Re: Why Bork -- Aspen?

[Steve Salop and Judy Gelman <salop@erols.com>]

Your discussion of "impair the ability of rivals to constrain...." shows
the benefits of the "exclusionary market power" approach.  Under that
approach, exclusionary conduct with no efficiency benefits leads to
consumer harm if and only if the perpetrator gains the power to raise or
maintain price above the competitive level.   This condition in
principle could even if only one rival (e.g., a "maverick") is impaired.
This would depend on the structure of the market, other rivals and the
competitive influence of that rival.  Similarly, even if many rivals are
impaired, the perpetrator may gain no exclusionary market power if there
is sufficient competition from other rivals, including potential
competitors.  I presume that this analysis assumes that rivals take
reasonable efforts to prevent the disadvantages they claim to suffer,
eg., they must search out other possible input sellers to prevent their
costs from being raised.  

The basic analysis of exclusionary market power would follow the basic
outlines of the competitive analysis of mergers, tailored to the
exclusionary conduct.  Of course, unlike standard merger analysis in
which the current price is the competitive benchmark, exclusionary
conduct that prevents price from falling amounts to "maintenance" of
market power.

Of course, if there are efficiency benefits, they must be balanced, in
order to gauge the net effect on consumer welfare.

Wayne Dale Collins wrote:
> 
> I not sure that this is correct (or at least complete) either as a
> statement of law or a statement of public policy.  There are at least two
> problems.
> 
> First is the perennial question of what constitutes a "plausible efficiency
> justification."  A lot of writing uses the term, but I am not sure exactly
> what is mean by it or the quantum of proof by which it must be shown.
> 
> Second, I don't know what it means to "impair[ ] the ability of rivals to
> constrain a monopolist's market power."  Does this mean all rivals, some
> rivals, or any rivals?  Does the "ability to constrain" itself have any
> qualifying threshold, or does any impediment suffice?  And what is the
> nature of the defense, if any, if the rivals do not make "reasonable"
> reasonable to circumvent any such constraints (ala the duty to mitigate in
> tort law), and if there is such a defense, at what point to the efforts
> needed to circumvent the constraints become unreasonable.
> 
> jjacobson@akingump.com on 04/23/98 07:07:11 AM
> 
> Please respond to jjacobson@akingump.com
> 
> To:   AT-MEMBERS@ABANET.ORG, antitrust@essential.org,
>       at-members-approval@mail.abanet.org
> cc:   rbork@aei.org (bcc: Wayne Dale Collins/NY/NA/ShS)
> 
> Subject:  re: Why Bork -- Aspen?
> 
> Perhaps it is also because conduct that impairs the ability of rivals to
> constrain a monopolist's market power, without any plausible efficiency
> justification, is subject to antitrust condemnation under any responsible
> view of antitrust - as the passages from the Antitrust Paradox quoted by
> Stevens in Aspen attest.
> -------------