Antitrust Law and Distributive Politics in the American States

• Published date: 01 October 2014
• Date: 01 October 2014
• DOI: http://doi.org/10.1111/lapo.12025

Antitrust Law and Distributive Politics in the

American States

COLIN PROVOST

State enforcement by state attorneys general (AGs) has become a major compo-

nent of American antitrust law. Much has been written about state antitrust

enforcement, but existing accounts of AG incentives and behavior are incomplete.

As elected officials in forty-three states, AGs must represent their constituents

and, therefore, will be drawn to cases that maximize the level of settlement

reward—cases with large, wealthy defendants. I hypothesize and find that state

AGs represent their constituents along ideological lines, but this relationship is

conditioned by case characteristics that involve the potential settlement reward.

Moreover, incentives to participate are likely to be higher when there are clear

violations of the law, as in price-fixing cases, rather than in merger cases, where

no wrongdoing has necessarily been established. The study adds to our under-

standing of antitrust law but also has implications for how distributive politics

shapes political responsiveness to the electorate.

State enforcement of antitrust law has long been an important part of anti-

trust law enforcement in the American federal system. States, through their

attorneys general (AGs), have the power to enforce both state and federal

antitrust laws, and a wealth of research has been published describing this

role of state AGs in antitrust federalism (Lemos 2011; Calkins 2003; First

2001). Some scholars have been highly critical of state antitrust enforcement,

arguing that state AGs are too driven by electoral concerns, rather than by

considerations of economic efficiency, and that their standards diverge from

federal standards, creating a messy, overlapping process (Greve 2005; Posner

2004; Zimmerman 1999; Flexner and Racanelli 1994; Gellhorn 1989). Other

research defends the role of state AGs, claiming that they supply additional

regulation not provided by federal enforcers and that they have better knowl-

edge of local markets (Hubbard and Yoon 2005; Calkins 2003; First 2001).

Valuable as these studies are, little research has demonstrated what drives

AG behavior in antitrust enforcement. As elected officials in forty-three

states, AGs know they must be responsive to their state constituents, as the

The research for this article was supported, in part, by a grant from the British Academy.

Address correspondence to Colin Provost, Department of Political Science/School of Public

Policy, University College London 29/30 Tavistock Square, London, WC1H 9QU, UK.

Telephone: +44 (0)20 7679 4903; E-mail: c.provost@ucl.ac.uk.

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LAW & POLICY, Vol. 36, No. 4, October 2014 ISSN 0265–8240

© 2014 The Author

Law & Policy © 2014 The University of Denver/Colorado Seminary

doi: 10.1111/lapo.12025

large majority of them face reelection and many later run for higher office

(Provost 2010a; Mahtesian 1996). However, the level of responsiveness AGs

display toward constituents will vary according to the characteristics of

particular cases they pursue. While some scholars have made strides in ana-

lyzing state antitrust behavior (Lemos 2011; Feinberg and Reynolds 2010),

their research has not fully captured this dynamic of AG accountability

toward the electorate. In this article, I argue that AG responsiveness to the

electorate depends on the role of the state in the lawsuit as well as on the

case’s salience. Salience in turn is represented by defendant characteristics in

antitrust cases.

AGs will strive to be ideologically responsive to their constituents, partly

by bringing home pork in the form of lawsuit settlements. First, they will

target wealthier companies who have the ability to pay large settlements.

The AGs that initiate these lawsuits do so because they tend to come from

liberal states—states where citizens look more favorably upon government

intervention in markets—and also because they have the resources to do

much of the investigative work in such cases. After the case is initiated by

one state or a small group of states, the rest of the states have the option of

joining the settlement. For these remaining states, the decision to join will

also be driven by ideology, as AGs from liberal states will be more willing

to bring antitrust enforcement actions against businesses. However, this

ideological responsiveness on the part of joining states is conditional upon

the salience of the case in question. I define the salience of a case by the

chances it has of being noticed by the broad electorate. The salience of a

case increases along with the monetary stakes in a case. Thus, as defendants

become bigger and wealthier, case salience increases as well and this, in

turn, changes the manner in which AGs are responsive to their constituents.

As defendants grow in wealth, it becomes more difficult for AGs from

conservative states to ignore the potential monetary rewards of participat-

ing in the case. Thus, differences in ideological responsiveness to the elec-

torate ought to gradually disappear, as a majority of the AGs rush to claim

their share of the settlement.

This builds on previous work, which demonstrates that in consumer pro-

tection cases, AGs only exhibit responsiveness to the electorate when defen-

dants are large and wealthy (Provost 2010b). However, in this case, the high

probability of a reward from an antitrust case, particularly against a large,

wealthy defendant, means that AGs from conservative states are more likely

to temporarily put aside conservative principles in order to claim a share of

the reward. Moreover, previous research has not examined the difference

between initiating and joining such litigation, but in this analysis, I examine

the factors that drive states to initiate, as well as join, multistate lawsuits.

Examining the types of antitrust infractions AGs are most likely to pursue

has been done in previous research (e.g., Feinberg and Reynolds 2010) but

also without explanation of why particular types of cases see greater AG

participation.

Provost ANTITRUST LAW AND DISTRIBUTIVE POLITICS 409

© 2014 The Author

Law & Policy © 2014 The University of Denver/Colorado Seminary