“Agency Fallibility and the Effect of Judicial Review in Competition Cases”, by Jorge Padilla

The job of an administrative agency when assessing a competition complaint is to produce a decision {infringement, no infringement} by assessing the complainant’s theory of harm (or complainant’s narrative) and the defendant’s counterarguments (or defendant’s narrative) in light of the available evidence. In reaching a decision, because of human fallibility, the agency can make two types of error: it may conclude (i) that the complainant is right when it is not (a Type I error or a false positive), or (ii) that the defendant is right when it is not (a Type II error or a false negative). Each of these errors involves a cost – i.e., a loss of competition to the detriment of consumers. As Judge Easterbrook explained, if the agency chooses i