Approaches to Global
Antitrust: EU vs. US
Redundant & Unfair
Or
Comprehensive & balanced?
Marieme Ba
Betsy Barrientos
Brian Blasser
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Overview
1890 - The Sherman Act
"every contract, combination in the form of trust of otherwise, or
conspiracy, in restraint of trade or commerce among several States or with
foreign nations."
-§1
"...monopolize, or attempt to monopolize, or combine with any other person
or persons, to monopolize any part of the trade or commerce among the
several States, or with foreign nations..."
-§2
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Sherman Act
•Protect consumers from monopolies and cartels
•Conduct that restrains trade or conduct that creates a
monopoly
•Enforced by Antitrust Division, Department of Justice
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1914 - The Clayton Act
Prohibits acquisitions of stock or assets where “the effect of
such acquisition may be substantially to lessen
competition, or to tend to create a monopoly.” § 7
• Addresses mergers and joint ventures, price fixing, price
discrimination, exclusive deals arrangements, "tying" of
products
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Clayton Act
•Significant as it questioned the harms of increased
concentration of market share and its effects on
competition.
- horizontal mergers vs vertical acquisitions
•Enforcement
- Antitrust Department, Department of Justice
- Federal Trade Commission (FTC)
- State Attorneys General
- Private Lawsuits (damages awards can be high)
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1914 - Federal Trade Commission Act
•Prohibits “unfair methods of competition” and “unfair or deceptive acts
or practices” - § 5
•Established the Federal Trade Commission (FTC) to challenge unfair
competition
•Power to enforce Clayton Act
•Focused also on consumer protection issues:
• false advertising in foods, drugs, and cosmetic products
• credit: lending practices such as billing, reporting; and equal
credit opportunity
•
health warnings in tobacco products
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Antitrust
•
Protection of competitively of markets. The laws are intended to
promote healthy market competition and encourage the production of
quality goods and services at the lowest prices.
•
Applicable because of flexibility and vagueness.
•
No precise guidance on what constitutes illegal conduct and reach of
law outside US territory. Defined in court on a case by case basis.
•
•
•
per se
rule of reason
Enforced by both Antitrust Division of DoJ
and FTC. However, cases brought up by
private firms continue to increase.
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International Agreements
•
1957 - Treaty of Rome (EU)
Title V: Common Rules on Competition, Taxation and
Approximation of Laws
•
1982 - US Foreign Trade Antitrust Act
•
1991 - US-EU Antitrust Agreement
1994 - US Int’l Antitrust Enforcement Assistance Act
•
1998 - US-EU Positive Comity Agreement
•
•
2002 - International Competition Network Formation
Also, US bilateral agreements within framework of NAFTA
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Landmark Cases
• 1909 - American Banana Co v. United Fruit Co
• 1911 - Standard Oil v. US
• 1945 - US v. Aluminum Co of America (Alcoa)
Alcoa Effects Test: US Courts have jurisdiction if acts have effects within
US territory
• 1976 - Timberlane Lumber Co v. Bank of America
• 2001 - GE-Honeywell v. US
• 2006 - Maytag-Whirlpool v. US
• current- US v. Google and ITA Software
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US Gov’t/Microsoft Pretrial
History
•1991 FTC inquiry on MS-DOS Monopoly
•1993 2-2 deadlock
•Microsoft Licensing Agreements with PC Manufacturers – 1993
•1993 DOJ opens investigation
•1994 Settlement w/ Consent Decree.
-No bundling products but free to integrate features.
•1995 integrates ‘feature’ Internet Explorer
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US DOJ vs Microsoft
•May 1998 DOJ & AGs of 20 states sue MSFT thwarting
competition to protect SW monopoly.
•October 1998 DOJ sues MSFT for violating 1994 Consent
Decree because of Internet Explorer.
•Damning testimony and emails show MSFT tried to destroy
Netscape competition.
•MSFT claims lower bundling costs & network effects help
consumers.
•Claims it can’t remove IE without substantially affecting
underlying SW.
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United States vs Microsoft
•Economists complain rivals like Norvell, Oracle, and others
pushed DOJ to hurt MSFT as corporate strategy.
•Noted no price increase in SW & increased quality.
•Hard to access monopoly rents from zero marginal price.
•November 1999 District Court Judge Penfield Jackson rules
against MSFT. Breakup company into two: Windows and Apps
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US Appeals Process
•In 2000, MSFT send to Supreme Court kicked to Federal
Appeals Court
•In 2001, Judge Kollar-Kotelly rules against breakup.
•MSFT must disclose SW interfaces with others w a panel to
oversee enforcement.
•9 of the 20 states sought further remedies since punishment
didn’t change MSFT behavior.
•2004 Appeals court approved DOJ settlement.
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EU vs Microsoft
•In 2000, Statement of Objectives per Sun Microsystem
Complaint, Java coding.
•In 2001, Statement of Objectives. Windows Media Player
Bundling Issue.
•EU saw US appeal settlement as weak and ineffective.
•In 2004, EU fines MSFT record $612 million.
•MSFT must offer windows w/o media player option. And
disclose coding information to rivals
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EU vs Microsoft part 2
•MSFT pays fine and discloses information following requirements but
EU claims coding specs insufficient.
•IN 2006, EU fines MSFT $450 million, and $2.4 million a day with
increase to $4.8 if still not compliant.
•In 2007, MSFT loses appeal in European Court of First Instance (ECFI).
•Decided against bringing it to the highest court: European Court of
Justice
•In 2008, MSFT fined additional $1.45 billion for noncompliance to 2004
decision.
•In 2009, MSFT complies & unbundles internet explorer for EU product.
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Comparison of the Two Trustbusters
United States
• Transparent & Open
• Court Hearings
• Independent Judges
• Consumer welfare focus
• Allows more time for
preparing cases.
• More empirical approach
• More big business friendly
• FTC, DOJ, Private
Litigation
European Union
• Rivals can secretly disclose
evidence.
• Commissioner misses
hearings.
• Prosecutor, Judge, & Jury
• ECFI doesn’t retry or see
new evidence. Up or down
vote on EC and defers to EC
on complex issues
• More analytical approach
• Concerned more w/ market
dominance than consumer
welfare.
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US EU Agreements
•1991 U.S.-EC Agreement on the Application of their
Competition Laws
•Agreement Between the Government of the United States
of America and the Commission of the European
Communities Regarding the Application of Their
Competition Laws, 1995
•Best Practices Concerning Bilateral Co-operation in Merger
Cases of 2002
•E.U.-U.S. Merger Working Group, in which high level
officials from the FTC, the DOJ and the EC
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Policy Proposal
•A stronger regional agreement between the
EU and US versus Global Antitrust
agreement
PROS: Regional
CONS: Global –House an Antitrust
Authority inside either the WTO or OECD
Closely aligned antitrust Interest
Poorly structured to manage global antirust
policy successfully
Increase cooperation between the two
authorities
Difference between institutional Norms and
the need of the system
Highlighted the inefficiencies in a system
based only on national borders
Undermined the diplomatic style missions of
the WTO and OECD
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Policy Proposal
•A new world government court akin to
International Criminal Court for Antitrust
Cases
Pros
Cons
Mutually acceptable international Antitrust
Increase protection of national sovereignty
Increase extraterritoriality
Dominance of US and EU in the global
Antitrust System
More efficient way to bring in action against
domestic firm by Foreign Antitrust Authority
Other countries would bear the
disproportionate burdens
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Counter-Arguments
•Idealistic Goals of a single global antitrust
authority continue to butt up against the
realities of a global system still based on
interactions among nations-states.
•Global Antitrust agreements should be
disregarded as unachievable in practice—
we should instead focus on regional
agreements and applications of
extraterritoriality
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Impact of Proposal on US Trade
Policies
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Impact of Proposal on Private
Sector
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Works Cited
•"Antitrust in the European Union Unchained Watchdog." The Economist 18 Feb. 2010. Print.
•"Antitrust Maturing Monopoly Europe Gets Tougher with Microsoft." The Economist 7 Aug. 2003.
Print.
•"Antitrust The Unusual Suspects." The Economist 6 July 2006. Print.
•Economides, Nicholas, and Ioannis Lianos. "The Elusive Antitrust Standard on Bundling in Europe
and in the UNited States in the Aftermath of the Microsoft Case." Antitrust Law Journal 76.3 (2009).
Print.
•"The EU and Competition A Real Monti?" The Economist 19 Aug. 2004. Print.
•"European Antitrust Policy Competing Visions." The Economist 13 June 2002. Print.
•"Global Antitrust and the Evolution of an International Standard." Vanderbuilt Journal of Transnational
Law 35 (2002): 989-1017. Print.
•"Improving European Antitrust The EU’s Policy Needs Reform. But Not in the Way the European
Commission Is Proposing." The Economist 20 Jan. 2000. Print.
•"Microsoft and Antitrust The End, Sort of." The Economist 16 Dec. 2009. Print.
•"Microsoft on Trial." The Economist 28 Apr. 2006. Print.
•"Technology Firms and Antitrust Here We Go Again." The Economist 17 Dec. 2009. Print.
•https://www.competitionpolicyinternational.com/
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•https://docs.google.com/viewer?a=v&q=cache:VHkcN1oAS9cJ:law.vanderbilt.edu/publications/journal
Works Cited cont.
•https://www.competitionpolicyinternational.com/
•https://docs.google.com/viewer?a=v&q=cache:VHkcN1oAS9cJ:law.vanderbilt.edu/publications/journal-of-transnationallaw/archives/volume-35-number4/download.aspx%3Fid%3D1817+&hl=en&gl=us&pid=bl&srcid=ADGEESjYpDgJPf6yvQufy8_QMMcjjiy-ugjCrb_w_KY2tqa-sFtMtlwC63HzDFlISoXb9O6kzafiteC0BGV20XGk8HxtcWyE4mXkMwMnNZsaKO4IS1y_0C_1UjVcz-GMsHhWj_RmgD&sig=AHIEtbRRkSrPXVB5vnyMxRqhbigiFG_Oug
•http://www.techpolicy.com/Media/Fact-Sheets/Global-Antitrust-%28Competition%29.aspx
•http://law.fordham.edu/fordham-competition-law-institute/fcli.htm
•international antitrust law policy
•https://docs.google.com/viewer?a=v&q=cache:UJ6VWK5hkAJ:www.justice.gov/atr/public/speeches/3952.pdf+&hl=en&gl=us&pid=bl&srcid=ADGEESh5gFcBGSKWSX6qLEtkGP40i2OurDI8
rineHxX0iBag_mdMLHdyOsg7wMTNEw6huluWPUGB3TGJ35h46Gwqno53x_7OsDmd1uOhVtThZ32FlhFINylkZhjbvEUfDPlgs2iikv0&sig=AHIEtbTJnGFrdYuroQeQOAunarJkINbXjQ
•http://chillingcompetition.com/2011/06/10/38th-annual-conference-on-international-antitrust-law-and-policy-a-virtual-seat-forchillincompetition-readers/
•http://www.cfr.org/industrial-policy/international-antitrust-law-policy-opportunities-greater-convergence/p20385
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