Chicago Takes It On the Chin: Imperfect Information Could Play a Crucial Role in the Post-Kodak World

This article briefly describes the revolutionary potential of the Supreme Court\u27s Kodak decision. It discusses the dramatic changes in antitrust that would occur if the field took concepts such as imperfect information, lock-in effects, strategic behavior, and other post-Chicago ideas seriously. Among the effects of this decision could be: (1) Imperfect information could substitute for traditional market share-based market power and reveal that a market that structurally appeared competitive in fact was behaving anticompetitively. Market share-based safe harbors are more likely to be inappropriate. (2) This imperfect information-based market power also can lead to relatively direct harm to consumers by allowing price increases or by distorting consumers\u27 choices among differentiated products. (3) Imperfect information also can create more narrowly defined relevant markets because it can effectively prevent customers from turning to certain potential substitutes. They may not know of an option\u27s existence or, more likely, that it is a cost/effective option. A finding of narrower markets usually will have the effect of making it more likely that a firm will be found to have market power. (4) Businesses, like individual consumers, can make information-based mistakes that can cause them to be exploited. Consumer protection law\u27s assumptions about individuals\u27 capabilities, vulnerabilities, and needs can apply to businesses as well. (5) Information problems can be so great that they can affect the competition in entire markets. A broad interpretation of Kodak could shake the antitrust world. In addition to tying analysis, at least four areas of antitrust could be profoundly affected, including vertical restraints analysis, franchiser/franchisee relationships, predatory pricing analysis, and Robinson-Patman Act and other antitrust situations involving price discrimination, such as bundled and single product discounting. This article shows that these topics all require considerable additional analysis by the antitrust community