Consumer Injury in Antitrust Litigation: Necessary, but by What Standard?
Rooney, William H., St. John's Law Review
Since the early days of the rule of reason under section 1 of the Sherman Act, the effect of the challenged conduct on competition has been central to whether the conduct is lawful.1 The Clayton Act also makes the actual or likely competitive effect of the arrangement in question directly relevant to the lawfulness of that arrangement under that statute.2 In addition, the Supreme Court-under section 2 of the Sherman Act-has clarified that competitive effect is relevant to the lawfulness of conduct challenged as either attempted or actual monopolization.3
Aside from cases governed by the per se rule of illegality or the quick-look doctrine, proving that the conduct in question has or would cause an "anticompetitive" effect has thus been an
element of most substantive antitrust claims separate and apart from the "antitrust injury" standing requirements that have been developed since Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.4 As courts have increasingly looked to economics to "inform the antitrust laws," the metes and bounds of a legally cognizable "anticompetitive" effect have been more clearly defined. The driving concept, though not always stated, seems to have been allocative efficiency: whether the challenged conduct distorts the allocation of economic resources in the production of goods and services that consumers value most.5
Preserving allocative efficiency fits easily within the traditional antitrust framework. Relevant consumer preferences are reflected in market definitions,6 allocation is reflected in the current and potential supply of the relevant product or service, and distorted allocation is reflected in a reduction in the output-and a corresponding increase in the price-of the products or services comprising the relevant market.7 Output, of course, is multi-dimensional and is understood broadly. It includes the quantity of the product or service as well as its quality, which in turn includes functionality, branding, features, and innovation.
Competitive effect is assessed in light of the impact of the practice on the allocation of resources. From the perspective of allocative efficiency, an anticompetitive effect occurs when the challenged conduct restricts output in a properly defined relevant market, in a material amount, for a material duration. A procompetitive effect occurs when the practice in question expands output in the relevant market in a material amount for a material duration. A competitively neutral act has no material effect on the relevant output.
Reducing output typically causes, and is most obviously
reflected in, an increase in price-a harm that is acutely felt by consumers.8 Some courts have accordingly identified the objective of the antitrust laws as protecting consumers ("consumer welfare"), not competitors. Indeed, the Supreme Court in Reiter v. Sonotone Corp. described the Sherman Act as a "consumer welfare prescription."9 Hence, the moniker "consumer injury" has developed as a shorthand means of describing the anticompetitive effect required for a successful antitrust claim.
Although the debate over consumer injury in antitrust litigation is intense, much of the above is not widely disputed. As discussed in Part I below, courts and the enforcement agencies generally agree that antitrust analysis (other than that governed by the per se rule and the quick-look doctrine) turns on the competitive effect of the practice in question and that such an effect involves more than harm to a single rival.10 They also agree that an anticompetitive effect relates to the actual or anticipated impact of the challenged conduct on output and price in a relevant market--or in shorthand, on consumers.11 Can we imagine a press release by an enforcement agency that claims its enforcement of the antitrust laws, …
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Consumer Injury in Antitrust Litigation: Necessary, but by What Standard?. Contributors: Rooney, William H. - Author. Journal title: St. John's Law Review. Volume: 75. Issue: 4 Publication date: Fall 2001. Page number: 561+. © St. John's Law Review Association Fall 2008. Provided by ProQuest LLC. All Rights Reserved.