Second-Generation Monopolization: Parallel Exclusion in Derivatives Markets

The reluctance of antitrust to condemn parallel exclusion permits oligopolies to be entrenched. This is because parallel exclusion—multiple-firm conduct that inhibits market entrants—cannot satisfy the current strictures of monopolization, which is understood to prohibit single-firm conduct. Yet this is an outdated way of conceptualizing monopolization. An expansion of monopolization—to cover parallel, non-collusive acts by an oligopoly—is due. To push the law toward recognizing parallel exclusion, this Article examines concentration in the markets for financial derivatives, which are perennially dominated by the same big banks. Even after losses under first-generation antitrust claims, the dominant derivatives dealers have found ways to retain market power. This Article therefore delves into the market power dynamics that traditional theories have sidestepped. As a technical exercise, this Article illustrates the relevance of market definition as a paradigm—particularly for illuminating blindspots in financial regulation. As a doctrinal endeavor, this Article buttresses the efforts of other scholars to frame parallel exclusion as a form of monopolization