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Several prominent federal appeals court judges said Aug. 6 that a general consensus has emerged on how to properly analyze antitrust cases. The judges said two rival camps among jurists and regulators — the so-called Chicago School and the post-Chicago School — are now advocating similar ways to establish if a merger or other deal has resulted in anti-competitive behavior. “It is a false conflict,” said Judge Douglas H. Ginsburg of the U.S. Court of Appeals for the District of Columbia. “It is merely a matter of evolution.” “The war is over,” agreed Judge Frank H. Easterbrook of the U.S. Court of Appeals for the District of Columbia. “It ended quite some time ago.” The debate led off the antitrust section of the American Bar Association’s annual meeting. The Chicago School emerged in the 1970s with a group of conservative academics, including Easterbrook and Richard Posner of the 7th U.S. Circuit Court of Appeals, along with economists such as the University of Chicago’s Milton Friedman, who argued that legal enforcers should never presume that firms act anti-competitively, even if there are only one or two companies in the market. Rather, they used economic analysis to show that firms rarely raise prices to above-market levels. They also sought to show that the market in most cases corrects itself if a firm raises prices excessively. In a paper released at the conference, American University law school professor Jonathan Baker said the biggest impact of the Chicago School has been on mergers, where the amount of evidence required to stop a deal rose dramatically. The post-Chicago School coalesced in the past decade. It also relies heavily on economic analysis, including newer tools such as econometrics and game theory modeling. According to Baker, however, post-Chicago proponents are generally more supportive of government intervention than Chicago School advocates, who prefer to see markets correct themselves. Easterbrook pointed to the unanimous Microsoft Corp. decision in June as proof that disagreements between the two camps have largely evaporated. That panel included a former head of the antitrust division in the Reagan administration, two devotees of the Chicago school, and two politically left-leaning judges likely to support post-Chicago views, he said. “They didn’t disagree even on a punctuation mark,” Easterbrook said. The best way to conclude that consensus on antitrust has prevailed is to re-examine the debates from 25 years ago, when the Chicago School was gaining ground, Ginsburg said. Back then, leading academics such as Georgetown law center professor Robert Pitofsky, who later would go on to chair the Federal Trade Commission, were arguing that political considerations outside the rubric of economic analysis should play a part in antitrust reviews, he said. “That view has not been mentioned today,” Easterbrook said. “It has been banished, and we are better off for it.” Also during the debate, Posner, the Chicago-based judge who tried to mediate a Microsoft settlement, said he is concerned that the quality of economic research is being compromised by abundant use of economists in antitrust disputes. “It is corrupting,” he said. “You pay the person $1,000 per hour and feed him all the information from one side.” Posner said he finds economists from consulting firms more credible than academics hired as expert witnesses. That’s because the consultants put their livelihoods on the line each time they testify. “If you screw up and you give unreliable testimony, that is the end of your professional career,” he said. In contrast, academics can return to the classroom without losing much income, Posner added. Copyright (c)2001 TDD, LLC. All rights reserved.

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