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####  DEPARTMENT OF JUSTICE

**[We Should Not Let the Ongoing Rationalization of Antitrust\
Lead to the Marginalization of Antitrust]{.smallcaps}**

**David L. Meyer**

**Deputy Assistant Attorney General**

**Antitrust Division**

**U.S. Department of Justice**

**Presented at the**

Number range CHAPTER**George Mason University Law Review**

**11th Annual Symposium on Antitrust**

**Washington, DC**

**October 31, 2007**

**I. [Introduction]{.smallcaps}**

Courts play a key role in formulating and implementing antitrust policy
in this country. One of our two federal antitrust agencies -- the
Department of Justice Antitrust Division (DOJ) -- can enforce the law
only by persuading courts to use their remedial powers. The other -- the
Federal Trade Commission (FTC) -- has administrative powers that are
subject to judicial review, and as a result the agency must adhere to
the legal standards developed in antitrust cases brought in court by
others. And, in any event, most antitrust cases are brought by private
plaintiffs, not government enforcers. As a result, how courts view the
antitrust laws says a lot about the role antitrust enforcement will play
in the economy: if the antitrust enforcement agencies cannot win merger
cases, for example, because of a court's attitudes toward antitrust
standards, the role of merger enforcement will necessarily wane.

The past three decades or so have seen sweeping changes in attitudes
toward antitrust -- attitudes that are not limited to courts. I would
characterize most of the developments in antitrust jurisprudence and
enforcement over that period as highly beneficial: as what I will call a
rationalization of antitrust, which has better matched the antitrust
laws to their goal of protecting competition and thereby enhancing
consumer welfare. But there are signs recently of an undercurrent of
antipathy to antitrust itself: a distrust of the antitrust laws' ability
to do more good than harm, and skepticism as to whether antitrust is
ever necessary. This undercurrent appears to stem in part from the
perceived abuses of private treble-damages antitrust litigation, where
some see "bet-your-industry" cases being brought without any reasonable
basis for thinking an antitrust violation was committed. Reining in
these excesses is not simple. In the main antitrust jurisprudence is a
unitary body of law, applicable equally to private cases and government
cases, so changing legal standards in order to reduce excessive private
litigation could threaten the role of government enforcement as well.

Those of us who believe that antitrust still plays an important role in
the economy should be concerned. As I will argue, we need to continue
our efforts to rationalize antitrust and educate the public about the
role of antitrust. It is important that antitrust not come to be viewed
as a misguided regulatory impulse of the last century, but as a vital
means of safeguarding competitive markets so that there is less need to
regulate them.

**II. [The Court-Driven Rationalization of Antitrust Law]{.smallcaps}**

By the middle of the last century, the antitrust laws had assumed a
larger-than-life role in American jurisprudence and law enforcement.
Competition had become a sacrosanct precept that guided the American
economy, allocating resources efficiently for the benefit of American
consumers. By 1972, the Supreme Court was able to observe that the
antitrust laws in general, and the Sherman Act in particular, had become
"the Magna Carta of free enterprise," "as important to the preservation
of economic freedom and our free-enterprise system as the Bill of Rights
is to the protection of our fundamental personal freedoms."[^1] The
antitrust laws were viewed as statutory enactments on a plane above
other federal legislation. They rarely yielded to other enactments, even
when Congress explicitly ousted antitrust enforcement. Plain repugnancy
was the standard for implied repeal, and even express exemptions were
narrowly construed.[^2]

On one level, antitrust's role in the economy may have been at its
zenith in the 1950s and 1960s. Viewed through our more modern and
economically enlightened lens, however, antitrust as practiced in that
era was a mess. Courts were too solicitous of protecting the firms that
inevitably are injured in the rough and tumble of free markets -- of
"Number range CHAPTERdriving out of business the small dealers and
worthy men . . . who might be unable to readjust themselves to the\[\]
altered surroundings"[^3] caused by competition. Some perceived
Congress' passage of the 1950 Clayton Act amendments as "not concerned
about increased efficiency" but instead "concerned about the competitor
. . . the small business man whose 'little, independent units are
gobbled up by bigger ones,' and about other competitors whose
opportunities to meet the prices of the larger concern and hence compete
with it might be diminished by a merger which increased the
concentration of power in the large organization."[^4] Antitrust law had
in many ways come unmoored from the goal of "protecting competition," at
least as we understand that concept today. Instead, antitrust law and
enforcement often was itself interfering with the competitive process
and the goals of efficiency and welfare.

Sometime in the 1970s or 80s -- and I will not attempt to pinpoint a
date or a specific cause -- a shift occurred towards the rationalization
of antitrust law, by which I mean greater sophistication in applying the
law in a manner that serves its goals of safeguarding the competitive
process, harnessing market forces and competition to serve the aim of
allocating resources efficiently, growing the pie, and ultimately
benefiting consumers and the economy as a whole. We've come a very long
way since then, very much to the good for the antitrust enterprise and,
more importantly, the welfare goals that the law seeks to protect.

I don't think I need to belabor this point with this audience. Consider
just for a moment the effect of cases like *Brunswick*[^5] and
*Cargill*[^6] that reformed standing doctrine and emphasized that
antitrust really was about protecting competition and not competitors.
Consider the effect of cases like *Brooke Group*,[^7] *Trinko*[^8] and
*Weyerhaeuser*[^9] on Section 2 jurisprudence. Consider how cases like
*Matsushita*[^10] and *Twombly*[^11] have dismantled the previous bias
against summary adjudication in antitrust cases and made it harder for
antitrust to be misused as a tool for conducting baseless administrative
investigations of entire industries. And consider how far we have come
in merger enforcement since the days when the government could bring --
much less win -- a case like *Von's Grocery.*[^12]

I could say the same about developments in joint venture law
(*BMI*,[^13] *Dagher*[^14]), the IP/antitrust interface (remember the
Nine No-Nos[^15]), and of course the law of vertical restraints -- where
the Supreme Court just last term removed the sole remaining out-of-date
per se rule applicable to vertical arrangements in *Leegin*.[^16]

Treatises could be written about the evolution in antitrust over the
past half-century. I will not attempt to summarize all of the important
changes, but will offer a few reminders that illustrate some of the key
themes.

***The law protects competitors less, and competition more.***

At one time, competitors could readily use the antitrust laws -- and
particularly Section 2 -- opportunistically to protect themselves from
potentially efficient forms of competition. An emphasis often on
protecting competitors and their "opportunities," rather than the
competitive process and consumers, led to cases such as *Kiefer-Stewart
Co.*[^17] in 1951, where the Supreme Court held that an agreement by
corporate distillers to fix their wholesalers' maximum resale prices
violated Section 1 of the Sherman Act, even where the corporations were
under common ownership and control. This case improperly focused on the
effect of a practice on a particular class of competitors (wholesalers),
rather than upon the competitive process as a whole or the effect on
short- or long-term efficiency. And more generally, any injured victim
could sue regardless of whether the harm flowed from the antitrust
violation.

How times have changed. Courts have developed rigorous principles of
antitrust standing. Cases like *Brunswick* and *Cargill* and countless
other lower court rulings have recognized that the law is about
protecting competition and not the opportunities of individual
competitors. The need to demonstrate a causal nexus between a
plaintiff's injury and a cognizable harm to competition has made it much
harder for opportunistic plaintiffs to use antitrust law as a way of
short-circuiting the competitive process.

We are likewise in the midst of an ongoing rationalization of the law of
monopolization -- in particular a recognition that competition is often
at its most robust when firms are motivated to take actions that have
the effect of harming rivals and achieving dominance for themselves.
Cases like *Brooke Group*, *Trinko*, and *Weyerhaeuser* are key examples
of this trend, but more work remains to be done.

> ***Invoking "antitrust" no longer automatically entitles plaintiffs\
> to an industry fishing license.***

At one time, plaintiffs could conduct extensive near-administrative
reviews of entire industries based on bare bones allegations of
misconduct, secure in reliance on Supreme Court case law (like *Poller
v. CBS*[^18]) advising that summary judgment should rarely be granted in
antitrust cases. Now, cases like *Monsanto*[^19] and *Matsushita* have
admonished courts to grant summary judgment when the only evidence of an
antitrust conspiracy is circumstantial evidence that does not "tend\[\]
to exclude the possibility of independent action."[^20] And last Term,
in *Twombly*, the Court similarly recognized the danger of allowing
unbridled industry-wide investigations when the complaint alleging
conspiracy fails to provide any reasonable expectation that discovery
will reveal evidence of illegal agreement. [^21]

> ***Merger law is no longer fixated with preserving industry
> structure.***

During much of the last century, merger law and merger enforcement
inhibited the efficient reallocation of capital by focusing unduly on
preserving extant market structure, precluding most alterations in that
structure other than through organic growth. *Von's Grocery* in 1966 was
perhaps the crowning achievement of this era -- the Department
successfully sued to block a grocery store merger where the merged
firm's combined market share would have been only 7.5%. This was the
case in which Justice Stewart famously observed that "the sole
consistency \[in merger law\] . . . is that . . . the government always
wins."[^22] Merger enforcement has undergone a sweeping transformation.
We now focus intensely on whether a transaction is likely to reduce
competition significantly and harm consumers. Historical market shares
can be important evidence in this inquiry, but we also recognize that
most mergers are likely to be procompetitive or competitively neutral --
and often are so even when they significantly disrupt pre-merger market
structure (and sometimes precisely because they do so).

> ***Potentially procompetitive collaboration is no longer condemned by
> over-zealous application of per se rules.***

Joint ventures and other collaborations among competitors short of
merger were once frowned upon and quite often treated as per se illegal.
For example, in 1953, in *United States v. General Electric Corp.*,[^23]
the government broke up a patent pool as to electric light bulbs. At the
Department's suggestion the court imposed a compulsory license remedy
not only to patents that existed at the time of the government's
antitrust suit, but also to patents that might be developed in the
future -- coming perilously close to destroying the firm's right to hold
patents altogether.[^24] Making matters worse, firms were often required
to compete even against themselves, with courts inquiring whether firms'
internal decision making amounted to a so-called intra-enterprise
conspiracy. Now, after cases like *BMI*, *Dagher*, *NCAA*,[^25] and
*Northwest Wholesale Stationers*,[^26] bona fide joint ventures and many
forms of competitor collaboration are viewed with tolerance and
subjected to a rule of reason analysis that inquires whether they are on
balance likely to enhance rather than destroy competition. And
*Copperweld*[^27] underscores that antitrust is interested in the
substance of economic decision making rather than the form.

And, of course, we have moved from a realm in which per se rules
reflected in such cases as *Dr. Miles*,[^28] *Albrecht*,[^29] and
*Schwinn*[^30] foreclosed many procompetitive avenues to efficient
distribution and marketing. Now, we have the more rational world of *GTE
Sylvania*,[^31] *State Oil v. Kahn*,[^32] and *Leegin*, where vertical
restraints of all sorts are analyzed under the rule of reason.

> ***Intellectual property is no longer viewed with suspicion.***

Once, at the interface between antitrust and IP, there was a distrust of
intellectual property as a source of market power inherently in tension
with the antitrust laws, and antitrust rules were sometimes used to
restrict the ability of IP holders to decide how to license. The Nine
No-Nos of the 1970s -- an unwritten policy at the DOJ, reflected in a
1975 speech by this name -- were one manifestation of this distrust. The
Nine No-Nos presumed certain now-common IP-licensing practices to be
illegal based on a belief they tended to increase prices for the
licensor's IP, without considering the potential role the practices
played in enhancing competition with other products or technologies, and
without considering the impact on firms' long-term incentives to create
new technology and creative works. Now, the antipathy to IP has faded.
*Illinois Tool Works Inc. v. Independent Ink, Inc.*[^33] confirmed that
the mere fact that a tying product is patented does not support a
presumption of market power, for purposes of antitrust tying analysis.
The 1995 Antitrust Guidelines for the Licensing of Intellectual
Property[^34] and the April 2007 "IP2" Report[^35] avoid rule-based
approaches like the Nine No-Nos and prescribe a rule of reason analysis
for most licensing restraints.

**III. [Rationalization Means Better Antitrust, Not Less]{.smallcaps}**

To some, perhaps, this shift in antitrust over the past several decades
could be viewed as a shrinkage in the reach of antitrust -- a shift to
less enforcement, and less-binding legal rules. But I submit that this
is the wrong way of thinking about the evolution. All of these trends
have been driven not by a desire for less antitrust, but a desire for
*better* antitrust, for rules and standards more closely tailored to the
proper goals of antitrust enforcement. Note in particular that this
shift in antitrust policy proceeded hand in hand with the push to
deregulate many sectors of the American economy, an initiative driven by
a strong preference for harnessing competition and market forces as a
mechanism for determining economic outcomes. In this vision, antitrust
retained a critical role in keeping markets competitive.

Consider the contemporaneous views of Christopher DeMuth, Executive
Director of President Reagan's Office of Management and Budget Task
Force on Regulatory Reform. Speaking at the Antitrust Section's Spring
Meeting in 1984, he said: "I think we have been almost entirely
consistent in urging that: (1) in competitive markets, regulatory
restraints on price, output and entry should be removed as promptly as
circumstances permit; and (2) the antitrust laws should then be applied
exactly as they are in unregulated markets."[^36] He also noted that "we
will continue to urge that the antitrust laws have been applied too
expansively from an economic point of view, sometimes with highly
perverse results."[^37] Then-Judge Breyer, writing in 1987 about the
implications of the ongoing deregulation of U.S. industry, identified
the following "special risks the public faces in the newly deregulated
world . . . which should alert us to four corresponding policy
needs."[^38] Three of these needs are: "(1) the need for a strong
antitrust policy to maintain competitive market structures; (2) the need
to avoid protecting competitors where doing so is inconsistent with
promoting competition; \[and\] (3) the need to minimize the potential
anticompetitive impact of residual monopoly power in newly deregulated
industries."[^39]

Underscoring that modern antitrust means better antitrust and not
necessarily less enforcement, some of the improvements in our ability to
analyze the effect of practices on competition have arguably led to an
increased role for enforcement. One example is our analysis of potential
unilateral effects in merger cases, where the old market structure
paradigm -- which tended to focus on market share in formally defined
markets -- might have overlooked potential harm to significant groups of
consumers. Our challenge last year to the Exelon/PSE&G transaction
offers one possible illustration.[^40]

### IV. [Implications and Cause for Caution]{.smallcaps}

There is no doubt that antitrust law and enforcement today is much
better tailored to its legitimate aim of protecting competition, and
much less likely to be misused as an instrument for impeding
competition. Of course, there remains more to do in the Section 2 arena,
where case law has not succeeded in developing standards that uniformly
provide clear guidance to businesses, and we are working on that. And
there is always room for incremental improvement across the board,
including in the efficiency of merger enforcement. Similarly, there are
issues raised by the regime of multi-layered/multi-jurisdictional
enforcement of the antitrust laws with treble-or-more multiplied
recovery. But I want to spend the rest of my time not on the room for
further rationalization -- about which you've heard plenty from the
Antitrust Division in recent years -- but to offer some words of caution
about how antitrust is viewed in some quarters, including some courts,
and the need to renew efforts to guard against impulses that threaten to
take the antitrust enterprise away from the path of rationalization and
send it down a course towards marginalization.

There are signs that, despite the progress in rationalizing antitrust,
some view antitrust itself (and not just its excesses) in a negative
light. Some perceive it as another form of regulation that inherently
stands in the way of market outcomes -- as part of the regulatory
problem rather than as part of the solution. Others acknowledge the
desirability of the goals of antitrust but -- perhaps laboring under a
dated view of the law's intrusiveness -- are unduly skeptical about the
good antitrust can do in protecting competition. This skepticism about
the role of antitrust threatens to shrink antitrust too far, potentially
undermining its still-vital role in protecting the competitive process.

There have long been a variety of academic commentators who hold views
along these lines. For example, the Competitive Enterprise Institute has
said:

> For more than two decades, the willingness of policy makers to rethink
> the presumption that economic regulation automatically benefits
> consumers has driven the deregulation of the transportation,
> telecommunications, banking, and electricity sectors. Yet antitrust
> regulation enjoys continued esteem in both the business and popular
> press. High-profile antitrust enforcement actions increasingly
> constitute a business hazard for aggressive, successful firms,
> threatening to disrupt innovation and economic growth.[^41]

Chicago Professor Richard Epstein has said: "\[t\]he two competing forms
of regulation are direct administrative scrutiny and competition (or
antitrust) law"; "\[c\]ompetition law for its part offers imaginative
lawyers a hunting license to attack the innocent practices of dominant
firms."[^42] Thomas DiLorenzo has said: "\[t\]he truth is that monopoly
is impossible in a free market; government is the true source of
monopoly; and antitrust itself has never done anything but render
American industry less competitive while inflicting great harm on
consumers." [^43]

These ideas also have cropped up in the popular business press from time
to time. Some of the editorial commentary about the FTC's Whole Foods
unsuccessful challenge to the Whole Foods/Wild Oats transaction has this
flavor, often without regard to the factual or theoretical underpinnings
of the FTC's case, as if antitrust has no proper role to play in
protecting competitive markets from transactions that threaten
competition, and as if antitrust had not evolved since the days of
*Von's Grocery*. I hasten to add that the DOJ has been the target at
least as often in recent years. In fact, some have criticized even DOJ's
criminal enforcement of the antitrust laws against hard-core cartel
behavior:

> Nobody came out looking a hero in the \[DOJ's successful\] trial . . .
> in New York for . . . the price-fixing scandal at the famous
> Christie's and Sotheby's auction houses. The media lapped it up, but
> it's a sad thing when a government sponsors the degradation of
> reputable people by threatening them with jail for something that
> nobody should go to jail for . . . . The right to throw your fist is
> supposed to stop at somebody else's nose. In all the annals of
> antitrust, however, no one has shown where a nose enters the picture.
> Firms that engage in conversations with competitors are doing no more
> than exercising their freedom of speech, property rights and freedom
> of contract. Their customers . . . have no rights that are violated
> when competitors get together to agree on terms for offering their
> services to the public.[^44]

This sort of debate about antitrust is healthy, and perhaps expected in
a free society. More troubling are indications in the case law that
might reflect a similar skepticism about whether antitrust plays a
productive role in preserving competition. I see these signs in three
areas: the interface between antitrust and regulation; the interface
between antitrust and intellectual property; and merger enforcement.

### A. [Interface with Regulation]{.smallcaps}

In two recent Supreme Court cases addressing the application of
antitrust in partially-regulated fields, there are indications that the
Court doubts whether antitrust can be applied in a principled and
precise manner that avoids doing more harm than good. I start with
*Trinko*, a case that I hasten to add was rightly decided (the United
States having urged the result). Justice Scalia's dicta about the
"slight benefits of antitrust intervention" and the need to "weigh a
realistic assessment of its costs"[^45] arguably suggest a view of
antitrust as an inherently costly double-layer of regulation and a drag
on free markets rather than an effective way of preserving them. His
opinion states:

> One factor of particular importance is the existence of a regulatory
> structure designed to deter and remedy anticompetitive harm. Where
> such a structure exists, the additional benefit to competition
> provided by antitrust enforcement will tend to be small, and it will
> be less plausible that the antitrust laws contemplate such additional
> scrutiny.
>
> \* \* \*
>
> Against the slight benefits of antitrust intervention here, we must
> weigh a realistic assessment of its costs. . . . The cost of false
> positives counsels against an undue expansion of § 2 liability.[^46]

This perspective was reinforced last Term in Justice Breyer's majority
opinion in *Credit Suisse,*[^47] where it is potentially more troubling
given that, unlike in *Trinko*, antitrust was being invoked to address
an alleged horizontal conspiracy -- the "supreme evil of antitrust"[^48]
-- rather than to regulate interactions between a dominant firm and its
rivals. The *Credit Suisse* complaint alleged laddering and other
conduct, similar to traditional price fixing, which would violate both
the antitrust and securities laws. The Court stated the issue as
follows: "Is there a conflict that rises to the level of
incompatibility? Is an antitrust suit such as this likely to prove
practically incompatible with the SEC's administration of the Nation's
securities laws?"[^49] The case should be viewed as driven by the unique
setting of the SEC's extensive regulation of the IPO process, but even
so it is plain the Court had doubts about antitrust courts and the
possibility that, especially in treble damages actions brought by
private plaintiffs,[^50] they might act in blunderbuss, imprecise
fashion, causing more harm than good:

> It will often be difficult for someone who is not familiar with
> accepted syndicate practices to determine with confidence whether an
> underwriter has insisted that an investor buy more shares in the
> immediate aftermarket (forbidden), or has simply allocated more shares
> to an investor willing to purchase additional shares of that issue in
> the long run (permitted). And who but a securities expert could say
> whether the present SEC rules set forth a virtually permanent line,
> unlikely to change in ways that would permit the sorts of
> "laddering-like" conduct that it now seems to forbid?[^51]

Consider Justice Breyer's skepticism towards the role of antitrust
courts in this passage:

> \[T\]here is no practical way to confine antitrust suits so that they
> challenge only activity of the kind the investors seek to target,
> activity that is presently unlawful and will likely remain unlawful
> under the securities law. Rather, these factors suggest that antitrust
> courts are likely to make unusually serious mistakes in this respect.
> And the threat of antitrust mistakes, *i.e.*, results that stray
> outside the narrow bounds that plaintiffs seek to set, means that
> underwriters must act in ways that will avoid not simply conduct that
> the securities law forbids (and will likely continue to forbid), but
> also a wide range of joint conduct that the securities law permits or
> encourages (but which they fear could lead to an antitrust lawsuit and
> the risk of treble damages).[^52]

What is remarkable here is not the observation that courts may get
antitrust cases wrong; this is certainly true, and probably inevitable.
What is remarkable is the implied confidence that, in the face of some
risk of antitrust courts creating false positives, antitrust should
yield entirely without regard to the potential that SEC regulation might
lead to false negatives from the perspective of competition, and without
more of an attempt to hone the antitrust tools to minimize the potential
for interference with SEC prerogatives.

### B. [Interface with IP]{.smallcaps}

In cases involving intellectual property, and particularly patents,
there are signs that the much-needed rationalization of the IP/antitrust
interface has sometimes swept antitrust too far outside of the picture,
failing to acknowledge the legitimate role for antitrust in addressing
anticompetitive behavior involving IP rights.

The patent settlement cases provide one illustration. As the Department
said to the Supreme Court in both *Schering*[^53] and *Tamoxifen*,[^54]
the lower courts there went too far in giving holders of patents of
uncertain validity *carte blanche* to enter agreements restraining
competition under the guise of a patent settlement. The *DDAVP* case, in
which the DOJ recently filed an amicus brief, provides another
illustration. *DDAVP* involved a claim that the defendant improperly
listed its fraudulently obtained patent in the Orange Book, foreclosing
generic entry. The district court denied standing to plaintiffs because
they were consumers rather than competitors, and had not been sued by
the defendant for patent infringement. The United States filed an amicus
brief in the Second Circuit, arguing that the district court erred in
applying antitrust standing doctrine, seemingly out of a concern that
antitrust not provide avenues for challenging patents separate from the
patent law regime. We believe that the district court overlooked the
"important public interest in permitting full and free competition in
the use of ideas which are in reality a part of the public domain," as
in the situation where a patent was procured by fraud.[^55] As of this
writing, the case is fully briefed and waiting for the court to schedule
oral argument.

### C. [Merger Enforcement]{.smallcaps}

Finally, there is merger enforcement. The skepticism toward antitrust as
an enterprise is somewhat less overt in this arena; however, the
antitrust enforcement agencies have lost five significant merger cases
in recent years: *Arch Coal*, *Oracle*, *Equitable*,[^56] *Western
Refining*, and *Whole Foods*. In two of these cases, *Oracle* and *Arch
Coal*, the courts' carefully-written opinions -- neither of which were
taken up on appeal -- are susceptible to the interpretation that courts
may be inclined to hold the government's claims to a higher standard of
proof than in the past. To some extent this is appropriate, since part
of the rationalization of antitrust that we have pursued is a
recognition that the mere fact that a merger will increase concentration
is not dispositive, and in fact is no more than one starting point of a
proper merger analysis.[^57] But I submit there are signs that point to
an inappropriate degree of skepticism about the role of antitrust in
blocking (or remedying) potentially anticompetitive mergers.

Consider the *Oracle* case for a moment. I should emphasize that,
although we disagree with the ruling in that case -- and Assistant
Attorney General Thomas Barnett has said that he would bring the same
case again -- we respect the decision that the court reached. I observe,
however, that one can read in the decision a skepticism toward the role
of antitrust. One can find that skepticism in the court's insistence on
sharp demarcations between products that are in the market and those
that are outside, in the court's rejection of testimony by sophisticated
customers about the options available to them (dismissing such testimony
as stating only "preferences"), and in the court's apparent insistence
on "thorough econometric analysis such as diversion ratios showing
recapture effects."[^58] And throughout, the court seemed to express
skepticism regarding the government's ability to understand a "complex"
market such as enterprise software. In effect, the court at least in
part rejected credible *direct* evidence on the ultimate question --
what is the effect on price of the competition between Oracle and
PeopleSoft that the merger would extinguish?

Now, I do not suggest that customers should be given a vote on whether
their suppliers' mergers can proceed, or should be given free rein
merely to speculate about a transaction's effects, but it strikes me
that when sophisticated customers testify on issues they are in the best
position of all witnesses to know -- such as their own preferences,
which writ large make up the firms' demand curve -- their testimony is
entitled to greater weight than it seems to have received in this
case.[^59]

Similarly, in *Arch Coal*, the court gave little credence to customer
testimony opposing the transaction and described as "novel" the FTC's
theory that producers post-merger could tacitly coordinate a decline in
production, leading to direct consumer harm and leading indirectly to a
higher price.[^60]

To be sure, the government's position in merger cases need not always
prevail, and courts are entitled to view the evidence differently from
the plaintiff agency. Testing the government's case is indeed the role
of federal courts in merger cases. But there was nothing novel about the
government's theory in either of these cases, and it is hard to dispute
that there was at least substantial evidence supporting the government's
concern in both cases that the transaction at issue would harm
competition and consumers.

**V. [Conclusion]{.smallcaps}**

If I am right in perceiving signs of an apparent antagonism towards
antitrust -- as distinct from a desire to rationalize it to make it more
effective -- this should be troubling to anyone who believes in the
importance of competitive markets and antitrust's role in protecting the
competitive process. In application, such skepticism threatens to hinder
sound antitrust enforcement. Consider the potential implications if
*Credit Suisse* were applied broadly in any number of partially
regulated industries where antitrust and the regulatory regime have
traditionally played complementary roles. Consider the implications for
merger enforcement if courts, skeptical at the intrusion of antitrust
law, insist on a degree of certainty about likely competitive harm that
the agencies' already-extensive investigations are unable to satisfy.

An aversion to antitrust would have several ironic implications:

First, as antitrust becomes more sophisticated and more closely linked
to its consumer welfare goals, there ought to be less, not more, need to
shy away from its application when the more sophisticated analysis
indicates harm to competition. Rationalized antitrust should be less
likely to generate false positives and should be less of a drag on
healthy procompetitive behavior or proposed transactions.

Second, as rationalized antitrust gives firms a freer hand to pursue
unilateral conduct -- and to collaborate with their rivals in
procompetitive ways -- it is arguably more rather than less important
for antitrust to be applied to keep collaborations from going too far,
and to preserve competitive market structure where entry barriers exist
and mergers threaten lasting harm.

Third, if antagonism towards antitrust does end up leading to a
shrinkage of antitrust beyond that entailed in honing antitrust to its
pro-competition goals, we may face a legislative backlash that prompts a
counterproductive return to invigorated antitrust-for-antitrust's sake
-- possibly reversing some of the progress that has been made toward
rational antitrust enforcement.

And fourth, I harken back to the words of the Reagan-era deregulators:
sound antitrust, and the principles of competition that undergird it,
are the best defense to future efforts to re-regulate markets. It would
be ironic indeed if in the name of freeing business from the constraints
of antitrust, one created a system in which businesses would face more
probing scrutiny and far-reaching constraints via sector regulation.

If I am right to have these concerns, is there anything we should be
doing? Yes. First and foremost, we need to continue to push for rational
development and application of antitrust laws, not just here but around
the world. The best antidote to antagonism likely is continued
improvement in antitrust and education about how antitrust can be
executed well. Of course, we need to continue to keep our enforcement
efforts focused where they are likely to advance the law's underlying
welfare goals, and not where the costs exceed the benefits.

But more broadly, all of us who believe in antitrust need to be vigilant
about the rhetoric we use to support the rationalization of antitrust:
we should be more careful to distinguish between *less* antitrust and
*better* antitrust. All of us need to reinvigorate our competitive
advocacy efforts to remind regulators, courts, the bar, and the public
why competition is a good thing, and why sound antitrust enforcement
plays an important role in preserving competition. And we all should
remember that a system of sound and robust antitrust enforcement, while
it might never be perfect, is far preferable to the likely alternatives.

Thank you for the opportunity to speak today.

[^1]: United States v. Topco Assocs., Inc., 405 U.S. 596, 610 (1972).

[^2]: *See* Nat'l Gerimedical Hosp. & Gerontology Ctr. v. Blue Cross of
    Kansas City, 452 U.S. 378, 388--89 (1981) ("Implied antitrust
    immunity is not favored, and can be justified only by a convincing
    showing of clear repugnancy between the antitrust laws and the
    regulatory system. Repeal is to be regarded as implied only if
    necessary to make the \[subsequent law\] work, and even then only to
    the minimum extent necessary.") (internal quotation marks omitted)
    (citations omitted) (alteration in original).

[^3]: United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 323
    (1897).

[^4]: Crown Zellerbach Corp. v. FTC, 296 F.2d 800, 825 (9th Cir. 1961)
    (quoting United States v. Columbia Steel Co., 334 U.S. 495, 534
    (1938) (Douglas, J., dissenting).

[^5]: [Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
    477](http://www.stolaf.edu/people/becker/antitrust/summaries/429us477.html)
    (1977).

[^6]: Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986).

[^7]: Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.
    209 (1993).

[^8]: Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540
    U.S. 398 (2004).

[^9]: Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., 127 S. Ct.
    1069 (2007).

[^10]: Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
    574 (1986).

[^11]: Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007).

[^12]: United States v. Von's Grocery Co., 384 U.S. 270 (1966).

[^13]: Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1
    (1979).

[^14]: Texaco Inc. v. Dagher, 547 U.S. 1 (2006).

[^15]: *See generally* Makan Delrahim, Deputy Assistant Attorney Gen.,
    U.S. Dep't of Justice, The Long and Winding Road: Convergence in the
    Application of Antitrust to Intellectual Property, Address at the
    George Mason Law Review Symposium 6--7 (Oct. 6, 2004) (discussing
    the Department's creation and later rejection of the Nine No-Nos),
    http://www.usdoj.gov/atr/public/speeches/205712.pdf.

[^16]: Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S. Ct.
    2705 (2007).

[^17]: Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, 340 U.S. 211
    (1951).

[^18]: Poller v. Columbia Broad. Sys., Inc., 368 U.S. 464 (1962).

[^19]: Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984).

[^20]: Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007) (citing
    *Monsanto*, 465 U.S. 752).

[^21]: *See id.* at 1972--74.

[^22]: United States v. Von's Grocery Co., 384 U.S. 270, 301 (1966)
    (Stewart, J., dissenting).

[^23]: 115 F. Supp. 835 (D.N.J. 1953).

[^24]: *See id.* at 843--46.

[^25]: Nat'l Collegiate Athletic Ass'n v. Bd. of Regents of the Univ. of
    Okla., 468 U.S. 85 (1984).

[^26]: Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co.,
    472 U.S. 284 (1985).

[^27]: Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984).

[^28]: Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373
    (1911).

[^29]: [Albrecht v. Herald Co., 390 U.S.
    145](http://www.stolaf.edu/people/becker/antitrust/summaries/390us145.htm)
    (1968).

[^30]: United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967).

[^31]: Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977).

[^32]: State Oil Co. v. Khan, 522 U.S. 3 (1997).

[^33]: 547 U.S. 28 (2006).

[^34]: [U.S. Dep't of Justice & Fed. Trade Comm'n, Antitrust Guidelines
    for the Licensing of Intellectual Property]{.smallcaps} (1995),
    http://www.usdoj.gov/atr/public/guidelines/ipguide.pdf.

[^35]: [U.S. Dep't of Justice & Fed. Trade Comm'n,]{.smallcaps}
    [Antitrust Enforcement and Intellectual Property Rights: Promoting
    Innovation and Competition]{.smallcaps} (2007),
    http://www.usdoj.gov/atr/public/hearings/ip/222655.pdf. The
    shorthand title "IP2" is used to distinguish this from an earlier
    report issued by the FTC. [Fed. Trade Comm'n, To Promote Innovation:
    The Proper Balance of Competition and Patent Law and
    Policy]{.smallcaps} (2003),
    http://www.ftc.gov/os/2003/10/innovationrpt.pdf.

[^36]: Christopher C. DeMuth, *Deregulation Review*, 53 [Antitrust
    L.J.]{.smallcaps} 189, 190 (1984).

[^37]: *Id.* at 192.

[^38]: Stephen G. Breyer, *Antitrust, Deregulation, and the Newly
    Liberated Marketplace*, 75 [Cal. L. Rev.]{.smallcaps} 1005, 1044
    (1987).

[^39]: *Id.* at 1044-45.

[^40]: The unilateral effects analysis that underlay the Division's
    challenge is described in some detail in the Division's Competitive
    Impact Statement, available at
    http://www.usdoj.gov/atr/cases/f217700/217717.htm. *See also*
    Elizabeth Armington et al., *The Year in Review: Economics at the
    Antitrust Division, 2005-2006*, 29 [Rev. Indus. Org.]{.smallcaps}
    305 (2006).

[^41]: Competitive Enter. Inst., Antitrust & Competition Policy,
    http://www.cei.org/sections/subsection.cfm?section=22 (last visited
    Oct. 23, 2007).

[^42]: Richard Epstein, Double Trouble for American Telecoms (June 18,
    2007), http://www.law.uchicago.edu/news/epstein-telecomm/index.html.

[^43]: Thomas J. DiLorenzo, *Anti-Trust, Anti-Truth* (June 1, 2000),
    http://www.mises.org/story/436.

[^44]: Holman W. Jenkins Jr., Editorial, *Playing The Stooge: Silly
    Trial, Silly Law*, [Wall St. J.]{.smallcaps}, Dec. 14, 2001, at A13.

[^45]: Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP,
    540 U.S. 398, 414 (2004).

[^46]: *Id.* at 412--14.

[^47]: Credit Suisse Securities (USA) LLC v. Billing, 127 S. Ct. 2383
    (2007).

[^48]: *Trinko*, 540 U.S. at 408.

[^49]: *Credit Suisse*, 127 S. Ct*.* at 2393.

[^50]: Concern about the costs of misguided antitrust private treble
    damages actions can also be observed in Bell Atl. Corp. v. Twombly,
    127 S. Ct. 1955, 1959 (2007): "It is one thing to be cautious before
    dismissing an antitrust complaint in advance of discovery, but quite
    another to forget that proceeding to antitrust discovery can be
    expensive. That potential expense is obvious here, where plaintiffs
    represent a putative class of at least 90 percent of subscribers to
    local telephone or high-speed Internet service in an action against
    America's largest telecommunications firms for unspecified instances
    of antitrust violations that allegedly occurred over a 7-year
    period. It is no answer to say that a claim just shy of plausible
    entitlement can be weeded out early in the discovery process, given
    the common lament that the success of judicial supervision in
    checking discovery abuse has been modest."

[^51]: *Credit Suisse*, 127 S. Ct. at 2394.

[^52]: *Id.* at 2395--96.

[^53]: Brief for the United States as Amicus Curiae, FTC v.
    Schering-Plough Corp., 126 S. Ct. 2929 (2006) (No. 05-275), *denying
    cert. to* 402 F.3d 1056 (11th Cir. 2005),
    http://www.usdoj.gov/osg/briefs/2005/2pet/6invit/2005-0273.pet.ami.inv.pdf.

[^54]: Brief for the United States as Amicus Curiae, Joblove v. Barr
    Labs., Inc., 127 S. Ct. 3001 (2007) (No. 06-830), *denying cert. to*
    466 F.3d 187 (2006),
    http://www.usdoj.gov/osg/briefs/2006/2pet/6invit/2006-0830.pet.ami.inv.pdf.

[^55]: Brief for the United States and Federal Trade Commission as Amici
    Curiae Supporting Plaintiffs-Appellants at 15, *In re* DDAVP Direct
    Purchaser Antitrust Litig., No. 06-5525-cv (2d Cir. May 25, 2007)
    (quoting Lear, Inc. v. Adkins, 395 U.S. 653 (1969)),
    http://www.usdoj.gov/atr/cases/f223700/223731.pdf (internal
    quotation marks omitted).

[^56]: FTC v. Equitable Res., Inc., No. 07cv0490, 2007 WL 1437447 (W.D.
    Pa. May 14, 2007).

[^57]: *See* Charles F. Rule & David L. Meyer, *Toward a Merger Policy
    That Maximizes Consumer Welfare: Enforcement by Careful Analysis,
    Not by the Numbers*, 35 [Antitrust Bull.]{.smallcaps} 251, 265
    (1990).

[^58]: United States v. Oracle Corp., 331 F. Supp. 2d 1098, 1172 (N.D.
    Cal. 2004).

[^59]: *See generally* Ken Heyer, *Predicting the Competitive Effects of
    Mergers by Listening to Customers*, 74 [Antitrust L.J.]{.smallcaps}
    87 (2007).

[^60]: *See* FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109, 131--32
    (D.D.C. 2004).