The Efficiency and Fairness of Enforced Sharing: An Examination of the Essence of Antitrust

49 Pages Posted: 12 May 2004 Last revised: 26 Jun 2009

Abstract

This Article begins with a critique both of existing law, and of a prominent recent reform proposal, for failing to articulate a theoretically coherent and administrable means to distinguish legitimate, pro-competitive refusals to deal from unlawful, anticompetitive ones. Through this critique, I show that cooperation among competitors can be both efficient and fair according to economic and property rights theory, and that antitrust law should force competitors to share assets when a firm with market power blocks an efficient sharing arrangement that would emerge in a more competitive market.

Next, I offer three concrete guides to help courts resolve specific cases. First, a court should look to comparable markets that are competitively structured and ask whether the competitors cooperate in those markets. If cooperation is not found in competitive markets, it is unlikely to be efficient. Second, a court should ask whether the defendant's refusal to cooperate either: (a) directly benefits consumers; or (b) stimulates reasonably likely market entry. If a refusal does either, it should not be held to violate the antitrust laws.

Most importantly, the article shines new light on the longstanding controversy over refusal cases by revealing a continuing, but rarely recognized, confusion over the role of economics in antitrust analysis. This, I refer to as the essence of antitrust. Everyone now agrees that economics is critical to antitrust analysis. A seldom recognized debate continues, however, as to whether economics should be used as a tool to develop traditional legal rules applicable across industries, or, alternatively, whether economic dialogue should be the primary focus of antitrust unmediated by traditional legal structures. Despite concerns in the academy regarding the ability of judges and juries to understand and apply complex economic analysis, the Supreme Court appears, tacitly, to have settled on the latter approach.

Keywords: antitrust, property, sharing, refusal to deal, market, competition, competitive market

Suggested Citation

Semeraro, Steven, The Efficiency and Fairness of Enforced Sharing: An Examination of the Essence of Antitrust. TJSL Public Law Research Paper No. 04-06, Available at SSRN: https://ssrn.com/abstract=541762

Steven Semeraro (Contact Author)

Thomas Jefferson School of Law ( email )

701 B Street
Suite 110
San Diego, CA 92101
United States
619-961-4305 (Phone)

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