Anticompetitive Exclusion and the "Inherently Suspect" Framework: The Viability of the Federal Trade Commission's Analysis in Realcomp II
Tiffany Lena Lee
Posted Friday, March 3, 2017

Part I of this paper examines the history and development of the “inherently suspect” framework in antitrust analysis. From its first use of the term in Justice Brennan’s concurring opinion in White Motor Co. v. United States, to the FTC’s development and application of the framework in Mass. Board, Polygram Holding, and North Texas Specialty Physicians, the “inherently suspect” framework has been de facto limited to, and should continue to be limited to horizontal joint venture conduct with obvious and clear collusive anticompetitive effects.

Part II addresses how the Commission’s application of the “inherently suspect” framework in Realcomp extended, perhaps unwittingly, a framework developed for collusive conduct to exclusionary conduct. While the Commission easily could have evaluated the merits of Realcomp under the precedent of Northwest Wholesale Stationers, it instead chose to apply a hybrid theory, based upon Indiana Federation of Dentists and Polygram Holding.

Finally, Part III examines how the Commission’s opinion in Realcomp, their amicus curiae brief in Princo, and the revised Department of Justice and FTC Horizontal Merger Guidelines reflect a fundamental shift in focus in antitrust policy to address concerns about stifling innovation. Economic learning and experience of the markets may adequately support the impetus behind antitrust laws towards recognizing innovation as an important component to, and effect of, healthy competition. The courts, however, have never considered exclusion to be anticompetitive without proof of actual anticompetitive effects. Even in the context of “new economic thinking,” a court should not presume the anti-competitiveness of exclusionary conduct based solely on the nature of the conduct. Allowing condemnation of exclusion without proof of either market power or anticompetitive effects (as the Commission did in Realcomp) is an unwarranted departure from basic antitrust economics.