High Stakes Antitrust: The Last Hurrah? PDF
Preview High Stakes Antitrust: The Last Hurrah?
00-3395-x FM 7/22/03 9:59 AM Page i High-Stakes Antitrust This page intentionally left blank 00-3395-x FM 7/22/03 9:59 AM Page iii High-Stakes Antitrust The Last Hurrah? Robert W. Hahn Editor - Washington, D.C. 00-3395-x FM 7/22/03 9:59 AM Page iv Copyright © 2003 by AEI-Brookings Joint Center for Regulatory Studies, the American Enterprise Institute for Public Policy Research, Washington, D.C., and the Brookings Institution, Washington, D.C. All rights reserved. No part of this publication may be used or reproduced in any manner whatsoever without permission in writing from the AEI-Brookings Joint Center, except in the case of brief quotations embodied in news articles, critical articles, or reviews. High Stakes Antitrust may be ordered from: Brookings Institution Press 1775 Massachusetts Avenue, N.W. Washington, D.C. 20036 Tel.: (800) 275-1447 or (202) 797-2960 Fax: (202) 797-6004 www.brookings.edu Library of Congress Cataloging-in-Publication data High-stakes antitrust : the last hurrah? / Robert W. Hahn, editor. p. cm. Includes bibliographical references and index. ISBN 0-8157-3396-8 (cloth : alk. paper) — ISBN 0-8157-3395-X (pbk. : alk. paper) 1. Antitrust law—United States. I. Hahn, Robert William. II. AEI-Brookings Joint Center for Regulatory Studies. III. Title. KF1649.A2H54 2003 343.73'0721—dc22 2003015789 9 8 7 6 5 4 3 2 1 The paper used in this publication meets minimum requirements of the American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials: ANSI Z39.48-1992. Typeset in Adobe Garamond Composition by R. Lynn Rivenbark Macon, Georgia Printed by R. R. Donnelley Harrisonburg, Virginia 00-3395-x FM 7/22/03 9:59 AM Page v Contents Foreword vii 1 Introduction 1 . 2 Antitrust Activities during the Clinton Administration 11 . 3 High-Stakes Antitrust: The Last Hurrah? 45 4 Has the Consumer Harm Standard Lost Its Teeth? 72 . , . , 5 Flawed Efforts to Apply Modern Antitrust Law to Network Industries 117 . Contributors 159 Index 161 v This page intentionally left blank 00-3395-x FM 7/22/03 9:59 AM Page vii Foreword After almost two decades in which antitrust policy had veered sharply toward less-is-more, the rules changed in the late 1990s. The U.S. Department of Justice mounted challenges to the practices of successful service enterprises in payment cards, airlines, and software. All three antitrust suits involved industries in which networks played a significant role. Do interventions in these network industries signal a return to an era in which Washington second-guesses market outcomes, rather than simply setting ground rules for competition and allowing mar- kets to respond on their own? This collection of essays provides a state-of-the-art analysis of high- stakes antitrust issues raised over the past decade. It is the result of an AEI- Brookings Joint Center for Regulatory Studies conference held on October 3, 2002. The scholars who participated reflected diverse points of view. While each of the four panelists agreed to two basic facts—first, that the Depart- ment of Justice’s approach to antitrust in the 1990s was aggressive and, second, that the impact of the landmark cases filed in that decade will be felt for many years to come—agreement mostly ends there. Two of the panelists argued that the department had lost its way, albeit for different reasons. The other two panelists argued that while the Justice Department missed some opportunities and made some missteps, its aggressive stance was largely justified by changing technology and market conditions. vii 00-3395-x FM 7/22/03 9:59 AM Page viii viii This volume is one in a series of books commissioned by the AEI- Brookings Joint Center for Regulatory Studies to contribute to the con- tinuing debate over antitrust. The Joint Center builds on the expertise of both sponsoring institutions on regulatory issues. The series addresses sev- eral fundamental issues in antitrust and regulation, including the design of effective reforms, the impact of proposed reforms on the public, and the political and institutional forces that affect reform. We hope that these publications will help illuminate many of the complex issues involved in designing and implementing regulation and regulatory reforms at all levels of government. The views expressed here are those of the authors and should not be attributed to the trustees, officers, or staff members of the American Enter- prise Institute or the Brookings Institution. . Executive Director . Director AEI-Brookings Joint Center for Regulatory Studies 01-3395-x CH 1 7/22/03 10:01 AM Page 1 . 1 Introduction After almost two decades in which antitrust policy veered sharply toward the philosophy that less is more, the policy changed in the late 1990s when the U.S. Department of Justice mounted challenges to the practices of successful service enterprises dealing in software (Microsoft), consumer payment cards (Visa and MasterCard), and air travel (American Airlines). All three antitrust suits involved industries in which networks were crucial. Microsoft supports a network of hardware manufacturers, personal computer vendors, computer users, and software developers that depend on the company’s Windows operating system. Visa and MasterCard have created vast networks of merchants who accept credit, charge, and debit cards that are issued to consumers by thousands of financial institutions. American Airlines operates an air carrier network connecting hundreds of cities worldwide. Do challenges to the practices of these network industries signal a return to an era in which Washington second-guessed market outcomes instead of simply setting ground rules for competition and allowing mar- kets to respond on their own? Or were antitrust activities of the later Clin- ton years an aberration—a last hurrah for hard-line trustbusting? In Octo- ber 2002 the AEI-Brookings Joint Center for Regulatory Studies invited experts with a variety of perspectives on those questions to discuss them
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