There is no antitrust law without antitrust law enforcement. Legal action turns economic and jurisprudential theory into litigation, remedy, prohibition, deterrence, and precedent that advance competition.
This Collection, Unlocking Antitrust Enforcement, demonstrates that tools to advance antitrust enforcement already exist, and they are well-suited to confront today\u27s U.S. antitrust challenges. The Features arrive at a critical moment, when economic forces mirror the industrial concentration and economic inequality of the turn of the twentieth century. Recall that the impetus for the creation of U.S. antitrust laws was the growing power of Industrial Age trusts, combinations of holdings within and across industries that dominated important economic sectors like oil, steel, and tobacco

Baker, Jonathan B.

Sallet, Jonathan

Scott Morton, Fiona

English

Yale Law School Legal Scholarship Repository

JONATHAN B. BAKER, JONATHAN SALLET & FIONA
SCOTT MORTON
Unlocking Antitrust Enforcement
There is no antitrust law without antitrust law enforcement. Legal action
turns economic and jurisprudential theory into litigation, remedy, prohibition,
deterrence, and precedent hat advance competition.
This Collection, Unlocking Antitrust Enforcement, demonstrates that tools to
advance antitrust enforcement already exist, and they are well-suited to confront
today's U.S. antitrust challenges. The Features arrive at a critical moment, when
economic forces mirror the industrial concentration and economic inequality of
the turn of the twentieth century. Recall that the impetus for the creation of U.S.
antitrust laws was the growing power of Industrial Age trusts, combinations of
holdings within and across industries that dominated important economic sec-
tors like oil, steel, and tobacco. Trusts exercised what reformers saw as outsized
political power, and they were blamed for the rise of economic inequality in the
early years of the twentieth century. Public outrage at their economic dominance
spurred the passage of the ShermanAct in 1890,' and, fueled by a decade of mer-
ger mania, the Clayton2 and Federal Trade Commission Acts' in 1914. One lead-
ing proponent of antitrust reform captured the prevailing mood when he warned
of the "gross inequality in the distribution of wealth and income which giant
corporations have fostered."'
Today, we see similar economic trends. The United States has a market
power problem; one that may well extend beyond individual markets to slow
1. 15 U.S.C. §§ 1-7 (2012).
2. 15 U.S.C. § 12-27 (2012).
3. 15 U.S.C. § 41-58 (2012).
4. Louis K. Liggett Co. v. Lee, 288 U.S. 517, 570 (1933) (Brandeis, J., dissenting).
1916
UNLOCKING ANTITRUST ENFORCEMENT
economic growth and widen economic inequality.' But there is also an arsenal of
antitrust-enforcement actions that can be used to preserve and garner the bene-
fits of competition.
The nine Features in this Collection primarily focus on the efforts that can
be undertaken by the federal antitrust agencies: the Antitrust Division of the
Department of Justice (DOJ) and the Federal Trade Commission (FTC). To-
gether, these Features lay the foundation for an overarching enforcement
agenda, one written in the long, but receding, shadow of the Chicago School,
which brought economic analysis to the forefront of antitrust but failed to fully
capture the realities of competition and the private actions that can curb it. This
agenda can be implemented immediately, relying on the "dynamic potential" of
the antitrust laws, 6 which "evolve [] as circumstances change and learning
grows."'
Key to that learning is the discipline of economics. Each Feature includes an
economist author. Economic analysis lies at the center of antitrust analysis as an
indispensable tool for establishing harm or benefit from firms' actions. Though
the Chicago School relied on economics to criticize the antitrust rules of an ear-
lier era, economic analysis should not be considered as synonymous with oppo-
sition to enforcement. The discipline of economics has developed many tools
that identify and measure anticompetitive conduct. Theories of collusion and
exclusion have developed in sophistication and variety since the founding of the
Chicago School. And advances in empirical methods since that time have al-
lowed for careful and rigorous measurement of anticompetitive strategies. Eco-
nomic tools are powerful and neutral and can be used for assessment of proposed
remedies and enforcement policies. When applied to anticompetitive acts, eco-
nomic analysis will demonstrate the need for enforcement and indicate solu-
tions. To that end, the authors in this Collection rely upon the modern economic
tools of game theory, empirical estimation, bargaining theory, and other tech-
niques that can help courts determine where, and if, there is harm to competi-
tion. And, in so doing, this Collection illustrates three larger themes important
to the future of antitrust.8
5. Jonathan B. Baker, Market Power in the U.S. Economy Today, WASH. CTR. EQUITABLE
GROWTH (Mar. 20, 2017), http://equitablegrowth.org/research-analysis/market-power-in
-the-u-s-economy-today [http://perma.cc/722A-ZZW7].
6. Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 732 (1988) ("The Sherman Act adopted
the term 'restraint of trade' along with its dynamic potential. It invokes the common law itself,
and not merely the static ontent that the common law had assigned to the term in 1890.");
accord Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 888 (2007).
7. Frank H. Easterbrook, Is There a Ratchet in Antitrust Law?, 60 TEX. L. REV. 705, 706 (1982).
8. Although UnlockingAntitrust Enforcement states an overall point of view, no author necessarily
supports the views expressed in any other Feature.
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THE YALE LAW JOURNAL
First, competitive harm today may arise from business arrangements far
more diverse than horizontal agreements reached between powerful, competing
sellers. Horizontal agreements have been too-often treated as the ground zero of
antitrust. In fact, competitive harms and exclusionary conduct can result from
any number of corporate arrangements, and this Collection contains several Fea-
tures that illustrate the potential for such enforcement. The antitrust laws can be
applied to reach horizontal shareholding in a concentrated product market, as
demonstrated by Herbert Hovenkamp and Fiona Scott Morton,9 as well as rules
adopted by standards-setting organizations that are ineffective in preventing the
owners of standard-essential patents from exploiting the monopoly power they
gain from the creation of a standard that employs their patents, as explained by
Douglas Melamed and Carl Shapiro.10 Danger to competition may come, we are
told by Scott Hemphill and Nancy Rose, from buyers as well as sellers," and
from vertical contractual arrangements of the kind analyzed by Jonathan Baker
and Fiona Scott Mortonl2 and vertical mergers, which are discussed by Steven
Salop. "
Second, we believe that the common-law approach to antitrust must always
reflect current economic theory and the facts at hand, even requiring a rethinking
of skeptical Supreme Court dicta. Scott Hemphill and Phillip Weiser show that
careful application of precedent would allow modern predation cases to escape
Brooke's Group's incredulity about the likelihood of predatory pricing, 14 and
Howard Shelanksi urges reexamination of Trinko's doubt about the ability of the
judiciary to fashion effective antitrust remedies in cases that present very differ-
ent fact patterns from Trinko itself." At the same time, examination of new eco-
nomic trends and business models reinvigorates, rather than deemphasizes, the
importance of treating market concentration as a critical starting point in anti-
trust analysis,16 the issue on which Carl Shapiro and Herbert Hovenkamp focus,
while also reminding enforcers and courts alike that the customers in each
9. Fiona Scott Morton & Herbert Hovenkamp, Horizontal Shareholding and Antitrust Policy, 127
YALE L.J. 2026 (2018).
10. A. Douglas Melamed & Carl Shapiro, How Antitrust Law Can Make FRAND Commitments
More Effective, 127 YALE L.J. 2110 (2018).
ii. C. Scott Hemphill & Nancy L. Rose, Mergers that Harm Sellers, 127 YALE L.J. 2078 (2018).
12. Jonathan B. Baker & Fiona Scott Morton, Antitrust Enforcement Against Platform MFNs, 127
YALEL.J. 2176 (2018).
13. Steven C. Salop, Invigorating Vertical Merger Enforcement, 127 YALE L.J. 1962 (2018).
14. C. Scott Hemphill & Philip J. Weiser, Beyond Brooke Group: Bringing Reality to the Law of
Predatory Pricing, 127 YALE L.J. 2048 (2018).
15. Howard Shelanski, Antitrust and Deregulation, 127 YALE L.J. 1922 (2018).
16. Herbert Hovenkamp & Carl Shapiro, Horizontal Mergers, Market Structure, and Burdens of
Proof, 127 YALE L.J. 1996 (2018).
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127:1916 2018
UNLOCKING ANTITRUST ENFORCEMENT
properly-defined antitrust market deserve protection, a principle discussed by
Michael Katz and Jonathan Sallet. "
Third, we call on antitrust enforcers to recognize that underenforcement will
not inevitably be corrected by the market. It is mistaken, for example, to expect
that a new firm will always enter to attack monopoly profits. " A dominant in-
cumbent can use its profits to buy up small entrants, build entry barriers, or en-
list a regulator's support to suppress rivalry. Concerns about the potential for
under-enforcement are growing. " It is therefore time - indeed past time - for a
reassessment of the assumption that markets will always, and in a timely way,
self-correct. For this reason, enforcers must be vigilant in their protection of the
competitive process. The Features in this Collection demonstrate several actions
by which enforcers could act against current forms of anticompetitive behavior
that have, in some cases, existed for many years without any self-correction
through the actions of private firms.
Concern that antitrust enforcement must be curbed today to avoid inevitable
over-enforcement ignores the practical threat of under-enforcement. As veterans
of antitrust agencies know, practical considerations influence how and which
cases are brought. Antitrust agencies must investigate and prosecute an enforce-
ment action against a defendant that will counter the government's case by un-
dermining the government's view of the law, economics, and evidence. The
agency must be confident both in its evidence and the match with relevant prec-
edents to bring a case. To write a complaint that will be argued before a federal
judge entails a deep contemplation of what knowledge is needed to demonstrate
the necessity of enforcement and the nature of harm. Antitrust actions must be
defended in court as well as to the public, and given that the enforcer might lose,
enforcement is risky. This risk may discourage enforcers from bringing some
meritorious cases, and forces them to devote a substantial (and perhaps socially
17. Michael Katz & Jonathan Sallet, Multisided Platforms and Antitrust Enforcement, 127 YALE L.J.
2142 (2018). Both this Feature and Hovenkamp & Shapiro, supra note 16, demonstrate the
continuing importance of Philadelphia National Bank.
18. Jonathan B. Baker, Taking the Error Out of "Error Cost" Analysis: What's Wrong with Antitrust's
Right, So ANTITRUST L.J. 1, 8-12 (2015).
ig. Baker, supra note 5; Carl Shapiro, Antitrust in a Time of Populism, INT'L J. INDUSTRIAL
ORG. (forthcoming 2018) (manuscript at 24), http://faculty.haas.berkeley.edu/shapiro
/antitrustpopulism.pdf [http://perma.cc/4HYN-7LUU] ("Sound competition policy would
tolerate some false positives - blocking mergers involving targets, only to find that they do
not grow to challenge the incumbent- in order to avoid some false negatives - allowing mer-
gers that eliminate targets that would indeed have grown to challenge the dominant incum-
bent.").
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THE YALE LAW JOURNAL
excessive) fraction of their limited resources to strengthening the cases they do
bring.
And yet there is no symmetric reminder of the risk of inaction; no judge that
scolds antitrust enforcement authorities after a cleared merger causes higher
prices or less innovation; and no court that chastises the government for declin-
ing to challenge exclusionary conduct harming competition. This inherent im-
balance in risks motivates this Collection: without persistent and comprehensive
analysis of anticompetitive conduct in the economy, followed by action, enforce-
ment will tend to be inadequate. In this Collection, we offer tools for enforce-
ment that include detailed economic analysis, that are informed by experience,
new technologies, and data, that advance the sound evolution of the law, and
that are always anchored to the competitive realities of a controversy. Antitrust
has long been described as a common-law discipline;2 0 this Collection's ambition
is to demonstrate that antitrust enforcement can become more effective while
working with the core tenets of common-law logic and experience.2 1
20. Leegin Creative Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 887, 899-900 (2007) ("From the
beginning the Court has treated the Sherman Act as a common-law statute.").
21. OW. HOLMES. JR., THE COMMON LAw 1 (1881) ("The life of the law has not been logic, it has
been experience.").
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127:1916 2018


Unlocking Antitrust Enforcement

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