Author(s)
Source
GMU Working Paper; Competition Policy International, Vol. 3, No. 4, pp. 24-57, Autumn 2007
Summary
This paper asks what ideas influence the Supreme Court’s competition law cases.
Policy Relevance
In future, the Supreme Court is likely to support rules requiring those who argue that a business practice is harmful to prove that it really harms consumers.
Main Points
- The Supreme Court headed by Chief Justice Roberts takes up more antitrust cases than the previous Court.
- The Chicago School of law and economics greatly influenced antitrust theory and law beginning in the 1970s. These scholars focus on:
- Using price theory to predict how businesses will behave.
- Using empirical studies of business practices to test economic theories.
- Choosing rules that help courts avoid common errors, such as declaring business practices illegal that benefit consumers.
- Chicago School scholars point out that business practices formerly thought to harm competition and consumers usually benefit consumers. Post-Chicago school scholars rely on game theory to show that sometimes these practices might harm competition.
- Recent studies tend to support the Chicago School position.
- The history of how antitrust law has been influenced by Chicago School, the Post-Chicago School, the Harvard School, and others in past decades has often been oversimplified.
- Supreme Court cases decided in 2006 involving women’s apparel, telecommunications, securities, and lumber shows the influence of the Chicago School in focusing on:
- Whether empirical studies or real evidence support the charge that a business has harmed competition or broken the law.
- Whether it is likely that common business practices will harm consumers, compared it is likely that courts will mistakenly condemn helpful practices.
- In the future, the Supreme Court is likely to show an interest in cases involving the merger of two competing firms, and might move away from rules that assume some contracts should always be illegal (“per se illegal”).