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U.S. Convergence with International Competition Norms: Antitrust Law and Public Restraints on Competition
Abstract
In this Article we focus upon an area in which greater convergence of U.S. policy with the practice of many foreign countries is long overdue: the treatment of public policies that suppress competition. Whereas the European Union (“EU”) and numerous other jurisdictions have taken strong measures to limit restraints imposed by national government authorities and political subdivisions, U.S. antitrust policy in many ways is more tolerant of public restraints upon business rivalry. Since the early twentieth century, Supreme Court doctrines have evolved to grant states and the federal government broad rights to enact laws that restrain competition. Further, individual groups are largely free to lobby for laws designed to erect marketplace barriers, and in many cases to mire their competitors in a morass of governmental processes. Because government action (and private conduct to obtain such action) is challengeable in only relative narrow circumstances, much of the battle takes place in the legislative and regulatory arenas rather than in courts. Accordingly, advocacy is the primary tool available to both public and private enforcers of the U.S. antitrust laws to challenge state-imposed restraints on competition. Although the U.S. competition advocacy program has achieved important success, it is not enough. United States enforcers should stand on equal footing with their EU and other foreign counterparts in being able to challenge state action that threatens competition in the same manner as they can challenge private conduct. In this paper, we describe measures available to competition authorities in the U.S. and other jurisdictions to resist encroachments by government policies on the competitive process. We suggest approaches by which the framework of controls upon anticompetitive government policies could be strengthened in the United States.
... 6 of 2014, Vishal Gupta v Google Inc., Case No. 17/2014, Ashish Ahuja v. Snapdeal, and Case No. 7 of 2012, Consim Info Pvt Ltd v. Google Inc. 15 See Cooper and Kovacic (2010) and Crane (2013) for details. 16 SeeGal and Faibish (2007),Sokol (2009), Lianos (2013 Cooper and Kovacic (2010),Fox and Healey (2014).Content courtesy of Springer Nature, terms of use apply. Rights reserved. ...
Can adoption of an antitrust/competition law substitute for a formal competition policy that lays down principles for reforming other government policies that affect competition? We address this question in the context of India, which has a track record of antitrust enforcement as well as a history of extensive controls over the private sector and domination of key sectors by state owned firms. After briefly summarizing these features, we argue that several clauses of the Competition Act, 2002, allow the Competition Commission of India (CCI) to challenge public restraints on competition. We then undertake a detailed review of several cases that have addressed public restraints and that have gradually extended the jurisdiction of the Act. We also identify some areas that remain beyond its reach—government policies that violate competitive neutrality, and discretionary purchases by public buyers—and we note possible social or business justifications for such restraints. Finally, we briefly discuss conflicts between the CCI and other regulatory agencies. We suggest that these remaining challenges can be addressed without laying down a broader policy.
Does a special responsibility not to impair competition constrain the actions of the State? Is the State bound by specific competition law obligations where its administrative or legislative interventions create a legal monopoly? This chapter argues that, with regard to Europe, a central concern must be the harm caused to competition by legal monopolies and similar privileges. From that perspective, Section 2 of the chapter surveys the EU law and practice relating to the most important legal tool in the EU context—Article 106 of the Treaty on the Functioning of the European Union (TFEU). Critical discussion of the relevant legal criteria and of latest case law of the European Court of Justice (through the fall of 2014) is provided. Then, in Section 3, the focus shifts from Europe to China. Here the chapter furnishes succinct suggestions as to how China should build on the steps it has taken already with regard to public restraints of competition, and how it should construct a comprehensive and credible national competition strategy to produce important benefits for its economy and society.
The Twenty-first Amendment repealed prohibition, but granted the states broad power to regulate the distribution and sale of alcohol to consumers within their borders. Pursuant to this authority, states have established a complex web of regulations that limit the ability of beer, wine, and liquor producers to control the distribution of their product. From a consumer welfare perspective, one of the most potentially harmful state alcohol distribution regulations are “post and hold” laws (“PH laws”). PH laws require that alcohol distributors share future prices with rivals by “posting” them in advance, and then “hold” these prices for a specified period of time. Economic theory would suggest that PH laws reduce unilateral incentives for distributors to reduce prices and may facilitate tacit or explicit collusion, both to the detriment of consumers. Consistent with economic theory, we show that the PH laws reduce consumption by 2-8 percent. We also test whether PH laws provide offsetting benefits in the form of reducing a range of social harms associated with alcohol consumption. We find no evidence of such offsetting benefits. Taken together these results suggest that PH laws are socially harmful and result only in a wealth transfer from marginal alcohol consumers, who are unlikely to exert externalities on society, to wholesalers. These results also suggest a socially beneficial role for antitrust challenges to PH laws and similar anticompetitive state regulation. If states wish to reduce the social ills associated with drinking, our results suggest that increasing taxes and directly targeting social harms are superior policy instruments to PH laws.
As Chairman of the Federal Trade Commission and throughout my career, I have reflected on what makes public institutions successful. Part I of this Essay provides a framework for defining success in government agencies. Building on that definition, Part II offers six guiding principles for an effective competition agency. These principles focus not just on the goals for successful policy, but also on how such policy should be created and implemented. Of course, good policy based on sound economics and profound respect for fundamental legal principles is essential. Nonetheless, no matter how well crafted a policy may be, no public institution achieves success without a coherent strategy for exercising its authority and spending its resources wisely. Strong policy ideas must be married to effective implementation. While discussing these guiding principles, I describe the consensus that was developed regarding the proper goals of competition policy. I conclude in Part III with brief comments on areas of disagreement. This discussion largely serves to underscore, not to undermine, the extent of the modern consensus regarding the proper goals of competition policy.
This article examines the problem of designing federalist regulatory policies (in particular, making sense of the current antitrust state action doctrine) from the perspective of a well-articulated theory of federalism respecting the twin values of political participation and economic welfare. The conflict between state and federal regulatory interests has been longstanding in U.S. constitutional history. This conflict has typically been resolved by a Constitutional interpretation in which federal regulations trump their state counterparts -- witness the Supremacy Clause of the U.S. Constitution which resolves conflicts in favor of federal law. At the other extreme, however, has been the "state action" doctrine, which resolves the tension between federal antitrust regulations and the states' sometimes anticompetitive regulation of business activities in favor of the states. Despite this disparity, the Supreme Court has thus far been largely unwilling to undertake a substantive balancing test between such state and federal regulations. This is especially surprising in the realm of antitrust, where federal and state antitrust laws come directly into conflict with state and local economic regulations. Does the present state action doctrine provide the foundation for making good federalism policy? We will argue that it does not. (Texas Law Review, May 1997) Contact the Law and Economics Program at Boalt Hall, UC Berkeley, Berkeley, CA 94720 for a copy of this paper.
Antitrust state action doctrine immunizes restraints of trade from antitrust scrutiny upon a sufficient showing of "state action." In this Article, Professor Elhauge argues that this doctrine has continued to spawn uncertainty and confusion because courts and commentators analyzing the doctrine currently view their task as accommodating an inherent conflict between a federal policy favoring competition and state policies favoring restrictions on competition. By instead focusing on the decisionmaking processes framed by the doctrine, Professor Elhauge explains that the antitrust case law distinguishing state from private action fits a simple process view: financially interested actors cannot be trusted to decide which restrictions on competition advance the public interest; disinterested, politically accountable actors can. Professor Elhauge also grounds this process view in the legislative history of the Sherman Act and defends it against various alternative process views, including those relying on theories of interest-group capture or the economics of federalism. Finally, Professor Elhauge explores the implications of the doctrine's process view in cases where political accountability itself creates a financial interest in restraints that inflict costs on those outside a governmental unit and in cases where financially disinterested but politically unaccountable actors restrain trade to further their own conceptions of the public interest.
In the course of damning the market giant Standard Oil, the Supreme Court declared that the purpose of the Sherman Antitrust Act is to prevent monopoly and the acts which produce the same result as monopoly. The Constitution's Supremacy Clause, in turn, requires preemption - that is, non-enforcement - of state laws that conflict with a federal statute. Put together, these propositions suggest that state laws which create monopolies should be prime candidates for preemption via the Sherman Act. But despite the syllogistic logic bearing down on them, monopoly-creating state laws have easily weathered most federal antitrust challenges, even when the state does not regulate the price the monopolist charges. The reason is that the Supreme Court's antitrust decisions on state economic regulation have consistently confused two distinct questions: whether market conduct encouraged by state law violates the Sherman Act, and whether state law conflicts with the Sherman Act and thus is preempted. This confusion explains other problems in the Court's antitrust jurisprudence, including the Court's inability to make sense of antitrust claims against municipalities acting as lawmakers rather than market participants. In this Article, I describe the sources and consequences of the Court's confusion, and then I propose how to resolve it.
This article was prepared as part of a recent symposium celebrating the Ninetieth Anniversary of the founding of the Federal Trade Commission. In addition, Fall 2004 marks the Thirtieth Anniversary of a pivotal moment in the establishment of the modern advocacy program at the FTC, Chairman Lewis Engman's speech on the economic burden that inefficient transportation regulation policies were imposing on the American economy. Although the FTC has been involved in advocacy activities since its founding, Engman's speech symbolized a new aggressiveness on the part of the FTC in using its expertise to work with other governmental actors at all levels of the political system and in all branches of government to design policies that further competition and consumer choice. Notwithstanding the beneficial impact that advocacy activities have had on the economy, the fortunes of the advocacy program have waxed and waned over time. In part, these mixed fortunes may reflect a lack of fundamental grounding of advocacy within the core mission of the FTC. The advocacy program, moreover, often has been politically controversial, exposing the Commission to criticism from special interests, Congress, and other governmental actors. This article explores the theory and practice of competition advocacy, with the goal of explaining why the advocacy program should be recognized as a core element of the Commission's mission. Advocacy can be used in conjunction with many of the FTC's other tools, and in many situations the judicious use of advocacy can provide a low-cost and effective alternative to other enforcement options. The advocacy program is a unique and cost-effective tool for carrying out this mission. Because consumers are disadvantaged in the political arena vis-a-vis industry, they are likely to be unable to stop anticompetitive regulation on their own. Antitrust immunities, moreover, sometimes put anticompetitive regulation beyond the reach of traditional enforcement. By providing a means for the FTC to represent consumers' interests directly in the policy-production mechanism, the advocacy program can overcome these two hurdles and provide protection for consumers at relatively low cost.
A variety of single equation and simultaneous equation models have been employed to test the hypothesis that interest group campaign contributions influence congressional voting. Although contributions exhibited the anticipated positive effect in all models, the simultaneous equations estimates generally indicated much lower significance levels for the contribution coefficients than did the single equation models. The lower significance levels are apparently attributable to a lack of precision of the simultaneous model estimates (indicated by large standard errors) as well as possible bias of the single equation models. It was also found that qualitative results from the more sophisticated simultaneous probit-Tobit models were quite similar to those obtained from 2SLS estimation of the linear probability model.
The overall results of the study are unavoidably ambiguous. Contributions did not show highly significant effects in the preferred simultaneous models, but the consistent sign pattern suggests that it would be inappropriate to conclude that contributions have no effects. Study of additional issues and interest groups may help to resolve some of ambiguity surrounding the contribution-voting relationship.
Given the background of changing institutional competencies in the European Union, we analyze the choice of asylum law standards of national and European parliaments, the Council of the European Union and codecision between the Council and the European Parliament. In a two country model we nd that the European arrangements maximize neither the welfare of the Member Countries nor the welfare of refugees. For the latter, there has been an improvement in the institutional location of asylum law making with the introduction of codecision. The current development towards a Common European Asylum System is in the interest of neither party. --
In this paper we specify a model in which Congressmen, constituents, and campaign contributors simultaneously decide on behavior.
Constituents and contributors desire to influence the voting behavior of Congressmen; Congressmen, on the other hand, want
to be elected and vote accordingly. We empirically test this model using roll call voting on eight bills dealing with economic
regulation and find support for the model. Our results indicate that part of the voting behavior of Congressmen may be explained
by noneconomic factors. We also find that unions and businesses as campaign contributors are sometimes influential; unions
are more often influential than is business. Ideological factors are also important in explaining voting.