Friday, November 23, 2012

State-Federal Relations

Posted by D. Daniel Sokol

Kathleen Foote (California DOJ, Attorney General’s Office) discusses State-Federal Relations.

ABSTRACT: Antitrust enforcers in the offices of state attorneys general frequently find ourselves between a rock and a hard place when it comes to public perceptions of our work. State antitrust enforcement tends to be subject to criticism as misguided-or worse-whenever it diverges publicly from enforcement by the federal agencies. Yet when it doesn't diverge it is often labeled "redundant" in the pejorative sense of that term. The reality is a good bit different from the perception in either case. Much of the perception is a legacy of the historic 2001 split between the U.S. Department of Justice Antitrust Division ("DOJ") and state government prosecutors over appropriate remedies in the Microsoft case, which arose after an exemplary partnership throughout the liability phase of the case. The rupture led to two contemporaneous and highly visible tracks through the same courtroom in early 2002: a Tunney Act review of whether the DOJ settlement (joined by nine states) was in the public interest, and a six-week merits trial in which nine other states sought to prove that far stiffer remedies should be required. Judge Kollar-Kotelly's ultimate rulings rejected most of the state-requested remedies but added some terms to the DOJ settlement, thus largely conforming the state and federal results. The subsequent years of joint enforcement of the affirmative mandates of the Microsoft decree under active court supervision marked a return to smooth sailing between the state and federal agencies and close cooperation in executing their shared enforcement responsibilities.

The wave of criticism following the initial split, however, by then had taken on a life of its own. It was promptly formalized in the initial agenda of the Antitrust Modernization Commission, which reviewed and debated at length the history of dual state-federal enforcement and considered, but ultimately rejected, various proposals for partial preemption of state authority. Its conclusion, reached in 2007, was that no changes to the institutional structure were warranted. The AMC did note, as others have, that further efforts by state and federal enforcers to harmonize their work would be salutary.

While Microsoft is an undeniable and extreme exception to their usual consistency, it is not the only time that state and federal agencies have differed in recent years. Typically, the differences can be viewed as healthy ones that foster the overall goal of preserving competition, and rarely manifest themselves as public disagreements over major policy issues. No generalizations are possible, however, without distinguishing between merger reviews and non-merger situations.

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