Perspectives on State and Federal Antitrust Enforcement

CALKINS.DOC 06/21/04 3:59 PM PERSPECTIVES ON STATE AND FEDERAL ANTITRUST ENFORCEMENT STEPHEN CALKINS† ABSTRACT This Article reviews federal and (especially) state antitrust enforcement in light of the Microsoft proceeding. Criticism of state enforcement based on that case is misplaced. The Article identifies three consensus comparative advantages of state enforcers: familiarity with local and regional markets, closeness to state and local institutions, and ability and experience in compensating individuals. A review of state enforcement activities finds that the vast majority are consistent with one or more of these advantages. The Article also identifies hallmarks of generally accepted federal civil non-merger enforcement: both antitrust agencies participate actively, using a variety of tools, while showing support for mainstream, economicsbased antitrust and an interest in addressing important questions, litigating, and addressing legal issues arising in private as well as public cases. These factors are considered through review of the agencies’ role in addressing the appropriate application of the per se rule, the rule of reason, and mid-level review. The Article ends with modest recommendations. Enforcers should continue to use their array of powers, they should address systemic issues in the antitrust system, and they should apologize less. State enforcers, in particular, need to do a better job of helping observers understand what they actually do—which is something on which state enforcers are working, and something to which this Article may contribute. Copyright © 2003 by Stephen Calkins. † Professor of Law, Wayne State University Law School. The author was General Counsel to the Federal Trade Commission from 1995–1997, but obviously nothing herein represents the views of that or any other agency or institution. The author thanks Andrea Poole for research assistance and the many enforcers from whose comments he has benefited. CALKINS.DOC 674 06/21/04 3:59 PM DUKE LAW JOURNAL [Vol. 53:673 TABLE OF CONTENTS Introduction ............................................................................................675 I. State Attorneys General ...................................................................676 A. Overview of State Antitrust Enforcement ..............................676 B. The States’ Comparative Advantages......................................679 1. Familiarity with Local Markets.............................................680 2. Familiarity with Local Institutions .......................................681 3. Compensating Individuals .....................................................682 C. The Critics ...................................................................................684 D. The States’ Activities .................................................................686 1. Local Emphasis.......................................................................688 2. Public Institutions...................................................................690 3. Compensation to Consumers ................................................691 E. State Antitrust Enforcement in Perspective ...........................694 II. Federal Antitrust Agencies .............................................................696 A. Hallmarks of Effective Civil Antitrust Enforcement.............697 1. Active Participation by Both Agencies................................697 2. Using a Wide Array of Tools ................................................698 3. Addressing Important Questions from a Position of Mainstream, Economics-Supported Antitrust....................698 4. Litigating .................................................................................699 5. Interacting with Private Enforcement .................................699 B. An Illustration: The Agencies and the Structured Rule of Reason .....................................................................................703 1. Active Participation by Both Agencies................................708 2. Using a Wide Array of Tools ................................................710 3. Addressing Important Questions from a Position of Mainstream, Economics-Based Antitrust ...........................713 4. Litigating .................................................................................715 5. Interacting with Private Enforcement .................................725 C. Summary......................................................................................725 III. Recommendations ..........................................................................725 A. Continue to Use and Develop Existing Powers......................726 B. Address Systemic Issues in the Antitrust System ...................728 1. NAAG Should Communicate Its Activities More Effectively ...............................................................................728 2. The States and Agencies Should Keep a Long-Term Perspective ..............................................................................729 3. Government Enforcers Should Be More Appreciative of Private Litigation ...................................................................732 CALKINS.DOC 2003] 06/21/04 3:59 PM ANTITRUST ENFORCEMENT 675 C. There Should Be More Pride and Less Apologizing..............733 Conclusion...............................................................................................734 INTRODUCTION State and federal antitrust enforcement are perceived differently. State antitrust enforcement is viewed as the new kid on the block, is 1 less understood, and is more controversial. In contrast, federal antitrust enforcement has achieved widespread acceptance and 2 support. Overly influenced by the aberrant Microsoft case,3 commentators have misconstrued the roles that state and federal antitrust 4 enforcement officers play. This Article seeks to correct these misunderstandings. Part I identifies three consensus comparative advantages of state enforcers: familiarity with local and regional markets, closeness to state and local institutions, and ability and experience in compensating individuals. A review of state antitrust enforcement shows that the vast majority of activities (unlike Microsoft) are consistent with one or more of these comparative advantages. Part II then examines federal antitrust enforcement practices. Federal antitrust enforcement enjoys such sweeping comparative advantages—especially in criminal and merger enforcement—that there is little point in cataloguing them. Instead, this Article identifies hallmarks of generally accepted, civil, non-merger enforcement: (1) both the Justice Department’s Antitrust Division (Division) and the Federal Trade Commission (FTC) participate actively, (2) using a variety of tools, while (3) showing support for mainstream, 1. See, e.g., RICHARD A. POSNER, ANTITRUST LAW 281–82 (2d ed. 2001) [hereinafter POSNER, ANTITRUST LAW] (calling for states (...truncated)