The Modern Trustbusting Debate William E. Kovacic George Washington University/King’s College London Emerging Trends in Competition Policy Bruegel, 11 December 2018
Competition Law and Dominant Firms: Context • Yesterday • US System 40 Years Ago: Uniquely interventionist • Today • EU System: Globally preeminent • US System: Portrayed as desperately inadequate • “Trustbusting in the 21st Century,” The Economist, November 17, 2018
Three Questions for This Afternoon • What Happened? • Why Did It Happen? • What Will the Future US Role Be Globally? • Caveat: My Views Only • Contact: email@example.com
What Happened? The US Experience • What Did the US Federal Agencies Do? • Cases Filed? • Cases Considered, but Rejected?
Modern Commentary • Richard Blumenthal & Tim Wu, New York Times, May 18, 2018 • “Enforcement of the antimonopoly laws has fallen: Between 1970 and 1999, the United States brought about 15 monopoly cases each year; between 2000 and 2014 that number went down to just three.”
The Economist (June 16-22, 2018) • “Yet, if anything, America needs a more activist approach to antitrust. In 1970-99 regulators brought an average of 16 cases per year; in 2000-14, that number fell below three.”
The Economist, Nov. 17, 2018 • Chart on Page 10: “All Quiet on the Western Front” • “Number of cases brought by competition regulators against firms abusing dominance” • 2000 to 2017: Flat Line at Zero • Source: Guitierrez & Philippon, “How EU markets became more competitive than US markets” (2018)
But What About? • FTC Cases 2001-2017: A Few Examples • Bristol Myers Squibb • Unocal • Rambus • Intel • AbbVie • Qualcomm
Mundane But Fundamental Problem • No Common Understanding of Activity • Why? • Poor agenda data reporting • Path dependent narratives: academics/journalists • Result-driven research • An Agenda for International Bodies?
Why Did the US Changes Happen? Bork Did It • The Economist, Nov. 17, 2018 • “This learned helplessness reflects the tricky legacy of Robert Bork, an American scholar and judge who wrote the Antitrust Paradox, a deeply influential book published in 1978.
Why Did the Changes Happen? Cowardice and Contentment • The Economist, Nov. 17, 2018 • “When you come into contact with the competition establishment in the rich world – regulators, academics, lawyers – the cruelest comparison is with financial watchdogs before the 2008-09 crash. . . . Most competition authorities are unwilling to be held accountable for the level of competition in the economy; indeed, they go further and insist that it is impossible to measure.”
Why Did the Change Happen? Capture • The Economist, Nov. 17, 2018 • “[C]ompetition regulators have been captured. . . . Competition regulators have a dated view of the economy and, in official forums about how to reform competition policy, lawyers acting for private firms are given undue weight.”
Why Did Change Happen? Caution About the Popular Narratives • Chicago Takeover? • Modern Harvard School (Areeda, Turner, Breyer) and its anxiety about US private rights of action • Example: FTC Rambus case • Cowardice and Contentment? • Modern impact evaluation programs • Capture • How to explain activism by those with strong private bar connections? E.g., FTC 1970-1975
Why Did Change Happen? Better Agency Disclosure Would Help • Example: Obama Administration and Dominant Firm Conduct • FTC and Google • DOJ 2009-2016
What Will Be the US Role in the Future? • Results of Pending Litigation • Example: FTC Qualcomm case • The DOJ/FTC Relationship • The Courts • Legislation