Identifying Anticompetitive Agreements in the United States and the European Union

Date01 June 2017
Published date01 June 2017
Identifying Anticompetitive
Agreements in the United
States and the European Union:
Developing a Coherent Antitrust
Analytical Framework
Alison Jones* and William E. Kovacic**
Commentary in both the U.S. and the European Union (EU) has repeatedly debated whether, and
when, it is more effi cient to use “rules” or “s tandards” to determine the legality of conduct
subject to the antitrust laws and how such rules or standards should be formulated. This article
concentrates principally on the question of how this debate impacts on the analytical framework
for identifying infringing agreements in the U.S. and EU. It sets out the view that the question of
how agreements are to be analyzed under both the U.S. and the EU jurisprudence is unduly
opaque. Confusion as to, in particular, the roleandscopeofperserules,theroleandscopeof
ancillary restraint doctrines, and how competing anticompetitive and procompetitive effects of
mixed agreements are to be balanced against each other have led to excessive complexity in the
system. The article considers what factors might shape development of a coherent and optimal
framework for antitrust analysis in a jurisdiction. Once these factors have been set out, it
examines how U.S. and EU competition law have approached the issues identified in relation to
the analysis of agreements and what features of each system have molded the developments
there. It concludes that both systems require some development to create more intelligible
frameworks for antitrust analysis of agreements based on common concepts rather than historical
categories of antitrust analysis and, further, that competition agencies could play an important
part as catalysts in this progress.
antitrust analysis of agreements, rules and standards
*King’s College London, London, UK
**George Washington University, Washington, D.C., USA
Corresponding Author:
Alison Jones, King’s College London, Dickson Poon School of Law, Somerset House East Wing, Strand, London WC2R 2LS, UK.
The Antitrust Bulletin
2017, Vol. 62(2) 254-293
ªThe Author(s) 2017
Reprints and permission:
DOI: 10.1177/0003603X17708363
1. Introduction
Since the late 1980s, competition law has become a truly global regulatory enterprise. More than 130
jurisdictions around the world now have competition (or antitrust) systems in place.
Many of these, to
prevent firms from distorting competition, stand upon three main substantive pillars:
(i) provisions prohibiting restrictive agreements (in the U.S. and EU, Section 1 of the Sherman
Act 1890
and Article 101
of the Treaty on the Functioning of the European Union [TFEU],
(ii) provisions prohibiting monopolization (or attempts to monopolize) or abusive conduct of
dominant firms (Section 2 of the Sherman Act and Article 102 TFEU);
(iii) provisions prohibiting mergers that will substantially lessen or significantly impede compe-
tition (Section 7 of the Clayton Act and the EU Merger Regulation, Council Regulation 139/
In many countries, the purpose of antitrust legislation, and its core concepts, is not precisely
For example, legislation in the U.S. and the European Union (EU) does not make its purpose
explicit or provide definitions of its central substantive ter ms, such as, respectively, “restraint of
trade,” “monopolization,” “substantial lessening of competition” and “restrictio n” of competition,
“abuse,” “dominant position,” and “significant impediment to effective competition.” Rather, the task
of putting flesh on these laws’ skeletal provisions has been left to be developed in the jurisprudence
and to be decided, ultimately, by the Supreme Court (in the U.S.) and the Court of Justice of the
European Union (in the EU, comprised of the Court of Justice [CJ] and the General Court [GC]).
the years, therefore, these courts have had to wrestle with the plethora of complex questions and issues
that application of the laws has raised. These include what their goals are and how the overarching
objectives guide interpretation of their key words and the crafting of tests to identify anticompetitive or
restrictive conduct and to distinguish it from procompetitive or competitively neutral conduct (or, to
paraphrase Justice Stephen Breyer, to separate the antitrust goats from the beneficial sheep).
Commentary in both jurisdictions has repeatedly debated whether, and when, it is more efficient to
use “rules” or “standards” to determine the legality of conduct subject to the antitrust laws and how
such rules or standards should be formulated.
An extensive literature has identified the tensions
1. William E. Kovacic & Marianela Lopez-Galdos, Lifecycles of Competition Systems: Explaining Variation in the
Implementation of New Regimes,79L
AW &CONTEMP.PROBS. 101, 101–2 (2016). In contrast, “Until the mid 20t h
century less than 10 competition regimes existed worldwide” (United Nations Conference and Trade & Development
2. Section 1 provides that “[e]very contract, combination...or conspiracy, in restraint of trade or commerce among the several
States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1.
3. Art 101(1) prohibits agreements between undertakings which affect trade between Member States and have as their object
or effect the prevention, restriction or distortion of competition. Art 101(3) provides a legal exception from the Art 101(1)
prohibition for agreements which satisfy its four conditions; see,e.g., Alison Jones & Brenda Sufrin, EU COMPETITION LAW:
TEXT,CASES,AND MATERIALS (6th ed., 2016), chaps. 3 and 4.
4. Section 2, 15 U.S.C. § 2, prohibits any person from monopolizing or attempting to monopolize trade, whilst Article 102
prohibits abuse of a dominant position held by one or more undertakings.
5. Clayton Act, section 7, 15 U.S.C. § 18, prohibits merger transactions which will substantially lessen competition whilst the
EU Merger Regulation, [2004] OJ L 24/1, provides for concentrations which would significantly impede effective
competition in the EU, or a substantial part of it, to be declared incompatible with the common market.
6. On the modern debate about antitrust’s goals, see Symposium, The Goals of Antitrust,81F
ORD.L.REV. 2151 (2013).
7. Treaty on European Union, Art 19.
8. Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 914 (2007) (Breyer, J., dissenting).
9. We use the terms “standard” and “rule” in the manner set out in Ehrlich’s and Posner’s formative paper on the design of
legal rules; Issac Ehrlich & Richard A. Posner, An Economic Analysis of Legal Rulemaking,3J.L
EGAL STUD. 257 (1974).
Jones and Kovacic 255
between the desire for competition laws to be accurate and consistent, yet also clear, predictable,
transparent, administrable and not too costly to apply; the question of when complex standards may be
more appropriate than simpler, bright line rules (or vice versa) is well rehearsed.
The difference between rules and standards is a matter of degree, and the line between them can be
fine. Some rules begin to resemble standards when, for the sake of accuracy, they require consideration
of additional circumstances. By the same measure, a standard may incorporate decision-making
principles that seek to attain some of the clarity associated with rules.
The blurring of the lines
between rules and standards has led to debate, in the antitrust context, as to whether doctrine governing
firm behavior should present a sharp dichotomy with two wholly distinct realms—one compartment in
which some conduct is prohibited (or approved) categorically, and a separate compartment in which
conduct is subject to a more elaborate examination of purpose and actual or likely effects—or whether
there should be a continuum of tests—a mix of rules, standards, and hybrid approaches in between. In
particular, whether and when there should be:
categorical rules that condemn certain conduct (for example, the U.S. rule of per se illegality);
categorical rules that allow certain conduct (rules of per se legality);
standards that test conduct with a more complex, multi-faceted analysis of the restrictive and
procompetitive effects of each agreement, accounting for the context in which the behavior took
place and the situation that would occur without the conduct; and/or
intermediate types of analysis, such as a rule which requires the weighing or balancing ofcertain
factors before it is applied, the application of rebuttable presumptions of legality or illegality, or a
structured standard which requires a series of specified factors to be taken into account.
Where courts, as they have in the U.S., conclude that antitrust chiefly seeks to promote economic
efficiency (allocative, productive, and dynamic), economics will guide the answer to these questions.
The term “standard” refers to “a general criterion of social choice,” such as a mandate to promote “competition.” The term
“rule” refers to a more precise statement that circumscribes the assessment of factors relevant to a decision according to the
standard. Id. at 258. The relative efficacy of rules and standards is an issue of virtually universal concern in the field of law.
See,e.g., Sepehr Shahshahani, The Nirvana Fallacy in Fair Use Reform,18M
INN. J. L., SCI.&TECH. 273, 283 & n. 59
(2015) (collecting sources); Daniel A. Crane, Rules Versus Standards in Antitrust Adjudication,64W
ASH.&LEE L. REV. 49,
52–54 & n. 11 (2007) (hereinafter Rules Versus Standards) (collecting sources); Louis Kaplow , A Model of Optimal
Complexity of Legal Rules,11J.L.ECON &ORG. 150 (1995).
10. See further Section 2 below. Informative treatments of this topic in antitrust law include Crane, supra note 9; Wolfgang
Kerber, “Rules vs Standards” or Standards as Delegation of Authority for Making (Optimally Differentiated) Rules,in
INTERNATIONALIZATION OF THE LAW AND ECONOMIC ANALYSIS 489 (Thomas Eger et al. eds., 2008); Andrew I. Gavil, Moving
Beyond Caricature and Characterization: The Modern Rule of Reason in Practice,85S
O.CAL.L.REV.733 (2012); Yannis
Katsuulakos & D. Ulph, On Optimal Legal Standards for Competition Policy: A General Welfare-Based Analysis,57J.
INDUS.ECON. 410 (2009); Symposium, The Future Course of the Rule of Reason,68ANTITRUST L.J. 331 (2000); Leon B.
Greenfield & Daniel J. Ma thieson, Rules Versus Sta ndards and the Antitrust Juri sprudence of Justice Brey er,2009
ANTITRUST, Summer, at 87 (2009) (reviewing rules versus standards debate in context of analyzing opinions of a jurist
who has focused on tradeoffs between the two approaches to formulating legal commands). For a discussion of the issue as it
arises in the treatment of vertical restraints, see OECD Policy Roundtables: Re sale Price Maintenance (2008), http:// tion/43835526.pdf and Matthew Be nnett et al., Resale Price Maintena nce: Explaining the
Controversy, and Small Steps Towards a More Nuanced Policy (2011) 33 FORDHAM INTL. L.J. 1278, 1281–82
(conducting a detailed assessment in every case might impose too high a burden on firms, competition agencies (and
other claimants) and courts). A separate literature discusses analytical approaches that enforcement agencies can sequence
the collection and assessment of information needed to apply a legal regime that subjects some conduct to assessment by
bright-line rules and reviews other behavior with standards. See Damien J. Neven, Identifying “Restrictions of
Competition”—Some Comments from a Law and Economics Perspective, in THE NOTION OF RESTRICTION OF COMPETITION
39 (Damien Gerard et al. eds., 2017).
11. See Carol M. Rose, Crystals and Mud in Property Law,40STAN.L.REV. 577 (1988).
256 The Antitrust Bulletin 62(2)

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