This book chapter, published in 2002, argues that courts decide antitrust cases based mainly on their perception of the “obvious” effects of the practices at issue on consumers. Courts must rely on both theory and evidence in resolving antitrust cases, but the persuasiveness of theoretical predictions depends in large part on the determinacy of their implications for consumers. Theories of liability are often too restrictive in their assumptions and markets are often too complex to allow confident predictions that a practice that obviously benefits consumers in the short run will ultimately hurt them in the long run, or vice versa.

The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.

A reform movement is underway in antitrust. Citing prior enforcement failures, deviations from the original intent of the antitrust laws, and overall rising levels of sector concentration, some are seeking to fundamentally alter or altogether replace the current consumer welfare standard, which has guided courts over the past 50 years. This policy push has sparked an intense debate on the best approach to antitrust law enforcement. In this Article, we examine a previously unexplored potential social cost from moving away from the consumer welfare standard: a loss in the information value to the public from a finding of liability. A virtue of the current standard is the knowledge that firms who violate the antitrust laws have harmed consumers. This simple reality is a direct, easy-to-interpret signal to market participants and investors. In contrast, a broader and more nebulous standard, such as a “public interest” approach--which has been proposed by some academics and agency officials--could conceivably water down the information value of a finding of liability. In essence, the greater license that regulators and courts have to condemn a business practice beyond a finding of harm to consumers, then the noisier the signal to the public about what the verdict actually means. We can call this phenomenon “the stigma dilution effect.” To that end, we develop a formal model to gain insight into the role of reputation in the enforcement and deterrence effects of antitrust laws. The model reveals broadening the welfare standard is likely to weaken the reputational impact of antitrust violations. This dilution can, in turn, have implications which go against what the proponents of abolishing the consumer welfare standard desire. Namely, a new standard could increase, rather than decrease, the frequency of conduct they seek to deter. Thus, our analysis suggests that there may be important and underappreciated costs associated with departures from the consumer welfare standard. In fact, the presence of reputational considerations suggests that these departures can produce effects contrary to the stated goals of their proponents.

This book anticipates virtually every antitrust issue you can expect to face, including: horizontal and vertical restraints; joint ventures; private treble damage actions; price fixing; and more.

This work offers a critical evaluation of the Chicago approach to antitrust. The authors discuss the economic foundations of competition policy and the different ways in which both American and European competition law does - or does not - take account of economic insights.