Setting the Standard: A Fraud-based Approach to Antitrust Pleading in Standard Development Organization Cases
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In high-technology sectors, uniform industry standards are crucial for ensuring product compatibility. For decades, the government had the primary responsibility for developing these standards. Over the last several years, the government has increasingly delegated this responsibility to private standard development organizations (SDOs), and Congress passed the Standards Development Organization Advancement Act of 2004 to encourage private organizations to assume this role. SDOs rely on a consensus-based approach in which industry participants agree on which technology will comprise a particular standard.
Mainstream antitrust policy is grounded in economics and views the protection of competition as antitrust’s singular goal. But the populist “antimonopoly movement” believes that antitrust should focus less on economic issues and more on the political influence of large firms. While the courts have long embraced the economic approach to antitrust, antimonopolists have recently gained some support in politics. This battle of ideas is therefore poised to determine the future of antitrust. Antitrust law currently suffers from a number of problems, but the antimonopoly movement does not offer serious solutions. On the contrary, by deemphasizing tangible economic harms in favor of abstract political concerns, it would cause immense economic damage. Antitrust populism is grounded in the moralistic belief that large companies are inherently detrimental to society, overlooking the fact that most big firms attained their success by providing significant economic benefits to the public, such as better products or lower prices. This Essay argues that rather than punishing bigness for its own sake, antitrust should focus on proscribing anticompetitive behavior and ensuring that all firms can compete on a level playing field.
We would like to thank the participants of the How AI Will Change the Law Symposium, cohosted by the Coase-Sandor Institute, the University of Chicago Law Review Online, and Oxford Business Law Blog, for their helpful comments.
We would like to thank the participants of the How AI Will Change the Law Symposium, cohosted by the Coase-Sandor Institute, the University of Chicago Law Review Online, and Oxford Business Law Blog, for their helpful comments.
Artificial intelligence (AI) has the potential to alter the interpretation of the duties of care, skill, and diligence. As these duties form the foundation for the BJR and equivalent provisions, the development of AI is also expected to impact the BJR. There is a broadening importance, in an increasingly data-driven business environment, of the requirement to gather sufficient information before making a decision and to use information in a valid manner. Changes are both quantitative (how much information to collect) and qualitative (which types of information to collect). The changes also relate to the methods of decision-making, including the role of measures and statistics over intuition.
The author wishes to thank Abdi Aidid, Ben Alarie, Francesco Ducci, Anthony Niblett, Tom Ross, and Michael Trebilcock and participants at the How AI Will Change the Law Symposium at the University of Chicago for helpful comments and conversations.
This Essay focuses largely on structural responses to AI pricing in antitrust, outlining the bulk of its argument in the context of merger law but also considers monopolization law and exclusionary conduct. It argues that the relationship between the strictness of the law and the sophistication of AI pricing is not straightforward. In the short run, a stricter approach to merger review might well make sense, but as AI pricing becomes more sophisticated, merger policy ought to become less strict: if anticompetitive outcomes are inevitable with or without a merger because of highly sophisticated AI pricing, antitrust interventions to stop mergers will not affect pricing and instead will create social losses by impeding efficient acquisitions. This Essay considers similar questions in the context of monopolization. It concludes by observing that the rise of AI pricing will strengthen the case for antitrust law to shift its focus away from high prices and static allocative inefficiency and toward innovation and dynamic efficiency.