EVENTS

Date:	Wednesday, December 7, 2005
Time:	4:30 PM -- 6:30 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

December 2005

Antitrust and the New Economy: Transatlantic Turmoil

 

Recent judicial decisions (such as the Supreme Court’s decisions in Empagran and Intel) and enforcement proceedings (such as the Oracle-Siebel merger and the still-pending Microsoft case in Europe) have again highlighted the difficulties of international antitrust coordination, particularly between the United States and the European Union. “New economy” industries, including those at the intersection with intellectual property issues, have become a particular focus of debate. On both sides of the Atlantic, moreover, the institutional antitrust apparatus appears to be in flux. A panel of distinguished experts examined the pressing questions of international comity and coordination in an uncertain environment at a December 7 AEI panel discussion.

Makan Delrahim
Brownstein Hyatt & Farber

Ninety countries and jurisdictions now have some form of antitrust. Each adopts different subjective approaches to both theory and enforcement. Many foreign countries do not have the capacity to address antitrust issues.

While a World Trade Organization (WTO) competition policy may not be the best approach, some international accord on basic rules and principles would be helpful. Of course, such an agreement would not necessarily be reviewed by WTO governing body.

Monopoly--both the definition of monopoly and the best methods for hindering monopolistic enterprise--is the most difficult area of antitrust theory. Lower prices and other healthy competitive maneuvers cannot alone be enough to define a monopoly. Nor does it seem wise to have one standard for the largest player in a market and another standard for the little guys; it hardly accords with the principles of competition to hamstring the best competitor.

Richard Epstein
University of Chicago

Antitrust regulation has three faces: cartels, mergers, and monopolies. Cartels are relatively clear areas of antitrust. Mergers, I would argue, are all but impossible or foolish to regulate. Monopolies, as Mr. Delrahim noted, present a much greater problem.

By nature, mergers usually tend to efficient ends. Moreover, merger review introduces a two-horned dilemma: present data are out-of-date by the time the review process completes, while future data are unknown. Past data, of course, are not accurately predictive of future data. In short, there is no sensible way to examine mergers. The international antitrust “convoy problem” compounds this dilemma: the slowest and most hostile reviewer sets the pace. Merger review is effectively impossible and any review is more likely extortion than antitrust.

Antitrust and intellectual property present another burgeoning dilemma. Many countries bar exclusive dealing (company A licensing a product solely to company B), essentially forcing holders of intellectual property to sell it broadly. And intellectual property must be universal; trade secrets are valuable only if everyone keeps the secret.

Robert Pitofsky
Georgetown Law School

The multiplicity of antitrust jurisdictions has two inherent problems. Firms go forum shopping, looking for the most favorable jurisdiction. Of course, if they shop long enough, they will almost certainly find the decision they seek. With so many governing bodies, some are all but bound to conflict.

The interests of enhanced comity should prescribe basic antitrust rules. Countries should assist the best interests of consumers, primarily by presumptive deferral of antitrust decisions to the country with the greatest interest in the decision and by avoiding inconsistent remedies.

A greater efficiency of enforcement would benefit all enforcers. The “soft convergence” as jurisdictions learn from previous mistakes helps but will not lead to broad convergence. Comity deference offers the best way out of the tangle of most antitrust conflicts.

Michael S. Greve
AEI

Are lawyers ambivalent toward restructuring of antitrust? They seem happy to play the gamed system. Second, are these really trade issues in an antitrust guise?

Richard Epstein

Lawyers face the prisoners’ dilemma: as long as any one of them could play the rigged game, they all have to play it. At the high CEO level, however, “preconstitutional” considerations could press for better organization of the antitrust world.

Makan Delrahim

The overlap between antitrust and trade is enormous. While antitrust discipline is encouraged, these markets are more negotiated than free. Increasingly, though, trade agencies employ antitrust competition experts.

AEI research assistant Will Wilson compiled this summary.