..pricing and is so treated by the law." Based on this determination that the two concepts are analytically similar, the Court thus concludes that therefore "similar legal standards should apply to claims of monopolization and to claims of monopsonization." Reasoning that predatory-pricing is fundamentally an act of monopolization and that predatory-bidding is fundamentally an act of monopsonization, and that both claims involve the deliberate use of unilateral pricing measures for anticompetitive purposes, the Court finds that the logically same legal standard should therefore govern actions brought on both.
Based on this reasoning, the Court concludes that "the general theoretical similarities of monopoly and monopsony combined with the theoretical and practical similarities of predatory pricing and predatory bidding convince us that our two-pronged Brooke Group test should apply to predatory-bidding claims." Accordingly, under the first prong, in a predatory-bidding action the plaintiff must prove that "the alleged predatory bidding led to below-cost pricing of the predator's outputs." To meet this burden, the Court states that "only higher bidding that leads to below-cost pricing in the relevant output market will suffice as a basis for liability for predatory bidding." Under the second prong of the test, the plaintiff must prove that "the defendant has a dangerous probability of recouping the losses incurred in bidding up input prices through the exercise of monopsony power." Because in the case at hand Respondent failed to meet the standard of proof as established by Brooke Group, they cannot prevail in its predatory-bidding theory of liability.
Consequences of the Weyerhaeuser Decision
The Supreme Court relies heavily on the previously mentioned reasoning for its Brooke Group decision. However, since the Brooke Group decision, significant scholarly research has essentially undermined the Brook Group's underlying economic assumption, thus meaning that Weyerhaeuser and all subsequent cases are ruled on false pretenses of reality.
According to in-depth research conducted by numerous modern economist, along with the American Antitrust Institute and the Forest Industry Participants, the factual premises of the Brooke Group decision holding that predatory pricing was economically irrational, rare and rarely successful has since been disproved. The court based its Brooke Group decision on this presumption, making the Brooke Group test an appropriate protection against the "threat of a spate of false positive results that would chill procompetitive conduct in the form of lower prices for consumer." However, this underlying rational was based on faulty research.
Even in 1976, Judge Posner warned "literature on predatory pricing had been excessively influenced by a 1958 pathbreaking article on the Standard Oil Trust." Richard Posner, Antitrust Law: An Economic Perspective (1976). More so, prominent economist Alfred Kahn stated in 2006 that "only the economically brainwashed can deny that price discrimination has also been used as a means of predation, to the ultimate injury of consumers." Further, such noteworthy economist as Boton, Brodley and Riordan concluded: "It is now the consensus view in modern economics that predatory pricing can be successfully and fully rational business strategy. In addition, several sophisticated empirical studies have confirmed the use of predatory pricing strategies. The courts, however, have failed to incorporate the modern writing into judicial decisions, relying instead on earlier theory that is no longer generally accepted."
Whereas at the time of the Brooke Group decision predatory pricing was not common and thus did not effect competition, such is no longer the case. Since the time of the Brooke Group decision, predatory pricing has developed as a widely used and strategic form of business competition,...
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