Antitrust Goes Global: A Review
Albert A. Foer
This review appeared as an aai column in the FTC:WATCH #562, March 12, 2001
Antitrust Goes Global: What Future for Transatlantic Cooperation?Simon J. Evenett, Alexander Lehmann, and Benn Steil, editorsBrookings/RIIA, 2000206 pp, $39.95 in hardback and $16.95 in paperback.
The transfer of Reuters' antitrust reporter David Lawsky from Washington to Brussels, to step up coverage of competition policy in the European Union, is a sign of the times. For over one hundred years, the U.S. was the primary situs of antitrust, but the momentum is clearly shifting. As Simon J. Evenett, Alexander Lehmann, and Benn Steil, the editors of Antitrust Goes Global: What Future for Transatlantic Cooperation?, write in their very useful introductory chapter, "Falling trade barriers, a revolution in communications technology, declining restrictions on foreign investment, ongoing deregulation, and the embrace of market-friendly policies by many governments have wrought significant changes in business strategies on both sides of the Atlantic."
The Brookings Institution in Washington and the Royal Institute of International Affairs in London, in conjunction with a conference held at Chatham House in 1999, commissioned both academic papers and legal case studies, to examine the lessons from almost ten years of formal U.S.-EU antitrust cooperation. The resulting volume is one that I recommended to Lawsky as essential preparation for his assignment in Brussels.
The new environment the editors describe includes a cross-border merger wave of unprecedented scale, a reevaluation of the benefits of vertical integration, and the spread of network-based industries. These create a number of substantive challenges for multijurisdictional antitrust, including defining markets in an integrating global economy, growing international trade and antitrust intervention, dealing with cross-border issues involving the "new economy," and relating antitrust to sectoral regulation. These issues are developed in several of the essays. Of equal importance are issues relating to cooperation between the European Union and the United States, and this leads into comparisons of both procedural and substantive differences.
The best way to help a potential reader decide whether this volume is worth acquiring will be to summarize the principal papers. The nine case studies, while informative, tend to be brief.
Merit E. Janow, who recently served as executive director of the Justice Department's International Competition Policy Advisory Committee, writes about transatlantic cooperation on competition policy. She lays out the agreements that set the framework for cooperation, shows that the U.S. and the EU have significantly expanded their formal and informal cooperation in recent years, provides an "early evaluation" that positive comity is an important doctrine for facilitating enforcement cooperation, urges that bilateral agreements should be looked upon as building blocks (and not stumbling blocks), and points to the need for developing other building blocks through international initiatives.
Edward (Monty) Graham of the Institute for International Economics provides a summary of economic considerations in merger review. He finds the economic literature relating to mergers to be disturbingly inadequate. Despite the need for more empirical work, Graham notes that "divergence in both substantive standards and procedures among national and regional authorities can lead to increased costs for firms trying to comply with the requirements of these authorities."
James S. Venit and William J. Kolasky, lawyers working in Brussels and Washington, respectively, argue that substantive standards applied by EC and U.S. antitrust agencies for reviewing horizontal mergers are increasingly converging, although there can be appreciable differences in the assessment of factual and economic issues and, therefore, in outcome. At the same time, they observe that significant procedural differences between the two systems continue to have an important impact on the practical outcome of cases. They urge the adoption of procedural steps that combine the virtues of the two systems and reduce the transaction costs of completing a multinational merger.
Anticartel cooperation is the topic treated by Spencer Weber Waller, a specialist in comparative law at Loyal University Chicago. By contrast to the merger area, Waller concludes, somewhat surprisingly, that there is relatively little formal cooperation across the Atlantic in cartel investigations. The key to improvement, he argues, lies in forging innovative investigatory techniques as well as continuing to expand cooperation using the current tools of the trade.
The substantive differences between the EC and the U.S. are greatest in the way vertical arrangements are reviewed. Philip Marsden, an English solicitor, says these differences "may be sufficient to cause bilateral enforcement cooperation between the two jurisdictions to break down." The gap would not be easy to bridge because it is based on fundamentally different philosophies, which Marsden sums up in the difference between protecting competition (the American way) and protecting competitors (the European approach). Assuming that Marsden's characterization of European law remains accurate, it is not clear to me that empirically-based post-Chicago examinations of vertical relations will not eventually lead to something of a rapprochement with Europe. After all, competition cannot exist without competitors, so some degree of protection is ultimately inherent in the idea of antitrust.
Albert A. Foer is President of the American Antitrust Institute, whose website is www.antitrustinstitute.org. By way of full disclosure, Spencer Weber Waller serves on the AAI Advisory Board and Edward Graham serves on AAI's International Antitrust Committee.