A Bargaining Model v. Reality in FTC v. Qualcomm: A Reply to Kattan & Muris

May 2019

A Bargaining Model v. Reality in FTC v. Qualcomm: A Reply to Kattan & Muris By Douglas H. Ginsburg & Joshua D. Wright (George Mason University)¹

Introduction
In a recent article² Joe Kattan and Tim Muris (K&M) criticize our article³ on the predictive power of bargaining models in antitrust, in which we used two recent applications to explore implications for uses of bargaining models in courts and antitrust agencies moving forward.  Like other theoretical models used to predict competitive effects, complex bargaining models require courts and agencies rigorously to test their predictions against data from the real world markets and institutions to which they are being applied.  Where the “real-world evidence,” as Judge Leon described such data in AT&T/Time Warner, is inconsistent with the predictions of a complex bargaining model, then the tribunal should reject the model in favor of the reality.

K&M, who represent Intel Corporation in connection with the FTC v. Qualcomm case now pending in the Northern District of California, ⁴ focus exclusively upon, and take particular issue with, one aspect of our prior article:  We argued that, as in AT&T/Time Warner, the market realities at issue in FTC v. Qualcomm are inconsistent with the use of Dr. Carl Shapiro’s bargaining model to predict competitive effects in the relevant market.  K&M—no doubt confident in their superior knowledge of the underlying facts due to their representation