Wednesday, October 01, 2008

DOJ, EC Antitrust Chiefs Provide Diverse Views on Unilateral Conduct by Dominant Firms

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Antitrust enforcement chiefs from the U.S. Department of Justice and the European Commission expressed differing approaches to dealing with unilateral conduct by dominant firms at two antitrust conferences last week.

Antitrust Division’s Views

Just two weeks after the Department of Justice issued its report on the antitrust issues raised by single-firm conduct, Thomas O. Barnett, Assistant Attorney General in charge of the Department of Justice Antitrust Division, explained the U.S. policy trend toward a “mid-channel course for treating unilateral conduct.”

Barnett told attendees of the Georgetown University Law Center’s Global Antitrust Enforcement Symposium in Washington, D.C. on September 23 that Sherman Act, Section 2 policy must navigate between “the formalism of rigid prohibitions and the unstructured, open-ended vortex of a pure effects-based analysis.”

The speech, entitled “Navigating Scylla and Charybdis: Three Stages in the Journey to Effective Section 2 Enforcement,” appears in full text at CCH Trade Regulation Reporter ¶50,232.

Barnet said that the Antitrust Division’s goal is “to enforce Section 2 in a manner that increases overall efficiency and, thereby, consumer welfare.” Early approaches to antitrust enforcement against single-firm conduct often failed to maximize consumer welfare, according to Barnett, where government and private plaintiffs attacked firms “for engaging in behavior that, although perhaps aggressive, nonetheless was a beneficial part of the competitive process.”

Barnett also cautioned against relying on a highly fact-intensive, effects-based analysis to address unilateral conduct under the antitrust laws. He warned of the costs and burdens associated with such an approach. “We should seek liability standards that are based on clear and objective criteria, that effectively identify conduct likely to harm the competitive process, and that take into account institutional limitations and costs of administration,” Barnett said.

European Commission Approach

Neelie Kroes, European Commissioner for Competition Policy, offered the European Commission’s approach to unilateral exclusionary conduct of dominant firms during Fordham Law School’s 35th Annual Conference on International Antitrust Law and Policy.

On September 25, two days’ after Barnett’s speech at Georgetown, Kroes announced that the European Commission (EC) was planning to release a report offering guidance on enforcement of Article 82 of the EC Treaty to exclusionary conduct by dominant firms. It is unlikely that the EC report will closely resemble the recent U.S. Justice Department’s report on single-firm conduct. Kroes said that the Justice Department report gave “food for thought” and that, together with the responses from the FTC commissioners, the documents provided a vital opportunity for debate. She noted, however, that “there is a wide range of views on these issues.”

There is agreement among U.S. and EC antitrust enforcers that the protection of consumer welfare is the goal of competition policy. Kroes pointed out a greater concern in the United States “about over-enforcement, about false positives, than in Europe.” She added that “[i]n Europe, we are worried equally about over-enforcement and under-enforcement. Both false positives and false negatives harm consumers.”

The result has been more unilateral conduct cases in Europe. Cases based exclusively on Article 82 make up one quarter of the Commission’s antitrust cases, according to Kroes. Cases involving both Articles 81 & 82 make up between one-third and one-half of recent cases.

Significant Agreement

Barnett addressed Fordham attendees at a later session and suggested that there was significant agreement regarding unilateral conduct on both sides of the Atlantic. He noted the positive shift to a more effects-based analysis in Europe and the share goal of protection of consumer welfare. He did point out that, despite convergence in other areas of competition law (such as cartel and merger enforcement), single-firm conduct was an area where most of the progress was left to be made.

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