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Slide 1

Section 2 of the Sherman Act


Thomas O. Barnett
Assistant Attorney General
Antitrust Division
U.S. Department of Justice

Antitrust Division and Federal Trade Commission
Hearings Regarding Section 2 of the Sherman Act

Washington, DC

June 20, 2006


Slide 2

Reasons for Sponsoring Hearings


  • Enhance Division Understanding of Unilateral Conduct
  • Advance the Development of the Law
    • Provide helpful guidance for courts

    • Provide helpful guidance for
    • businesses

    • Provide helpful guidance for
    • international community


Slide 3

Monopoly 96 Years Ago


  • Standard Oil and the 3 Evils of Monopoly
Standard Oil Image

 

  • Price Increases
  • Output Reductions
  • Quality Deterioration
Image of the Devel pointing at text


Slide 4

Product Development and Innovation


Image of Man sleeping in a cot

The Quiet Life:
Inhibiting Competitive Zeal

-- v. --

Gales of Creative Destruction:
Incentives to Innovate

Image of tornado


Slide 5

R.W. Grant, Tom Smith and
His Incredible Bread Machine


Picture of a man holding loaves of bread You're gouging on your prices if
You charge more than the rest.
But it's unfair competition
If you think you can charge less!
A second point that we would make
To help avoid confusion:
Don't try to charge the same amount!
That would be collusion.
You must compete--but not too much
For, if you do, you see
Then the market would be yours--
and that would be monopoly!


Slide 6

Monopoly Today


Judge Posner: Antitrust policy toward "unilateral abuses of market power" is "the biggest substantive issue facing antitrust." 72 U. Chi. L. Rev. 229, 229 (2005).


Slide 7

Monopoly Today


Professor Hovenkamp: "Notwithstanding a century of litigation, the scope and meaning of exclusionary conduct under the Sherman Act remain poorly defined." 72 U. Chi. L. Rev. 147, 147-48 (2005)


Slide 8

Brooke Group


  • Harm to a Competitor Does Not Demonstrate Harm to Competition Image of a harbor
  • The "Practical Ability of a Judicial Tribunal" to Regulate a Problem and Avoid "Chilling Legitimate Price Cutting"
  • The Importance of Safe Harbors

 

 


Slide 9

Trinko


  • Cost of False Positives

    • Underscores need for administrable rules

  • Remedy

    • Not all problems have antitrust solutions


Slide 10

Future Panels


  • Predatory Pricing and Predatory Buying

    • Appropriate cost measure
    • Relief
    • Weyerhaeuser

  • Refusals to Deal

    • When if ever should a firm be compelled to deal with a competitor?

    • Relief


Slide 11

Future Panels


  • Loyalty Discounts

    • Brief for the United States as Amicus Curiae in LePage's

    • Predatory pricing, exclusive dealing, or tying?
    • Safe harbors

  • Tying and Exclusive Dealing

    • Identifying and assessing efficiencies
    • Relief


Slide 12

Future Panels


  • General Principles

    • Is there an overarching standard for Section 2?

    • Proposed Tests

    • Different duties under different provisions of the antitrust laws?


Slide 13

Cartoon

[D]


Slide 14

Six Principles Informing
Section 2 Enforcement


  • Anticompetitive Exclusionary Conduct Should Be Prosecuted
  • Mere Size Does Not Demonstrate Competitive Harm
  • Injury to Competitors Does Not Demonstrate Competitive Harm
  • Need for Clear, Objective, and Administrable Rules
  • Avoid Chilling Procompetitive Conduct Remedy Must Promote Competition


Slide 15

Section 2 of the Sherman Act


Thomas O. Barnett
Assistant Attorney General
Antitrust Division
U.S. Department of Justice

Antitrust Division and Federal Trade Commission
Hearings Regarding Section 2 of the Sherman Act

Washington, DC

June 20, 2006