![]() ![]() ![]() Even for the theoretically simpler cases involving claims of 'per se' violations, the concepts of market and monopoly power lurk in the shadows because these concepts are relevant to the threshold question of whether the type of behavior at issue is properly characterized as 'per se' illegal. Market power or monopoly power, then, is a crucial and central issue in almost any complex antitrust case today. Market power is treated as irrelevant only because 'per se' offenses involve behavior that courts have determined virtually always lacks plausible efficiency justifications no harm is done, therefore, by condemning the practice without undergoing the expense of an inquiry into monopoly or market power. An essential characteristic of a 'per se' offense, however, seems to be that it constitutes behavior that, if engaged in by a firm with market power, would be egregiously anticompetitive. Indeed, the label 'per se' seems to point to the irrelevance of market power. Ĭertain antitrust violations, conventionally described as 'per se' offenses, do not require proof of market or monopoly power. Virtually any summary of the relevant factors in a case to be judged under the 'rule of reason' will include the presence or absence of 'market power' as a key factor. According to the Supreme Court's latest formulation, a tying arrangement is not illegal unless the seller has 'market power' in the tying product. The Department of Justice measures the antitrust legality of corporate mergers against a set of guidelines whose 'unifying theme' is said to be 'that mergers should not be permitted to create or enhance 'market power' or to facilitate its exercise.' The first step in determining the antitrust legality of joint ventures for research and development or for production is to ask whether the partners, if merged, would achieve market power. An illegal attempt to monopolize occurs, according to the majority view, only when there is a dangerous probability that the defendant will succeed in obtaining a monopoly. Most antitrust rules require the plaintiff to show that the defendant has or is likely to obtain 'market power' or 'monopoly power.' The offense of monopolization requires, of course, proof that the defendant has monopoly power. THE RELEVANCE OF MONOPOLY POWER AND MARKET POWER TO ANTITRUST ANALYSIS Readers already familiar with the main body of antitrust law and conversant with antitrust economics may wish to begin by reading the appendix. The appendix presents a shorter, more technical description of the principal argument. The body of this article describes these conclusions, and the bases for them, in some detail. Identifying this fundamental distinction and discarding the false one can help to clarify other troublesome antitrust issues as well. Real differences, with significant legal and policy implications, do exist, however, between anticompetitive economic power that is exercised by restricting one's own output and such power exercised by restricting the output of one's rivals. We argue that attempting to distinguish between market power and monopoly power creates a false dichotomy. ![]() We conclude that the present level of confusion is unnecessary and results from two different but related errors: (1) the belief or suspicion that market power and monopoly power are two different concepts, when they are in fact, for antitrust purposes, qualitatively identical, and (2) the failure to recognize that anticompetitive economic power may manifest itself in two distinct ways. These legal rules follow prevailing antitrust policy analysis, which suggests that concepts of market power or monopoly power should play a crucial role in defining the reach of most antitrust proscriptions.Įxamination of key antitrust law opinions, however, shows that courts define 'market power' and 'monopoly power' in ways that are both vague and inconsistent. This article seeks an answer to a question that should be well settled: for purposes of antitrust analysis, what is 'market power' or 'monopoly power'? The question should be well settled because antitrust law now requires proof of actual or likely market power or monopoly power to establish most types of antitrust violations. Salop Ĭopyright 1987 by the Georgetown Law Journal Association Thomas G. MONOPOLY POWER AND MARKET POWER IN ANTITRUST LAW For an official signed copy, please contact the Antitrust Documents Group.Īirlie House Conference on the Antitrust Alternative ![]() This document is available in this web page (for browsing content). ![]()
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