Exclusionary Conduct in Antitrust

By Elyse Dorsey (Wilson Sonsini Goodrich & Rosati) & Jonathan Jacobson (New York State Bar Association)

Courts and commentators have struggled hard for many decades to develop rules that separate the lawful conduct of a single firm from the unlawful. That struggle continues today. We trace a bit of the history of this struggle, summarize where the courts are today, and then offer a few suggestions for a path going forward. Particularly, we explain why examining both defendant’s conduct and effects on the plaintiff–as modern antitrust analysis does–is appropriate. Because the issue is exclusion, and because the fundamental concern in the raising rivals’ costs paradigm is whether a rival can achieve minimum efficient scale, some inquiry into whether the plaintiff can or cannot compete effectively against the tactics in question is essential. Conduct challenged as exclusionary may in fact prevent rivals from constraining the market power of a dominant firm. But the effects of that conduct, almost invariably, are ambiguous: Does the conduct prevent rivals from competing effectively or should it cause rivals to compete more effectively? Distinguishing between these two effects is essential because the one threatens consumer harm while the other yields consumer benefits. There is no one-size-fits-all test for distinguishing exclusionary conduct from aggressive but legitimate competition. But by placing at least some of the focus on whether an efficient rival could meet or defeat the tactics in question, important light is shed on the ultimate question of consumer harm. The law is moving in that direction, and that trend should continue.

Continue Reading…