Antitrust, Dominant Firms, and Public Policy Problems: A Framework for Maximizing Success by Minimizing Uncertainty

Abstract

This first of two reports in a series creates a general framework for policymakers to assess potential outcomes when combating dominant-firm behavior using federal antitrust litigation under existing legal doctrine. It explains that when a single firm achieves dominance in a critical market, it can give rise to complex public-policy problems with economic, social, and political dimensions that call upon government to craft creative solutions using a variety of available tools. The menu of available options includes antitrust law, economic and/or social regulation, intellectual property law, labor and trade policy, tax law, and other legal and regulatory mechanisms. And, it is up to policymakers to choose the right combination of tools and wield them collaboratively and effectively. Because of modern antitrust law’s technical complexity, non-expert policymakers often struggle to understand how antitrust law can be effectively deployed as part of a broader public-policy strategy. The first report solves for this problem by creating a framework that policymakers can use to assess degrees of uncertainty associated with litigation-based antitrust challenges to dominant-firm behavior under existing legal doctrine. It derives five variables that implicate litigation uncertainty, each of which arises from core areas of policy agreement or disagreement in antitrust law. The core area of policy agreement that informs litigation uncertainty under existing antitrust law is the idea that antitrust law, as currently constituted, serves to protect and promote competitive markets. The core area of disagreement is over whether antitrust, in the course of protecting competition, should seek to protect and promote consumer welfare as its primary or exclusive goal. Each of these areas has been a flashpoint in recent public policy debates over the adequacy of existing antitrust law as applied to modern digital technology markets. But, importantly, each area also tends to inform the litigation arguments of parties who appear before judges in actual antitrust cases. Consequently, these areas of policy agreement and disagreement tend to shape the contours of applied antitrust law, affecting arguments and outcomes from jurisdiction to jurisdiction and even from case to case. After a detailed analysis, the report identifies and explains the five uncertainty variables that emerge from an understanding of these key areas of agreement and disagreement, as well as their implications for policymakers.