On January 26 the Heritage Foundation hosted a one-day conference on “Antitrust Policy for a New Administration.”  Featured speakers included three former heads of the U.S. Department of Justice’s Antitrust Division (DOJ) (D.C. Circuit Senior Judge Douglas Ginsburg, James Rill, and Thomas Barnett) and a former Chairman of the U.S. Federal Trade Commission (FTC) (keynote speaker Professor William Kovacic), among other leading experts on foreign and domestic antitrust.  The conference addressed developments at DOJ, the FTC, and overseas.  The entire program (which will be posted for viewing very shortly at Heritage.org) has generated substantial trade press coverage (see, for example, two articles published by Global Competition Review).  Four themes highlighted during the presentations are particularly worth noting.

First, the importance of the federal judiciary – and judicial selection – in the development and direction of U.S. antitrust policy.  In his opening address, Professor Bill Kovacic described the central role the federal judiciary plays in shaping American antitrust principles.  He explained how a few key judges with academic backgrounds (for example, Frank Easterbrook, Richard Posner, Stephen Breyer, and Antonin Scalia) had a profound effect in reorienting American antitrust rules toward the teachings of law and economics, and added that the Reagan Administration focused explicitly on appointing free market-oriented law professors for key appellate judgeships.  Since the new President will appoint a large proportion of the federal judiciary, the outcome of the 2016 election could profoundly influence the future direction of antitrust, according to Professor Kovacic.  (Professor Kovacic also made anecdotal comments about various candidates, noting the short but successful FTC experience of Ted Cruz; Donald Trump having once been an antitrust plaintiff (when the United States Football League sued the National Football League); Hillary Clinton’s misstatement that antitrust has not been applied to anticompetitive payoffs made by big drug companies to generic producers; and Bernie Sanders’ pronouncements suggesting a possible interest in requiring the breakup of large companies.)

Second, the loss of American global economic leadership on antitrust enforcement policy.  There was a consensus that jurisdictions around the world increasingly have opted for the somewhat more interventionist European civil law approach to antitrust, in preference to the American enforcement model.  There are various explanations for this, including the fact that civil law predominates in many (though not all) nations that have adopted antitrust regimes, and the natural attraction many governments have for administrative models of economic regulation that grant the state broad enforcement discretion and authority.  Whatever the explanation, there also seemed to be some sentiment that U.S. government agencies have not been particularly aggressive in seeking to counter this trend by making the case for the U.S. approach (which relies more on flexible common law reasoning to accommodate new facts and new economic learning).  (See here for my views on a desirable approach to antitrust enforcement, rooted in error cost considerations.)

Third, the need to consider reforming current cartel enforcement programs.  Cartel enforcement programs, which are a mainstay of antitrust, received some critical evaluation by the members of the DOJ and international panels.  Judge Ginsburg noted that the pattern of imposing ever- higher fines on companies, which independently have strong incentives to avoid cartel conduct, may be counterproductive, since it is typically “rogue” employees who flout company policies and collaborate in cartels.  The focus thus should be on strong sanctions against such employees.  Others also opined that overly high corporate cartel fines may not be ideal.  Relatedly, some argued that the failure to give “good behavior” credit to companies that have corporate compliance programs may be suboptimal and welfare-reducing, since companies may find that it is not cost-beneficial to invest substantially in such programs if they receive no perceived benefit.  Also, it was pointed out that imposing very onerous and expensive internal compliance mandates would be inappropriate, since companies may avoid them if they perceive the costs of compliance programs to outweigh the expected value of antitrust penalties.  In addition, the programs by which governments grants firms leniency for informing on a cartel in which they participate – instituted by DOJ in the 1990s and widely emulated by foreign enforcement agencies – came in for some critical evaluation.  One international panelist argued that DOJ should not rely solely on leniency to ferret out cartel activity, stressing that other jurisdictions are beginning to apply econometric methods to aid cartel detection.  In sum, while there appeared to be general agreement about the value and overall success of cartel prosecutions, there also was support for consideration of new means to deter and detect cartels.

Fourth, the need to work to enhance due process in agency investigations and enforcement actions.  Concerns about due process surfaced on both the FTC and international panels.  A former FTC general counsel complained about staff’s lack of explanation of theories of violation in FTC consumer protection investigations, and limitations on access to senior level decision-makers, in cases not raising fraud.  It was argued that such investigations may promote the micromanagement of non-deceptive business behavior in areas such as data protection.  Although consumer protection is not antitrust, commentators raised the possibility that foreigner agencies would cite FTC consumer protection due process deficiencies in justifying their antitrust due process inadequacies (since the FTC enforces both antitrust and consumer protection under one statutory scheme).  The international panel discussed the fact that due process problems are particularly bad in Asia but also exist to some extent in Europe.  Particular due process issues panelists found to be pervasive overseas included, for example, documentary request abuses, lack of adequate access to counsel, and inadequate information about the nature or purpose of investigations.  The international panelists agreed that the U.S. antitrust enforcement agencies, bar associations, and international organizations (such as the International Competition Network and the OECD) should continue to work to promote due process, but that there is no magic bullet and this will be require a long-term commitment.  (There was no unanimity as to whether other U.S. governmental organs, such as the State Department and the U.S. Trade Representative’s Office, should be called upon for assistance.)

In conclusion, the 2016 Heritage Foundation antitrust conference shed valuable light on major antitrust policy issues that the next President will have to confront.  The approach the next President takes in dealing with these issues will have major implications for a very significant branch of economic regulation, both here and abroad.