The Local Law of Global Antitrust

Abstract

INTRODUCTION Antitrust seems like a brief for the uselessness of international law. The imperative for international cooperation is obvious. (1) Lowered trade barriers increase the relative significance of private restraints on competition, (2) even as heightened international trade undermines the ability of individual nations to achieve antitrust objectives by themselves. (3) Meanwhile, the phenomenal proliferation of antitrust codes (4) demonstrates not only the possibility of a new consensus on antitrust, but also the need for it, given the huge potential for regulatory overlap. Numerous antitrust regimes impose inconsistent requirements and substantial compliance costs, especially for the growing number of mergers requiring approval in multiple jurisdictions. (5) Particularly given the highly active antitrust authorities in the United States and the European Union, some think that anti-trust has been an accident waiting to happen in transatlantic relations. (6) Tempers in fact were sorely tested in the Boeing/McDonnell Douglas merger (7) and the attempted GE/Honeywell merger. (8) Small wonder, then, that the obsession with adapting American antitrust to contemporary economics has taken a backseat to rationalizing the more discrepant impulses of international antitrust--the focus, as evidenced in weekly headlines, being more on Brussels, Paris, or Geneva than Chicago. (9) The question for many, in consequence, is why greater international cooperation has not transpired, or if it ever can; (10) the predicate, in any case, is that international law has failed to provide any sort of solution. Justice Holmes once suggested that U.S. antitrust legislation was limited by international principles, (11) but the Permanent Court of International Justice subsequently professed ignorance as to what those principles were. (12) There has been little progress since. Attempts to establish a comprehensive international antitrust regime have repeatedly failed, and many believe they will continue to do so. (13) Customary international law (14) (or its kissing cousin, comity (15)) has been left to fill the breach, without much effect. For one, international law objections to U.S. extraterritoriality have faded as more and more nations assert like authority themselves, and cooperate with the United States either informally or through bilateral agreements. (16) Meanwhile, attempts by U.S. courts to practice jurisdictional self-restraint--in the form of a multifactored reasonableness test based substantially on custom (17)--fell off the wagon in Hartford Fire Insurance Co. v. California, (18) in which the Supreme Court held that effects jurisdiction under the Sherman Act should be truncated only where foreign law compelled a defendant's antitrust violation. (19) Hartford Fire relied on a patent misreading of the Restatement (Third) of Foreign Relations, but many contend that the Court's mistakes were venial: customary international law has not yet dictated, and perhaps may never properly dictate, any judicially enforceable restrictions on the exercise of antitrust jurisdiction. (20) The antitrust experience, indeed, has been cited as a compelling indictment of customary international law in general. (21) The reasonableness test was bottomed substantially on judicial and academic fiat, rather than state practice, thus typifying a methodology that custom's critics find particularly unsavory. To be sure, nations have tried to avoid conflict and coordinate their antitrust affairs, but such practices look like political or regulatory alternatives to custom, (22) and offer little support for the distinctive balancing exercise they are supposed to have adopted. Reasonableness thus illustrates custom's familiar paradox: if the norm is genuinely patterned on what nations do, it verges on redundancy; if, on the other hand, it imposes a higher standard, it is not custom at all, and illegitimately interferes with ostensibly adequate political alternatives. …