Editor’s note: Local Tech Wire welcomes outside opinion, which will be published after review in our ‘Say Something” section. James DeLong is senior fellow, project on technology and innovation, at the Competitive Enterprise Institute. C:\SPIN is a weekly commentary from the Competitive Enterprise Institute and is reprinted with permission. If you have something to say, email your comments to LTW Managing Editor Rick Smith (email@example.com).
WASHINGTON, D.C. – It is a fundamental statement of American jurisprudence and government, drummed into new law students their first week:
“[T]he United States form, for many and for most important purposes, a single nation … In all commercial regulations, we are one and the same people. In many other respects, the American people are one, and the government, which is alone capable of controlling and managing their interests in all these respects, is the government of the Union. … These States are constituent parts of the United States … for some purposes sovereign, for some purposes subordinate. Cohens v. Virginia (1821)(per John Marshall, Chief Justice).
Antitrust is commercial regulation, and if the U.S. is to retain the inestimable benefits of a common market, multistate firms must have one set of antitrust laws with which they comply and one federal authority to which they look. To have 51 other jurisdictions each asserting a right to invent its own antitrust law and apply it to national firms is ludicrous. (Def.: “meriting derisive laughter or scorn as absurdly inept, false or foolish.”)
An obvious application is the Microsoft case. Microsoft moved to dismiss the effort to continue the litigation by the nine non-settling states, citing the several clauses of the U.S. Constitution that are designed to nullify the centrifugal forces of state interest. The judge signaled that she takes this motion seriously, which gives reason to hope that this manifestation of the problem will end.
But the problem will remain. Some 30 state Attorneys General may attack the EchoStar/Hughes satellite merger, even if it is approved by the Federal Communications Commission and the Department of Justice. It’s hard to get much more extra-territorial than satellites. Twenty-one state AGs are lining up against Orbitz, an airline-founded online travel service that should improve information for consumers and cut costs for airlines. State AGs may hop into the messy field of telecom, which is already controlled by the FCC, the DOJ, 51 state regulatory commissions, and a growing industry of private actions.
Such a chaotic system is destructive. Splintered enforcement renders impossible any coherent antitrust policy, because no one can decide that particular arrangements or conduct do not violate antitrust laws. This introduces a strong pro-regulatory bias into the system; with 52 regulators, one “attack” overrides 51 “abstains.”
Logically, one might say, “so what?” States will sue, lose in court, and the law will right itself. But antitrust is going through a period of intellectual incoherence. It is rare conduct that cannot be characterized as pro- or anti-competitive with equal dexterity, depending on the desired outcome, and the courts are as baffled as anyone. Outcomes are a bit quirky.
If the fed enforcers remain supreme, there is a chance of restoring rigor to the field; it happened before, in the antitrust reformation of the 1980s. But if every state AG must be persuaded, there is no chance, especially because state AGs are not particularly interested in policy coherence. They are politicized – the NAAG in National Association of Attorneys General also stands for National Association of Aspiring Governors – and antitrust offers enticing sound bites.
AGs are also good vehicles for individual competitors. Those leading the charge against Microsoft are from states with companies that would profit from the case. They could care less about impacts on consumers. A competitor that gets its state to litigate can avoid the unpleasantness of competing on products, price, and service.
So remember John Marshall. Quote him often. The e-conomy needs to go back to the future.
C:\SPIN is produced by the Competitive Enterprise Institute.