AAI Releases Findings and Recommendations on Monopolization and Exclusion

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Exclusionary Conduct , Monopolies , Section 5 of the FTC Act

Today, the American Antitrust Institute (AAI) released the monopolization chapter of its forthcoming Transition Report on Competition Policy to the 45th President of the United States. The chapter is entitled Restoring Monopoly and Exclusion as Core Competition Concerns.  This release is the second in a series of previews in which the AAI will make select chapters of the transition report available for download in advance of the November election.

“The AAI has long highlighted the languished state of Section 2 enforcement. It has become too harmful to ignore,” said AAI’s President and economist, Diana Moss. The monopolization chapter chronicles the limited progress of recent approaches to policing exclusionary conduct by dominant firms. AAI’s Associate General Counsel, Randy Stutz, who is editor-in-chief of the Transition Report, said “the chapter also offers the next administration a principled way forward in ensuring that one of antitrust’s oldest problems does not drag innovation in the new economy.”

The monopolization chapter makes a variety of findings and recommendations to improve enforcement of Section 2 of the Sherman Act, including urging the next administration to:

  • Take a more aggressive enforcement posture towards exclusionary conduct by dominant firms, and renew antitrust’s historic skepticism of durable monopolies.
  • Oppose efforts to promote a single proxy for exclusionary conduct under Section 2, such as the profit-sacrifice test, the no-economic sense test, or the equally efficient competitor test. The default framework should be the consumer-welfare balancing test articulated by the D.C. Circuit in Microsoft.
  • Treat a monopolist’s exclusive dealing that reasonably appears capable of making a significant contribution to maintaining its monopoly power as presumptively anticompetitive.
  • Reject cost-based safe harbors for conditional pricing practices (loyalty and bundled “discounts”), and treat such practices as presumptively anti-competitive when they help preserve, extend, or exploit a monopolist’s market power.
  • Look for opportunities to bring predatory-pricing cases and encourage courts to develop a structured rule of reason that is more consistent with modern economic thinking about predatory pricing strategies than is current law.

Visit the new Transition Report section of the AAI website for a free download of the entire chapter, links to the AAI’s related work, and audio from a panel discussion of the chapter at the June 2015 AAI Annual Conference.

The AAI Presidential Transition Report makes policy recommendations based on the AAI’s mission of promoting competition that protects consumers, businesses, and society.  The Report is one way the AAI serves the public through education, research, and advocacy on the benefits of competition and the use of antitrust enforcement as a vital component of national and international competition policy.

Contact:
Randy Stutz, Associate General Counsel, American Antitrust Institute
(202) 905-5420
rstutz@antitrustinstitute.org

Diana Moss, President, American Antitrust Institute
(202) 536-3408
dmoss@antitrustinstitute.org