation to shift the burden to the defendant to justify conduct that harms a competitor. But to relax the antitrust plaintiff\u27s obligation to prove harm to competition, particularly when the conduct provides immediate consumer benefits, is unwarranted. A business justification defense does not provide dominant firms the breathing space they need to pursue legitimate objectives in a rough-and-tumble marketplace. We argue that the plaintiff in an actual or attempted monopolization case based on a prediction of distant consumer injury must articulate a credible theory of specific harm and support it with some evidence. The defendant, in turn, is free to dispute that claim. In addition, a finding that the defendant\u27s conduct produced immediate and significant consumer benefits should create a presumption in favor of the defendant. In that event, the plaintiff must lose unless it can prove by compelling evidence that the expected cost of future consumer harm exceeds the immediate benefits. We argue, using Microsoft and Intel as examples, that our approach best accommodates the important interests at stake

Economic Authority and the Limits of Expertise in Antitrust Cases

In antitrust litigation, the factual complexity and economic nature of the issues involved require the presentation of economic expert testimony in all but a few cases. This dependence on economics has increased in recent years because of the courts\u27 narrowing of per se rules of illegality and the courts\u27 expansion of certain areas of factual inquiry. At the same time, however, courts have limited the scope of allowable expert testimony through the methodological strictures of Daubert and its progeny and through heightened sufficiency requirements. In this Article, Professors Page and Lopatka make four important points about these judicially imposed constraints on expert testimony. First, they contend that these constraints, in the first instance, rest on economic authority -- a body of economic ideas adopted by the courts from the scholarly literature. Second, Page and Lopatka analyze a wide range of antitrust decisions to show that much of this economic authority is taken either directly or indirectly from the Chicago School of antitrust economics. Third, through analysis of existing case law, the authors show the ways in which the courts apply economic authority as a screen in deciding which evidence to admit and which to exclude. In making this point, the authors highlight four important antitrust categories: determination of predatory pricing; market definition and assessment of market power; characterization of cartels and proof of agreement in cartel cases; and the determination of damages. Fourth, Professors Page and Lopatka end by examining the legitimacy of assigning such a defining role to economic authority in general, and to the Chicago School in particular. In making this point, the authors revisit the continuing controversy over the role of post-Chicago economic analysis