The Future Direction of Antitrust Law

The analytic framework of antitrust law is well established. There are very few changes that occur in antitrust law. The Sherman Antitrust Act, the nations first antitrust law, was adopted in 1890. To a large extent, there have not been major doctrinal changes in the case law in recent decades following the mid-1970s correction in course away from excess enforcement embodied in Supreme Court decisions such as General Dynamics in the merger area, GTE Sylvania as to vertical non-price restraints and BMI with regard to joint ventures . Much of the case law since then has been tinkering at the margin although there have been some significant cases more recently such as Liggett Group in predatory pricing cases.

The basic merger law, Section 7 of the Clayton Act, was adopted in 1914, amended very significantly in 1950, and has not been changed materially since. The most important statutory change in the ensuing half century has been the adoption of the HSR Act in 1976. That statue allows the government to challenge mergers before they are consummated, and thereby avoided the scrambling of the eggs problem that had plagued merger antitrust enforcement. In addition, the development of the DOJ/FTC horizontal merger guidelines, introduced in the first instance by Bill Baxter at the DOJ, was a profoundly important and positive doctrinal change. Following their adoption in 1981, the federal merger guidelines have been revised (mostly at the margin) three times in twenty-two years . There is broad consensus in the antitrust bar and among industrial organization economists that the guidelines have the analysis essentially right.

Some contend that we need new antitrust principles to deal with new industries. In my judgment, that argument is not well founded. To be sure, there are mergers that are reviewed today that involve industries that didnt exist five years ago. Antitrust laws are based on general principles that apply well to industries generally once the facts of the industry are well understood . Antitrust applies to all industries except for a relatively small number that are exempted by law e.g., insurance, securities to a certain extent. There are some industries that have had comparatively greater exposure to antitrust law because of cartel activities, a spate of mergers, or the presence of an allegedly dominant firm. But the courts in the US and the authorities both in the US and abroad are very suspicious of arguments that antitrust doesnt apply to a particular industry. Experience shows that for the most part, correctly dealing with new industries involves careful application of existing analysis to new fact situations.

For example, business-to-business networks became a major issue in antitrust laws a few years ago. Companies were entering into joint ventures that allowed for on-line trading with other companies or learning useful information, but there were antitrust issues because competitors were involved in the venture. I quickly formed the view that most of the issues could be identified and properly resolved using familiar concepts drawn from other types of joint venture activity based on older technologies. What was new about B2B exchanges was understanding the facts ( i.e., how the ventures worked). Once that was understood, the analysis for the most part was the same as had been applied to exchanges using less advanced technological means.

The real challenges in antitrust in the future are going to be applying the well-developed concepts to new industries. In the merger area, the analytical framework will likely stay generally the same (with some changes around the margins to reflect advances in economic theory), but it will be applied to factual situations that are impossible to predict today.

Michael Byowitz heads the antitrust department of Wachtell, Lipton, Rosen & Katz, focusing his practice on antitrust law and policy, and principally advising multinational corporations on major domestic and international mergers, acquisitions, joint ventures and corporate takeovers. He represents many clients before the Department of Justice and Federal Trade Commission in the United States and consults on investigations by foreign antitrust authorities in the European Union, Canada, Mexico, South America, Australia and many other jurisdictions. Before joining Wachtell, Lipton in 1983, Mr. Byowitz served as a Trial Attorney and Senior Trial Attorney with the US Department of Justice, Antitrust Division.

Mr. Byowitz is a leader of the American Bar Associations Section of International Law & Practice. He is presently the Sections Vice Chair (and will serve as Chair-Elect and Chair of the Section over the next two years); he is the former Chair of three of the Sections Divisions (General, Public International Law and Business Regulation) and is the former Chair of the Sections International Antitrust Law Committee. Mr. Byowitz has served as Chair of the Antitrust and Trade Regulation Committee of the Association of the Bar of the City of New York.

Mr. Byowitz writes articles on antitrust issues and is a contributor to legal publications , including two ABA books The International Lawyers Desk Book and the Merger Review Process. He is a frequent speaker on international antitrust and compliance in the United States and abroad.

Mr. Byowitz received his AB from Columbia College in 1973 and his JD from New York University School of Law in 1976 (Order of the Coif).