Competition Law as Common Law: American Express and the Evolution of Antitrust

We explore the implications of the widely accepted understanding that competition law is common—or “judge-made”—law. Specifically, we ask how the rule of reason in antitrust law should be shaped and implemented, not just to guide correct application of existing law to the facts of a case, but also to enable courts to participate constructively in the common law-like evolution of antitrust law in the light of changes in economic learning and business and judicial experience. We explore these issues in the context of a recently decided case, Ohio v. American Express, and conclude that the Supreme Court, not only made several substantive errors, but also did not apply the rule of reason in a way that enabled an effective common law-like evolution of antitrust law.

Michael L. Katz is the Sarin Chair Emeritus in Strategy and Leadership at the Haas School of Business and Professor Emeritus in the Department of Economics at the University of California, Berkeley. Katz served as the government’s economic expert in United States v. American Express, which is how the case was captioned in the lower courts. This paper does not draw on any confidential materials from that matter. A. Douglas Melamed is Professor of the Practice of Law at Stanford Law School, Stanford University.

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Competition Law as Common Law: American Express and the Evolution of Antitrust