Why One Should Never Define Markets or Use Market-Oriented Approaches to Analyze the Legality of Business Conduct under U.S. Antitrust Law: My Arguments and a Critique of Professor Kaplow's

Abstract

In 1978, I published an article demonstrating that, for two reasons, one should never use market-oriented approaches to determine the legality of business conduct under either the Sherman Act's specific-anticompetitive-intent test or the Clayton Act's lessening-competition test: (1) market definitions are inherently arbitrary, not just at their periphery but more comprehensively, and (2) data on the non-market-aggregated parameters that market-oriented antitrust legality analyses use to define markets have more legally relevant predictive power than data on any market-aggregated parameters could have. In 2010, Professor Louis Kaplow published an article claiming that one should never define markets to measure a firm's economic power. Although Kaplow's asserted conclusion follows from my 1978 article's arguments, Kaplow's article includes a lengthy footnote denigrating my 1978 article. My current article (1) delineates slightly improved versions of the two arguments for my 1978 article's ultimate conclusion, (2) explains why Kaplow's narrower conclusion is implied by those arguments, (3) delineates and criticizes Kaplow's purported arguments for his conclusion, and (4) demonstrates that all of Kaplow's criticisms of my 1978 article are unjustified.