Wright in Forbes, WSJ: Abuse of Dominance or Vigorous Competition?
Recent signals of change in domestic antitrust enforcement portend a "new interventionist antitrust regime and a break with the intellectual antitrust mainstream," according to a Forbes commentary penned by Professor Joshua D. Wright and two co-authors.
Wright and his colleagues point to announcements by Christine Varney, new Assistant Attorney General for Antritrust for the Department of Justice, indicating her agency will begin aggressive scrutiny of big business as foreshadowing a relaxation of standards for proof of consumer harm in antitrust cases.
In addition, last week's action by the European Commission in levying the largest antitrust fine in its history on Intel demonstrates the difficulty, they say, of addressing the question of when the benefits to consumers from vigorous competition and low prices might run the risk of harming consumers in the future. Until now, say the authors, U.S. law has been more demanding than foreign nations in requiring proof of real harm. But the administrations's new approaches to antitrust regulation may effect changes to the law in ways harmful to large, successful companies.
Wright commented earlier on the Intel fine in a May 14 Wall Street Journal article by Charles Forelle and Don Clark in which he speculated that the possibility the FTC will take action against Intel has increased significantly since the European Commission levied its $1.45 billion fine against the company (Intel Fine Jolts Tech Sector).
U.S. Antitrust Becomes More European, Forbes, May 18, 2009. By Keith N. Hylton, Geoffrey A. Manne, and Joshua D. Wright.
"It turns out that it is a very difficult business to identify the few cases when low prices and aggressive competition might perversely end up harming consumers in the long run rather than simply making them better off. And the cost of erroneous antitrust enforcement, such as mistakenly condemning Intel's discounting practices on the view that they 'might' harm competition in the future, can have important negative consequences throughout the economy as other firms learn that aggressive competition might get them a phone call from the Justice Department or the FTC--or a dawn raid from the European Commission.
"In announcing a new direction for the administration's antitrust agenda, Varney was refreshingly explicit in her rationale and made clear that in the new DOJ the existence of possible harm alone would be enough--and that she and her staff will recognize anti-competitive conduct when they see it, without inadvertently deterring beneficial conduct.
"One hundred years of legal and economic thinking in antitrust suggests that this task will be much more difficult than Varney and the new Antitrust Division are expecting. Unfortunately, the political harm from deterring what might have been valuable business behavior is negligible, as un-attempted innovation and unrealized efficiencies rarely show up on the political balance sheet.
"The irony of the new approach is that it puts the new administration on a collision course with the law. The previous DOJ, whatever its shortcomings, reflected an honest effort to adopt an enforcement strategy that was likely to find success given the existing monopolization law developed independently by the courts. The new strategy, so far as one can tell, seeks to pressure the courts to change the law in order to meet the desires of the new administration. In the end, either the Antitrust Division will fail, or the courts will bend in a way that unsettles the law. But either way, this week's events in Europe and the U.S. portend a tough road ahead for the world's most successful companies."