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The DOJ Section 2 Report: It All Depends on Your Priors

Sean Gates, Oct 15, 2008

Why do we have the antitrust rules that we have? While I was at the Federal Trade Commission (“FTC”), this was a question with which we often grappled. For instance, I had the pleasure of consulting with DG Competition regarding its discussion paper on the application of Article 82 to exclusionary abuses. As we and the DOJ examined the principles laid out in the discussion paper and compared them to our own, I was struck by the many differences. Why was it that very experienced agencies, often starting from the same premises, ended up with different conclusions? Why do we have the rules that we have while they have their rules? A senior DOJ economist offered the answer: It all depends on your priors.... Similarly, the conclusions in the DOJ’s recently released report on monopolization law (“Report”) are driven by priors. Judging these conclusions, three FTC Commissioners claimed, “At almost every turn, the Department would place a thumb on the scales in favor of firms with monopoly or near-monopoly power and against other equally significant stakeholders.” Whether that is an accurate portrayal of the Report is debatable. But whether or not the underlying assumptions are merited is the real question. If they are, the conclusions, even if they tilt the scale, may well be sound. Fortunately, the DOJ is explicit in describing many of its priors, allowing us to engage in a deeper examination of the DOJ’s conclusions

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