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Friday, October 7, 2011

The Specter of Cartelization: Alcoa’s Effects Test and the Export of Antitrust

Posted by D. Daniel Sokol

Benjamin Kagan Brady, University of Virginia, Corcoran Department of History has written on The Specter of Cartelization: Alcoa’s Effects Test and the Export of Antitrust.

ABSTRACT: This Article examines Judge Learned Hand’s 1945 decision in United States v. Aluminum Co. of America (Alcoa) and its relationship to the politics of World War II and the early Cold War. According to the standard narrative, Hand’s opinion ushered in a new era of extraterritorial jurisdiction. By abandoning rigid formalism in favor of an “effects test,” Hand transformed conventional views about the territoriality of law and thereby introduced an important mechanism for forcing other nations to come to terms with (and ultimately embrace) U.S. notions of competition.

Yet scholars have also puzzled over why Hand (a mere appellate judge) rejected established Supreme Court precedent that restricted antitrust law within the territorial boundaries of the United States. Moreover, historians have argued that U.S. antitrust law declined in importance during this period, but the Alcoa narrative centers on its dramatic extension overseas.

I argue that scholars have misread Hand’s opinion. Rather than rejecting established precedent, Hand sought to apply existing conflicts of law principles in a difficult and novel context. Indeed, the concern for comity that underlay existing law was at the center of his opinion. I also situate Alcoa within a Justice Department campaign to link the danger of cartels to totalitarianism. By recasting antitrust law as part of the war effort, the Antitrust Division hoped to counteract its increasing marginalization. Nonetheless, corporate lawyers and law professors began to question this attempt, arguing that onerous enforcement actually undermined U.S. foreign policy goals. In this struggle, Hand’s care to limit Alcoa’s scope was forgotten, and the case came to stand for legal overreaching. Ultimately, attempts to extend antitrust law overseas failed to reinvigorate it at home.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/10/the-specter-of-cartelization-alcoas-effects-test-and-the-export-of-antitrust.html

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