Louis Kaplow ’81 seeks to upend the academic debate and to suggest important reforms to legal practice in his latest book, which addresses the law and economics of price fixing. The Harvard Law School professor describes the law prohibiting this practice as “incoherent, its practical reach uncertain, and its fit with fundamental economic principles obscure.” And that’s just in the first paragraph.
In “Competition Policy and Price Fixing,” Kaplow argues that there is too much emphasis in the cases—and in related scholarship—on a search for “magic words” exchanged between firms. In fact, he contends, “smoking gun” evidence may not exist and, when it does, may not be discovered. In such instances, if price-fixing cases are to proceed, it makes more sense to focus on anti-competitive outcomes than to attempt to infer from such outcomes and other circumstantial evidence what sorts of invisible communications firms most likely employed in achieving their ends.
Rather than trying to detect certain kinds of communication, which may or may not have occurred, Kaplow argues, attention should be focused on the economic harm caused by oligopolistic pricing. “The question should be: Did they operate in a coordinated manner to increase prices to the detriment of the economy?” Kaplow said in an interview. “The fundamental analysis of policy in this area should be based on whether socially bad things are happening.”
Kaplow’s book, which was published in June by Princeton University Press, is winning praise within the community of antitrust scholars and beyond. Judge Richard Posner ’62 of the U.S. Court of Appeals for the 7th Circuit, who wrote a seminal 1976 antitrust book, said Kaplow’s work “is likely to be recognized as the definitive work on price fixing.”
Antitrust law is a topic of long-standing interest to Kaplow, who co-wrote a leading casebook on the topic with Phillip Areeda ’54, his professor at HLS. In the past half dozen years, Kaplow has returned his main focus to antitrust, having been writing for some time primarily on law and economics and tax policy. (In addition to a J.D., he holds a Ph.D. in economics from Harvard.)
As he focused again on antitrust, Kaplow said, the “linguistic semantics debate” that has dominated the last 40 years of price-fixing literature continued to bother him, as did a number of other fixations in the legal and economic writing and court and agency practice in the competition realm. These ongoing concerns motivated him to write again on antitrust after finishing his last book, “The Theory of Taxation and Public Economics,” published in 2008.
In his latest endeavor, he set out to show how the debate over price-fixing policy might be reframed, rather than trying to shape the law himself. “This is really a book that’s more than anything about what’s the kind of debate and discussion we need to have to address the problem,” Kaplow said. “Do we have a modern debate about the pros and cons and trade-offs, or do we continue to have a formalistic legal discussion?”
It seems that Kaplow will be quite happy if his book engenders all manner of disagreement, as long as critics are addressing the right questions. But since he also breaks new ground in offering preliminary answers to many of them, don’t be surprised if, as Judge Posner suggests, this book proves to influence the direction of the discourse as well as its focus.