151. See Barry Nalebuff, Competing Against Bundles (Yale School of Management Working Paper #7, 2000). Nalebuff shows that, under certain conditions, competitors may not be able to compete with the incumbent`s package, even if they are able to do so. And in other cases, link matching may prove ineffective, even if it prevents market foreclosure. The district court that applied the test to Jefferson Parish ruled that the combination of IE and Windows met Jefferson Parish`s conditions and was therefore illegal. The Court of Appeals rejected the Jefferson Parish test, concluding that software platforms such as Windows should be subject to a rule of reason that outweighs anti-competitive effects and efficiencies.55 In particular, the Court of Appeal concluded “that the integration of new functionality into platform software is a common practice and that the wooden application of the rules per se in this litigation may cast a cloud. on platform innovation for PCs. Networked computers and information devices. » 56 91. See Hr`g Tr. of 13 February, note 50 above, p. 47 (asterisk) (“It is important to avoid unintentional violations, litigation and investigations that end up wasting the time and resources of the company as well as the time and resources of the authorities.”); id.
163 (Wark) (in-house counsel who notes that “it distracts a lot of attention from the company`s management and resources” to defend an antitrust suit); Ehrlich & Posner, op. cit. cit., note 87, p. 270. 1.THE APPROACH TO THE RULE OF REASON The Court of Appeals challenged the application of the rule itself in Jefferson Parish by the District Court for two reasons: first, generally speaking, that a rule per se was inappropriate in cases such as Microsoft III, which raised a number of new issues; second, and in particular, that the single-product test of the amended rule developed in Jefferson Parish cannot be used per se in this case. The Chicago School`s contribution to the tying doctrine has been to give the efficiency reasons described above their rightful place in antitrust analysis and to reorient the thinking of competition authorities so that they understand that tied and bundling are likely to be pro-competitive as a result of cost reductions or quality improvements. In the 1990s, however, the so-called post-Chicago economic literature showed that the single-profit monopoly theorem is not as robust as Chicagoans claim. The theorem, at least in its most extreme form, depends on the assumption that the related market is “perfectly” competitive.133 If this is not true, the theorem may fail. The application of Article 2 is essential to the U.S. economy. However, this is an annoying field because competitive behavior and exclusionary behavior often look the same. It is precisely the same behaviour that can have pro-competitive and exclusionary effects.
An effective legal system will take into account the impact of false positives, false negatives and administrative costs when setting standards for the behaviour of individual entities in accordance with Section 2. 89. See Hr`g Tr. of 13 February, op. cit. cit., note 50, p. 170 (Wark) (in-house counsel reports that his client changed his behaviour “not on the basis of what we thought was illegal, but on the basis of what we feared others might consider illegal” and that “in these circumstances competition was likely to have been affected”); 20 June Hr`g Tr., op. cit. cit., note 29, p. 29.
55 (Carlton) (“[T]he most significant impact of an antitrust policy is likely to be not on the parties to the dispute, but on companies that are not at all involved in litigation, but are compelled to change their business conduct in accordance with legal requirements.”); Dennis W. Carlton, Does Antitrust Need to be Modernized?, J. Econ. Persp., Sommer 2007, pp. 155 and 15960 (“[T]he cost of errors must include not only the cost of errors to the firms involved in a given case, but also the effects of setting a precedent that will cause other firms to adapt their behaviour inefficiently.”); cf. 1 May Hr`g Tr., op. cit. cit., note 83, p.
86 (Jacobson) (who states that the “problem” of excessive deterrence “is more important to the law enforcement community than in the real world”). In antitrust law, it usually takes time for changes in economic theory to lead to corresponding changes in competition policy. The delay proved to be particularly long for the link. The antitrust approach to ties on both sides of the Atlantic still reflects (more or less) elements of pre-Chicago thinking. (a) Market power Although tying has generally been contemplated under section 1 rather than section 2 of the Sherman Act,15 some market power of the seller in the tying product market has always been one of the preconditions for illicit tying. However, the seller`s market power need not constitute monopoly power within the meaning of section 2 of the Sherman Act. According to the Supreme Court, the relevant question was whether “a party has sufficient economic power with respect to the tying product to substantially restrict free competition in the market for the tied product”. 16 Having concluded that British Sugar held a dominant position on the market for `white granulated sugar intended for both retail and industrial sale in Great Britain`78, the Commission considered that `it was abusive to reserve to itself the separate activity of supplying sugar which could, under normal circumstances, be carried out by a single contractor`79.
According to the Commission, tying gave customers the choice to buy sugar on the basis of the ex-works price and the price supplied, `thereby eliminating all competition as regards the supply of the products`. 80 Determining the correct standard of law depends on previous beliefs about the prevalence of injurious relationships and the ability of courts to separate harmful relationships from beneficial relationships.166 Do we believe that tied selling is generally effective? Do we believe that the courts can make decisions with a high degree of accuracy? An inherently illegal rule is more appropriate if one considers that links are often harmful and that courts cannot accurately separate harmful links from beneficial links. In this case, it is better to condemn all bonds than to risk approving many harmful compounds just to save a few useful compounds. A legal rule applicable in itself is more appropriate otherwise. Passing up a few harmful compounds is a small price to pay for allowing companies to build beneficial relationships without the risk of erroneous condemnation. These two extremes range from illegal modification per se (Jefferson Parish) to rule of reason (Microsoft III) to legal amendment per se (Hylton-Salinger).167 Under the legal standard amended per se, tying agreements would be considered legal unless there is substantial evidence that there are significant anti-competitive effects that outweigh pro-competitive effects. In the United States, technology nexus cases appear to take this approach.168 Where a competitor acquires or maintains monopoly power through conduct that serves no purpose other than to prevent competition, such conduct is manifestly inappropriate. There are also examples of clearly legitimate behavior, such as when a company launches a new product that is simply better than its competitors` offerings. Difficult cases occur when behaviour increases economic efficiency or reflects the kind of dynamic and disruptive change that characterizes competition, while excluding competitors by means other than simply attracting consumers. In these situations, distinguishing between strong competition from a firm with significant market power and illegitimate behaviour is one of the most difficult conundrums for courts, enforcement authorities and antitrust lawyers. 33. Supreme Court judges emphasize the degree of consensus in many cartel cases today and have shown remarkable agreement in recent cartel cases.
The total number of votes for the twelve cartel cases decided over the last ten years shows ninety-one votes in favour of the judgment and only thirteen votes against. What is even more striking and directly relevant to this report is that the three cases involving Article 2 claims were decided without opposition. See Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 127 p. ct. 1069 (2007); Trinko, 540 US 398; NYNEX Corp. v.
Discon, Inc., 525 U.S. 128 (1998). This chapter provides an overview of Section 2 and its application to the behaviour of individual firms. Part I describes the elements of the primary offences in Section 2 – Monopolization and attempted monopolization. Part II deals with the purpose of Division 2 and the important role it plays in the enforcement of U.S. antitrust law. Part III sets out the main principles of enforcement that emerge from the United States.