Revitalizing Antitrust in Its Second Century: Essays on Legal, Economic, and Political Policy

By Harry First; Eleanor M. Fox et al. | Go to book overview

Chapter 15
Legal Reasoning and the
Jurisprudence of Vertical
Restraints: The Limitations of
Neoclassical Economic Analysis in
the Resolution of Antitrust Disputes

John J. Flynn and James F. Ponsoldt

The question of how antitrust policy "ought" to treat vertical distribution restraints under Section 1 of the Sherman Act 1 embodies the difficulties entailed when any field of law becomes captive to a single paradigm. 2 Inherently political assumptions concerning the proper scope of property and contract rights and government power to regulate the economy, and unrealistic factual assumptions concerning the nature of vertical economic relationships have come to the fore in currently fashionable analysis of vertical restraints. 3 Furthermore, executive and certain judicial applications of the Sherman Act to restrictive commercial agreements have increasingly been characterized by use of clichés 4 and deductive reasoning instead of reflective inductive analysis. When this occurs, the governing rules are detached from the legislative rationales that gave them birth.

Proper application of rules intended to govern commercial relationships must first identify the values that the relevant statute is meant to maintain. Traditional legal analysis addresses how, within the limitations of the judicial process, those values can be implemented in the context of disputes touching upon them. Antitrust jurisprudence of vertical distribution restraints has seldom addressed these deeper political and jurisprudential dimensions. 5

Cognizant of historical shifts in the methodology and standards applied in antitrust analysis, particularly in the analysis of vertical restraints, this chapter first considers the underlying jurisprudential nature of legal reasoning as background for determining what the law of vertical restraints ought to be. The chapter then explores the implications of substituting economic analysis" -- in the narrow sense of the economic analysis advocated by the Chicago School of "law and economics" 6 -- for legal reasoning in disputes arising under the antitrust laws. A more accurate, multivalued background for antitrust policy is explored. 7 This chapter finally proposes a method for analysis of vertical restraints that will allow

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