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Tuesday, September 20, 2011

The Institutional Structure of Antitrust Enforcement: Comments of Okeoghene Odudu

Posted by Okeoghene Odudu

The Institutional Structure of Antitrust Enforcement, by Daniel A Crane, is not a study of enforcement agencies—rather ‘institution’ refers to any factor that facilitates or hinders the enforcement or implementation of antitrust norms, beyond the substantive norms themselves (xii-xiii).  The central theme explored is whether antitrust is best enforced by prosecution before general courts (described as the ‘crime-tort model’) or whether the task of antitrust enforcement is better left to a specialist body.[1] It is clear that there is a relationship between the substantive norms and the ability to enforce such norms (xii-xiii, and at 61 noting that ‘there is no doubt that institutionalist concerns have played a major role in shaping contemporary Sherman Act norms’). As such, Crane is focused in the question of whether the norms should be modified to increase administrability or whether the enforcement structure should be modified so as to more accurately administer the norms as they exist.

 

Crane considers antitrust amenable to technocracy, i.e., that antitrust is a body of law that is best applied by an administrative body that is immune from political pressure and so can simply apply the rules without additional considerations (69-90). Antitrust has become technocratic primarily because the goals of antitrust are relatively well settled, to the point that ‘the political elites have found antitrust a less likely font of political intrigue and demagoguery’ (88). As such, ‘political elites have accepted that antitrust is an important but largely technical matter that should be administered vigorously but without great public fanfare’ (86). Particularly, ‘Breyer has plainly called into question the competence of generalist judges … in antitrust cases’ (62).  Antitrust would better be enforced by:

‘administrators who have tools at their disposal to gather facts and, unlike judges, are not limited to the records presented to them by litigants. Similarly, given the highly specialized and technical work required of making competition policy, perhaps it makes sense to have the preliminary adjudicatory function wielded by administrative law judges who frequently see competition issue and are somewhat specialized in the field’ (39).

The problem identified by Crane is that whilst the substance of antitrust has become technocratic, antitrust does not have a technocratic enforcement regime. Instead, there is ‘a mismatch between ends and means[,] with important implications for the function of the entire system’ (89). First, there exists a right of private parties to enforce the competition rules before the ordinary courts, which accounts for the majority of all enforcement activity.[2] However, drawing on Elzinga and Wood’s study of private litigation, Crane sees private litigation as being misused to subvert the effects of competition on the merits (56-63). It has long been clear that it is not in the public interest to enforce the antitrust laws against all conduct falling within the scope of the prohibition.[3] However, the ability to recover treble damages, plus attorney fees and costs, encourages private parties to ‘press courts to condemn business behavior that does not actually harm competition, and courts will sometimes be persuaded.’[4] Thus, over-time, the Court’s jurisprudence can be seen as an attempt to align private enforcement with the public interest of antitrust, a phenomenon Calkins terms equilibrating.[5] And it is not just private parties that are antithetical to technocratic enforcement: ‘The antitrust jury is a populist thorn in antitrust’s side’ (118), since for juries the central issue in antitrust cases ‘is ideology’ (112), and, citing a study by Austin, ‘jurors think that large corporations regularly use unethical and unfair tactics to bully smaller competitors and squeeze them out of the marketplace’ (112). As such, substantive antitrust rules are also modified to minimize the possibility of a jury having an impact or role in antirust adjudication (115-121).

 

Crane points out that modifying substantive norms to deter private enforcement, or to prevent the jury playing a role, creates problems for the public enforcement of antitrust—public agencies are ‘constricted at least in part because of institutionalist concerns that should not have applied to public enforcers. It seems likely that some of the FTC’s high profile defeats in the court in the last several decades have owed in large measure to the baggage of private litigation stowed in the Sherman Act liability norms’ (66)—‘there is little doubt that the post-war explosion of private antitrust litigation in the United States and the backlash that it engendered has, to some degree, stymied the effectiveness of public enforcement’ (67). For Crane, ‘the choice is between reinvigorating private litigation and its institutional baggage and reinvigorating the public enforcement agencies. Whatever the liabilities of the expert agency model, it has substantial advantages over the institutional realties of private litigation’ (133).

 

Public agencies need to be rescued from the ‘private litigation overhang’ (127), which, Crane argues, can be achieved by agencies bringing actions in areas and circumstances where private enforces do not act; preventing private litigants bringing actions that follow-on from public enforcement; and giving the FTC Act, which is not subject to private enforcement, a different, broader interpretation than the Sherman Act (128-143). Further, the agencies need to adopt a model of enforcement that is focused ‘on problem solving rather than assigning blame for norm violation’—i.e., a system ‘geared toward informal solutions and negotiated agreements rather than formal adjudication or rule making’ (103). This approach is termed ‘administration’ and Crane sees ‘ample room within the current legal and regulatory environment to move more functions in an administrative direction’ (107). Whether or not one agrees with the solutions (or even the problems) that Crane identifies, the focusing of attention on attempts to develop an mechanism regime that goes beyond the choices of ‘condemn the practice; or bless it’ (100), and instead seeks to provide ‘practical legal solutions to market power problems’ (101) is one we should all hope endures.

 



[1] In the UK the question of whether ordinary courts are an appropriate forum in which to consider the economic issues raised by antitrust has been raised in Crehan v Inntrepreneur Pub Company [2004] EWCA Civ 637, para 76

[2] Of the 1,165 antitrust cases brought in the 2006-2007 term, 1,150 were brought by private actors: http://www.uscourts.gov/caseload2007/tables/C02Mar07.pdf.

[3] William M Landes & Richard A Posner, The Private Enforcement of Law, 4 Journal of Legal Studies 1-46,38-41 (1975)

[4] Douglas H Ginsburg, Comparing Antitrust Enforcement in the United States and Europe, 1 Journal of Competition Law and Economics 427-439, 439  (2005).

[5] Stephen Calkins, Summary Judgment, Motions to Dismiss, and Other Examples of Equilibrating Tendencies in the Antitrust System, 74 Geo. L.J. 1065-1161, 1104-1127 (1986).

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