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"Antitrust law protects competition, not competitors."
These recent comments by Assistant Attorney General Thomas Barnett of the United States Department of Justice's Antitrust Division echo a constant theme in American antitrust jurisprudence and nicely articulate the commonly held perception of the key difference between the United States (U.S.) and the European Union (EU) in the field of competition law. See Siobhan Hughes, Apple Gets Vote of Confidence For iTunes From Antitrust Chief, The Wall St. J., September 14, 2006, at B5, see also Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962); Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977). While antitrust law in the U.S. is typically described as protecting consumers, competition law in the EU (as enforced by Directorate General IV of the European Commission) is typically described as protecting competitors. Unfortunately for practitioners, this oversimplified calculus does not accurately describe all of the differences between U.S. and EU approaches to enforcement of antitrust and competition law, especially in the area of transatlantic merger review.
Although competition law encompasses a wide range of legal issues, this Antitrust 101 article focuses on the treatment of merger review by enforcement agencies in the U.S. and in the EU. Focusing on these jurisdictions is warranted for at least two reasons. First, approximately 80% of all transnational mergers involve these two jurisdictions. See Simon J. Evenett, Alexander Lehmann & Benn Steil, Antitrust Policy in an Evolving Global Marketplace, in Antitrust Goes Global 3 (Simon J. Evenett, Alexander Lehmann & Benn Steil, eds. 2000). Second, the bilateral cooperation between the U.S. and the EU is frequently cited as a model for harmonizing divergent competition law policies. As noted in the following sections, this bilateral cooperation has eliminated some, but not all, of the disparities that exist between the two jurisdictions.
The history of formal U.S. and EU cooperation in competition law policy dates back to an agreement signed in 1991, which was subsequently amended in 1998. See Kathryn Fugina, Comment, Merger Control Review in the United States and the European Union: Working Towards Conflict Resolution, 26 Nw. J. Int'l. & Bus. 471, 492 n.162 (2006). These agreements address the "basic procedural aspects of investigation and enforcement cooperation in connection with enforcement of the competition laws generally." Katherine B. Forrest, The State of E.U./U.S. Merger Coordination, 1565 Pli/Corp 223, 225 (2006). According to the respective agencies, the main reason that the U.S. and EU entered into this cooperative arrangement was to decrease the "possibility or impact of differences between the Parties in the application of their competition laws." Honorable Pamela Jones Harbour, Developments in Competition Law in the European Union and the United States: Harmony and Conflict, 19-Spg Int'l L. Practicum 3, 9 (2006). To further these goals, regulators in each jurisdiction share information as well as economic theories such as the definition of relevant product and geographic markets. See Sarah Stevens, The Increased Aggression of the EC Commission in Extraterritorial Enforcement of the Merger Regulation and its Impact on Transatlantic Cooperation in Antitrust, 29 Syracuse J. Int'l L. & Com. 263, 298 (2002).
As a result of the notification, consultation and coordination of merger review between jurisdictions, the U.S. and EU have "managed to avoid inconsistent results in the vast majority of cases." Charles A. James, Assistant Attorney General, Antitrust Div., U.S. Dep't of Justice, Address at the Canadian Bar Association, Annual Fall Conference on Competition Law: International Antitrust in the Bush Administration (Sept. 21, 2001), available at http://www.usdoj.gov/atr/public/speeches/9100.htm. The most notable exception to this general proposition is the EU's widely criticized decision to block the GE/Honeywell merger in 2001. Ironically, the divergent outcomes in the case between U.S. and EU regulators may have actually created an incentive to avoid future conflicts. Proof of this theory comes from two significant steps taken towards increasing cooperation following the GE/Honeywell decision. First, a joint U.S.-EU working group was formed in October 2002. This group prepared a report providing "a more structured basis for cooperation in reviews of individual merger cases." See Forrest at 228-29. Second, the EU's adoption of a new merger regulation and issuance of Horizontal Merger Guidelines similar to those used by agencies in the U.S., discussed in Part II.B supra, suggests that future convergence in transatlantic merger review is likely to occur.
Sources of Conflict
Despite the extensive cooperative efforts in merger reviews between U.S. and EU officials, a number of differences still remain. The following section introduces some of the most significant differences, since a comprehensive discussion falls outside the scope of this article.
Despite the high level of cooperation and substantive policy convergence between U.S. and EU regulators in the merger context outlined in Part I, supra, the unique facts involved in each merger case based on "geographic, cultural, political and resource realties" cannot be eliminated. See Forrest at 231. The highest probability for divergent enforcement decisions appears to be when the parties' businesses in Europe and the U.S. are different scopes and when different market conditions prevail in each region. See Gotts, supra note 17 at 499-500 (noting that in these situations, the EU has "had the instinct to rely on public intervention rather than market mechanisms", and that "the smaller geographic markets that exist [in Europe] tend to result in higher market concentration levels and are therefore more likely to attract the attention of antitrust regulators."). Thus, current U.S.- EU merger policy can be thought of as a mostly cooperative effort that will occasionally produce disparate results.
About the Author
Candidate for Juris Doctor, 2008, Northwestern University School of Law.