92 Tex. L. Rev. See Also 1 (2013)

handle is hein.journals/seealtex92 and id is 1 raw text is: 

Texas Law Review

See Also

Volume  92


Detailed Analysis, not Catechism: A Comment on
Crane's Bargaining over Loyalty

Abraham L. Wickelgren*

I.  Introduction
     Daniel Crane's Bargaining over Loyalty argues that loyalty discounts
are usually procompetitive, and that the conditions under which they can
create anticompetitive effects typically do not obtain. This is fundamentally
an empirical claim for which he does not provide any precise data to support.
That said, whether this claim is true or false is not the critical issue. Rather,
the critical issue is how relevant it should be for antitrust. Except for a few
practices, such as horizontal price fixing, which are considered per se illegal,
antitrust law examines the legality of most competitive practices under the
rule of reason. Rule-of-reason analysis entails a detailed examination of the
facts of the particular case at hand in order to determine whether the practice
in question is pro- or anticompetitive (in this particular case). Just as the fact
that driving is socially desirable almost all the time tells us very little about
whether a particular driver was reckless in any given instance, finding that a
practice such as a loyalty discount is procompetitive (anticompetitive) in one
case, given one set of competitive conditions, does not mean  that it is
necessarily procompetitive (anticompetitive) in another case under a different
set of competitive conditions.
     This means that even a conclusive determination that loyalty discounts
are procompetitive, say, 87 percent of the time they are used is of little use in
deciding whether the use of loyalty discounts in any given case is pro- or
anticompetitive. First, there is not a precise, generally accepted definition of

   * Bernard J. Ward Centennial Professor of Law, The University of Texas School of Law. I
thank Einer Elhauge for very helpful comments. All errors are my own.

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