The multibillion dollar fine imposed by the EU for rigging the LIBOR and other rates was doled out not because the rate rigging was deemed a form of market fraud, but because it was collusive, anti-competitive conduct. Indeed, the EU doesn't have a regulator who can police that kind of fraud. Instead it has antitrust, the seminal European worry, and a font of regulation that has quite literally been used to further the European project (dethroning national champions, removing internal trade barriers, defending important European companies, like Airbus, against foreign competitors, you name it). So it's a good thing for Europe that this could be fit within the antitrust rubric.
It gives some lie to the idea that Europe hopes to become the world's regulatory superpower though (see this talk by Moravcsik, or this for an overview of that school of thought). Clearly the continents super powers are not distributed evenly.
Of course no one loves price fixing - other than those in on the fix.
Indeed, allegations of anti-competitive behavior in OTC derivatives markets have recently surfaced on both sides of the Atlantic. This week MF Global brought a class-action antitrust suit in the Northern District of Illinois against a number of large financial conglomerates and ISDA alleging violations of the Sherman Act. MF Global claims that the defendants conspired to deny derivatives brokers access to central clearing (by restricting access to a platform called ICE Clear controlled by the dealers).
MF Global's lawsuit builds on a European Union investigation involving similar allegations against many of the same defendants. The gravamen of the E.U. investigation: firms colluded to block Deutsche Boerse and the Chicago Merchantile Exchange from creating electronic exchanges for the credit derivatives market.
But one question lurking not too far below the surface is what this alleged behavior might mean for systemic risk.
On the one hand, there is a broad trend among policymakers in many nations to move OTC derivatives to exchanges and central clearing. The theory is that transparent exchange pricing and centralizing counterparty risk is a good way to mitigate systemic risk. (This view, however, is not universally shared; some see the move to centralize counterparty risk as transforming clearing houses into potential systemic risk time bombs. For a nuanced analysis - click here).
So what else is not to love about opening up exchange trading and central clearing of derivatives to all?
Fighting systemic risk and ensuring price competition in derivatives markets are somewhat awkward bedfellows. Drilling a little deeper into the MF Global complaint, it appears that the crux of the allegations is that the smaller fish derivatives brokers could not clear trades on ICE Clear directly, but were forced to do so through one of the larger brokers that are members of ICE Clear. The big conglomerates allegedly restricted membership in the clearinghouse that they helped set up. The clearinghouse allegedly served as a kind of club to protect conglomerate profits in dealing derivatives.
Here is where things get tricky. If you believe that the crisis was exacerbated by too many credit derivatives being sold too cheaply (something I've written about), then perhaps anti-competitive behavior has some potential (and I stress both of those last two words) silver linings. After all, oligopoly behavior typically leads to too few of products being sold at prices that are too high.
This is not to condone any anti-competitive behavior. It is merely to underscore a somewhat uncomfortable fact: promoting financial stability and promoting vigorous price competition in financial markets can sometimes be in tension (something Gary Gorton has written about). The relatively stable and boring world of banking that imploded in the 1970s and 1980s was not vigorously competitive. In fact, it was competition from money market mutual funds and various other capital market products that blew open the doors to competition and started the cycle of financial deregulation spinning.
Even though Europe is explicitly more willing to consider competitive injury than is the United States, and rather clearly a more active enforcer, there are still a couple of things you hear suggesting that really, we're moving towards one law of antitrust:
- The last time the EU reversed a merger approved in the US was Honeywell-GE in 2001.
- The EU and US talk all the time, through the ICN, through the Translatlantic Dialogue, you name it.
- They both use HH indexes.
I generally believe that international economic law harmonization is likely in many things, but antitrust, perhaps because of strong differences in the competition cultures of the two jurisdictions, is probably going to harmonize slower than most. The jurisdictions took very different views about Microsoft, the ICN has been sidetracked into technical training, and antitrust in general is becoming a little like accounting, where Europe has the world's standard, and the US has the idiosyncratic one. Unlike in acccounting, however, the pressure to change American exceptionalism is not likely to be as great.
Anyway, the UPS-TNT deal's undoing underscores this. America has blocked mergers - it blocked T-Mobile - AT&T - but this doesn't feel like something that would have suffered the same fate in the American context.
I never met Robert Bork, but I was an intern at the DC Court of Appeals in 1985, when he and Antonin Scalia were still on that court. The word among the staff and clerks at the Court was that one of those two would become the next nominee to the United States Supreme Court, if President Reagan were given the opportunity to nominate someone.
The next year, when William Rehnquist was elevated to Chief Justice on the retirement of Warren Burger, President Reagan had an opportunity to nominate a new Associate Justice. Should he nominate Scalia or Bork?
I don't know if this story is true, but I was told later by someone who claimed to be an insider that President Reagan nominated Scalia in part because he was younger than Bork and in better health. (Bork was a smoker.) If you want a justice to leave a legacy, it probably helps if the justice stays on the Court awhile. That was over 26 years ago.
Of course, Robert Bork would also get his nomination the year after Scalia was confirmed. The battle over Bork's nomination happened during my first year of law school, and it consumed much of the time and attention of the students and faculty at the University of Chicago. That seat eventually went to Anthony Kennedy.
After the Senate rejected Bork's nomination, I took Antitrust from Frank Easterbrook, who introduced me to The Antitrust Paradox. I know a lot of antitrust scholars criticize that book, but as a law student, I was enthralled by Bork's command of history and policy. He was a great writer. Reading that book made me think that being a law professor could be both fun and important, and I am grateful to Bork for that.
Robert Bork died today. He was 85 years old.
So says the government, after settling with some of the most fun firms in technology (Google! Apple! Pixar!) ... and Intuit. That was last year, but now Lieff Cabraser is bringing the follow on civil suit, and it just won a motion to dismiss and got to discovery. I think it's fair to say that the settlement or verdict will be pretty substantial, but the conduct itself ... it involves the employment market in Silicon Valley. Firms there apparently agreed to create "do not call" lists for the employees of select competitors - not a "do not hire" list. But just a restriction on how you market your job opening. It's an interesting example, if yet another is needed, or just how far antitrust regulation reaches into business practices.
All the antitrust profs must be excited as they can be -- an actual case of the DOJ suing to block a merger! Wow! The Department of Justice has sued to stop the merger of AT & T, Inc. and T-Mobile USA, Inc. on the grounds that the merger will have anticompetitive effects. The Complaint is here. The Complaint alleges the things you expect: the firms operate in a nationwide market, there are four big players in the market, the merger would take this from four to three, and the effect will be higher prices, poorer services and decreased innovation.
All that's great, and the antitrust folks can bring out their eyeshades and calculate concentration, etc. But, what interested me was a statement that is being ascribed to Deputy Attorney General James Cole yesterday at a press conference regarding the lawsuit:
“The view that this administration has is that through innovation and through competition, we create jobs,” said James M. Cole, the deputy attorney general, at a news conference announcing the lawsuit. Mergers usually reduce jobs through the elimination of redundancies, he said, “so we see this as a move that will help protect jobs in the economy, not a move that is going in any way to reduce them.
Note that this may have come up during Q & A, as it is not in Cole's published remarks.
This is very interesting. Yes, the government can use its powers to block mergers to foster competition and the good things it brings to consumers: lower prices, better quality, innovative products and services. However, after my exhaustive research questioning two antitrust professors in the hall, I don't believe that preserving jobs is a valid use of this power. Almost all mergers result in fewer jobs, so basically no merger should then go through. So why did Cole bring up jobs? (Admittedly, he could have merely been responding to a particular question about jobs or in response to the dubious argument that AT&T advanced that the merger will create jobs.)
I can think of two reasons. First, it could be that the merger is anticompetitive and just a bad idea. But, the administration doesn't want to seem like it's anti-business to voters and/or may want to take the opportunity to look like the protector of jobs. So, let's throw in that the administration is about job creation and preservation, Mr. and Ms. Voter. Second, it could be that the merger isn't all that anticompetitive or at least not any mroe than the rest that have been let throught in the past decade or two. But, the administration sure doesn't want any more jobs to be included in any of those pesky "jobs lost during this administration" counts. So, let's hang on to those jobs during this election cycle, even if it means stopping this big merger. The first scenario is probably the more accurate one, but I still think it's interesting to think about.
Another college football scandal, another round of calls for the NCAA to get tough on schools.
Why can’t we just admit that the NCAA is doomed to perpetual failure? Enforcing amateurism in big revenue sports is just a price control on the labor of college-age athletes. Price controls succeed mainly in creating black markets. Although, if they are effectively enforced, price controls can reduce supply.
But does the NCAA really want to reduce supply? Does it really want to enforce its rules? Miami won’t be treated like SMU and have its football program shut down because that would hurt television revenue.
There are really three explanations for why the NCAA seeks to enforce price controls:
1. It sincerely believes that doing so will encourage schools to provide the students who are generating the billions of dollars in revenue to NCAA schools with an education. (This focuses only on the supply side of education and ignores the demand side. It also is only lightly tethered to reality.).
2. It wants to prevent rising labor prices for student athletes from eating into the revenue to schools.
3. It needs to protect the “amateur” brand that it thinks creates such strong demand for its product.
If this last assumption is true, it leads to a perverse result: demand for amateurism threatens to undermine that amateurism. As a result, the NCAA would have to do just enough enforcement to maintain a perception of amateurism.
Likely some combination of all three of the above explanations accounts for the continuing NCAA game: being “shocked, shocked” to find that college athletes are getting paid under the table and then imposing some penalties on schools, but not enough to actually hurt the egg-laying goose.
So let’s be frank. Division 1 football and basketball is about gobs and gobs of money. If universities would like to engage in a little less hypocrisy and actually serve the interests of its money-generating athletes, isn’t it time to actually test the premise of reason number three above? Is amateurism really essential to rabid demand for college football and basketball? Let’s pay college athletes a market rate for bringing in revenue to their schools. Better yet, let’s have schools sponsor professional athletic teams.
Bailouts of megabanks preserved our financial system-for better and for worse. Next time around, Dodd-Frank allows winding down of big firms that cause systemic threats. But as I far as I can tell, the Act doesn’t require any liquidations—it’s up to the Treasury Secretary to decide whether to appoint the FDIC as receiver, (and up to the FDIC to pass the actual rules ). So it’s not clear whether there will be political courage to use this power in a future crisis; likely there will be bailouts again.
The obvious solution to the too-big-to-fail problem is to start breaking up the too-big ones that almost failed last time, and to prevent any more from getting that big. Then we can see a little creative destruction now and again. [How to do it? Luckily, I don’t have to bother with that part, since this forum is about the next two years and this is so not going to happen any time soon (if ever).]
Monetary policy: [Yes, I know this is mostly Fed policy, not legislative]
One has to wonder: the economy almost self-destructed because of easy credit, and the solution is…to ease up on credit?
I understand, and generally sympathize with, demand-side economics, and it may be the only way to mitigate the current pain of job losses. And I find it hard to believe there’s currently a real danger of inflation in the near term (those who claim to be worried about these days are probably most concerned about bond prices). But in the longer term, economic growth based entirely on expanding domestic demand seems like a snake eating its own tail. Is it prudish--or radical--to suggest there’s something wrong with our culture of consumption? If it needs fixing, punishing savings with low/negative interest rates ain’t the way to start. I don’t profess to have a palatable alternative. Maybe that’s the point—it’s time to take the nasty medicine….But I have tenure, so it’s too easy for me to say that.
Looks like I'm not the only wishing I'd written Dave Hoffman’s post, but since he got there first, let me polish the apple a bit: Instead of passing new laws, how about actually enforcing the laws already on the books? Oh, yeah, enforcement is the job of the executive branch. Then how about Congress just refrains from obstructing the enforcement of the ones it just passed? [Edit: Underbelly has more juicy stuff on this.] Just a thought.
The NY Times is reporting that United and US Air are in merger talks.
Ten years ago, the last time these two airlines were courting each other, I lived in D.C., and it was that market that caused the most antitrust concerns. United has a hub at Dulles, while US Air has one in Philadelphia and has major operations out of National.
Will this courtship turn out differently? Are the continuing struggles of the airlines enough to overcome union and antitrust obstacles? (Don't ask me. I won't even pretend to be an antitrust scholar.)
Which of the potentially eight hubs of the combined airline (SF, LAX, Phoenix, Denver, O'Hare, Philly, Dulles, Charlotte) would be downgraded? Living in the Southwest, I hope it would be none of the western ones. Phoenix might seem like a good candidate, although the city has stealthily grown into one of the five largest in the country. I am also rooting for Philly to remain viable. The US Air hub there keeps prices down when we fly back to God's Country (aka New Jersey).
I couldn’t agree with Rachel more. The discussion on the role of corporations in society is not over, in fact two seemingly separate stories from last week – the standoff between Google and China and the landmark Supreme Court decision in Citizens United –together signal that we are a watershed moment in this question. I don’t claim to have done the type of deep thinking that Rachel or Gordon or Lisa or other corporate scholars who have written on corporate social responsibility have. But at the risk of interloping into territory others know and think about far deeper and better than I, consider a few quick thoughts on how contrasting Google/China with Citizens United suggests we are returning to some very old questions about the twin risks of not having corporations separated from government power and not having governments separated enough from corporate power.
I would argue that Google’s threat to leave China because of government intrusion into its operations can be seen as a victory for those who advocate for corporate social responsibility. And the Citizens United decision obviously represents a victory for those who want to see corporations as not being creatures of the state, but rather as persons that can check government action. But these two victories pose thorny intellectual problems for the victors. These problems, in turn, reveal something about the horrible tangle we find ourselves in after the financial crisis as we cut our way between the risks of government being captured by corporate interests and corporations becoming the playthings of the state. Bear with me, because I think these two stories also have something to tell us about New Governance and the need for even greater cross pollination between public and private law in scholarship and the classroom.
Google v China: Do we know corporate social responsibility when we see it?
Many (I won’t even attempt to embed links) have applauded Google’s threat to pull out of China on account of state censorship and cyberattacks on Google’s servers as a victory for corporate social responsibility. Some scholars, like Ribstein, complicate this interpretation, in part, because Google’s actions may stem more from pure economic self interest. Given Google’s business model -- particularly their need to reassure users of the sanctity of personal information -- it may be impossible to disentangle definitively whether this resistance to China is an example of self-interest or social responsibility.
Let me ask a more basic question. How do we define what corporate social responsibility is? And who gets to define it? When we discuss corporate social responsibility at the end of my Business Associations class, there inevitably seems to be widespread consensus in the classroom about what responsible behavior means. Everyone seems to agree that dumping mercury in the Rio Grande or employing child laborers is irresponsible. But then I ask students what if social activists were pushing a corporation either to include abortion coverage in their health plans or to exclude same sex partners from employee health benefits. Consensus evaporates.
Do we define corporate social responsibility through the public law process? There are real dangers with treating corporate social responsibility as a matter of positive law and state determination. Consider that Google may not be a good corporate citizen if you look through the lens of the Chinese government. They are violating Chinese law. That of course is an extreme, rhetorical example. But there is a deep concern though that by implicating public law or government intervention – however light and well-intentioned -- in the core purposes of corporations we are slouching towards treating corporations as a plaything of the state rather than as a potential check on government power. Which is the role many lauded Google for playing.
So the Google victory poses several questions for advocates of corporate social responsibility, including how do we know what is corporate social responsibility, who decides, and are we comfortable that we can draw principled distinctions that will ensure the public does not subsume the private? Are corporate social responsibility advocates putting great faith in the political process to check abuses?
Citizens United: spheres unseparated
Meanwhile, Google and all other corporations received a huge boost to their political power and their ability to check and shape government regulation by virtue of the Supreme Court’s landmark decision in Citizens United. I won’t pretend to be a public law scholar, but the sweeping aside of restrictions on corporate political speech clearly represents the culmination of a centuries long evolution of case law -- running from Dartmouth College to Bellotti – that has given corporations more and more of the constitutional rights of natural persons. If last week’s Supreme Court decision means anything, it is a clear refutation of the ancient idea that corporations are creatures of the state.
But in this victory too lies a deep intellectual challenge for the victors. In the precursor of the current debate on social responsibility, Berle espoused a view of corporations and government as existing in “separate spheres” a view that echoed 19th century political thought and was in turned echoed later by Milton Friedman and others who later argued against corporate social responsibility. To render a fine idea into a quick sausage: governments should set the rules of the game for corporations then stay out, and corporations play by the rules.
From a pure descriptive standpoint, after the Citizens United decision, it seems impossible to argue that these spheres can be neatly separated. Corporations are not just playing by the rules, they have the right to participate in setting them. Moreover, they may be the 800 lb gorilla in the room. One interesting morsel in reading through the dissent was to see Justice Stevens grappling, even briefly, with corporate law scholarship questioning whether shareholders have the realistic ability to control corporate speech through corporate governance.
More deeply, do we now need to worry more that corporate law rules are not merely the product of competition and economic efficiency but set through management’s use of the political process. (For an interesting comparative study of the intersection of politics and corporate governance, see Peter A. Gourevitch & James Shinn, Political Power & Corporate Control (Princeton 2005). There seems to be a danger of management using the political process to hardwire not only management entrenchment but the political preferences of those in control of corporations. Aren't those who laud Citizens United placing great faith in the capacity of markets and the competition for corporate control to prevent agglomerations of political power? If the Google/China standoff lays bare for the need for the separation of corporations from state control, Citizens United raises the question of how we ensure that governments can retain sufficient independence from corporate control.
Strange constellations: the alignment of corporate law scholars after the financial crisis
I don’t think these concerns about corporations capturing the government or the government overreaching into the private sector are just dystopian constructs. The bailouts during the financial crisis reveal that these concerns are festering. There is plenty in the bailout for people across the political spectrum to lament. Progressives lament that bailing out AIG and other firms represents government capture and the socialization of loss and the privatization of profit. Conservatives lament the government interference in the discipline of the marketplace and now government using its leverage from the bailouts to justify interventions such as in executive compensation.
In the wake of the financial crisis, is government becoming the plaything of corporations? Are corporations becoming the playthings of government? Or is the reality some complex and perverted mix of both? Forgive the metaphor, but we seem to be stuck in bad remake of some scene from Eyes Wide Shut. It’s not clear from the tangle and the masks who is in control, but it’s clear it is not G-rated.
Problems of power and the dangers of a lack of clarity between public and private power point to a reason to ask tough questions of New Governance – which I admit to being only at the beginning of understanding. Cindy Williams politely told me that there are different versions of New Governance. At its core, New Governance seems to look to public/private partnership in regulation. But blurring the lines between public and private, even in experiments, has dangers. Progressives should fear regulatory capture. Libertarians should fear government co-opting the private sector.
Further afield, experimentation to insulate government decision-making from the political process has again become a constitutional issue as revealed by the Supreme Court taking up the challenge to the Public Company Accounting Oversight Board. This case – about an obscure and odd agency duckling created in the wake of the Enron scandal to insulate the regulation of the accounting profession from the political influence of the accounting profession – brought together strange constellations of law professors to support and oppose the constitutionality of the agency. If you look at the professors who filed briefs as amici, you might seem some striking lineups. I don’t presume to place scholars in political pigeonholes, but their previous scholarship suggests we have seen truly strange alliances of professors with very different political beliefs. And within the various alliances, the professors likely have very different opinions on the relative risks of state versus corporate power. I am sorry I missed the AALS Hot Topic Panel on the case, because I hear it cast a sharp spotlight on the strangeness of these political constellations.
Is this a one-off phenomenon, or are we seeing an ideological realignments in the legal academy? If you are outside the academy, you might ask: who care what we eggheads think on this technical topic? It sounds trite, but ideas matter and will spill over into the political arena -- perhaps after years of gestation. Perhaps the gestation period will be much shorter; the political arena seems ripe for a tectonic shift. We already see stark examples of strange political bedfellows – the Kuciniches of the left and the Pauls of the right -- in Congressional opposition to bailouts and to the political independence of the Federal Reserve itself.
Unchecked Power – Public and Private
So in debating the risks of concentrated corporate power versus concentrated government power, we are likely revisiting the same debates we had at the turn of the last century. History didn’t end. Nor does it repeat. It rhymes and samples. Indeed, to sample from my favorite poem, “All the new thinking is about concentrated power. In this it resembles all the old thinking…”
We are also likely to hear some familiar motifs in the political noise – such as calls to break apart corporate conglomerates to reduce perceived threats to democratic values. Is this perhaps an unspoken aim of the Volcker plan to limit the size of financial institutions. Will we return to trust busting?
If we are concerned about democratic values, we need to pay attention to agglomerations of control in the media. Without a critical and independent media, we will have no way of gauging how corporate and state powers are intersecting. But we may come to find a genie let out of the bottle during the Clinton presidency when few were watching closely. If few really understood what the repeal of Glass Steagall would mean for the consolidation of power in the financial sector, are we considering enough what the Telecommunications Act of 1996 means for the consolidation of power in the media industry? Do we understand how competition and consolidation among broadcast, cable, phone, internet, newspaper, radio corporations will play out in terms of concentrations of political power? I certainly don’t because communications law and the economics of those industries lie far outside my understanding.
When historians look back to the Clinton era, they will likely see the most radical shifting in economic and political control since FDR – all the more radical because its magnitude was obscured by its technicality and by the fact that the President who squired it cast himself as part of some “Third Wave” in politics. Beware those selling easy ways to transcend and triangulate across political divides. Here is a third example of a statute passed during the Clinton years that will have far reaching consequences for concentrations of political power: cyberlaw scholars have been trying to get us for years to pay attention to what the Digital Millenium Copyright Act of 1996 means for who holds the power over the intellectual commons.
Looking for checks
Cyberlaw scholars first made their mark by alerting us to the subtle and far-reaching consequences of seemingly technical questions on how both the state and corporations could use the internet as a means of social control. So we are now full circle to the conflict between Google and China. One of those scholars, Larry Lessig advocated making the “code” of the internet “open” to allow civil society to check these subtle forms of control. This last fall, Lessig notably balked at a broadbrush application of these same open source ideas to making politics more transparent.
Indeed, citizens would have trouble making sense of raw government transparency – in terms of the volume of information and the complexity of issues. This is not because people are stupid, but no individually has time to master complex issue and process reems of raw data. We need to rely on experts to edit and filter information for us. The forms of political, economic, and technological control are subtler and potential threats to democratic value harder to grasp.
But how do we trust those experts? Trust throughout society has long been thought to have been declining for decades, and perhaps accelerating in an age of political polarization. Moreover, we also decry how the digital age has left us with shorter attention spans. We also live famously in an age of irony. It is often remarked now that some of our most intelligent commentators on public affairs are fake newscasters. This irony may lead to a particularly unfunny kind of political paralysis (“Ha ha – that’s really funny what Colbert said about our country going to hell. LOL ;-).”)
It’s not easy to make sense of the new dangers of concentrations of political power. Bolshevism and trusts were simple compared to understanding interconnections between complex corporate ownership structures, telecommunications regulations, and how the technology of the internet functions.
Understanding this landscape requires the involvement of scholars who are independent of corporate and government power. Which is why sources of university financing during an age of budget cuts looms as so large an issue.
All the New Thinking: cross pollination in legal scholarship and public law in the business law curriculum
If legal scholars must play a valuable role in sorting through the risks of concentrating political power, it suggests that faculties need to foster greater dialogue among private and public law scholars. Understanding new constellations of power might require minds in corporate law, constitutional law, cyberlaw, communications law …
Integrating scholarship in corporate law with public law is not a new idea. In fact, this essay has clearly trampled all over ground covered by many scholars who’ve looked at the intersection of public law and corporate law -- Kent Greenfield, Larry Mitchell, Lyman Johnson, Lynn Stout, Cindy Williams, Margaret Blair, Lynn Dallas. Not to mention our own Lisa and Gordon and our guest Rachel. I’m likely making enemies galore by the dozens of scholars I am leaving out including scholars -- like Bainbridge -- critical of corporate social responsibility.
There is also a question of whether we corporate law scholars need to build a bigger public law component into basic business law courses. This is also not a novel idea. I admit being resistant to doing this; law students need to learn the nuts and bolts in order to get a job and have the intellectual tools to practice as effective lawyers. But I am reconsidering, because law students also need a set of intellectual tools to exercise their duties as citizens.
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This semester I am teaching Antitrust law to a group of eager students who are willing to take the class pretty early in the morning. I have now taught the class for a few years and have come across the same issue each year: how much of an international/comparative perspective should I bring into the course? On the one hand, there is the worry that too much of a comparative perspective will confuse students in an introductory course who are trying to master the basic concepts. On the other hand, as can be seen in many cases, like the infamous lysine cartel playing at a theater near you, modern antitrust cases and practice have a vast global component.
There has been a dramatic increase in cross-border antitrust issues since the 1990s with more comprehensive antitrust laws being adopted around the world, such as China’s 2007 Anti-Monopoly Law, or antitrust regimes in India or Latin America. Furthermore, the European Union has played an aggressive role in antitrust enforcement in the past ten years, including against US companies and in challenging merger transactions between US companies. For example, the European Commission recently imposed a record $1.5 billion fine against Intel (which Intel claims violated its human rights) and has released a very lengthy decision laying out its evidence and justifying this enormous fine. In another high profile matter, the Europeans have decided to extend their investigation into Oracle’s $7.4 billion acquisition of Sun Microsystems which the Department of Justice had already approved back in August without any conditions. Antitrust scrutiny of horizontal mergers is just one of the areas in which Europe and the US have diverged. Some antitrust scholars like Jonathan Baker and Carl Shapiro have argued “ in favor of reinvigorating horizontal merger enforcement" and statements by Christine Varney, who heads the Department of Justice antitrust division, also indicate that there will be greater merger review in the US. It is too early to say whether antitrust enforcement by the US and EU will converge, although the big players have been talking regularly. And on the merger front, the DOJ and the Federal Trade Commission will be holding joint workshops to determine whether the Horizontal Merger Guidelines need to be updated “in light of legal and economic developments that have occurred since the last major revision of the guidelines” in 1992. Assistant Attorney General Varney, in a recent speech discussing international convergence of competition policy regimes (HT: Antitrust Law Prof Blog), stated that this modification process will be done with "an openness to others' ideas and new approaches."
These types of developments indicate a need for the introductory Antitrust course to take a global view. Of course, the challenge is how to convey the essential substantive material that should be covered in the class with the undertaking to help students comprehend the global nature of current Antitrust practice. Undoubtedly, the degree to which one should/can bring a global perspective comes up in numerous other courses. I am not sure that I have any solutions yet, but I am planning on internationalizing at least some of the material covered in my Antitrust course.
Danny Sokol has the scoop, here. The comments are amusing too.
"Section 2 and the Section 2 Report: Perspectives and Evidence." Great lineup. Details here.
Ok, day 2 as a guest blogger. I'm off in a few minutes to teach the first day of Business Associations and Mergers & Acquisitions, so I'll be (mercifully) brief.
On Sunday David Zaring commented on the value of taking Antitrust while in law school. I agree wholeheartedly that it's a terrific course, but especially so for a particular subset of students.
As I am sure is the case at many law schools, each year I encounter a number of students who entered law school with visions of social justice in their heads - and no real life experience to speak of - but who then discover that their real interest lies in business law. Either they were ignorant of the joys and challenges of dealmaking, or they just assumed that they wanted to litigate. The pedagogical challenge they present is not only to teach them the legal skills they need to practice business law, but also to help them get a feel for how businesses (and businesspeople) think and behave.
One way to handle this is through course selection. In my experience, antitrust and business bankruptcy are the two courses that best expose what goes on behind the curtain in a large corporation. Maybe it's the glimpse that antitrust provides into the proverbial smoke-filled room, or the fact that bankruptcy is when all is laid bare, but I urge all of my inexperienced business law students to take both courses.
In addition, I should note, I of course encourage them to get involved with various externship opportunities as well as our small business clinic, both of which also provide insights into how businesses behave. Finally, I give them a list of books by people like Roger Lowenstein and James Stewart that I encourage them to read offline. "Deals from Hell" by Robert Bruner is also a good read for students who are unfamiliar with the doings of large businesses, as are a number of other fairly obvious choices. Books of this ilk are also helpful in providing some recent background as to how (and why) the American economy has evolved in recent years, something that is especially important for students who paid no attention to economic news until law school (and maybe not even then). More and more, for example, I am finding students who are unfamiliar with important corporate law developments like the Disney/Michael Eisner soap opera or even the doings of Enron (let alone events of the 20th century!). How can they understand current trends in corporate law if they don't know the context in which the law developed?
By the way - I too saw the new Star Wars movie over the weekend. As my six-year-old daughter recently explained to me, "star wars isn't just a phase, Dad, it's part of who I am."
Josh Wright considers the question here. He says the subject can be about exciting smoke-filled rooms. Maybe those rooms are the document receptacles in the decade-long litigation that will never be going to trial that you've found yourself trapped in for the remainder of your time at the firm. Nonetheless, if you read this blog, I agree with Josh: yes, you should probably take antitrust.