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Defining Unreasonably Exclusionary Conduct: The ’Exclusion of a Competitive Rival’ Approach

Thomas A. Lambert, 92 North Carolina Law Review 2014, Forthcoming 2014.

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Unreasonably exclusionary conduct, the element common to monopolization and attempted monopolization offenses under Section 2 of the Sherman Act, remains essentially undefined. Federal courts, including the U.S. Supreme Court, have purported to define the term, but the definitions they have offered are so indeterminate as to be, in the words of one prominent commentator, “not just vague but vacuous.” Seeking to fill the void left by the courts, antitrust scholars have in recent years proposed four universal definitions of unreasonably exclusionary conduct. Each, however, is deficient: One would fail to deter a substantial amount of anticompetitive conduct, and the other three would provide business planners with little guidance and no safe harbors and would likely chill efficient but novel business practices. In light of these deficiencies, some commentators have recently suggested abandoning the search for a universal definition of unreasonably exclusionary conduct and instead adopting non-universal standards. Such an approach, though, would either offend rule of law norms or, if implemented as some non-universalists have suggested, reduce to one of the aforementioned - and deficient - universal definitions.

This Article examines the proposed definitions or tests for identifying unreasonably exclusionary conduct (including the non-universalist approach) and, finding each lacking, suggests an alternative definition. The proposed approach would deem conduct to be unreasonably exclusionary if it would exclude from the defendant’s market a “competitive rival,” defined as a rival that is both as determined as the defendant and capable, at minimum efficient scale, of matching the defendant’s efficiency. The “exclusion of a competitive rival” definition identifies the common thread running through instances of unreasonable exclusion, comports with widely accepted intuitions about what constitutes improper competitive conduct, and generates specific safe harbors and liability rules that collectively would maximize monopolization doctrine’s net benefits by minimizing the sum of its “decision” and “error” costs.

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