The Economics of Antitrust Law

• Author: Richard S. Markovits
• Published date: 01 March 2016
• Date: 01 March 2016
• DOI: http://doi.org/10.1177/0003603X15625138

Article

The Economics of Antitrust

Law: A Comment on the

Other Contributions

to This Symposium

Richard S. Markovits*

Abstract

This Comment on the other contributions to this symposium addresses their authors’ and my

positions on (1) the definability of markets and various approaches to defining markets, (2) the

definition and legal relevance of market (economic) power, (3) the economic functions and

legality of vertical practices (correctly analyzed as a matter of law), (4) the legality of unsuccessful

attempts to commit acts whose successful completion would be illegal, (5) so-called ‘‘objective

intent,’’ so-called ‘‘subjective intent,’’ and ‘‘specific anticompetitive intent,’’ (6) the relevance of the

economic efficiency of conduct or its prohibition to its legality, (7) the defensible goals of anti-

trust policy, (8) the appropriateness of courts’ using decision-rules that minimize the losses

generated by the Type I and Type II errors they will make when those rules recommend deci-

sions that would not find defendants liable in a civil case if and only if the preponderance of

evidence implies that the defendants violated the law and guilty in a criminal case if and only if the

evidence establishes their guilt beyond a reasonable doubt, and (9) the extent to which my

‘‘conception’’ (in one contributor’s terms)—i.e., my novel conceptual systems, economic theories,

and legal conclusions—in his words ‘‘has ended up faring very well’’—i.e., has been progressively

andnowlargelyacceptedbyantitrustscholars, antitrust enforcement-agencies, and courts.

Keywords

market definition, market (economic) power, contrived and natural oligopolistic pricing, predatory

pricing, horizontal mergers, vertical practices, foreclosure, unsuccessful attempts, ‘‘objective intent,’’

‘‘subjective intent,’’ specific anticompetitive intent, lessening competition, economic efficiency,

antitrust-policy goals, Type I and Type II errors

*The University of Texas at Austin, Austin, TX, USA

Corresponding Author:

Richard S. Markovits, The University of Texas at Austin, Austin, TX 78705, USA.

Email: rmarkovits@law.utexas.edu

The Antitrust Bulletin

2016, Vol. 61(1) 198-227

ªThe Author(s) 2016

Reprints and permission:

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DOI: 10.1177/0003603X15625138

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Given the embarrassing (though evidently ins ufficiently embarrassing) length of my intro ductory

essay,

1

I will reduce the length of this Comment by restricting myself to ten points or sets of points

raised by the other contributors’ articles and referencing whenever possible relevant portions of my

introductory essay.

First, the articles of several of the European Community (E.C.)/European Union (E.U.) law experts

who contributed to this issue reveal the importance of having detailed knowledge of a body of law both

as written and as interpreted and applied as well as of the law’s intellectual antecedents, legal ante-

cedents, and legislative history. I do not claim to be a real expert on E.C./E.U. competition law. I

devoted a great deal of time to reading and thinking about the competition-law-related provisions of

the various E.C./E.U. treaties; the European Commission’s (EC’s) various competition-law-related

Discussion Papers, Notices, Guidelines, and Regulations; EC and E.C./E.U.-court competition-law-

case opinions; academic treatises on E.C./E.U. competition law; and specialized academic books and

articles on specific or related clusters of E.C./E.U. competition-law issues. I do not think that I reached

any incorrect conclusions about the substance of E.C./E.U. competition law, correctly interpreted and

applied, and occasionally my outsider perspective made it easier for me to recognize the incorrectness

of conclusions of the EC and E.C./E.U. courts about particular legal issues that no European E.C./E.U.

competition-law expert appears to have questioned—e.g., the conclusion that now-Article 101 does

not cover horizontal mergers that do not create a dominant firm or make a set of rivals collectively

dominant.

2

Nevertheless, I recognize that my discussions of various E.C./E.U. competition-law issues

would have been enriched had I been aware, for example, of Prof. Akman’s research establishing that

the original E.C. Treaty was not designed to secure consumer protection,

3

of the adherents of the

Ordoliberal school’s concern that huge companies might exert undesirable political as well as eco-

nomic power (which was referenced by Professors Van den Bergh

4

and Zimmer

5

), or of the details of

the social and political worries that led to the promulgation and ratification of the Treaty of Rome,

6

to

which Prof. Van den Bergh alludes.

7

Second, a significant portion of Prof. Zimmer’s article

8

and all of Prof. Podszun’s article

9

are

concerned with the proper way to define markets and the role that market definition should play in

the application of E.U. competition law. Both take note

10

of my argument that market definitions are

inherently arbitrary, not just at their periphery but at their core.

11

However, both seem to believe that a

1. Richard S. Markovits, Economics and the Interpretation and Application of U.S. and E.U. Antitrust Law: A Summary

(hereinafter Markovits Summary), ANTITRUST BULL. (2016). This Comment will also reference the two volumes of my study

of ECONOMICS AND THE INTERPRETATION AND APPLICATION OF U.S. AND E.U. ANTITRUST LAW,VOL.I:BASIC CONCEPTS AND

ECONOMICS-BASED LEGAL ANALYSES OF OLIGOPOLISTIC AND PREDATORY COND UCT (hereinafter MARKOVITS I) an d VOL.II:

ECONOMICS-BASED LEGAL ANALYSES OF MERGERS,VERTICAL PRACTICES,AND JOINT VENTURES (hereinafter MARKOVITS II).

2. See MARKOVITS I at 104-108 and MARKOVITS II at 175-176.

3. See Pinar Akman, The Tests of Legality Under Articles 101 and 102 TFEU,A

NTITRUST BULL. (2016), citing PINAR AKMAN,

THE CONCEPT OF ABUSE IN EU COMPETITION LAW:LAW AND ECONOMICS APPROACHES 101-102 (2012).

4. See Roger Van den Bergh, Vertical Restraints: The European Part of the Policy Failure,A

NTITRUST BULL. (2016) in the

paragraph following the paragraph in which footnote-number 3 appears.

5. See Daniel Zimmer, The Emancipation of Antitrust from Market-Share-Based Approaches,ANTITRUST BULL. (2016) at the

text in which footnote-number 6 appears.

6. Treaty Establishing the European Economic Community (Treaty of Rome), 298 U.N.T.S. 11 (March 25, 1957).

7. See Van den Bergh, supra note 4 in the paragraphs in which footnote-number 40 and footnote-numbers 42-44 appear.

8. See Part III of Zimmer, supra note 5.

9. See Rupprecht Podszun, The Arbitrariness of Market Definition and an Evolutionary Concept of Markets,A

NTITRUST BULL.

(2016).

10. See Zimmer, supra note 5 at the text that precedes footnote-number 17 and Podszun, supra note 9 at in the paragraph in

which footnote-numbers 20-25 appear.

11. I first established this conclusion in 1978 in Richard S. Markovits, Predicting the Competitive Impact of Horizontal Mergers

in a Monopolistically Competitive World: A Non-Market-Oriented Proposal and Critique of the Market Definition-Market

Markovits 199