Probability, Presumptions and Evidentiary Burdens in Antitrust Analysis: Revitalizing the Rule of Reason for Exclusionary Conduct

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The conservative critique of antitrust law has been highly influential. It has facilitated a transformation of antitrust standards of conduct since the 1970s and led to increasingly more permissive standards of conduct. While these changes have taken many forms, all were influenced by the view that competition law was over-deterrent. Critics relied heavily on the assumption that the durability and costs of false positive errors far exceeded the costs of false negatives.

Many of the assumptions that guided this retrenchment of antitrust rules were mistaken and advances in law and economic analysis have rendered them anachronistic, particularly with respect to exclusionary conduct. Continued reliance on what are now exaggerated fears of “false positives,” and failure adequately to consider the harm from “false negatives,” has led courts to impose excessive burdens of proof on plaintiffs that belie both sound economic analysis and well-established procedural norms. The result is not better antitrust standards, but instead an unwarranted bias towards non-intervention that creates a tendency toward false negatives, particularly in modern markets characterized by economies of scale and network effects.

In this article, we explain how these erroneous assumptions about markets, institutions, and conduct have distorted the antitrust decision-making process and produced an excessive risk of false negatives in exclusionary conduct cases involving firms attempting to achieve, maintain, or enhance dominance or substantial market power. To redress this imbalance, we integrate modern economic analysis and decision theory with the foundational conventions of antitrust law, which has long relied on probability, presumptions, and reasonable inferences to provide effective means for evaluating competitive effects and resolving antitrust claims.

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