Antitrust, UCL and Privacy

Competition: Fall 2015, Vol 24, No. 2

BREAKING A MONOPOLY: VIGILANTE JUSTICE OR THE SORT OF INNOVATIVE APPROACH WE CELEBRATE?

By Ryan McCauley1

The Second Circuit’s recent decision in United States v. Apple, Inc. (the "Opinion"),2 like Judge Denise Cote’s decision and judgment in the district court, paints a scintillating conspiracy story of Apple and five of the nation’s largest book publishers ganging up to take on Amazon and, as the majority argues, raising consumer prices. There are numerous factual aspects of the district court’s judgment that Apple will undoubtedly continue to dispute in its recently announced appeal to the Supreme Court, but the real policy question is whether relatively short term concerted action that is designed to facilitate entry into a monopolized market should be illegal per se, particularly where the monopolist is likely undertaking a preemptory price cutting regime to prevent entry.3

One of my antitrust professors offered what I find to be a helpful analogy when thinking about per se rules and the "rule of reason" standard in the antitrust realm: he analogized that a per se rule is like a numerical speed limit while the "rule of reason" was comparable to the state of Montana’s widely publicized former "reasonable and prudent" standard for judging whether a driver was speeding.4Per se rules are incredibly efficient for our legal system—there is very little analysis when it comes to the question of whether a driver exceeded a numeric speed limit—but the necessary trade-off is that cases deserving deeper analysis are quickly categorized along a bright line and justice is meted out roughly without respect to unique circumstances. To their credit, per se rules provide certainty and deter conduct that falls on the wrong side of the bright line. At the other end of the spectrum, rule of reason analyses take account of each cases’ unique aspects and, therefore, result in more accurate judgments, but require a significant dedication of parties’ and judicial resources. That antitrust law has long employed, depending on the circumstances, either per se or rule of reason analyses to efficiently adjudicate cases is one of the most interesting aspects of this body of law. But as economic thinking about certain types of conduct has grown more sophisticated and nuanced, the natural evolution for our legal regime has been to reduce the types of conduct judged illegal per se to only those types that are clearly anticompetitive.5

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