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Bruce Kobayashi, Jul 13, 2009
One of the most important changes in the antitrust laws over the past 40 years has been the diminished reliance of rules of per se illegality in favor of a rule of reason analysis. With the Court’s recent rulings in Leegin (eliminating per se rule for minimum RPM) and Independent Ink (eliminating the per se rule against intellectual property tying), the evolution of the antitrust laws has left only tying (under a “modified” per se rule) and horizontal price fixing under per se rules of illegality. This movement reflects advances in law and economics that recognize that vertical restraints, once condemned as per se illegal when used by firms with antitrust market power, can be pro-competitive. It also reflects the judgment that declaring such practices per se illegal produced high type I error costs (the false condemnation and deterrence of pro competitive practices). The widespread use of the rule of reason can be problematic, however, because of the inability of antitrust agencies and courts to reliably differentiate between pro- and anticompetitive conduct. The article is an adaption of a posting originally presented in a Section 2 Symposium on the blog site, Truth on the Market, available online at TruthOnTheMarket.
