Business Strategy and Antitrust Policy

Business strategy is fundamentally about firm decision-making. Antitrust policy and enforcement, in turn, evaluate the decisions made by firms and the market outcomes that result. To the extent that firms’ decisions will be scrutinized ex post, managers must understand how antitrust concerns might constrain their actions and, thus, suggest alternative optimal decisions. Owing to this importance, most business strategy courses broach the subject of antitrust, and managers frequently confer with antitrust attorneys when making important strategic decisions. Correspondingly, it is also useful for the antitrust community to understand how firms use the concepts and frameworks of business strategy to make the decisions that they will be evaluating. Business strategy maintains a holistic orientation, drawing on traditional functional areas such as operations, finance, accounting, and marketing to inform the firm’s overarching direction. Through the effort of academics and management consultants, business strategy has grown in prominence and is pervasive at the top levels of most firms. Over the past several decades, economics has emerged as the guiding discipline for businesses making strategic decisions. This immediately suggests a potential conflict between the goals of practitioners in strategy and antitrust. Economics-based strategy will inevitably aim towards the maximization of producer surplus, while antitrust policy and enforcement puts more emphasis on ∗Kellogg School of Management, Northwestern University, [email protected] †Simon Graduate School of Business, University of Rochester, [email protected]