Efficiencies in Antitrust Analysis

Abstract

While antitrust scholars continue to debate the goals of antitrust law, including the role of efficiencies in antitrust analysis, these discussions typically recognize that antitrust law does and should consider efficiencies, particularly efficiencies that lead to lower consumer prices. This paper provides a review of the “efficiencies debate” and the economics literature that evaluates efficiencies to assess whether the analysis of efficiencies in antitrust cases should be changed significantly. Our review finds that current antitrust law does a reasonable job of balancing the potentially conflicting policy objectives of promoting social efficiencies and protecting consumers from the adverse effects of anticompetitive practices. As a result, we conclude that only modest change in current antitrust policy is appropriate. Specifically, we recommend (as is consistent with some existing policies) that parties asserting an efficiency rationale for their conduct should bear the burden of proof, that a rule of reason analysis should be used, that all efficiencies (not just variable cost savings) should be recognized, and that limited equity issues should be considered. We conclude that antitrust law is not well suited for addressing tangential social policy problems.