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Prof. Hovenkamp explores antitrust law’s role regarding large digital platforms

October 07, 2020

In a recently released paper, James G. Dinan University Professor Herbert Hovenkamp delves into some of the most pressing antitrust issues concerning large digital platforms, beginning with whether such firms that deal directly with consumers are “winner take all,” or natural monopoly firms. In Antitrust and Platform Monopolies, Hovenkamp’s analysis reveals that, although the answer varies by platform, “competition can made to work in most of them.”

Hovenkamp, a world-renowned scholar of antitrust law and policy, also addresses the appropriate remedies should an antitrust violation be found.

“Breaking up large firms subject to extensive scale economies or positive network effects is generally unwise,” writes Hovenkamp. “The resulting entities will be unable to behave competitively. Inevitably, they will either merge or collude, or else one will drive the others out of business. Even if a platform is not a natural monopoly but does experience significant economies of scale in production or consumption, a breakup will be socially costly.”

Hovenkamp lands on breaking up ownership and management instead of assets as an attractive alternative.

“Leaving the platforms intact as production entities but making ownership more competitive could actually increase output, benefitting consumers, labor, and suppliers,” he writes.

In support of this position, Hovenkamp offers a list of firms “organized as single entities for many legal purposes but that also function as combinations and can be treated that way by antitrust law,” including the Chicago Board of Trade, the NCAA, the NFL, and numerous real estate boards.

Hovenkamp’s paper also offers suggestions regarding the emerging problem of platform acquisition of nascent firms, “where the biggest threat is not from horizontal mergers but rather from acquisitions of complements or differentiated technologies.”

Hovenkamp, who holds a joint appointment in the Wharton School, is a Fellow of the American Academy of Arts and Sciences. In 2008, he won the Justice Department’s John Sherman Award for his lifetime contributions to antitrust law, and in 2012, he served on the ABA’s Committee to advise the President-elect on antitrust matters.

His principal writing includes The Opening of American Law: Neoclassical Legal Thought, 1870-1970 (Oxford, 2015); Antitrust Law (formerly with Phillip E. Areeda and Donald F. Turner) (22 vols., Aspen 2008-18); Principles of Antitrust (West, 2017); Creation Without Restraint: Promoting Liberty and Rivalry in Innovation (Oxford, 2012, with Bohannan); The Making of Competition Policy (Oxford, 2012, with Crane); The Antitrust Enterprise: Principle and Execution (Harvard, 2006); Federal Antitrust Policy: The Law of Competition and Its Practice (West, 5th ed. 2015); IP and Antitrust (2 vols., Aspen, 2017, with Janis, Lemley, Leslie, and Carrier); and Enterprise and American Law, 1836-1937 (Harvard, 1991).

He has consulted on numerous antitrust cases for various government entities and private plaintiffs and has also co-authored casebooks in antitrust, property law, and a free open source casebook on innovation and competition policy.

Read more Law School faculty papers and publications.