Throughout the world, the rule against price fixing is competition law's most important and least controversial prohibition. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings conflict with the teachings of oligopoly theory that supposedly underlie modern competition policy. Competition Policy and Price Fixing provides the needed analytical foundation. It offers a fresh, in-depth exploration of competition law's horizontal agreement requirement, presents a systematic analysis of how best to address the problem of coordinated oligopolistic price elevation, and compares the resulting direct approach to the orthodox prohibition. In doing so, Louis Kaplow elaborates the relevant benefits and costs of potential solutions, investigates how coordinated price elevation is best detected in light of the error costs associated with different types of proof, and examines appropriate sanctions. Existing literature devotes remarkably little attention to these key subjects and instead concerns itself with limiting penalties to certain sorts of interfirm communications. Challenging conventional wisdom, Kaplow shows how this circumscribed view is less well grounded in the statutes, principles, and precedents of competition law than is a more direct, functional proscription. More important, by comparison to the communications-based prohibition, he explains how the direct approach targets situations that involve both greater social harm and less risk of chilling desirable behavior--and is also easier to apply.
Preface xiii 1. Introduction 1 PART I: HORIZONTAL AGREEMENTS 2. Defining the Problem 21 3. Communications 50 4. Statutory Provisions and Higher Court Interpretations 69 5. U.S. Lower Court Practice 101 6. Paradox of Proof 125 7. Oligopoly Theory and the Agreement Requirement 174 PART II: PRICE-FIXING POLICY 8. Social Welfare 217 9. Framework for Decision-Making 231 10. Detection: Market-Based Evidence 256 11. Detection: Other Types of Evidence 286 12. Liability Assessment 307 13. Sanctions 322 14. Unilateral Market Power 346 15. Additional Considerations 368 PART III: COMPARISON OF APPROACHES 16. Communications-Based Prohibition 387 17. Detection of Prohibited Communications 398 18. Further Topics 420 19. Conclusion 443 References 455 Index 475.
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