Federalism in Antitrust
Hahn, Robert W., Layne-Farrar, Anne, Harvard Journal of Law & Public Policy
I. INTRODUCTION 878 II. THE PROBLEMS WITH FEDERALISM IN ANTITRUST ENFORCEMENT 884 A. The Legal Process as a Political Tool 884 B. A Free Ride for States 887 C. Conflicting Competition Policies 891 III. A CASE STUDY OF FEDERALISM IN ANTITRUST ENFORCEMENT: UNITED STA TES V. MICROSOFT 892 A. Rent Seeking 892 1. Lobbying--Politics as Usual 892 2. The Litigating States' Proposed Remedy--A Voice For Competitors 896 a. Raising a Rival's Costs 897 b. Intellectual Property Giveaways 900 B. Free Riding 903 C. The Arguments For and Against State Involvement 905 IV. THE GLOBAL IMPLICATIONS OF FEDERALISM IN ANTITRUST: IS THE WORLD READY FOR A GLOBAL ANTITRUST AUTHORITY 907 A. National Antitrust Resources 908 B. National Rent Seeking 910 C. Conflicting Jurisdictional Approaches 912 D. Toward A Global Antitrust Authority 915 V. CONCLUSIONS 919
Several scholars have suggested that states should playa much more limited role in antitrust enforcement, especially in matters that are national or global in scope. In this paper, we analyze the states' part in the Microsoft case--a case that illustrates the costs of state intervention in antitrust matters that extend beyond state borders. Here, the states' involvement lengthened the lawsuit, complicated the settlement process, and increased both legal uncertainty and litigation costs. These results followed from the states' focus on parochial interests rather than broader concerns for efficiency and equity. We conclude that a state's antitrust enforcement authority should be restricted in matters that extend beyond its borders.
After analyzing the motivations for state behavior in federal antitrust, we consider whether restrictions should apply to federal antitrust authorities in cases with international implications. Though a global competition authority could, in principle, be designed to maximize economic well-being, practical and political obstacles appear to rule this option out, at least in the short term.
Antitrust regulation is an important government tool for curbing excesses in a market economy. (1) These excesses can result from a variety of behaviors, such as illegal acts to maintain a monopoly or collusion with the goal of raising prices. (2) In reducing the incentive for firms to engage in certain types of anti-competitive behavior, antitrust regulation is intended to promote consumer welfare. (3) Remedies used in antitrust regulation range from breaking up a company to imposing financial penalties on a firm for inappropriate conduct. (4)
The United States was one of the first countries to enact antitrust laws and has traditionally been one of the most active enforcers of them. (5) The U.S. government is the primary enforcer. (6) But the individual states have enacted their own antitrust laws and, at various times, have been quite active in their enforcement. (7)
In recent years, more states within the United States, as well as many countries, have taken an active role in antitrust policy. (8) With a larger number of players in the antitrust regulation arena, there are likely to be increased conflicts as different nations and states pursue different policies. …