Substance, Procedure, and Institutions in the International Harmonization of Competition Policy

Many people who pay attention to the rapid development of antitrust regimes across the globe hold two tenets in common. First, most of the relevant stakeholders would benefit if competition policy could be harmonized interjurisdictionally.1 Second, and alas, this beneficial harmonization is unlikely to happen on a significant scale in the foreseeable future.2 To many, antitrust harmonization is thus a noble but Utopian aspiration. I generally share both the former sentiment and the latter lament but both are far too general to be of much use without further specification. Uniformity of competition policy is valuable to be sure, but not all facets of harmonization are created equal. Some aspects of competition policy are in much greater need of harmonization than others. Also, there is good harmonization and bad harmonization. We are almost certainly better off with a system of antitrust heterogeneity with "better" and "worse" systems than we would be with a uniformly "bad" antitrust system - say, a worldwide regime of small-business protectionism. Against this backdrop, I aim to do three things in this essay. First, I identify areas where harmonization should be a priority and areas where harmonization is less important. Second, I articulate the preconditions necessary for meaningful harmonization. Finally, I discuss the feedback loops that can occur between three different aspects of harmonization - substance, procedure, and institutions - and suggest an incremental path forward. I. Harmonization Priorities What does the world gain from international antitrust harmonization? In part, the answer depends on the exact problem that harmonization would supposedly remedy. Harmonizationists cite many different potential benefits from increased international homogenization of antitrust norms. Some are more compelling than others, and sorting through them is necessary in order to prioritize the difficult tasks ahead. A. Less Compelling Justifications for Harmonization Some justifications advanced for multilateral antitrust harmonization that are not particularly compelling include eliminating discrimination against outsider firms, improving the average quality of antitrust norms, and eliminating export cartels. Of these, discrimination against foreign firms' access to domestic markets has received a good bit of attention. This is a real concern with many egregious illustrations, but it is not primarily an antitrust concern. Antitrust law tends to be concerned with the acquisition and exercise of market power, and trade barriers do not necessarily have anything to do with the acquisition of market power. For example, agricultural trade barriers often take place against a backdrop of intensely competitive local markets. Further, there are existing mechanisms under the General Agreement on Tariffs and Trade and the World Trade Organization ("WTO") to deal with trade barriers that do not rely on antitrust principles. The problem of trade barriers does not end with tariffs; there are other ways to discriminate against foreign firms. A more subtle version of parochial discrimination occurs when a jurisdiction allows anticompetitive activity in a way that blocks foreign competitors from accessing the domestic market. A case in point is the Kodak-Fuji dispute over the distribution of consumer photographic film and paper distribution in Japan.3 Japan effectively tolerated (and, indeed, encouraged) vertical exclusive dealing arrangements between manufacturers, wholesalers, and retailers that made it difficult for US firms like Kodak to access the Japanese market. But, again, harmonization of international antitrust enforcement would not necessarily address this set of problems. Tolerance of anticompetitive agreements in cases like the Kodak photographic film and paper matter exacts a toll on domestic consumers and potential domestic entrants to the market as well. The burden on foreign firms is incidental to the fact that the domestic regime may have adopted a poor antitrust policy that also threatens its own producers and consumers. …