An Economist Appraises Vertical Restraints

• Author: Betty Bock
• Date: 01 March 1985
• Published date: 01 March 1985
• DOI: 10.1177/0003603X8503000106
• Subject Matter: Article

The Antitrust Bulletin/Spring

1985

An

economist appraises

vertical restraints

BY BETTY BOCK*

Background

117

Following the tradition

of

an honorable profession, it has not

been difficult for me to build a model suggesting why those

organizing this program have invited an economist to appraise

vertical restraints . . . or why someone who has brewed up

potions

of

law and economics for more than 40 years might be

asked to chant an incantation over what to many appears a

•Consultant, Antitrust Research, The Conference Board;

Adjunct

Professor

of

Law, New York University School

of

Law.

AUTHOR'S

NOTE: The article that follows is from a talk given at the

Twenty-Fourth Annual Advanced Antitrust Seminar on Distribution

Problems and Solutions, Practising Law Institute, New York City,

December 6-7, 1984. It was prepared in the fall

of

1984 without

reference to the Antitrust Division's proposed guidelines on vertical

restraints. I have tried to take account

of

what I had heard about them,

but have not felt constrained to shift my basic views concerning the

economic differences between coercion and choice

for

members

of

a

distribution network; nor have I looked, one by one, at the practices

that have been identified by the courts as vertical restraints, but rather

consider the fundamental economic problem posed by such distribution

arrangements, considering specific restraints as examples

of

an overall

problem.

1985 by Federal Legal Publications, Inc.

118 The antitrust bulletin

dwindling broth. The answer, I think, lies in lawyerly curiosity

about what economic analysis is doing to traditional marketing

law and about what advice an economist can give lawyers about

how modern antitrust economics affects our views of marketing

facts.

There are many ways

of

describing the differences between

antitrust lawyers and economists. But like most attempts at

classification in the social sciences, the distinctions seldom come

clean. Some field marks are, however, worth formulating:

• The antitrust economist's focus is not circumscribed by statutes or

precedents; he can swing through branching assumptions on a

trapeze of logic in defiance of fact.

• Unlike a judge, an antitrust economist does not look primarily for

justice. Indeed, where short-term justice and long-term efficiency

conflict, the economist is free to go wherever consumer welfare

goals take him . . . even if the terrain is harsh.

• Finally, while antitrust lawyers and judges seek to define areas

where violation of law is

clear-or

where violation cannot be

found-leaving

as small as possible a gray area, an antitrust

economist seeks reasons for the results of specific practices in

specific markets and so may well expand the gray area to the edges

of

the problem.

I have been puzzled about what vocabulary to adopt for this

talk. I have no problem with the word "restraint," provided we

mean avoluntary individual "limitation on freedom

of

choice" in

aneutral sense. I have no problem with the word "agreement"

either, provided it means something like

"an

accord," also in a

neutral tone. Great confusion has been fomented because words

such as these are often used with prejudice, regardless

of

the

form, purpose, or effect of the "restraint" or "agreement." But a

prejudicial vocabulary puts the conclusion cart before the ana-

lytic horse.

Leaving out the gray area for the moment, as an economist I

believe that the position of the dividing line between pro- and

anticompetitive distribution restraints should depend on whether

the alleged restraint, if continued, would be likely to wipe out