High Stakes Antitrust: The Last Hurrah?

177 Pages·2003·1.01 MB·English

by  Robert William Hahn (Editor)

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High-Stakes Antitrust
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High-Stakes
Antitrust
The Last Hurrah?
Robert W. Hahn
Editor
-  
  
Washington, D.C.
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Copyright © 2003 by AEI-Brookings Joint Center for Regulatory Studies, the American
Enterprise Institute for Public Policy Research, Washington, D.C., and the Brookings
Institution, Washington, D.C. All rights reserved. No part of this publication may
be used or reproduced in any manner whatsoever without permission in writing
from the AEI-Brookings Joint Center, except in the case of brief quotations
embodied in news articles, critical articles, or reviews.
High Stakes Antitrust may be ordered from:
Brookings Institution Press
1775 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Tel.: [phone] or [phone]
Fax: [phone]
www.brookings.edu
Library of Congress Cataloging-in-Publication data
High-stakes antitrust : the last hurrah? / Robert W. Hahn, editor.
p. cm.
Includes bibliographical references and index.
ISBN 0-8157-3396-8 (cloth : alk. paper) —
ISBN 0-8157-3395-X (pbk. : alk. paper)
1. Antitrust law—United States. I. Hahn, Robert William. II.
AEI-Brookings Joint Center for Regulatory Studies. III. Title.
KF1649.A2H54 2003
343.73'0721—dc22 2003015789
9 8 7 6 5 4 3 2 1
The paper used in this publication meets minimum requirements of the
American National Standard for Information Sciences—Permanence of Paper for
Printed Library Materials: ANSI Z39.48-1992.
Typeset in Adobe Garamond
Composition by R. Lynn Rivenbark
Macon, Georgia
Printed by R. R. Donnelley
Harrisonburg, Virginia
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Contents
Foreword vii
1 Introduction 1
 . 
2 Antitrust Activities during the Clinton Administration 11
 . 
3 High-Stakes Antitrust: The Last Hurrah? 45
 
4 Has the Consumer Harm Standard Lost Its Teeth? 72
 . ,  . ,
  
5 Flawed Efforts to Apply Modern Antitrust Law
to Network Industries 117
 . 
Contributors 159
Index 161
v
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Foreword
After almost two decades in which antitrust policy had veered sharply
toward less-is-more, the rules changed in the late 1990s. The U.S.
Department of Justice mounted challenges to the practices of successful
service enterprises in payment cards, airlines, and software.
All three antitrust suits involved industries in which networks played
a significant role. Do interventions in these network industries signal a
return to an era in which Washington second-guesses market outcomes,
rather than simply setting ground rules for competition and allowing mar-
kets to respond on their own?
This collection of essays provides a state-of-the-art analysis of high-
stakes antitrust issues raised over the past decade. It is the result of an AEI-
Brookings Joint Center for Regulatory Studies conference held on October
3, 2002.
The scholars who participated reflected diverse points of view. While
each of the four panelists agreed to two basic facts—first, that the Depart-
ment of Justice’s approach to antitrust in the 1990s was aggressive and,
second, that the impact of the landmark cases filed in that decade will be
felt for many years to come—agreement mostly ends there. Two of the
panelists argued that the department had lost its way, albeit for different
reasons. The other two panelists argued that while the Justice Department
missed some opportunities and made some missteps, its aggressive stance
was largely justified by changing technology and market conditions.
vii
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viii 
This volume is one in a series of books commissioned by the AEI-
Brookings Joint Center for Regulatory Studies to contribute to the con-
tinuing debate over antitrust. The Joint Center builds on the expertise of
both sponsoring institutions on regulatory issues. The series addresses sev-
eral fundamental issues in antitrust and regulation, including the design of
effective reforms, the impact of proposed reforms on the public, and the
political and institutional forces that affect reform. We hope that these
publications will help illuminate many of the complex issues involved in
designing and implementing regulation and regulatory reforms at all levels
of government.
The views expressed here are those of the authors and should not be
attributed to the trustees, officers, or staff members of the American Enter-
prise Institute or the Brookings Institution.
 . 
Executive Director
 . 
Director
AEI-Brookings Joint Center for Regulatory Studies
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 . 
1
Introduction
After almost two decades in which antitrust policy
veered sharply toward the philosophy that less is
more, the policy changed in the late 1990s when the U.S. Department of
Justice mounted challenges to the practices of successful service enterprises
dealing in software (Microsoft), consumer payment cards (Visa and
MasterCard), and air travel (American Airlines).
All three antitrust suits involved industries in which networks were
crucial. Microsoft supports a network of hardware manufacturers, personal
computer vendors, computer users, and software developers that depend
on the company’s Windows operating system. Visa and MasterCard have
created vast networks of merchants who accept credit, charge, and debit
cards that are issued to consumers by thousands of financial institutions.
American Airlines operates an air carrier network connecting hundreds of
cities worldwide.
Do challenges to the practices of these network industries signal a
return to an era in which Washington second-guessed market outcomes
instead of simply setting ground rules for competition and allowing mar-
kets to respond on their own? Or were antitrust activities of the later Clin-
ton years an aberration—a last hurrah for hard-line trustbusting? In Octo-
ber 2002 the AEI-Brookings Joint Center for Regulatory Studies invited
experts with a variety of perspectives on those questions to discuss them
