Overdeterrence, Non-Competition Policy Goals, and Inadequate Defense Rights-Identifying (And Fixing) Antitrust Constraints on International Trade

• Date: 01 June 2021

OVERDETERRENCE, NON-COMPETITION POLICY

GOALS, AND INADEQUATE DEFENSE RIGHTS—

IDENTIFYING (AND FIXING) ANTITRUST

CONSTRAINTS ON INTERNATIONAL

TRADE

A

BBOTT

B. L

IPSKY

, J

R

.*

When the United States adopted the world’s first functional antitrust en-

forcement system with the passage of the Sherman Act in 1890, U.S. interna-

tional trade was limited, and U.S. antitrust enforcement rarely applied to

international competition. The century following passage of the Sherman Act

witnessed both a dramatic increase in the size and significance of global trade

and the enactment of effective antitrust systems in scores of jurisdictions

worldwide. Thus, the actions of multinational firms are now almost always

subject to the scrutiny of multiple antitrust enforcement agencies. Accord-

ingly, the influence of antitrust on international trade has become significant.

With more than 130 jurisdictions now involved,

1

a wide variety of antitrust

rules and institutions come to bear on the conduct of international business.

This essay will draw attention to the fact that not all of these rules and

institutions are consistent with the broad objective of fostering a dynamic in-

ternational competitive environment in order to expand trade for the mutual

benefit of the global community. Specifically, where antitrust authorities

adopt overinclusive rules that deter or punish competitively beneficial or neu-

tral conduct, where they pursue policy objectives in conflict with the main

goal of promoting trade-enhancing competition (e.g., protection of “national

champion” firms), or where they deny adequate defense rights to the targets of

antitrust proceedings, robust competition suffers and global trade is restrained.

I describe these issues in greater detail and identify possible approaches to

* Adjunct Professor and Director of the Competition Advocacy Program at the Global Anti-

trust Institute, Antonin Scalia Law School. The views expressed in this essay are those of the

author and do not necessarily coincide with the views of any other individual or entity.

1

U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrust Guidelines for International Enforce-

ment and Cooperation 2 (2017), www.justice.gov/atr/internationalguidelines/download.

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[Vol. 84

reduce or eliminate these trade-limiting elements of the current international

antitrust enforcement environment.

For nearly a century after passage of the Sherman Act, antitrust law was

largely a U.S. phenomenon. Although a handful of other jurisdictions had

competition statutes on the books, their enforcement efforts were sporadic and

generally inconsequential. In that era, the field of international antitrust

mostly comprised a set of specialized legal and policy questions on the appli-

cability of U.S. antitrust law to foreign parties or to conduct occurring in for-

eign jurisdictions—e.g., can U.S. antitrust be applied to anticompetitive acts

that occur outside the United States? Because the volume of global trade was

relatively limited during most of that period, questions about the antitrust laws

of other jurisdictions, or about how to resolve overlapping or conflicting anti-

trust enforcement efforts involving distinct jurisdictions, were largely aca-

demic. Consequently, any international trade impacts attributable to antitrust

were minimal.

Growth in international trade since World War II has been impressive, in-

creasing by a multiple of more than 30 (merchandise trade)

2

and reaching

almost 25 percent of global gross domestic product (GDP) at present.

3

Few, if

any, nations are now insulated from the effects of trade. Growth in interna-

tional antitrust enforcement since the 1980s has been even more impressive—

perhaps “astounding” is the right word. As the sheer volume of trade and the

level of antitrust enforcement have skyrocketed, both the influence of antitrust

on trade and the overall economic significance of that influence have in-

creased substantially.

Several developments combined to launch competition law into every cor-

ner of the globe, beginning in the mid-1980s. First, expansion and strengthen-

ing of key supranational European institutions ultimately produced a 28-

member European Union with a volume of economic activity comparable to

that of the United States. The European Commission was endowed with au-

thority to enforce competition rules against “undertakings.” As it evolved, the

European Commission became a strong new global advocate for “competition

culture,” with competition rules as a critical element. Second, the Soviet

Union, the only United States competitor as a superpower, suffered an eco-

nomic and political collapse, then officially disbanded on Christmas Day

1991. This destroyed the global Communist movement, forcefully demon-

2

See Trends in Global Export Value of Trade in Goods from 1950 to 2020, S

TATISTA

,

www.statista.com/statistics/264682/worldwide-export-volume-in-the-trade-since-1950/.

3

World Trade Statistics, WITS, wits.worldbank.org/CountryProfile/en/WLD#:~:text=world

%20All%20Products%20Exports%20and%20Imports&text=world%20services%20export

%20is%205%2C919%2C719%2C566%2C100,percentage%20of%20GDP%20is%2029.34%25

(last visited July 1, 2021).