Pre-spin legal analysis of Soft case:
<<Recent Supreme Court precedents arguably establish a legal rule even more favorable to the government that would apply in narrow circumstances, including a situation that might arise in the Microsoft litigation. As I have discussed in a 1999 George Mason Law Review article, the rule permits a finding of monopolization when a dominant firm excludes a competitor from a monopolized market by cutting off the rival's access to a complementary product or
collaborative venture without good reason. <=6> Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985); <=7> Eastman Kodak, 504 U.S. 451 (1992). The government need not prove anti-competitive harm.
Hence, if the court finds, for example, that Microsoft made it more difficult for Netscape's browser or Sun's Java to work with Windows for no legitimate purpose, the court could infer that competition was harmed. This rule operates
surgically to bar a dominant firm's use of tools that inhibit innovating rivals without interfering with the dominant firm's own incentive to innovate.
In sum, the government's prospects for legal success in the Microsoft case are far brighter than many believe.
The legal standard for identifying a bad act by a monopolist may well turn out to be the reasonableness test applied routinely elsewhere in antitrust matters. As it works its way through the appellate process, the Microsoft case will likely clarify that standard to the government's benefit.
More significant may be the case's boost to the legal theory of exclusion. Government antitrust cases alleging anti-competitive exclusion, whether by a monopolist or otherwise, largely disappeared after the mid-1970s, in the wake of critical commentary by conservative economists. But exclusion has staged a resurgence in the last few years as contemporary commentators (most notably, Thomas Krattenmaker and Steven Salop in a 1986 Yale Law Journal article) have recognized that practices raising rivals' costs or impeding rivals' market access can be just as harmful as price fixing by competitors in leading to
higher prices and reduced innovation. If the Microsoft litigation eventually reaches the Supreme Court, the justices' analysis of exclusion--and the standard under which they evaluate whether exclusionary acts unlawfully maintain monopoly--will likely be the case's most important legal legacy.
Jonathan B. Baker is an associate professor at American University's Washington College of Law. From 1995 through 1998, Baker was director of the Bureau of Economics at the Federal Trade Commission.>>
Copyright 1999 American Lawyer Newspapers Group Inc.
Legal Times
October 25, 1999, Monday |
