In this episode of Discourse Magazine Podcast, Alden Abbott, a senior research fellow at the Mercatus Center, interviews antitrust scholar-practitioners James Rill and William Kovacic about the development of global antitrust law, the International Competition Network, America’s role in the future of antitrust and much more. James Rill is one of America’s foremost antitrust lawyers, and he has served as assistant attorney general in charge of the U.S. Department of Justice’s Antitrust Division. William Kovacic is the Global Competition Professor of Law and Policy and the director of the Competition Law Center at the George Washington University School of Law. He was formerly a member of the Federal Trade Commission and chaired the agency in 2008-2009.
ALDEN ABBOTT: I’m Alden Abbott, senior research fellow at the Mercatus Center at George Mason University. I’m delighted to welcome this audience to our podcast on the globalization of antitrust.
In recent decades, antitrust laws, which deal with unfair competition, cartels, mergers and so forth, have liberated and have been adopted by most countries around the world. While at one time American enforcers paid little attention to what foreign enforcers were doing, things have changed dramatically. For example, alleged abuses by Google, Facebook and Amazon; big proposed mergers; and significant cartels are being investigated by many countries. Antitrust is a very hot topic here and around the world.
Joining me here today are the two individuals who have done the most to spread the gospel of antitrust to the four corners of the world, the Honorable James Rill and Professor William Kovacic. I’ve known these two distinguished scholar-practitioners for many, many years. They will discuss the significance of the globalization of antitrust for the United States and for the world, drawing upon their personal histories.
Professor William Kovacic is Global Competition Professor of Law and Policy at George Washington University Law School, director of the school’s Competition Law Center. He’s a former professor at George Mason University Law School and former chairman of the Federal Trade Commission—commissioner of the Federal Trade Commission during the George W. Bush administration. Since August 2013, he has served as a nonexecutive director with the United Kingdom’s Competition and Markets Authority. He has been very heavily involved in International Competition Network—we’ll discuss that in greater detail later—for many, many years.
James Rill is one of America’s foremost antitrust lawyers. A noted private practitioner throughout most of his career, Mr. Rill is also a distinguished public servant. He served as assistant attorney general for antitrust during the George Herbert Walker Bush administration, and prior to that was chairman of the ABA’s antitrust section. As assistant attorney general, he negotiated the U.S.-European Union Antitrust Cooperation Agreement of 1991 and issued a first joint Federal Trade Commission and Justice Department horizontal merger guidelines in 1992.
In 1997, Mr. Rill was appointed to serve as co-chair on U.S. Department of Justice’s International Competition Policy Advisory Committee. Through that, he played a leading role in the formation of the International Competition Network, which comprises almost all of the nations’ competition agencies.
Now I will discuss the development of global antitrust through a number of guided questions, and we’re looking forward to an entertaining dialogue. Both these gentlemen are loquacious and have very strong ideas.
Getting Involved in International Antitrust
ABBOTT: Gentlemen, you’ve worked in the antitrust field for decades, and when you started your careers, the focus of American antitrust lawyers was almost entirely domestic. What made you interested in international antitrust, and how did you start getting involved in international issues? I think I’ll start with Mr. Rill, whose career as an antitrust lawyer goes back to the 1950s.
JAMES RILL: Thank you very much, Alden. It’s an honor to be on the program with you, and particularly Bill, a longtime friend and colleague who I admire greatly and who’s really made the most important mark in antitrust of any of us in the international field.
My dear friend Tom Leary, who for many years practiced antitrust law, wrote a book called “The Accidental Lawyer.” I think that my first involvement in international antitrust, I would describe it as reflecting the accidental antitrust international lawyer. Before I was appointed the assistant attorney general, I had only minimal experience in international antitrust. I was doing mostly domestic mergers and conduct cases. But two weeks after I joined the Antitrust Division, I got a call from the A.G., Dick Thornburgh at the time, and he said, “Jim, you’re going to Japan.”
I said, “General, are you tired of me already?” He said, “No.” I got a call from Carla Hills, who was then the U.S. Trade Representative, an old friend. The United States and Japan had entered into what were called the Structural Impediments Initiative discussions. That was an attempt by the U.S. and the Japanese to avoid really a trade war that would have been occasioned by U.S. implementation of the 301 section of the Trade Act—sanctions against Japan. We had these discussions to see if these issues couldn’t be solved by negotiation.
There were six—I’ll get into more detail later, I believe—but there were six co-chairs on the U.S. side: Commerce, State, Treasury, USTR, Justice and Council of Economic Advisers. The Japanese counterparts were there also. In early September of 1989, I headed off to Tokyo to get involved in the Structural Impediments Initiative talks with an attempt to provide and encourage the Japanese Fair Trade Commission to enforce boycotts, if you will, or refusals to deal with the U.S. exports during the very highly concentrated, both vertically and horizontally, Japanese market.
During my time in office, I’ve made five or six trips to Japan within the context of discussion of these talks, which I think I produced good results. But that really started me off on the trail of antitrust in the international field, and followed up—I can talk a little bit more about discussions with then Sir Leon Brittan, who was the Commissioner for Competition of the EU, former cabinet member in the Thatcher cabinet in the U.K., leading up to the Cooperation Agreement of 1991, but I don’t want to monopolize the whole story.
But that’s really how I got started in my continuing interest in the field of the international application of antitrust. Third development during that period, of course, was the fall of the Berlin Wall and the opening up and then entry into market status of the former satellite states of the Soviet Union. We had several discussions there and meetings in some of those countries back in early 1990. We can get into more detail on that if you’d like, as well. But all of a sudden I found myself in Japan and Eastern and Central Europe, but that repast there, I never lost it. That’s where I got started, Alden.
ABBOTT: Thank you. So you got started at a very high level working with Japan and Europe, or for the two central jurisdictions beginning to work on competition law.
Professor Kovacic, tell us something about your interest and early involvement in international antitrust.
Researching Competition Laws Across Jurisdictions
WILLIAM KOVACIC: Alden, I’m enormously grateful to you for the opportunity to participate in this conversation. It’s a tremendous honor to do this, not just with you but with Jim. In so many ways, Jim set the foundation for the modern framework of international competition policy as we know it today. If you were to look at the faceplate that would go on a major structure—the bridge—you would see Jim’s name on that bridge, because in so many ways he helped build that framework. All of us who’ve walked across that bridge owe a debt to Jim, so it’s a delight to be here.
My beginning in this area goes back to 1975, 1976—only a few years ago, 45 years ago—when I had the opportunity as a law student to have a leave of absence to work on the majority staff of the Senate antitrust, the monopoly subcommittee of the Senate Judiciary Committee. I was a research assistant on that staff. The committee was headed by Phil Hart. My principal assignment during the year I was there was to work on a measure that soon became adopted as the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
My focal point was the then proposed mechanism for subjecting certain mergers to a mandatory notification requirement and a suspensory period to permit the government agencies to gather information and review transactions before they were consummated and, if necessary, to intervene, to block or modify our transactions. A keen area of interest for the committee was the larger global experience.
In 1975, ’76, there were perhaps 20 jurisdictions that had established competition laws in some form. That number today is over 130. Things have changed quite a bit. But a number of jurisdictions had experimented in a very tentative way with notification mechanisms, nothing that quite resembled what Hart-Scott ultimately adopted, but it was a wonderful opportunity for me to do a global survey of which jurisdictions had competition laws. Sen. Hart had devoted a considerable amount of his time as chair of the Antitrust Subcommittee to holding hearings on the then emerging topic of international competition law.
As a result, I got to spend hours looking at the green-backed volumes of the committee’s proceedings going back even before Senator Hart’s tenure as chair of the committee to when Estes Kefauver chaired the Antitrust Subcommittee, taking a tour through the larger evolution of what we now call international competition law.
Because it was clear in the development of the merger control regime that at some point, at some time, this would not simply be an American preoccupation, even a quirky American concern. This would ultimately command the attention of a larger number of jurisdictions, though nobody knew at the time that it would expand in such dramatic ways for the reasons that Jim was describing just a moment ago. And from that exposure in 1975, ’76, I was hooked, and I knew that I would love to have a career that had international competition law as a major dimension.
Antitrust Laws in Japan
ABBOTT: Fascinating. Getting to major jurisdictions involved in antitrust. Now, Japan developed a competition law during the postwar occupation, when Douglas MacArthur, in fact, pushed for development of Fair Trade Commission in Japan and antitrust laws generally. But antitrust law was not very important in Japan, and even as late as the late 1980s, early ’90s, it wasn’t too important. Mr. Rill, can you tell us how antitrust came to be important in Japan and why it wasn’t terribly important at first?
RILL: Let me start out with the first part of it—why it was not particularly important at first. One would have to read—I think it was reported in a book by Clyde Prestowitz—that the first very important prime minister of Japan postwar, Yoshida, really responsible for the formation of the Liberal Democratic Party, wrote in his memoir that the worst position of the Allied Control Commission was the imposition of the antitrust laws on Japan, which terribly distorted Japanese growth and economic success.
That view was embodied, I think, very much in the approach of the Japanese commerce agency, MITI, and MITI had much more power than the JFTC. Along at some point—I would say even in the ’50s or ’60s—the JFTC attempted to show its strength by moving then against the cartels and the petroleum marketing business, and MITI put the clamps down on it.
The JFTC from that point forward really had no authority within the Japanese government to speak of. MITI and man-controlled industrial policy approach took precedence in Japan over any kind of what we would consider to be competition policy. And the JFTC was actually chaired, many times seriatim, by men—and I mean men—who were sent over from the finance ministry, who had very little either love or knowledge of competition policy. The thought of whatever consumer welfare was was a strange American notion.
The evolution of the JFTC into a strong part of the Japanese government really, I think, coincided with—and I don’t think we can claim credit for it—I think the economics of Japan claimed some credit for it. They recognized that internal competition, which was fairly vibrant, could be stimulated as well by an overall competition framework that would not retard but would considerably enhance the growth of the market economy in Japan.
I think that was stimulated, to some extent—well, many in the Japanese government would agree that it was stimulated so much by the Structural Impediments Initiative talks in which the U.S. delegation, with DOJ as a key central part of that delegation, pressing Japan to enforce the antitrust laws to open up the markets, to get rid of the what were then keiretsu restraints on market—keiretsu being kind of a postwar inheritor of the prewar zaibatsu arrangement.
And we weren’t entirely successful. I think that the first stimulation of auto exports did not go very far. But in fact it did bring to light the importance of the Japanese Fair Trade Commission, and I think, as that evolved, the recognition of competition regime became much more embedded in the Japanese public policy principles. I have to tell you—I’m sort of embarrassed to tell you—former commissioner Matano of the JFTC once told me, “We really want to put a bust of you in the halls of the JFTC because you gave us credibility, with the SII talks, to have an important part of the Japanese government.”
I think that now we see that Japan—nobody’s perfect—but I think Japan now occupies a very important role in international antitrust and has a responsibility and has exercised the responsibility to attempt to create a very solid antitrust program among its neighboring states, as well as through international organizations such as the ICN and the OECD, which Japan is a very important and very outspoken member.
We’ll take a little bit of credit for the SII talks, but I think it was the evolution of Japanese thinking as the bubble began to burst and everything, and the importance of competition through the operation of the successful market became more embedded in Japan, and the role of MITI, which is now a different organization, became less dominant over the work of the JFTC.
Antitrust Laws in Europe
ABBOTT: Great. So competition law became important in Japan. Why did it become important in Europe, Professor Kovacic? I know it was included in the Treaty of Rome, the so-called European Constitution, 1957. There was a long cartel tradition, I believe, in Europe. Why was Europe interested in competition?
KOVACIC: I think there was a strong sense that came out of the experience of the 1930s and the 1940s that in Germany the cartelization of German industry and basic sectors, such as chemicals, had played an important role in supporting the ascent of National Socialism and had helped propel Germany towards the mobilization that underpinned the aggressive program of aggression that took place beginning in 1939 onwards. And there was a strong sense in Germany that you have the coalescence of great economic power and political power with disastrous consequences.
Certainly the development in the 1950s of Germany’s competition law system, which in many ways is a crucial antecedent of the Treaty of Rome and the competition articles that are adopted in the mid ’50s, reflected a strong sense that the decentralization of economic power, and the prohibition on cartels in particular, had a crucial role to play, not simply in economic growth and development, but in the preservation of democratic institutions themselves.
It’s a relatively slow process of development. I should mention an earlier crucial step is the Coal and Steel Treaty adopted in the early 1950s that is a foundation for the Treaty of Rome itself. The Coal and Steel Treaty has built into it an important competition provision. So I think there’s a sense in Europe, in crucial ways, that limiting the cartelization of entire sectors and the control of economic activity is a vital step towards the establishment of liberal political institutions as well.
It is a slow growth and development of the broader European regime from the 1950s up through the 1960s and ’70s. You might argue that the full blooming of the European system doesn’t take place until 1989 with the adoption of the Merger Regulation, which in some respects puts Europe on the global map in a way that had not taken place before that. But we see a collection of important economic and political impulses that lead to the integration of competition law in a deeper and deeper way into the fabric of European regulation and ultimately into the legal regimes of the member states themselves.
It is fascinating to see how this formative period, I would say the 1930s, 1940s, leads to the integration of competition law into the laws of what become the member states, the Coal and Steel Treaty, the first German anti-monopoly law, then the Treaty of Rome competition articles. Competition law, competition policy comes to be seen as a vital ingredient of not just economic development but political liberalization as well. And the fuller integration of the member states into a single political unit as well, and the remarkable development that is Europe itself—partly competition law, partly notions drawn from the commerce clause—the role that fuller integration of economies can play in supporting prosperity, but also political integration that discourages a repetition of the two horrific experiences that Europe had had in the first half of the 20th century.
Promoting Competition in the Wake of the Soviet Union
ABBOTT: Well, thank you. You mentioned 1989. I think the 1989 to 1991 period is a key turning point, isn’t it? Because you had the fall of the Berlin Wall, collapse of the Soviet Union, and suddenly the United States starts promoting the adoption of competition regimes in the former Soviet Union, former communist countries, and also in developing countries. Both of you had a real involvement in that.
I know Professor Kovacic has worked in developing countries, and Assistant Attorney General Rill was part of the Bush administration, and later on as part of this effort to promote an international grouping of antitrust or competition agencies. Can you tell us a little bit about your efforts, perhaps Professor Kovacic and then Mr. Rill?
KOVACIC: The process that Jim described, both the Structural Impediments Initiative in Japan, but the dramatic effect that the fall of the Berlin Wall had and the collapse of the Soviet Union had in creating opportunities for the development of new economic systems and new political systems that went with them. If we come into ’89, ’90, there are by this time about 30 jurisdictions that have a competition law in some form.
Over the past 30-plus years, that number has grown to over 130. A hundred new systems in barely 30 years. A crucial part of that process starts in the period you described where countries are reexamining the foundations for their economies, switching from economies that relied crucially on central economic planning, a deep government involvement in all aspects of the economy, toward a more market-oriented regime.
There was a belief as part of this process, a belief nurtured in part by the United States, by the European Union, that a process that simply privatized monopolies, that put state monopolies into private hands—a system that created a more liberal economic order without providing some assurance that that system would act in the best interest of citizens and generate economic results that would be seen in a visible way as a positive benefit of economic liberalization, and would support political liberalization—meant that you needed regulatory institutions, competition policy institutions, that would ensure that the private economic order would have strong incentives to operate in the broader public interest and would do so.
This meant that in country after country, some ingredient of competition law and policy became part of the package of suggested reforms. There was a parallel awareness that part of the effort—that a system of competition law isn’t simply suspended in the air, that the competition laws system depends vitally on a whole host of supporting institutions—public administration, private law, definitions of property rights, contract rights, professional societies, academic bodies—whose work is vital to the support and operation of a competition law system. Courts that are seen as respected and honest adjudicators of disputes.
There was not only the awareness that some measure of legal framework that would support competition was important, but that there was the vastly important step of building the foundations for effective legal regimes as well. I think we greatly underestimated how important and how difficult that was going to be, and that remains a crucial task in country after country now. But that’s the setting in which the broader global discovery of competition law as an ingredient of economic liberalization takes hold.
Development of the International Competition Network
ABBOTT: Well, thank you. Mr. Rill, after leaving office in the early ’90s, you kept up your involvement through your leadership in the International Competition Policy Advisory Committee and worked in a bipartisan fashion really, of course, in that area, which led to development of the so-called International Competition Network, which now has over 130 members.
That network was formally set up in 2001 at the beginning of the George W. Bush administration. Can you tell us something about your role in all of that and your thoughts on the launch of the ICN and perhaps where the ICN is going? Has it been successful? I’ll ask Professor Kovacic to put in his two cents as well.
RILL: He’s certainly worth a lot more than two cents. What happened in 1977, Attorney General Reno and Assistant Attorney General Joel Klein appointed me as co-chair of what was the International Competition Policy Advisory Committee—the Justice Department recognizing the growth of competition policy that Bill’s just described, and particularly in Europe—to try and advise the Department of Justice what appropriate measures it might take to confront, cooperate with, enhance the development of positive competition principles throughout the world.
The [International] Competition Policy Advisory Committee, acronym ICPAC, was really a nongovernmental body that was formed as an advisory committee to the Department of Justice. No government employees were on the committee, although we obviously had consultants and those who were assigned to us from the Justice Department, to put together a program for advice through the department and through the policies that you follow on international cooperation and harmonization, or rather convergence from antitrust principles.
Our report was filed in the year 2000. Basically, we had hearings, and most of the leading enforcers around the world had testified before us. We covered merger policy, cartel policy and organizational issues. One of the recommendations was the formation of an informal entity, which we called the Global Competition Forum in the ICPAC report, which would consist of basically antitrust enforcers who chose to join. The only qualification for being a member of this Global Competition Forum was that the country had to have an antitrust law and an antitrust agency.
The notion was that it would be an opportunity for antitrust enforcers to get together and discuss all antitrust, all the time and not be necessarily subject to, influenced by, directly influenced by, taken over by other organizations of the various governments—including, for example in the U.S., USTR—to come up with recommendations for the global harmonization of antitrust policy.
That was the beginning, and much of the credit for this notion, this idea, this thought came from Professor Merit Janow of Columbia University, who was the executive director of the ICPAC. Much of the work of the ICPAC is attributable to her foresight and hard work. She deserves a lion’s share of the credit for what ICPAC produced.
After the filing of the report, there was a little bit of a hiatus, and there was not much of an immediate move towards the formation of this “all antitrust, all the time” informal organization. And so Merit and I visited with Assistant Attorney General Klein, who had very little time left in office at that stage—we’re talking, again, the year 2000.
We persuaded him that that would be a good part of the legacy, would be to have a strong endorsement for that organization, and of course Joel agreed. On the occasion of the anniversary, the 10th anniversary—a little bit later than the 10th anniversary, actually—of the European Merger Regulation that Bill referred to a while back, Joel announced the U.S.’s strong support for the formation of a global antitrust informal organization as recommended in the ICPAC report.
As I understand it, that came as a little bit of a surprise to the competition commissioner of the EU at the time, who was Mario Monti from Italy. But he thought it was a good idea, and the next day, in his remarks at the anniversary of the Merger Regulation, endorsed Joel’s comments and said we should get it moving. Again, a little bit of hiatus occurred until there was a meeting in early 2001 at Ditchley Park.
Major antitrust enforcers attended that meeting with the express purpose of seeing what impulse, what motivation, what generation can be given to the creation of this organization, and it immediately came out of Ditchley Park. It was organized by a fellow named Bill Rowley, a prominent antitrust lawyer. The impulse came out of Ditchley Park, and then it was picked up by Bill Kovacic and Tim Muris, who were then running the Federal Trade Commission in 2001 as the new administration took over. They had the very, very important motivating and impulsive role for the creation of the organization.
So in September of 2001, coincident with the Fordham program that year, the formation of what was called the International Competition Network took place. My recollection is that it was 12 signatories of nations’ antitrust agencies joined onto the creation of the International Competition Network. As Bill has indicated, now not only 130 antitrust jurisdictions plus around the world, 130 members of the International Competition Network.
And another important aspect of the ICN—and it was recommended in the ICPAC report—that there be nongovernmental advisers to do the work of this international discussion organization, if you will. So now it is peopled by not only the 130 members, but a large number of nongovernmental advisers who are designed to make a contribution and recommendation and really elbow grease as well through the work of the ICN.
Now, how important is the ICN? In my view, it’s very important. I think much of the work done by the ICN has advanced a sensible antitrust policy around the world. From merger prenotification recommendations, recommendations on predatory pricing, through recommendations on unilateral conduct and, I think very importantly, recommendations on fair procedure, sensible procedure—still a work in progress.
Now, recently, the ICN has adopted a proposal initially voiced by the assistant attorney general at the time, Makan Delrahim, to create some level of accountability and organization, to create some level of accountability for whether or not fair procedures were being adopted and followed. And now it’s embraced in the ICN, taken over by the ICN in the Competition Antitrust Program, called CAP.
The CAP is beginning to function, and it’s very important to see how CAP works, to see if there is some level of accountability that can be produced by this organization. That I think could be a very major contribution of the ICN at this point. That’s where it stands.
Effectiveness of the ICN
ABBOTT: Professor Kovacic, what’s your evaluation of the ICN, how effective it is?
KOVACIC: A couple of thoughts to add to Jim’s wonderful panorama of the creation of the institution. One thing I’d note as a starting point in thinking about Jim’s comments is that the development and creation of the ICN reflects something very good, a good habit in our system of public administration that I’m afraid has faded a great deal. That is, it could not have happened had there not been a sustained commitment over time, even across regime changes, to make the entire framework develop.
It develops in the 1990s, during Bill Clinton’s presidency. The Justice Department appoints a former head of the Antitrust Division from a Republican era—that’s Jim—to be the co-chair of that effort, and then the question comes in late 2000, where’s it going to go now? You may recall that the regime change in 2000, 2001 was acrimonious, filled with bitterness, and there is a tendency in our system of public administration that when you have a regime change, for new management to come in and say, “Everything that was there before was rubbish, and I’m here to fix it.”
I would say that is, in many respects, a tone and an approach that has characterized our regime changes certainly since 2000 as well. What happens in 2001 is something different. That is in the antitrust agencies, it’s at the FTC with Tim Muris, it’s at the Department of Justice with Charles James—there is a view that this initiative created during the predecessor administration is worth carrying forward.
Tim Muris and Charles immediately decided we’re going to place the full weight of our tenure to making this work, and there was nothing that guaranteed that it was going to work.
And indeed, for all of the effort that had gone into creating awareness that a new forum would be valuable, the specific ingredients, work plan, methodology of that new forum had not been fully specified. That was all work that had to be done. But here you had a new administration, different party, saying that this effort, established before, is worth carrying on, and we are not going to disparage it because it was not created during our tenure. We’re going to embrace it and carry it forward.
I would say that if we think about that—how do good programs develop over time—it is exactly that kind of attitude that treats good policy as a relay race and not an individual event. I agree with Jim that there’s been a lot of progress—we’re 20 years out now, coming out almost 20 years this coming fall from the creation.
Now, what things have happened? One good thing that happened is that it put a real charge into the existing international networks that Jim was referring to: the United Nations Commission on Trade and Development, the Competition Committee of the Organisation for Economic Co-operation and Development that he mentioned too. Competition in the entry of this new institution made those institutions much better. It focused their work in a much more practical way. It turned projects that had been 5 or 10 years in duration into 1- to 2-year turnarounds. It inspired a much greater degree of inclusiveness.
The OECD shifts to a model that includes a global competition forum. That unmistakably reflected part of the influence of the nurturing and germination of the International Competition Network itself. So it made those networks much better than they had been before. It inspired the creation and has inspired the creation of regional replicas of the ICN.
A problem for the ICN and a number of other of the large international networks is that, within the umbrella of so many institutions, you have diverse interests. The interest capabilities and position of many competition authorities created in the last 20 years, especially in emerging market environments, are much different in many ways than those of the oldest of the institutions.
We now see a recognition that joining up those newer authorities on a geographic basis, for example, enables them to address common needs and common conditions much better than they would otherwise. We’ve had the development, in many ways, in Africa, in Latin America, in Asia—to take three regions of regional groups inspired by the opt-in, standard-setting, inclusive model established by ICN—being created. I don’t think that would have happened in the same way that it did without ICN.
I’ll just mention one other element that ICN has brought to the picture, and that’s a much greater emphasis on policy implementation. Now, good systems have two major ingredients. One is broader conceptual ideas about, well, what’s an abusive dominance? What’s a substantial lessening in competition? But a second ingredient is, how do you actually do this? How do you cross the gap between the policy aspiration and its realization and practice? A big part of the work program, a growing part of the work program at the ICN, became policy implementation.
What’s come out of the working groups and out of the work of the other international organizations is an outpouring of highly practical advice, guidance and know-how about how to actually do it. How do you do an investigation in a merger? How do you investigate a cartel? How do you run a leniency program? And very important, bringing together agency leadership and asking, in small groups often, in workshops, “How do you actually do the job?” To turn to the head of an agency and say, “What do you know today that you wish you’d known on day one? And how do we make that know-how accessible to your successors so that they travel down the learning curve much faster?”
I would say, for all the challenges that lie ahead—and they are formidable for this network and any other—policy implementation has arisen on the agenda to assume, I would say, equal significance along with the analytical and conceptual framework. In other words, we’re not just talking anymore about the physics of competition law; we’re talking about the engineering that enables you to make sure that the broad insights are put to work in a highly practical way.
ICN did this as well, and I simply end this comment by saying, where did it all begin? It began in so many ways with the work that Jim, Merit Janow, our wonderful support staff did in the late 1990s in ICPAC to put together the vision for a new institution. And, I would say, in each succeeding administration, the DOJ and the FTC have stood side by side saying this is worth having, this should endure, and this will not be affected by the winds of change that can come running through Washington when you have a change of party in the White House.
Will China Join the ICN?
ABBOTT: Thank you so much for that analysis, Bill. I think we’ll talk a little bit about winds of change in antitrust. But before that, I’d like to mention one country, the most populous country in the world, China. That is the one significant country that’s not an ICN member, although it has an antitrust law which is over 10 years old now. Is that a problem? And what about the claim by some that, not just in China but additional jurisdictions as well, competition or antitrust laws become a bit politicized? Do you gentlemen have thoughts on that?
RILL: Bill, why don’t you go ahead.
KOVACIC: Sure, Jim. It’s a most unfortunate omission. I think ultimately the ICN cannot fulfill its promise if what is arguably one of the three most important competition systems on the planet is not a participant. The duopoly that the European Union and the United States enjoyed certainly for a good part of the previous century is now a tight oligopoly that has China as a significant member. There’s no formal rating system that tells you who’s the most powerful, the most significant, but I’d suggest to you that business decision-makers and their advisers in planning transactions, on their shortlist of jurisdictions we have to think about, always have China on the list now.
And you can make a good argument that China is no less important in crucial respects today than the United States and the European Union; they’re right there. So, if one of your top three is not in the membership, and one of your top three has the ability by its own decisions to influence international standards to determine how commerce unfolds, that’s a dreadful gap in the membership.
I think at some point China will decide to join. The deliberations of the Chinese government will probably take into account all sorts of considerations. My impression in watching the work of the ICN and its steering committee is that the moment, the minute that China said, “We want to join,” they would be welcomed enthusiastically. They’d be given a seat on the steering committee, which is the governance board for the ICN. They would immediately find themselves featured on panels in internal deliberations. That is, that welcoming acceptance would take place right away.
But, given the significance of China as an economy, as a nation and certainly as a competition regime, until they are part of the institution and the organization, you can’t say that the framework is complete.
Antitrust Debates Within the U.S.
ABBOTT: Mr. Rill, thoughts?
RILL: No, I agree completely with what Bill says. But as Bill was talking about the leadership role of the triad of intellectual and policy leadership, I don’t want to get ahead of ourselves, but with time being what it is, I wonder what the leadership role of the United States is going to be, with the current debate going on in the United States as to whether the basic foundations of our antitrust policy and the consumer welfare standard are subject to serious question. How is that going to be playing in the continuation of the U.S. recognition as being the—if not the, then one of the three principals?
ABBOTT: An excellent point, Mr. Rill. So just for the audience, I think in recent decades there had been sort of a general consensus that antitrust laws, or competition laws as they’re called in most of the world, should be applied in a manner that benefits consumers. Now, in the last two years there have been some critics in the United States who have said that this consumer welfare standard isn’t working, that competition isn’t that strong in the U.S.; we need to have a much tougher stance; big may be bad; you may want to be more aggressive in breaking up companies or attacking possible mergers.
Now, in Europe and other parts of the world, you’re getting proposals to regulate the big digital platforms, such as Amazon, Google, Facebook. There are some proposals of that sort in the U.S. as well. There are some possible major changes in the way major jurisdictions are looking at antitrust, and this may be upsetting to the generalized view that was expressed and part of the ICN training too. Professor Kovacic, do you have any thoughts?
KOVACIC: No, we’re in a tumultuous period now, and you could make an argument that the influence of the United States has diminished significantly over the last 20 or so years. Go back to Jim’s tenure at the Antitrust Division, 1989 up to 1993. There would be no question at that time: If you asked what jurisdiction is preeminent in its influence globally, that unmistakably is the United States. There’s no question about that.
If you ask the same question today, which jurisdiction is most influential, I think that’s the European Union. In a very rough sense, the capital of competition law and policy in the world today has been Brussels. That influence is second to none, I think, in the world. It’s a contestable position because of developments not just in China, but in India, in Brazil and a host of other countries that are doing important work.
We shouldn’t weep or be concerned that the influence is diminished; that’s a competition worth having. In our own country, the notion that there would be a robust debate periodically over what we do and why we’re doing it is also healthy. As Tim Muris used to say, if we ever get to the point where we’re not willing to subject our ideas to a vigorous debate, maybe it’s time to get some new ideas. The turmoil that comes from that is not something to be feared or regretted.
There are concerns, and I’ll just mention a couple. One is that a tone of the modern debate in many ways is that increasingly you see public officials and commentators say that everything the U.S. has done over the past 40 years—and what they really mean to do is to go back to roughly 1980, before Ronald Reagan comes to Washington—has been a mistake. That there were a couple of lucid intervals, like the filing of the Microsoft case by the Department of Justice in the late ’90s, but the baseline is one of near irrationality and incompetence. Or to use a phrase, a word that is popular in discussions today, decision-making that is corrupt. Not only is the system as a whole a wasteland, but the people inside the system have been fatally flawed, if not morally derelict in some ways. The tone of the debate is so harsh.
One concern I have is that it means that—and do I have a horse in this race? Am I fond of looking at my own time at public service as being a wasteland or being individually derelict? That’s not my predisposition. But I think a neutral observer would say, if you look carefully at things done over this period, there are lots of things to like. One consequence of the modern critique is we’re telling the rest of the world there’s nothing to look at there. It’s all bad.
The second thing is that none of the analytical concepts that we’ve relied upon—including perhaps a definition of the consumer interests that includes innovation, dynamism, price, quality—that that interest in the well-being of the consumer, defined more broadly this way, was completely mistaken and that we should cast it to the side for a much more elaborate goal structure that looks at a broad constellation of other considerations. We may be on the verge of telling the world that we think that this orientation itself was deeply mistaken.
If I’m a foreign observer, I’m a bit concerned looking at a system that says, “For the last 40 years we have been deranged. We’ve been crazy, indeed in some ways morally derelict, but it’s better now. It’s all right now. We see the world clearly.” Why should I ever trust this system that is so prone to this kind of lapse and just seems to have wakened up? To the extent that we have useful things to say to the world about how to do this, why to do it, how to carry it out, I’m not sure that we will be in a position, if this critique is taken on abroad, to have a positive role to play.
The Future of Antitrust
ABBOTT: Some sobering thoughts. We should probably move to concluding comments.
So, we’ve seen the development of antitrust laws, so-called competition laws around the world, efforts at international cooperation. I think there’s also, as already discussed, through the ICN and other institutions—also, I’ll add, through United States agencies—cooperation on particular cases, particular matters with major foreign counterparts on a regular basis.
But we also see some major changes afoot that could derail things and the future of competition law—its standards, how it’s applied, the role of the United States and other jurisdictions is a bit up in the air. Do you have any closing comments, anything perhaps more optimistic, Professor Kovacic, for our audience?
KOVACIC: I think the process of cross-border cooperation has been a success story, since, if we go back to the period that Jim introduced early on, if we go back to the period in the 1980s, Europe develops its own merger control regime. We see the emergence of so many more systems around the world.
I think competition authorities around the world have realized that their interdependence is significant and that the sensibility of what they do depends a lot on achieving a deeper understanding of counterpart regimes, a greater standardization based around principles that are universally regarded (as a matter of process or substance) as being sound, sensible, state-of-the-art, and to have a common commitment to enhancing those over time through a process of experimentation, evaluation and opting in.
The awareness of the importance of that interaction and the knowledge that sharing experience enables individual jurisdictions to move down the learning curve much faster than they would otherwise, that especially with the welter of matters running internationally now involving tech giants and others, that there ought to be a conversation among the major actors about what are we doing and how are we going about that. I think that has propelled us in the direction of deeper cooperation.
It could be better. There could be greater efforts, for example, to use mechanisms such as staff exchanges or secondments, where major agencies place their personnel inside the other institution to work side by side by counterparts. There could be greater efforts at common research projects studying modern phenomena. There could be greater efforts to pool resources to build capability and knowledge in disciplines crucial to the implementation of policy over time.
There is the very worthwhile expanded, dedicated effort to ask, if we’re going to have an expansion of the range of factors that will be taken into account, how will that be done? What kind of norms will guide the application of authority, and how will we explain in a clear way to the outside world precisely what we’re trying to do? I think the story of cooperation has been successful. It’s been built upon decades of effort now, and it can be better.
I think perhaps a by-product of the COVID experience is that it forced agencies to recognize that looking to their counterparts for better practices, for better techniques out of desperate necessity made a lot of sense. I think out of those relationships has come an awareness that there are underexploited frontiers for greater performance. If we drew the production possibilities frontier, we’re inside of it, but I think there’s some understanding now about how to get out to the frontier and to do it through deeper interaction. That’s a positive story and one that encourages me for the future.
ABBOTT: Well, that’s very good, Professor Kovacic. It reminds me of the Greek myth that when all sorts of horrors escaped, problems arose, after Pandora opened this box, the world was afflicted, but one thing that did not escape was hope.
KOVACIC: Good point; hope did not get away. And even though there are real challenges, and we can look at Scylla on one side, Charybdis on the other, it’s important that Ulysses and his team did not stay in port at a sports bar watching football matches. They sailed. They sailed and they thrived. I have some underlying faith in the goodwill and ingenuity of the people and work in this field to sail and to sail successfully.
ABBOTT: Well, those are great words to end our program. I really appreciate the outstanding insights of Professor William Kovacic and former assistant attorney general James Rill. Now we know a lot more about international antitrust, its development. There are still a lot of questions. It’s an ongoing process, and stay tuned. Thank you very much for listening.
KOVACIC: Thank you, Alden, and thanks to Jim.
ABBOTT: Thank you all.