Fairness in Antitrust: Protecting the Strong from the Weak

by Adi Ayal

Overview

What drives popular support for state-enforced competition policy? What is it about antitrust law that garners approval from both the public and courts, to the point of demonizing large firms convicted of antitrust offenses? In this book Adi Ayal argues that the populist roots of antitrust are still with us, guiding sentiment towards a legal regime that has otherwise shifted towards economic analysis. Antitrust is very much about fairness and morality; this book assesses how modern policy has hijacked popular support - based on traditional conceptions of political and economic power - to combat market power in narrowly defined micro-markets. Beginning with history, but delving into moral and political philosophy, Professor Ayal shows how arguments concerning fairness in antitrust apply both to monopolists and their victims. Fairness thus requires a balancing test based on context and respecting the rights of all parties involved. While traditionally fairness arguments were used to justify intervention where economic analysis did not, this book assesses them from first principles, to show that pure efficiency analysis is flawed from a moral standpoint when the state intervenes. Protecting weak consumers from strong monopolists may carry rhetorical weight, but the reality of antitrust is that the state is much more powerful than almost all firms it regulates. Protecting the strong from the weak, especially when 'weak' consumers hold legal power and influence, might very well be a moral imperative. This book offers a philosophical account of the conundrum facing competition policy which challenges widely-held yet often implicit and unfounded beliefs. (Series: Hart Studies in Competition Law, Vol. 7) [Subject: Competition Law, Legal Philosophy]

Product Details

ISBN-13:	9781509907069
Publisher:	Hart Publishing UK
Publication date:	08/18/2016
Series:	Hart Studies in Competition Law
Pages:	230
Product dimensions:	6.14(w) x 9.21(h) x 0.49(d)

Table of Contents

Preface v

Introduction 1

Part I The Setting of Antitrust

1 The Legal and Rhetorical Context of Antitrust 13

I The Development of Antitrust Law: Common Law Antecedents 14

A Early American Sentiment 16

B Shirting Focus: From Grants to Trusts 17

II Competition Law in Europe: Between National and Community Goals 19

A The Dual Goals of European Competition Law 23

III Introducing the Goals of Antitrust: Fairness, Efficiency and Beyond 25

IV Terminology and Focus: What is meant by 'Monopolist' and which Rights are Assessed? 30

Part II The Goals of Antitrust

2 The Societal Goals of Antitrust 37

I The Efficiency Model of Antitrust 38

A Allocative Efficiency 41

B Productive Efficiency 45

C Innovative Efficiency 47

D Expecting the Impossible: When Collusion is Efficient 52

E When Antitrust Fails: Costs of Enforcement and Strategic Manipulation 55

II Competition Beyond Efficiency: Between Proxy and Independent Goal 64

A Competition as a Democratic Process: Individual Choice and the Problem of Bigness 67

III Antitrust as Facilitating a Society of Entrepreneurs 72

A Competition as Facilitating Individual Choice 75

B Facilitating Economic Efficiency 76

C Limiting Social Inequality 76

D Economizing on Monopoly Regulation 77

3 Monopoly's Victims 79

I Consumers and their Centrality in the Fairness Discussion 81

A Is Every Buyer a Consumer or Merely the End User? 82

B The Interests and Rights of Consumers 85

II Antitrust as a Tool for Protecting Competitors 116

III Workers, Local Communities and Small Businesses: The Lost Classes of Antitrust 119

4 Monopolists' Rights 122

I Why the Verizon Case is Unhelpful: Baselines in Antitrust 124

II Who are the Monopolists? 128

III Monopoly Profit as a Property Right, or Competition as Creating Property? 129

IV Freedom of Contract 132

V The Role of Firms 134

A The Parallel Definition of Consumers and Producers 135

B Monopolistic Firms as Proxies for Individuals' Rights 135

C Firms as Independent Bearers of Rights 140

D Conclusion: Monopolistic Firms' Rights 142

Part III The Balancing Act of Antitrust

5 Towards a Constitutional Balance in Antitrust 147

I The Need for a Balancing Test 147

A The Case for Balancing 147

B The Case against Balancing 149

C Answers to the Case against Balancing 151

II Striking a Balance 154

A The Setting: Constitutional Law 155

B Laying Down the Ground Rules 155

C Limitations on State Intervention 156

D Policy versus Principle: Can Societal Goals Supersede Fairness? 157

III Boundaries to be Respected 158

A No One Side may be Preferred A Priori 158

B Protection of Monopolists while not Abandoning their Victims 158

IV Developing the Standard 159

A State versus Private Interests 159

B State versus Private Action 160

6 Formalization of Fairness: Keeping Everyone Envy-Free 164

I The Framework of Envy-Freeness 165

II Complications and Extensions 169

A Dynamics of Time: Production of Goods and People 169

B Is Pareto Efficiency to be Desired? 171

C Are Fan-Allocations Fair? 173

III Implementation to Antitrust 174

A Perfectly Competitive Markets 177

B Market Failures 178

C An Alternative Conception of Surplus 179

D Conclusion 180

7 The 'Clear and Present Danger' for Antitrust 182

I Protecting Monopolists' Market Access: The Logical Fallacy Argument 183

II Logical Fallacy or Balancing Act? Trade and Speech Compared 184

III The Balancing Test: Free Speech as a Guiding Force 186

IV Implementation to Antitrust 190

V Objections to the 'Clear and Present Danger' Standard 193

A Free Trade is Different from Free Speech 194

B Monopolists have no Right to Infringe upon Others' Rights 195

C The Standard Discriminates in Favour of Monopolists 195

D Antitrust Law must Prevent rather than Operate 'Ex Post' 196

E Current Antitrust Law already Considers Monopolists' Rights 196

VI Answers to the Praised Objections 197

A Free Trade is Different from Free Speech 197

B Monopolists have no Right to Infringe upon Others' Rights 197

C The Standard Discriminates in Favour of Monopolists 199

D Antitrust Law must Prevent rather than Operate 'Ex Post' 201

E Current Antitrust Law already Considers Monopolists' Rights 202

VII A Rebellious Thought 203

Conclusion and Future Implementations 207

Index 213