Antitrust Laws and the Transatlantic Business
Goldberg, Martin A., Kruth, Cynthia, Journal of Global Business Issues
Despite having common origins, antitrust laws in different countries will produce different results. Disputes spanning more than 10 years illustrate differences between U.S. antitrust law and its European counterpart competition law. Several differences exist both as to substantive law and its enforcement. A multinational business with substantial operations in Europe cannot rely on U. S. antitrust law in making decisions that may have antitrust ramifications.
Antitrust law, called competition law outside of the United States, refers to a body of laws designed to protect competition. Its main targets include agreements and associations between companies that limit competition, mergers that reduce competition, and the creation and abuse of a monopoly or other dominant position within a particular market.
Although the stated goals of antitrust law are commonly understood, the modern variations and practices may differ from country to country. Thus, a transnational business enterprise needs to managed in such a manner so as to protect itself from undue liability in the various countries in which it operates, taking into account not only the substantive antitrust law of a particular jurisdiction but also the practices related to enforcement of those laws.
In early 2010 we saw the final resolution of disputes dating back over 10 years, in the final settlement of the Microsoft case before the European Union. The disputes that culminated in this final settlement help clarify the differences between the U.S. and the E.U. approach to antitrust. Any business enterprise with significant operations in both the U.S. and the E.U. will need to understand these different approaches.
Some form of competition law has been reported as early as the Roman Empire. The modern notion of antitrust law probably gained support with the publication of Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations in 1776, commonly referred to as The Wealth of Nations.
Antitrust law in the United States, currently based on the Sherman Antitrust Act and its successors, has never been free from controversy. In fact, there are several major movements fundamentally opposed to any kind of legislated antitrust law, preferring the marketplace and/or common law (court-developed) principles to protect the free market. Movements such as the "Law and Economics" movement, and the "Chicago School of Economics" (based at the University of Chicago) have provided cogent arguments for this position. An example of an article espousing this position in which the author argues that antitrust law deters economic growth, creates uncertainty in business planning, and causes unnecessary litigation expenses is by Easterbrook (1984).
Although stemming from a common genesis, competition law in Europe has always tended toward more stringency. For instance, large corporations are presumed to be anticompetitive unless shown otherwise. "While US law 'protects competition, not competitors,' and focuses on the welfare of consumers, European regulators consult competitors about whether the merged firm is likely to abuse a position of 'market dominance.'" (Cabrai, 2002)
In addition, enforcement of antitrust laws in Europe is primarily the domain of the government, which is to say, there is less of a burden on private litigants to enforce the law. (Cabrai, 2002) Given the high costs of litigation in the United States, such costs may themselves deter enforcement.
The GE/Honey well Merger Case
Two very prominent cases in the last decade that underscore the difference in approaches between the U.S and the E.U. are the proposed merger of G.E. and Honeywell, and the antitrust/competition cases of Microsoft.
The merger of G.E. and Honeywell, like all large mergers, needed to be approved by the Antitrust Division of the Department of Justice. Where two companies overlap in a particular market, the Department of Justice will look to see if the combination of the two companies creates market dominance. …