Thursday, September 18, 2008
Posted by D. Daniel Sokol
We are in the worst financial crisis since the Great Depression. Even the Wall Street Journal has come around to this conclusion. What does this mean for antitrust? In terms of mergers, certainly the failing firm defense comes to mind for the acquisition of a number of our financial institutions. However, I ask the question in the much larger sense of what does this systemic shock mean for antitrust policy as we know it. Here is my prognosis (of which I would gladly eat my hat if I am proven wrong given how gloomy it is) by events as they continue to unfold:
- We are likely to see a return to a more populist based antitrust as policy-makers, Congress and the general public's new-found general distrust for markets permeates into the antitrust realm.
- Most efforts to curb bad government interventions in the economy, whether new or existing, through competition advocacy will fail. Expect to see many non-financial bailouts. For example, the US auto industry is certainly going to use this crisis to push for a bailout even though its problems are of its own making.
- Antitrust decisions will take on a more political nature, which will take antitrust away from the more bureaucratic, efficiency based system based on economic reasoning that it has become.
- It will be much tougher to sell the idea of antitrust and of a larger competition policy abroad, particularly to China and India.
- Countries will erect more non-antitrust restrictions to cross country mergers, thereby increasing the cost of business.