ANTICOMPETITIVE EFFECTS IN MONOPOLIZATION CASES: REPLY

David Balto and Earnest Nagata,1 in their Response, criticize my recent article in this Journal about the Federal Trade Commission's position regarding proof of anticompetitive effects in monopolization cases.2 Relying on statements from cases and speeches, I wrote that "the Agency appears to believe that in monopolization cases government proof of anticompetitive effects is unnecessary,"3 a rule I criticized as both bad law and bad policy. Truncation of the analysis of competitive effects is sometimes appropriate in a Sherman Act Section 1 context for example, because we know from long experience the likely impact of practices, such as naked price fixing and market division, further inquiry is unnecessary. We lack similar experience with the single-firm practices that arise in a Section 2 context, however. I stated that the leading antitrust treatise provided the correct test for a monopolization case the alleged exclusionary behavior must "reasonably appear capable of making a significant contribution to creating or maintaining monopoly power."4 Messrs. Balto and Nagata argue incorrectly that I would, instead, require the FTC to prove that the monopolist's action raised price and restricted output. For the appropriate test, they cite the identical passage from the Areeda and Hovenkamp treatise.