Introducing Standards for International Antitrust
In recent years, the global ramifications of domestic antitrust enforcement have steadily crept up the international economic-policy agenda. The dispute over whether Boeing and McDonnell-Douglas should be allowed to merge took the United States and the European Union to the brink of a trade war and moved antitrust policy from obscurity in the business section to prominence on the front page of newspapers around the world. Yet, despite such incidents, there is a growing record of bilateral cooperation among industrial countries, and US confidence in certain foreign antitrust regimes reached such a point in 2000 that leading antitrust officials began calling for a "Global Competition Initiative."
Some US experts look east for a starting point in their analysis of globalization and antitrust policy. The suspicion that foreign access to Japan's domestic markets has been effectively blocked by agreements among Japanese firms to buy solely from members of their own industrial groups, known as keiretsu, or to sell only to distributors who also refuse to market rival firms' products, fuels this alternative perspective. According to this view, Japanese antitrust authorities have systematically declined to break up these inter-firm agreements to the detriment of US exporters, even though the authorities have the legal powers to do so. This interpretation of Japan's antitrust policy was influential in the United States from the late 1980s through the mid-1990s and was responsible for, among other things, the Structural Impediments Initiative and the disputes with Japan over automobile parts and photographic film. When the latter disputes were effectively resolved in Japan's favor, this view lost considerable g round, and even though many US policy-makers still publicly subscribe to its tenets, few now act on them.
Having failed to address these perceived deficiencies in Japanese antitrust enforcement through unilateral trade-policy measures, scholarly attention shifted to advocating common international standards for antitrust laws and enforcement that would enhance access to foreign markets. Peter Morici's Antitrust in the Global Trading System falls squarely in this camp.
Even if one does not agree with Morici's proposals, one must admit that he successfully demonstrates that national antitrust enforcement--and in some cases the lack of it--can damage the interests of foreign consumers and producers. An example illustrates this point: if two of the world's major platinum producers located in the same nation decide to merge, the combined firm is likely to gain more market power and to raise prices. The antitrust authority in the nation where the two firms are based will consider whether the enhanced profitability of the merged firm adequately compensates for the loss of home purchasers' welfare--and will ignore the effects on purchasers abroad. In a world of increasingly integrated markets, corporate actions typically have national and international ramifications, but national antitrust authorities usually only consider the former when making their decisions.
This characterization of the problem, however, misses an important point. After all, a corporate action that "spills over" national borders is rather like cross-border environmental pollution. Given the growing number of international agreements on the latter, how hard can it be to ameliorate some of the costs of the former? Unfortunately, the analogy breaks down because while environmental agreements often contain transfers by which the winners compensate the losers, in antitrust matters such compensation goes against the tradition of evaluating each corporate action case by case, forbidding trade-offs and other side payments. For example, a financial payment was never proposed as a means to overcome the European Commission's objections to Boeing's merger with McDonnell-Douglas. …