Can International Antitrust Be Saved for the Post-Boeing Merger World? A Proposal to Minimize International Conflict and to Rescue Antitrust from Misuse

AuthorE. Thomas Sullivan,Daniel J. Gifford
Published date01 March 2000
Date01 March 2000
DOIhttp://doi.org/10.1177/0003603X0004500102
Subject MatterSympdsium: Conflicts, Contradictions, Differences? Coordinating U.S./EC Merger Enforcement
The Antitrust Bulletin/Spring 2000 55
Can international antitrust be saved
for the post-Boeing
merger
world?
aproposal to minimize international
conflict and to rescue antitrust
from misuse
BY DANIEL J. GIFFORD* and E. THOMAS SULLIVAN**
I.
Introduction
The
opposition
of
the
European
Commission
to
the
Boeing!
McDonnell
Douglas
merger and the
compromise
that
Boeing
worked
out
with
the
Commission
mark
a
new
era
in
global
antitrust law.
It
is one that threatens to undermine the legitimacy
of
antitrust. Since the Federal Trade
Commission
(FTC)
had
determined that the merger posed no anticompetitive threat to the
commercial aircraft manufacturing industry,Ithe action
of
the
* Robins, Kaplan, Miller &Ciresi Professor
of
Law, University of
Minnesota.
** Dean and William S. Pattee Professor of Law, University
of
Min-
nesota.
Statement
of
Chairman
Robert
Pitofsky
and
Commissioners
Janet D. Steiger, Roscoe B. Starek III and Christine A. Varney, 1997
WL 359761 (F.T.C.). These Commissioners determined that the merger
posed no competitive threat because McDonnell Douglas was no longer a
Ii:>
2000 by Federal Legal Publications. Inc.
56
The antitrust bulletin
European Commission brings into sharp focus the problems that
differing approaches to antitrust are likely to pose for a rapidly
integrating global marketplace. This conflict between the United
States and European enforcement authorities occurred despite the
existence
of
acooperation agreement between the United States
and the European Commission- on the application
of
competition
laws,
an
agreement
that
specifically
addressed
conflicts
over
enforcement activities.'
In this article we propose a way for nations to minimize the
conflicts that arise as a matter
of
course in the administration and
enforcement
of
their antitrust and competition laws to transactions
having international dimensions. We are aware of the difficulties
facing serious attempts to harmonize substantive antitrust provi-
sions.4We seek to avoid those difficulties by limiting our proposal
competitive
force in
the
market
for large
commercial
aircraft. See United
States
v.
General
Dynamics
Corp.,
415 U.S. 486 (1974). In a
separate
statement
Commissioner
Azcuenaga
took
the
view
that
the
General
Dynamics
rationale
used
by
the
majority
raised
factual
questions
that
required
further
exploration.
Statement
of
Mary L.
Azcuenaga,
1997 WL
359762
(F.T.C.).
See also
FTC
Won't
Ground Consolidation
of
Boeing
and
McDonnell
Douglas,
73
Antitrust
&
Trade
Reg.
Rep.
(BNA)
4
(1997).
Agreement
Between
the
Government
of
the
United
States
of
America
and
the
Commission
of
the
European
Communities
Regarding
the
Application
of
their
Competition
Laws,
Done
at
Washington,
D.C. on
September
23,1991,30
I.L.M.
1487,1491 (1991).
Id., art. VI. Article VI
seeks
to
minimize
conflicts
over
enforce-
ment
policies
through
the
rubric
of
comity.
See
the
discussion
of
con-
flicts
and
comity,
infra text at
notes
8-32
&107.
Daniel
J.
Gifford
&
Mitsuo
Matsushita, Antitrust
or
Competition
Laws Viewed in a Trading Context: Harmony or Dissonance?, in 2
FAIR
TRADE
AND
HARMONIZATION:
PREREQUISITES
FOR
FREE
TRADE?
269, 270-71,
274-75
(Jagdish
N.
Bhagwati
&
Robert
E.
Hudec
eds., 1996); Daniel J.
Gifford,
The
Draft
International
Antitrust
Code
Proposed
at Munich:
Good
Intentions
Gone
Awry,
6MN. J.
GLOBAL
TR. 1(1996);
Diane
P.
Wood,
The
Impossible
Dream:
Real
International
Antitrust,
U. CHI.
LEGAL
F. 277,
278-80
(1992). A1991 study by a
committee
of
the Amer-
ican
Bar
Association
concluded
that
no
worldwide
competition-law
stan-
dards
were
feasible at the
present
time.
AMERICAN
BAR
ASS'N,
REPORT
OF
SPECIAL
COMMITTEE
ON
INTERNATIONAL
ANTITRUST
(1991). Aworking group
International antitrust 57
to the application of national antitrust laws to major international
transactions with multinational consequences. As developed in the
following pages, we propose that when national antitrust laws are
applied to mergers and acquisitions and other arrangements whose
primary impact lies in a market whose dimensions extend substan-
tially beyond national borders, the application
of
those laws be
guided
by the principle
of
efficiency, understood as maximiz-
ing overall welfare. As we demonstrate below, there are several
reasons that justify this proposal. First, this principle is neutral;
second, it works to enrich all nations over the long term; third, it
is recognized and broadly supported in the laws
of
every jurisdic-
tion with an antitrust or competition law; and, finally, it is the
principle most compatible with the movement toward freer trade
and the development
of
a
global
economy.
Consequently,
we
believe that it possesses the potential for achieving an interna-
tional consensus on the application
of
antitrust and competition
laws to international transactions.
We believe that our proposal can reduce discord and increase
trust in situations that are prone to engender
conflict
and mis-
understanding.
It
is
not-nor
could it or any other proposal
be-
apanacea. Even under our proposal, disagreements would arise
about how to apply antitrust laws to specific transactions.
Nor
would
our
proposal eliminate the possibility that
some
nations
would abuse the new standard
of
efficiency by using it as a pre-
text for pursuing protectionist goals. As we explain below, how-
ever,
our
standard would help to minimize
inevitable
conflict.
And it would further trust and dialog where nations have reached
different conclusions about the evaluation
of
the same transac-
tions. When people of good will approach agiven transaction with
the same set of evaluative principles, they will be able to explain
their decisions to each other in terms that each can readily under-
of
12 scholars meeting in Munich, Germany in 1993 took the opposite
position, releasing a draft International Antitrust Code which they pro-
posed as a GATT-MTO-Plurilateral Trade Agreement. 64 Antitrust &
Trade Reg. Rep. (BNA) No. 1628 (Special Supp.) (1993). The latter pro-
posal, however, appears vulnerable to the criticism that it is significantly
overinclusive in its prohibitions. See Gifford &Matsushita, supra at 275;
Gifford, supra at 5-23.

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