The Global Dominance of European Competition Law Over American Antitrust Law

• Date: 01 December 2019
• Author: Katerina Linos,Anu Bradford,Alexander Weaver,Adam Chilton
• DOI: http://doi.org/10.1111/jels.12239
• Published date: 01 December 2019

Journal of Empirical Legal Studies

Volume 16, Issue 4, 731–766, December 2019

The Global Dominance of European

Competition Law Over American

Antitrust Law

Anu Bradford, Adam Chilton,*Katerina Linos, and Alexander Weaver

The world’s biggest consumer markets—the European Union and the United States—have

adopted different approaches to regulating competition. This has not only put the European

Union and the United States at odds in high-profile investigations of anticompetitive conduct,

but also made them race to spread their regulatory models. Using a novel dataset of competi-

tion statutes, we investigate this race to influence the world’s regulatory landscape and find that

E.U. competition laws have been more widely emulated than the U.S. antitrust laws. We then

argue that both “push” and “pull” factors explain the appeal of the E.U. competition regime:

the European Union actively promotes its model through preferential trade agreements and

has an administrative template that is easy to emulate. As E.U. and U.S. regulators offer com-

peting regulatory models in domains as diverse as privacy, finance, and environmental protec-

tion, our study sheds light on how global regulatory races are fought and won.

I. Introduction

Competition laws are critical in balancing the relative role of private and public power in

the marketplace.

1

These laws shape global business conduct and often determine which

products are produced and consumed. Yet the world’s two biggest competition

*Address correspondence to Adam Chilton, Professor of Law and Walter Mander Research Scholar, University of

Chicago Law School, 1111 E. 60th St., Chicago, IL, 60637; email: adamchilton@uchicago.edu.

Bradford is Henry L. Moses Professor of Law and International Organization, Columbia Law School; Linos is

Professor of Law and Faculty Co-Director, Miller Institute for Global Challenges and the Law, University of Califor-

nia, Berkeley, School of Law; Weaver is an associate at Linklaters LLP.

The authors thank Stephen Calkins, Stavros Gadinis, Aila Matanock, Paul Schwartz, Alison Post, Kyle Rozema, Don

Rubinfeld, and Bartek Woda, as well as participants at the 2018 Berkeley Business Law Retreat, at the Tulane Workshop on

Regulation, at the 2018 Conference for Empirical Legal Studies, and at the 2019 American Law and Economics Association

Conference for helpful comments. We owe special thanks to the over 100 research assistants at Columbia Law School who hel-

ped us gather and code the antitrust data we employ in this article. We gratefully acknowledge funding by the National Sci-

ence Foundation that supported the early data gathering effort (see NSF-Law & Social Sciences Grants 1228453 and 1228483,

awarded in September 2012). The coding was subsequently expanded with the generous support of the Columbia Public Pol-

icy Grant: “Does Antitrust Policy Promote Market Performance and Competitiveness?” awarded in June 2015, and additional

financial support from Columbia Law School, including the Millstein Center for Global Markets and Corporate Ownership.

1

We use the term “competition law” as opposed to “antitrust law” unless we are specifically referring to

U.S. antitrust law. While antitrust law is commonly used in the United States to denote a law that regulates market

competition, we opt for “competition law” because it is a more commonly used term around the world.

731

regulators—the European Union and the United States—often find themselves at odds

in high-profile investigations of anticompetitive conduct.

E.U. regulators typically take a more aggressive stance than U.S. regulators

reviewing the very same conduct under their respective competition laws. For example,

in 2017 the European Commission imposed a record-high $2.3 billion fine on Google

for, allegedly, manipulating its search results to favor its own shopping comparison ser-

vice to the detriment of its rivals.

2

In contrast, the U.S. Federal Trade Commission found

no “search bias” and concluded instead that Google’s behavior benefited consumers. In

2018, the European Union doubled down on Google with an even higher fine of $5 bil-

lion in another competition law case involving Google’s operating system Android,

3

followed by a 2019 fine of $1.7 billion in a case involving Google’s AdSense online adver-

tising program.

4

Again, equivalent conduct has not been challenged in the United States

to date. Other recent targets of E.U. competition enforcement include Qualcomm

5

and

Apple.

6

These prominent cases against U.S. companies are not a new phenomenon. They

build on a series of decisions against U.S. corporate giants—including Intel,

7

Microsoft,

8

and General Electric

9

—over the past several decades. In all these instances,

U.S. regulators have either taken no action or intervened with a more modest remedy.

Although these examples all involve U.S. companies, the E.U. regulators have also

targeted E.U. companies with similar fervor. For example, in a 2016 acquisition involving

the world’s largest and second largest brewer, the Commission required the Belgian

2

Google Search (Shopping) [C (2017) 4444 OJ C (2018)].

3

European Commission Press Release of July 18, 2018, available at http://europa.eu/rapid/press-release_IP-18-

4581_en.htm (last visited Aug. 1, 2018).

4

European Commission Press Release IP/19/1770, Antitrust: Commission Fines Google €1.49 Billion for Abusive

Practices in Online Advertising (Mar. 20, 2019), available at http://europa.eu/rapid/press-release_IP-19-1770_

en.htm.

5

The Commission fined Qualcomm $1.2 billion for its exclusive dealing contracts with Apple on the computer

chips market. Case AT.40220—Qualcomm (exclusivity payments), Commission Decision of 24/01/2018 (no publi c

version available as of Mar. 25, 2018).

6

The Commission ordered Ireland to recover €13 billion in illegal state aid from Apple. Commission Decision of

30.8.2016 on state aid SA.38373 (2014/C) (ex 2014/NN) (ex 2014/CP) implemented by Ireland to Apple. C

(2016) 5605 final.

7

Commission Decision of 13 May 2009 relating to a proceeding under Article 82 of the EC Treaty and Article 54 of

the EEA Agreement (COMP/C-3/37.990—Intel) (finding that exclusivity rebates were an abuse of its dominant

position). In September 2017, the European Court of Justice overturned the fine levied by the Commission in its

decision. Case C-413/14 P.

8

Commission Decision of 24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-

3/37.792 Microsoft) (finding that Microsoft had abused its dominance as it related to interoperability of its systems

and tying of its Windows Media Player application, both to the detriment of its competitors).

9

Commission Decision of 03/07/2001 declaring a concentration to be incompatible with the common market and

the EEA Agreement Case No COMP/M.2220—General Electric/Honeywell.

732 Bradford et al.

acquirer of Anheuser-Busch InBev to sell practically its entire U.K.-based beer business as

a condition for approving AB InBev’s over $100 billion acquisition of SABMiller.

10

The European Union and the United States not only have their regulatory differ-

ences, but they also want the rest of the world to follow their respective regulatory

models. Both jurisdictions have actively promoted their competition laws as “best prac-

tices” abroad, urging developed and developing countries alike to adopt domestic compe-

tition laws and build institutions to enforce them (Kovacic 2008, 2015; Tappan & Byers

2013; Fox 1997). They promote their models through a specialized network of competi-

tion regulators—the International Competition Network (ICN)—and also more general

bodies—notably the Organization for Economic Cooperation and Development (OECD)

and the U.N. Conference on Trade and Development (UNCTAD) (Tritell & Kraus

2018). They also employ bilateral tools in their promotion effort—including offering

technical assistance to emerging competition law jurisdictions (Tritell & Kraus 2018). In

its trade agreements, the European Union also explicitly conditions access to its markets

on the adoption of a competition law, exporting its own law in the process (Bradford &

Chilton 2019), while the United States relies primarily on its persuasive powers rather

than on formal treaties in exporting its antitrust law (Kovacic 2015).

There aremultiple motivationsfor states to seek exporttheir laws abroad.For one, hav-

ing the rest of the worldreplicate one’s regulatory frameworklowers the costs of entering for-

eign markets. The regulatory similarity with the European Union is expected to lower the

entry costs for E.U. companies to those third markets given that the E.U. companies already

comply with similar standards at home. For the same reason, the United States prefers to

export its model and hence avoid adjustment costs that its companies may face when con-

fronted withregulatory differences. For another, exporting one’s rules ensures that competi-

tion takes place on “optimal,” “efficient,” or “fair” terms across the global markets—as

defined by the jurisdiction that successfully exports its laws. Finally, the winner of the regula-

tory race is able to export its economic philosophy to third countries, wh ich serves as a testa-

ment to the appeal of that jurisdiction’s value system. In the case of competition law, the

countries’ choice of aligning themselves with the European Union or the United States

reflects a more fundamental choice between an ideology that either places greater trust in the

government’s ability to improve outcomes through intervention (E.U. model) or, alterna-

tively, trust in the market’s ability to self-correct (U.S. model).

These efforts to globalize competition law appear, at first glance, largely successful:

today, over 130 jurisdictions have a domestic competition law, making competition law one of

the most widespread forms of economic regulation around the world. But, because the

E.U. and U.S. competition laws differ in key respects, understanding the type of competition

law a country has adopted is critical to understanding which country is having greater influ-

ence. For example, whereas promoting consumer welfare is the goal of U.S. antitrust law,

E.U. competition law has historically allowed additional goals to enter the analysis, including

the protection of small and medium enterprises, employment, regional development, and,

most critically, market integration. Moreover, the European Union is generally more likely to

10

Commission Decision in Case No. M.7881 (ABInBev/SABMiller) C (2016) 3212 final (May 24, 2016).

Global Dominance of European Competition Law Over American Antitrust Law 733