In September the DOJ issued a report about the intersection of the competition laws and unilateral conduct, entitled “Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act.” The report is directed at consumers, businesses and policy makers, and is the culmination of a year-long series of public hearings launched in June 2006 to examine issues that arise in the context of Section 2 enforcement. Section 2 makes it unlawful for a firm to acquire or maintain monopoly power through improper means, as opposed to superior innovation or business acumen.
Among the topics discussed in the report are:
- The role of market share in determining monopoly power;
- The tests employed to determine whether conduct is unlawful including effects-balancing, profit-sacrifice, economic rationale and equally efficient competitor tests;
- Predatory pricing and bidding;
- Tying and bundling arrangements;
- Refusals to deal with competitors; and
- Exclusive dealing arrangements.
The report can be downloaded from the DOJ’s website.
Although the Federal Trade Commission (FTC) participated in the hearings about single-firm conduct, it did not participate in issuing the report with the DOJ. Reaction to the report from the FTC has been mixed. Commissioners Harbour, Leibowitz and Rosch issued a joint statement that characterizes the report as “a blueprint for radically weakened enforcement of Section 2 of the Sherman Act.” The commissioners went on to criticize the report for relying too heavily on economic theory and statements by the one-sided constituency at the hearings, and for endorsing more-demanding standards for Section 2 enforcement than imposed under the current case law. Chairman Kovacic issued a separate, less-critical statement concerning the report. The chairman’s statement praised the efforts of those contributing to the hearings and to the report, but called for a deeper examination of the intellectual roots of Section 2 and modern enforcement trends.