ANTITRUST DIVERGENCE AND THE LIMITS OF ECONOMICS

Few would question the primacy of economic analysis in the construction and enforcement of contemporary antitrust rules. Chicago-derived principles of price theory have slowly, but inexorably, transcended their traditional boundaries within the United States to find welcome application in Europe and elsewhere. Indeed, it has become standard for antitrust authorities around the world to frame issues of competitive concern in exclusively economic terms. Price theory would thus seem to have become the ubiquitous standard by which to inform competition policy.Yet, international antitrust harmonization has proven to be frustratingly elusive. Although the two most important jurisdictions find broad agreement on many aspects of competition policy, notable instances of EC/U.S. divergence have become apparent.Given the primacy of economic analysis, it is only natural to suppose that the transatlantic divide will narrow in parallel with advancement in society’s understanding of economics. Put differently, contemporary areas of disagreement should be susceptible to resolution through the lens of economic theory and econometrics alone. Practice ostensibly mirrors this theoretical prediction, as both sides to the transatlantic rift vociferously promote the supremacy of their respective viewpoints in economic terms. The U.S. Justice Department has been especially vocal (and cutting) in its criticism of what it considers to be erroneous economic policy underlying European jurisprudence.We suggest that the direction of this debate may be misguided. Although price theory has forever revolutionized the substance and application of competition law, its contribution is not unlimited. Economic analysis is subject to serious epistemological limitations with respect to certain areas of antitrust concern, in particular with regard to the trade-off between the short- and long-run. It is noteworthy indeed that recent areas of major divergence are characterized by precisely such economic indeterminacy. Moreover, these policy disagreements are not limited to the international arena—a serious and disturbing rift has become apparent between America’s two enforcement agencies.We argue, first, that there are important limitations to economic analysis and, second, that the pursuit of long-run convergence must recognize these constraints and rely on a mutual understanding of distinct socio-political cultures and traditions. Recent scholarly and public debate has been noteworthy for its exclusive focus on economics, and may for that reason have been incomplete and inefficacious. This Article explores these concerns by focusing on perhaps the most divisive area of antitrust law, refusals to deal. Such refusals cast the tension between balancing short- and long-run effects into critical relief, and render explicit the limitations of economic theory. Given that the bastion of the Chicago School, the United States, has been incapable of agreeing on a uniform approach in this area, the idea that international law can be harmonized on the basis of economics alone seems strikingly quixotic. Nevertheless, we conclude that outside of the empirically indeterminate issue of balancing the short- and long-run, economics can indeed lead policymakers to optimal and well-defined outcomes.