The Limits of Antitrust in the 21st Century

Antitrust is having a moment. Commentators and policymakers, both progressive and conservative, are calling for increased antitrust enforcement to address all manner of social ills. From technology platforms\u27 power over speech and encroachments on user privacy to wage stagnation in more concentrated labor markets, to competition softening from ever-larger index funds, to growing income inequality, reduced innovation, and threats to democracy itself - the list of maladies for which antitrust has been proposed as a remedy goes on and on. This Article revisits The Limits of Antitrust in light of the current antitrust moment. Part I describes the central components of Easterbrook\u27s 1984 proposal and considers, for each, whether and how it should be revised in light of subsequent market developments and advances in economic learning. Part I concludes that Easterbrook\u27s overarching prescription for maximizing antitrust\u27s effectiveness remains fundamentally sound but that his view about the relative harms from overand under-enforcement, as well as some of the specific screening mechanisms he proposed for optimizing antitrust\u27s effectiveness, require some adjustment. Part II then builds upon Easterbrook\u27s approach by proposing four new screening mechanisms that could assist twenty-first century courts and enforcers in ensuring that antitrust secures as much social welfare as possible, given its intrinsic limitations. The proposed screening mechanisms would limit antitrust intervention to situations in which the complained of conduct (1) causes or threatens harm to consumers, (2) extends market power, (3) is unlikely to be addressed by other bodies of law or privately ordered solutions, and (4) does not involve a remedy requiring a great deal of information or endowing government officials with substantial discretionary authority

A Middle Ground on Insider Trading

For more than four decades, corporate law scholars have debated whether government should prohibit insider trading, commonly defined as stock trading on the basis of material, nonpublic information. Participants in this long-running debate have generally assumed that trading that decreases a stock\u27s price should be treated the same as trading that causes the price to rise: either both forms of trading should be regulated or neither should. I argue for a middle-ground position in which price-decreasing insider trading (sales, short sales, and purchases of put options on the basis of negative information) is deregulated, while price-increasing insider trading (purchases of stock and call options on the basis of positive information) remains restricted

Evaluating Bundled Discounts

This article identifies and critiques five attempts courts and commentators have made at articulating such an evaluative approach and, finding each approach lacking, proposes an alternative evaluative approach. The proposed approach would presume the legality of above-cost bundled discounts but would permit that presumption to be rebutted by a plaintiff that proved certain facts demonstrating that it had fully exhausted its competitive options and was, or was likely to become, as efficient as the discounter. The recommended approach would be easily administrable and would include clear safe harbors to ensure that procompetitive bundled discounting is not discouraged

Mere Common Ownership and the Antitrust Laws

“Common ownership,” also called “horizontal shareholding,” refers to a stock investor’s ownership of minority stakes in multiple competing firms. Recent empirical studies have purported to show that institutional investors’ common ownership reduces competition among commonly owned competitors. “Mere common ownership” is horizontal shareholding that is not accompanied by any sort of illicit agreement, such as a hub-and-spoke conspiracy, or the holding of a control-conferring stake. This Article considers the legality of mere common owner-ship under the U.S. antitrust laws. Prominent antitrust scholars and the leading treatise have concluded that mere common ownership that has the incidental effect of lessening market competition may violate both Section 7 of the Clayton Act and Section 1 of the Sherman Act. This Article, however, demonstrates otherwise. Competition-lessening instances of mere common ownership do not violate Section 7 of the Clayton Act because they fall within its “solely-for-investment” provision, which the scholars calling for condemnation have misinterpreted. Mere common ownership does not run afoul of Section 1 of the Sherman Act because it lacks the sort of agreement (contract, combination, or conspiracy) required for liability under that provision. From a social welfare standpoint, these legal outcomes are desirable. Condemning mere common ownership under the antitrust laws would likely entail significant costs, and the benefits such condemnation would secure are speculative. Accordingly, this Article argues courts and enforcers should not stretch the antitrust laws to condemn mere common ownership

Addressing Big Tech’s Market Power: A Comparative Institutional Approach

This Article provides a comparative institutional analysis of the three leading approaches to addressing the market power of large digital platforms: (1) traditional antitrust law, the approach thus far taken in the United States; (2) ex ante conduct rules, the approach embraced by the European Union’s Digital Markets Act and several bills under consideration in the U.S. Congress; and (3) ongoing agency oversight, the approach embraced by the United Kingdom with its newly established “Digital Markets Unit.” After identifying the general advantages and disadvantages of each approach, the Article examines how they are likely to play out in the context of digital platforms. It first examines whether antitrust is indeed too slow and indeterminate to tackle market power concerns arising from digital platforms, as proponents of ex ante conduct rules and agency oversight have suggested. It next considers possible error costs resulting from the most prominent proposed conduct rules: (1) structural separations and line of business restrictions; (2) bans on self-preferencing by platforms; (3) requirements to allow platform users to remove pre-installed software, “side-load” apps, and use alternative payment systems to make purchases on the platform; and (4) data-portability, data-sharing, and platform interoperability mandates. It then shows how three features of the agency oversight model—its broad focus, political susceptibility, and perpetual control—render it particularly vulnerable to rent-seeking efforts and agency capture. The Article ultimately concludes that antitrust’s downsides (relative indeterminacy and slowness) are likely to be less significant than those of ex ante conduct rules (large error costs resulting from high informational requirements) and ongoing agency oversight (rent-seeking and agency capture)

The Case Against Smoking Bans

In recent months, numerous localities and states have banned smoking in public places (i.e., privately owned places to which members of the public are invited). Such sweeping bans are typically justified on grounds that they alleviate externalities, shape individuals\u27 preferences in a desirable manner, and reduce risks. This essay rebuts the externality, preference-shaping, and risk-reduction arguments for smoking bans and contends that such bans are unnecessary and, on the whole, utility-reducing

Two Mistakes Behavioralists Make: A Response to Professors Feigenson et al. and Professor Slovic

This article provides a critique of Professors Feigenson and Slovic\u27s submissions to the Interdisciplinary Perspectives on Fear and Risk Perception in Times of Democratic Crisis Symposium. Examined are two common mistakes that behaviorists make; 1) discounting the rational account too quickly and 2) reflexively advocating a governmental fix

Addressing Big Tech\u27s Market Power: A Comparative Institutional Analysis

This Article provides a comparative institutional analysis of the three leading approaches to addressing the market power of large digital platforms: (1) traditional antitrust law, the approach thus far taken in the United States; (2) ex ante conduct rules, the approach embraced by the European Union\u27s Digital Markets Act and several bills under consideration in the U.S. Congress; and (3) ongoing agency oversight, the approach embraced by the United Kingdom with its newly established Digital Markets Unit. After identifying the general advantages and disadvantages of each approach, the Article examines how they are likely to play out in the context of digital platforms. It first examines whether antitrust is indeed too slow and indeterminate to tackle market power concerns arising from digital platforms, as proponents of ex ante conduct rules and agency oversight have suggested. It next considers possible error costs resulting from the most prominent proposed conduct rules: (1) structural separations and line of business restrictions; (2) bans on self-preferencing by platforms; (3) requirements to allow platform users to remove pre-installed software, sideload apps, and use alternative payment systems to make purchases on the platform; and (4) data-portability, data-sharing, and platform interoperability mandates. It then shows how three features of the agency oversight model - its broad focus, political susceptibility, and perpetual control - render it particularly vulnerable to rent-seeking efforts and agency capture. The Article ultimately concludes that antitrust\u27s downsides (relative indeterminacy and slowness) are likely to be less significant than those of ex ante conduct rules (large error costs resulting from high informational requirements) and ongoing agency oversight (rent-seeking and agency capture)

The Case for Doing Nothing about Institutional Investors\u27 Common Ownership of Small Stakes in Competing Firms

Recent empirical research purports to demonstrate that institutional investors\u27 common ownership of small stakes in competing firms causes those firms to compete less aggressively, injuring consumers. A number of prominent antitrust scholars have cited this research as grounds for limiting the degree to which institutional investors may hold stakes in multiple firms that compete in any concentrated market. This Article contends that the purported competitive problem is overblown and that the proposed solutions would reduce overall social welfare. With respect to the purported problem, we show that the theory of anti-competitive harm from institutional investors\u27 common ownership is implausible and that the empirical studies supporting the theory are methodologically unsound. The theory fails to account for the fact that intra-industry diversified institutional investors are also inter-industry diversified, and it rests upon unrealistic assumptions about managerial decision-making. The empirical studies purporting to demonstrate anti-competitive harm from common ownership are deficient because the inaccurately assess institutional investors\u27 economic interests and employ an endogenous measure that precludes causal inferences

Searching for Dust around Hyper Metal-Poor Stars

We examine the mid-infrared fluxes and spectral energy distributions for metal-poor stars with iron abundances [Fe/H] $\lesssim-5$, as well as two CEMP-no stars, to eliminate the possibility that their low metallicities are related to the depletion of elements onto dust grains in the formation of a debris disk. Six out of seven stars examined here show no mid-IR excess. These non-detections rule out many types of circumstellar disks, e.g. a warm debris disk ($T\!\le\!290$ K), or debris disks with inner radii $\le1$ AU, such as those associated with the chemically peculiar post-AGB spectroscopic binaries and RV Tau variables. However, we cannot rule out cooler debris disks, nor those with lower flux ratios to their host stars due to, e.g. a smaller disk mass, a larger inner disk radius, an absence of small grains, or even a multicomponent structure, as often found with the chemically peculiar Lambda Bootis stars. The only exception is HE0107-5240, for which a small mid-IR excess near 10 microns is detected at the 2-$\sigma$ level; if the excess is real and associated with this star, it may indicate the presence of (recent) dust-gas winnowing or a binary system.Comment: Accepted for publication in Ap