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8 Criterion J. on Innovation 1 (2026)

handle is hein.journals/critjinov8 and id is 1 raw text is: T H E C R I T E R I 0 N J O U R N A L O N IN N O V A T I O N VOL. 8 4 4 4 2026 Antitrust Treble Damages and Economic Efficiency J. Gregory Sidak* Section 4 of the Clayton Act authorizes the private recovery of three times the amount of injuries sustained as a result of an antitrust violation.' The first third of these treble damages compensates the plaintiff for his actual injury. The subsequent two-thirds are a punitive largess, putatively to deter further violations and to encourage private enforcement of the antitrust laws. Several lawyers and economists, however, contend that the treble damage suit is not an economically efficient instrument for antitrust enforcement. Both Richard Posner and Kenneth Dam argue that treble damages may overdeter.2 William Breit and Kenneth Elzinga challenge the efficacy of treble * Chairman, Criterion Economics, Inc. Email: jgsidak@criterioneconomics.com. At the age of 21, I wrote this paper, received helpful comments from John Shoven, Bruce Owen, and Oliver Williamson, and was given a prize by Stanford University. Over the next 49 years, I also learned much from Kenneth Elzinga and even more from Judge Richard Posner as his clerk. Copyright 2026 by J. Gregory Sidak. All rights reserved. I 'Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . . without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee. 15 U.S.C. § 15. 2 RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAw 361 (Little, Brown & Co. 1s ed. 1972); RICHARD A. POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE 226-27 (Univ. of Chicago Press 1976); Increasing Sherman Act Criminal Penalties: Hearing on S. 3036 Before the Subcomm. on Antitrust and Monopoly of the S. Comm. on the Judiciary, 91 Cong. 25 (1970) (statement of Kenneth W. Dam, Professor of Law, University of Chicago School of Law). Posner claims in his first edition of Economic Analysis ofLaw that the treble damage remedy overdeters in cases where the probability of punishment is higher than 33 percent and underdeters in cases where the probability is lower. POSNER, ECONOMIC ANALYSIS OF LAW supra, at 361. In the 1976 edition of Antitrust Law, Posner elaborates: Admittedly, the estimation of such probabilities presents a formidable, perhaps impossible, task since we do not know how many antitrust violations escape detection. But it is clear that many antitrust violations are so difficult to conceal that the probability of detection is much greater than one-third. Mergers and most exclusionary practices, such as tying agreements (and even most predatory pricing), fall into this category. The provision of treble damages in such cases serves simply to draw excessive enforcement resources into attempts to discover and prosecute such violations and to expand the prohibitions of the law. Only single damages should be available in such cases. POSNER, ANTITRUST LAW: AN ECONOMIC PERSPECTIVE, supra, at 226-27. Dam also warns of overdeterrence but does not rely on this efficiency argument exclusively: I see no reason why that 1I