Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Baer outlines nuts and bolts of U.S. competition policy at European Competition Forum, (Feb 12, 2014)

By Linda O’Brien, J.D., LL.M.

Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division, discussed the U.S. approach to the challenges of developing and implementing a modern competition policy agenda in a speech before the European Competition Forum 2014 in Brussels on February 11.

Baer began his remarks, entitled “Public and Private Antitrust Enforcement in the United States,” by stating that the United States relies on a combination of federal, state, and private enforcement to combat anticompetitive conduct. These three enforcers play different, yet complimentary roles. Federal and state competition law enforcement both protect the public from the harms flowing from the anticompetitive conduct. Similarly, private enforcement acts on behalf of the specific concerns of their clients, usually seeking damages for antitrust harms that have been inflicted. These roles have evolved over time and been determined to an extent by what economists call the principle of comparative advantage – each enforcer focusing on what the enforcer is best positioned to do.

Cartel enforcement. Having a single agency, such as the Department of Justice, is advantageous in uncovering and prosecuting price fixing and bid rigging. The Justice Department has the enforcement resources and powerful criminal investigative tools that private enforcement lacks, according to Baer. These tools include the grand jury and its power to compel the production of documents and testimony, attorneys specializing in cartel enforcement, and the support of skilled investigators in the Federal Bureau of Investigation. All of these tools strengthen the Department’s ability to uncover and prosecute cartels.

Federal competition law applies to local cartel activity when the wrongful conduct has a nexus to interstate commerce. Although the Justice Department stands ready to refer cases involving local activity to state prosecutors, local cartels in the United States nevertheless often are investigated and prosecuted by the Justice Department, Baer noted.

Baer stated that the states typically focus on securing monetary redress in such cases. In the United States, states have the same rights as private parties to sue for damages when they are the victims of cartels. In addition, federal law authorizes states to bring parens patriae actions to recover damages on behalf of their citizens. Finally, most state laws allow the imposition of civil penalties rather than criminal prosecution.

To assure that private parties have an adequate economic incentive to undertake costly antitrust litigation, federal competition law in the United States authorizes the award of treble damages, plus attorney fees, according to Baer. The Justice Department does not directly assist private plaintiffs’ lawyers pursuing damages actions and is legally barred from doing so. Nevertheless, the Justice Department’s cartel prosecutions facilitate success in follow-on private damages actions.

Merger enforcement. Baer next discussed that merger enforcement typically is led at the federal level with the Justice Department and FTC sharing the responsibility. The Department and the FTC coordinate on how agency will handle each merger and jointly promulgate guidelines setting out how horizontal mergers are assessed. Many mergers are notified and investigated in multiple jurisdictions around the world. For such transactions, the U.S. agency handling a merger works in coordination with counterparts in other competition agencies. Like the European Union, the U.S. requires advance notification for large transactions and the associated statute allows the federal agencies to obtain additional documents and data from the parties.

The states also are active in merger enforcement and have established the Multistate Antitrust Task Force of the National Association of Attorneys General to facilitate coordinated merger review and enforcement, Baer noted. Each year, cooperation with states occurs in several Justice Department’s merger investigations, and the Department typically works with multiple states that could be affected by the proposed merger. Private merger litigation is unusual because private plaintiffs lack the investigative tools available to the federal agencies and are more difficult for them to maintain.

Non-merger civil enforcement. Federal civil non-merger enforcement is a priority for both the Justice Department and the FTC. The public is entitled to remedies that will ensure that a company charged with anticompetitive conduct changes its ways, in Baer’s view. A high volume of private litigation in the United States means a constant flow of new competition law decisions. One feature of the U.S. legal system that can work to the government’s advantage is having 11 regional circuit courts of appeals. In each circuit, decisions from other circuits might be persuasive but are not binding precedent, so each circuit has the opportunity to take a fresh look at every interesting question in competition law. Review by the Supreme Court in competition cases, as in most cases in the U.S., is taken by the Court only on a discretionary basis.

Outside the cartel and merger areas, competition law in the United States is largely developed in private litigation, Baer noted. Those judicial precedents often apply to federal enforcement actions so these few cases are important both to consumers and to the development of the law. The Justice Department monitors them closely and intervene as amicus curiae where important principles are implicated. The close relationship between competition enforcers in Europe and in the United States is vital to vigorous and effective antitrust enforcement, not just in our respective jurisdictions, but around the world, Baer concluded.

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