The Current Debate About Section 2 of the Sherman Act: Judicial Certainty Versus Rule of Reason

Abstract

This paper discusses whether section 2 has generated too much legal uncertainty (i.e., ex ante unpredictability) and, if so, how legal certainty can be increased. U.S. commentators and businesses have complained vociferously about the lack of predictable rules governing unlawful monopolization under section 2. Uncertainty is compounded by the use of juries where instructions have been severely criticized as not providing sufficient guidance to the lay members. A principal basis for concluding that uncertainty is a serious business problem is the intuition that enforcement of section 2 is chilling procompetitive (and consumer welfare enhancing) behavior like investment into and introduction of innovative products and services. There are numerous assertions to this effect but unfortunately few specific concrete examples have been offered. There appear to be few to no empirical studies that offer solid facts to provide a confident answer. However, the risk of a section 2 chilling effect on procompetitive business decisions and the potential for section 2 mischief is sufficient to warrant careful consideration of legal uncertainty even without detailed comprehensive empirical work. To increase legal certainty, assumptions and policy objectives should be reflected in specific clear legal rules as the Supreme Court did in Trinko when fashioning the rule on refusing to grant access to rivals. But this is certainly not always the case and the non-transparency of assumptions and policy objectives considerably lessens legal certainty under section 2 (and Article 82).