Ghosh, Shubha --- "Vertical Restraints, Competition and the Rule of Reason" [2010] ELECD 277; in Hylton, N. Keith (ed), "Antitrust Law and Economics" (Edward Elgar Publishing, 2010)

Book Title: Antitrust Law and Economics

Editor(s): Hylton, N. Keith

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847207319

Section: Chapter 9

Section Title: Vertical Restraints, Competition and the Rule of Reason

Author(s): Ghosh, Shubha

Number of pages: 21

Extract:

9 Vertical restraints, competition and the
rule of reason
Shubha Ghosh1


As a counterexample to John Maynard Keynes's pronouncement about
the influence on policy of `defunct economists', contemporary antitrust
law in the United States is shaped by the living. Nowhere is this truer than
in the area of vertical restraints. Starting with debates over restrictions in
patent licensing2 and continuing with the most recent debates leading up to
the Supreme Court's decision in Leegin Creative Leather Prods. v. PSKS,
Inc.,3 the proper legal treatment of vertical restraints has been framed in
terms of ongoing debates over the economics of contractual restrictions on
business freedom and the structuring of competition.4
This chapter examines the law and economics of vertical restraints with
particular attention to the Supreme Court's recent decision in Leegin.
While the law of vertical restraints has moved towards a rule of reason,
and hence greater contractual freedom under the antitrust laws, this
shift requires us to rethink the meaning of competition and the role of
law in shaping the rules of the marketplace. Concomitant with this shift
towards contractual freedom is the centrality of intellectual property in
shaping competition policy. This chapter identifies parallels between the
legal analysis of vertical restraints and the theory of intellectual property,
with the goal of devising a unified approach to the law and economics of
distribution mechanisms. While the principal discussion is of US anti-
trust law, the chapter concludes with a comparison with the European
Union's ...