ONE PIECE AT A TIME: SUCCESSIVE MONOPOLY AND TYING IN ANTITRUST

Fred S. McChesney

Journal of Competition Law and Economics, 2015, vol. 11, issue 4, 1013-1032

Abstract: As highlighted by the linkLine case, litigation alleging anticompetitive price squeezes due to a defendant's successive monopoly remains the recurring feature in antitrust that it has been since Alcoa. Some decisions, notably then-Judge Breyer's Town of Concord opinion, treat the matter as one of economics. Others, such as linkLine and similar appellate court decisions, resolve the matter on narrower legal grounds. This article revisits the Concord opinion's economics, correcting small errors in Judge Breyer's graphical analysis but reaffirming his principal economic point that successive monopoly ordinarily is procompetitive and may well benefit consumers. Decisions upholding price squeezes in a successive monopoly on purely legal grounds are therefore economically correct. The article then argues that the economics of successive monopoly offer an economically sound extrication from the morass in which tying law currently wallows. The economic differences between successive monopoly and tying are inconsequential. So the law governing the two practices (section 2 of the Sherman Act for successive monopoly, section 1 of the Sherman Act and section 3 of the Clayton Act for tying) should be reduced to a single set of standards. Parallels to the economics and law of exclusive dealing are also noted as part of the case for legal unification.

Date: 2015
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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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