Structural Remedies in Section 2 Cases

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Richard Epstein, Apr 05, 2007

A Cautionary Note on Antitrust I very much appreciate the opportunity to present my views to this Joint Committee of the Department of Justice and the Federal Trade Commission on the use of structural remedies in Sherman Act Section 2 cases. To set the stage for the analysis, the Section 2 cases that I shall examine are those which are concerned with unilateral practices that are intended to, or have the effect of, creating monopolies within given industries. The common practices that are usually addressed under this heading include exclusive dealing and tie-in arrangements, and predation claims. The various types of remedies that may be imposed in these cases include damages, including treble damages, the invalidation of particular contractual provisions, and structural changes in the dominant corporation, including its break up into smaller units that may compete with each other, at least in certain markets.

In dealing with this issue, I put aside the question of whether there should be any remedies in these monopolization cases at all. In general, I am very skeptical about the success of these cases, because they raise issues of efficiency that are usually far more difficult than those associated with Section 1 cases that deal with cartels and the division of markets. In those cases the restraint in output and the increase in price is usually associated with a loss of overall s