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For Antitrust Enforcers, Causation Can Be The Matrix

Posted  September 23, 2009

“You see there is only one constant.  One universal.  It is the only real truth.  Causality.  Action, reaction.  Cause and effect.”

The Merovingian in The Matrix Reloaded

Characters in science fiction films such as The Matrix series and The Time Traveler’s Wife have struggled with life-or-death issues of causation.  As highlighted by recent decisions of the U.S. Court of Appeals for the District of Columbia, however, issues of causation can be just as fatal to antitrust enforcement.

Although causation may not be the only real truth, for antirust enforcers it can be the make-or-break issue that determines whether they can maintain an antitrust case against a dominant firm.  While a great deal of attention has rightly been focused on how to correctly identify monopolies and exclusionary conduct, relatively little attention has been given to the legal standard for proving that a firm’s conduct has, in fact, (a) caused the exclusion of rivals, and (b) caused or maintained a monopoly.

If a firm’s conduct does not cause exclusion and monopoly, then there is no reason to punish the conduct under U.S. anti-monopoly laws.  For this reason, causation of monopoly and anticompetitive effects is an element of every claim brought against a dominant firm in the U.S.  Yet, surprisingly, the Supreme Court has never addressed the legal standard for proving it.

The U.S. Court of Appeals for the District of Columbia has analyzed the standards for proving causation in two recent major decisions, U.S. v. Microsoft and Rambus v. FTC.  However, the answer to this fundamental question is far from clear.  And, as The Merovingian said in The Matrix Reloaded, antitrust enforcers may find that, if they go into court without the answer to why particular conduct has in fact caused harm, they will do so without the power to stop it.

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Tagged in: Antitrust Enforcement,

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