Appeared with minor changes in The Legal Times, April 3, 2000, under the title "What About the Issue? Presidential Candidates Have Told Us Too Little About Their Antitrust Policy"
THE POLITICS OF ANTITRUST, CAMPAIGN 2000
Albert A. Foer
This year's presidential primaries might have reflected substantial popular concern about antitrust. After all, we are in the midst of an unprecedented merger wave that is dramatically restructuring industry after industry. A technological revolution is rapidly constructing "the New Economy," at the same time threatening the "legacy" economy, while spawning high visibility antitrust cases headed by U.S. v. Microsoft. Deregulation, meanwhile, has proven to be less successful than it could have been, because antitrust failed to play its intended role in overseeing market forces.
Opponents of antitrust, often citing the Microsoft case, argue that globalization and high technology have rendered antitrust obsolete. Rather than withering away from its near-death experience with Reaganomics, however, antitrust has rebounded to an active life. There's plenty to talk about, but does the electorate care?
The last time antitrust played a major role in a presidential race was 1912, when candidates Taft, Roosevelt, and Wilson all had strong ideas, advocated with knowledge and eloquence, about the proper relationship between the central state and the still-new but frighteningly out of control big corporation. The antitrust fruit of the 1912 campaign was passage two years later of the Clayton Antimerger Act and the Federal Trade Commission Act, which --together with the Sherman Act of 1890-constitute the essence of today's antitrust regime.
The stage seems to be set for a confrontation on national antitrust policy, but as we leave the primaries behind, antitrust has not arrived as a salient political issue. Why not? And will this change as we approach the general election?
Questions for the Candidates
In an effort to pry open the antitrust attitudes of the primary election candidates, the American Antitrust Institute sent a survey to all the candidates in early December, 1999. Not unexpectedly, none responded, though Bill Bradley's Issues Director, in declining to answer the survey, noted: "[I]ssues regarding antitrust enforcement are certainly important to all Americans." Boldly stated, I thought; but my visits to the campaign websites (they didn't do this in 1912!) and conversations with campaign aids, do not necessarily confirm even this innocuous observation. Here are the seven questions we asked, with what we have been able to piece together from various sources. As this is written, months before the conventions, it is clear that the parties' nominees will be Albert A. Gore and George W. Bush.
1. What role would enforcement of the antitrust laws play in your administration?
"Vice President Gore," says spokesperson Elaine Kamark, "hasn't said anything other than the Administration line." Gore, therefore, can be taken to represent the continuation of the strongest antitrust policy we have seen since the late-70's.
Gore's chief opponent, Senator Bill Bradley, did not appear to have specifically addressed antitrust, except in the context of agriculture. According to his website, Bradley favored "reducing concentration of agribusiness through aggressive antitrust supervision."
Among the Republicans, George W. Bush and John McCain may or may not have taken different positions. In an interview with the Financial Times of London, the Texas Governor said he would restrict antitrust action to clear cases of price-fixing. Asked if there was a role for aggressive antitrust enforcement in cases other than price-fixing, Bush said, "Well no...everything evolves into price-fixing over time." The Financial Times pointed out that many high-profile cases in recent years would not meet the Bush standard.
Senator McCain, modeling himself on Teddy Roosevelt, ironically did not post anything on his website about the role of antitrust in a Republican administration. He told Business Week, without elaboration, "I would update the [antitrust] laws." According to the Wall Street Journal, McCain believes fervently in competition and the power of markets, saying, "The only thing worse than regulation is an unregulated monopoly."
2. How would you modify the budget of the Federal Trade Commission and the Department of Justice Antitrust Division?
The budget is an important test of how aggressive a policy is likely. The Clinton Administration, already having overseen a steady increase in the funding of the antitrust agencies, recently asked for a 22% increase in the Antitrust Division's budget and a 32% increase in the FTC's budget-a considerable step forward for the federal antitrust effort. While none of the candidates has commented on this, presumably it reflects the Vice President's interests. McCain, the Chairman of the Senate Commerce Committee that oversees the FTC, introduced a reauthorization bill for the FTC that would give it a 19% increase.
3.What concerns do you have, if any, with respect to the current merger wave?
Gore says, "I'll fight to ensure that economic concentration in agribusiness does not threaten the well-being of America's consumers and family farmers alike." He will "bolster the resources of the USDA and Justice Department to fight anticompetitive practices by enforcing antitrust laws and the Packers & Stockyard Act...[and] will create a Special Counsel for Agriculture within the Department of Justice to focus more attention on agribusiness mergers." On rural freight service, Gore says he will "continue his commitment to careful antitrust scrutiny of mergers in this sensitive area."
Bradley attacked Gore and the Clinton administration for not using antitrust laws to stem agribusiness mergers. He said he would move the Packers and Stockyard Act from the Department of Agriculture to the Department of Justice, which is better equipped to "keep a closer eye on possible anticompetitive practices."
Bush responded to a press question about the AOL/Time Warner merger, saying it "shows that the combination of the Internet and the media may be a new wave of the future. The merger speaks to the promise of where the world may be headed. I am interested to know more of the details about it, but I want to make sure any of these mergers are good for the consumer, that any merger is good for the competitive environment."
McCain, according to the Wall Street Journal, would pursue a vigorous policy of reviewing mergers. In his interview with Business Week, McCain said, "I say to Corporate America: I am worried about these [telecommunications] consolidations. These mergers are the biggest in history. I want them watched carefully and I want them carefully reviewed. I am a free trader and I am antiregulation. But I do read history and I know there have been times these consolidations have hurt consumers."
3. What is your position on the Microsoft case, and more generally, what changes do you advocate with respect to the role of antitrust enforcement in high technology industries?
The Microsoft case, of course, has been the most salient manifestation of antitrust since the breakup of AT&T (under the Reagan Administration, incidentally). Bill Gates has prodded top Microsoft employees in Redmond, Washington, to give generously for the 2000 elections, saying that the company's political action committee will only support lawmakers "who will make a difference" on issues such as competition and Internet regulation.
In what may have been the most courageous moment of the campaign, Gore on November 15 spoke to a crowded auditorium of frustrated Microsoft employees, telling them he believes that antitrust laws aimed at breaking up monopolies such as the software manufacturer "embody a fundamental American value." "If dominance in one area is used to prevent competition in another area, that is wrong," Gore said, referring repeatedly to "unhealthy concentrations of power."
Bush, while campaigning in Microsoft's home state this February, said he thought it was important "when there is innovation taking place, to understand the consequences of litigation." He went on to express his worries about the consequences for growth if Microsoft were to be broken up, and said that as president he would be "slow to litigate." While Bush said he would not take a stand on Microsoft, Sen. Slade Gorton told reporters, with Bush standing silently at his side, that Bush would "seek to resolve [the case] in a way that does not break up the company" and that "I don't think a Bush administration would have brought the case to begin with." After this was reported, several high tech executives demanded a clarification, which came from spokesman Scott McClellan : "As president, he will enforce our antitrust laws to help ensure competition...He prefers to see [the case] settled out of court, which is what the judge is trying to get the parties to do."
The other leading candidates in the primaries rarely spoke about the Microsoft case. McCain admitted, "I've not been able to come to a conclusion on Microsoft." In the New Hampshire debates, the Microsoft case was addressed only by the candidates who were early drop-outs from the Republican race. Steve Forbes was asked about the case and he said he'd dismiss it: "[W]hy go forward with something that technology's made obsolete?" Sen. Orrin Hatch, who as Chairman of the Judiciary Committee was easily the most knowledgeable of the candidates on antitrust, answered that the case is justified. "The whole purpose of the antitrust laws is to protect consumers. But you don't protect consumers if you crunch others who might be competitors from being competitors, and if you use predatory conduct to do that."
5. What level of antitrust law enforcement would you direct toward issues that have traditionally been of interest to the small business community, including dealer terminations, non-price vertical restraints, price discrimination, and predatory pricing?
With the exception of many of the candidates' positions against concentration in agribusiness and Gore's support of the Administration's challenge to predation by the airlines at hubs, none of the candidates has addressed small business antitrust issues.
6. What role do you want to see for U.S. antitrust enforcement in the international arena?
The globalization of trade has brought with it claims that antitrust is no longer relevant. Yet, in the past year, the Antitrust Division has emphasized investigations of international cartels, bringing in over $1 billion in fines and penalties, largely from foreign countries. Neither this nor the development of antitrust as an important new policy in countries around the world seems to have been discussed by the candidates. An exception of sorts came in a speech by Gore to an international group. He pointed out that "Monopoly power can foster corruption. Diluting monopoly by privatizing some functions would help reduce corruption. That is also a principle of reinventing government."
7. Who are your principal antitrust and competition policy advisors?
The next president will not only appoint the heads of enforcement agencies, but also several Justices of the Supreme Court and scores of other judges. All of these appointments will be largely determinative of antitrust policy going forward. It is therefore important to learn who has the candidates' ears on antitrust issues, but none of the candidates has provided a clear answer.
Why Antitrust Was Not an Important Issue in the Primaries
During the primaries, the important issues were naturally the ones that separated the candidates within each party. In the Democratic primaries, the Vice President was comfortable with the Administration's program. Senator Bradley chose not to criticize the Administration's antitrust positions, other than saying that it did not go far enough in dealing with agribusiness.
Late in the Republican primaries, McCain emerged as far more pro-enforcement than Bush, but neither went out of his way to put a point on their differences. Neither appeared particularly well-briefed on antitrust, probably because it was not an issue they were forced to address. Not needing to be well-briefed, they did not rely upon any particular advisors. Perhaps they remembered how the antitrust split between Taft and Roosevelt had torn the Republican party 88 years earlier.
The General Election: The Antitrust Ball Is in Bush's Court
The primaries failed to sharpen antitrust policy positions within the two major political parties. Whether antitrust will explode into a national issue during the general election is largely within the control of George W. Bush. His remarks to date can most generously be described as an inchoate policy. Although his sympathies appear to be generally with big business, his media staff clearly wants him to stay neutral on the Microsoft case and come across as a moderate law enforcer, like his father. On the other hand, many of his conservative supporters want Bush to declare a return to a Reaganomic antitrust policy limited to the prosecution of horizontal collusion.
Bush can satisfy the libertarian wing of his party by attacking both the Microsoft prosecution and much of the activist record of the Clinton era. Bush's dilemma is that a move in this direction will undermine his ability to reach out to the McCain moderate Republicans and independents without whom victory in the general election is less likely.
Unless he is forced by Gore or by a demanding press, Bush will probably not define a clear-cut position. This would be unfortunate, because once in office, the next President will set the antitrust agenda. If either candidate has strong but secretive attitudes about antitrust policy which are not revealed until after the inauguration, the public will have been cheated out of an important piece of its right to help determine our national direction.