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10 Antitrust 13 (1995-1996)
Antitrust: The New Regulation

handle is hein.journals/antitruma10 and id is 15 raw text is: (' ) \v IF R - s I ( ) R I F s Antitrust: The New Reoulation by A. Douglas Aelaned The trend toward t is fueled by two en frcement. Nei are becoming inc vigorous antitrust eiilorceniient, It has not worked oult that way. listead, anlitt luls has evolved ill recenlt years, subtly and aloSt inipercePlibliy, towa'd a new f'oril of' regulation. Tie triansI oir- imation is far f'roli complete, but tile trend is unmistakable. lin substaice, aititi'Lst eifollicers no IonIger confine their inliquiry to whether tile defendant has violated the law; instead, they ask whether the del endaiit's conduct maximizes consumer welf'are or other'ise serves the public interest. Two Iaraidignms T'lie transforiation cali be understood by imagining two para- clignis: the Law Eif'orcenent Model and the Regulatory Model. The Law Enfiorceiient Model is the more traditional. Under this miodel, the government simply enforces the laws: it f'ocuses on past CoiidLiC aind attempts to ascertain whether that conduct violates legal noris. For this purpose. legal norms aire behavioral tiles that describe ceitain conduct as illegal and. by implication, are iidif'- ferent tI all conduct that is not sci proscribed. Legal noris have two additional characteristics: They are publicly announced and understandable by those who are expected to comply with theMii; and they are intended to be, and generally are, applied in like ways to those similarly situated. The Regulatory Model dil'i'ers from the Law Enforcement Model in a number of ways. It tends to focus more oii prospec- tive regulation of lthe private sector by the government. It tends to ask, when assessing the propriety and nature of government intervention, how private entities should behave or how private property could be used to maximize social welf'are - in tie antitrust context, usually consumer welfare - rather than tile nar- rower qfuestion whether the private conduct violated legal norms. There is not a neat dichotomy between the Law Enf'orcement Model and the Regulatory Model; rather, there is a continuuml. A. I)oughml Afehoned is a partner tit Wiln'i: Cull' S& Pickering, Wt.shin,'ton. IC l/hn 7f/nan, h'uioniic Anayst at Wihlnel; Cithr & Pickering, assi.v ed iii resear'chfi this artic'. Ml: Mc'/aic'd has Scrved ais co'ilisci to.firml that a , parti's to or iltcrn'sted ill solie' of 'ti inattrr discussed in thi artich'. i i'ecent years, it Iilas been i fash- ionlahle tio decry 'egulation anid to exalt coinipeliion. The con- V'enltiOal wisdOui is that tihe heavy haiid cf' goe niie li Ieg Ill ation Canl be lifted, leaving ill its place ribLst cOlupctitiOn saf'eguarId ed by The two are distingunished pri ncipally he Regulatory Model by the distance they prcine and seek between the government and the pri- aspects of antitrust vate sector. The Law Inforceient ther is new, but both Model focLsCs priniarily on whether tile def enda lit has violated tie law. The reasingly important. Regulatory Model focuses more on remldics for perceived market failure and las lmiore ccillfiderlce ill tile ability if the g cvernmenlt to inprove upon private sectora *mrrlgelien lis. Anltitrust enlforcenient has mloved markedly along the coln- tinuliU from the Law Iillforcenlenlt Model toward the Regulatory Model. The trend has become iiiore appaent in i'ecent years because cITrrent ailitlrust oici alS appear ilo0re inclinied toward ail activist pligl'anil of alitilrust eiif'orcement and intervention into tile markets than were their predecessors ini previous admillis- trations. But tihe distinction between (he Law Eiforccment Model and the Regulatory Model is not fundanentally a dis- tlinction between passive and active antitrust eiiforceiient. The distinction has more to io with ways of thinking abouL antitrust problems and the solutions fOr them. Tile trend toward the Regulatory Model is fueled by two aspects of' antitrusi elforcement. Neither is new. but bolth are becolning increasingly inportanlt. Increasing Use of Consent Decrees Fiist, tie evoilion of anltillsl into a frmi of regutianiol is ill part a by-product Of the increasing use of consenlt decrees as the pri- niary neais if anlititnisl eiforeenit. The Antitrust Division, for example, entered into 8 consent decrees in 1993, 19 ill 1994, and 12 in the first half of 1995. Dui'ing this same period, the Division Iiled only five complaints that were not accolpanied by consent decrees. The record of' (ie Federal Trade Commission is similar. The number of consent decrees put out f'or comment by the Commission has continually increased. There were 5 in 1992, 9 iii 1993, 15 iin 1994, and 22 in the first six and one-half lonths of' 1995. The reasons that the parties enter into a consent decree in an individual case are usually obvious and of'ten comlpelling. Consent decrees resolve uncertainty about the del'endants' legal duties. eColniZe Ol eillforcelleilt aid colmpliance resources, and enable government officials to address issues that are polil t ically or econonmically importanlt but legally amibiguous. Presumably, dlefendants do not enter inlto consent decrees when it is clear that they have not violated the law, but it appears that def'endants coniionly enter into consent decrees where the alleged violation is uncertain and the costs of the consent decree Cl 0'l M Ml E Ni IT. A R11 V<

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