KEEPING SCORE: IMPROVING THE POSITIVE FOUNDATIONS FOR ANTITRUST POLICY William E. Kovacic* INTRODUCTION ................................................................................... 50 I. THE AMBIGUOUS, DISPUTED SIGNIFICANCE OF DATA ON ANTITRUST ENFORCEMENT ..................................................... 60 II. HOW THE QUALITY OF POSITIVE ANALYSIS AFFECTS OUR UNDERSTANDING OF THE OPERATION OF THE U.S. ANTITRUST REGIME .................................................................................... 67 A. Excessive and Misdirected Enforcement Activity: Two Narratives from the Late 1970s ........................................ 70 B. The Inadequate and Misdirected Enforcement Activity Narrative........................................................................... 86 C. How Narratives Predicated Upon Mistaken Positive Assumptions Distort Understanding About the Functioning of the U.S. Antitrust Regime............................................ 95 III. HOW THE QUALITY OF POSITIVE ANALYSIS AFFECTS ANTITRUST ENFORCEMENT AGENCY PERFORMANCE .............................. 101 A. Building Historical Awareness: The FTC in the 1970s.... 102 IV. HISTORICAL DATA-BASED ANALYSIS FOR ANTITRUST AGENCIES: FOCAL POINTS........................................................................ 108 A. Determining What Happened ........................................... 109 B. Using Positive Data to Make Normative Assessments..... 110 C. Improving Agency Historical Awareness......................... 112 D. Historical Analysis: Gains from Fuller Application......... 119 E. Case Reconstructions ........................................................ 121 F. Institutional Methods......................................................... 129 V. CONCLUSION ................................................................................ 130 * Global Competition Professor of Law and Policy, George Washington University Law School; Visiting Professor, Dickson Poon School of Law, King’s College London; Non- Executive Director, United Kingdom Competition & Markets Authority. The author received many useful comments and suggestions from Rory Van Loo and other participants in the summer 2020 antitrust research workshop convened by Professor Daniel Sokol of the University of Florida’s Levin School of Law. The author is most grateful for the excellent editorial guidance of the members of the University of Pennsylvania Journal of Business Law. The views expressed here are the author’s alone. Contact: [email protected]. 49 50 U. OF PENNSYLVANIA JOURNAL OF BUSINESS LAW [Vol. 23:1 INTRODUCTION At the start of class in a new academic term, students often ask their instructors, “What is the basis for the grade in this course?” In 2001, after fifteen years of fielding that question in university classrooms, I became a senior official at the Federal Trade Commission (“FTC”). On many occasions, a variant of my students’ perennial query came to mind: What is the basis for the grade in this course? How should my agency’s performance be evaluated?1 The question that occupied my thoughts at the FTC attracts vigorous debate today as a growing body of commentators and elected officials calls for dramatic changes in the U.S. competition policy regime. 2 Reform advocates have proposed a fundamental reorientation of federal antitrust enforcement, a major redesign of the competition statutes, and the creation of new tools to regulate dominant firms, especially large information services platforms.3 Not since the early-to mid-1970s has the mood reflected in public debate and legislative deliberations so welcomed a thorough overhaul of the U.S. competition law system.4 1. See William E. Kovacic, Rating the Competition Agencies: What Constitutes Good Performance?, 16 GEO. MASON L. REV. 903 (2009) [hereinafter Rating the Competition Agencies] (offering reflections on criteria for assessing performance of public antitrust authorities). 2. See Daniel A. Crane, The New Crisis in Antitrust (?), 83 ANTITRUST L.J. 253 (2020) (discussing modern debate about U.S. antitrust policy); A. Douglas Melamed, Antitrust Law and Its Critics, 83 ANTITRUST L.J. 269 (2020) (same). 3. These proposals are summarized in Alison Jones & William E. Kovacic, Antitrust’s Implementation Blind Side: Challenges to Major Expansion of U.S. Competition Policy, 65 ANTITRUST BULL. 227 (Issue 2, 2020) [hereinafter Implementation Blind Side]. 4. In the early-to mid-1970s, Congress pressed the federal antitrust agencies to initiate cases to deconcentrate large segments of the U.S. economy. See William E. Kovacic, Failed Expectations: The Troubled Past and Uncertain Future of the Sherman Act as a Tool for Deconcentration, 74 IOWA L. REV. 1105, 1126–27 (1989) [hereinafter Failed Expectations] (describing congressional encouragement in 1970s for federal antitrust agencies to undertake cases to restructure concentrated industries). The exhortations of legislators drew upon scholarly work and the findings of expert panels that recommended expansive efforts to break up dominant firms and tight oligopolies. Id. at 1136–37. The federal agencies responded to this guidance by bringing an ambitious collection of cases challenging single-firm misconduct and collective dominance. Id. at 1119–20. In this same period, Congress enacted major reforms to the U.S. antitrust laws. In 1974, it raised the status of the criminal antitrust offense from a misdemeanor to a felony and boosted fines and prison terms for infringements. Antitrust Procedures and Penalties Act, P.L. 93-528, 88 Stat. 1706 (1974). In 1976, Congress renovated the merger control mechanism by requiring 2020] KEEPING SCORE 51 The contemporary reform proposals seem to be having a genuine effect. The calls for expanded enforcement already seem to have moved the federal antitrust authorities, the FTC and the Department of Justice (“DOJ”), to adopt a more aggressive posture.5 On October 20, 2020, the DOJ and eleven state attorneys general filed a complaint charging Google with illegal monopolization in various markets related to search. 6 There are also indications that Congress will give serious attention to bills to amend the antitrust laws and alter the competition policy institutional framework.7 A predicate for the reform demands is the view that the DOJ and the FTC have failed miserably in performing their law enforcement duties in the advance notification to the antitrust agencies of certain proposed mergers and imposing a suspensory period in which the agencies could gather information to review such deals. Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 18a. 5. Since 2019, the DOJ and the FTC have been investigating possible antitrust violations involving the country’s leading information technology firms. See Jones & Kovacic, Implementation Blind Side, supra note 3, at 237–38. 6. U.S. v. Google LLC, Case 1:20-cv-03010 (Oct. 20, 2020) [hereinafter DOJ Google Complaint], available at https://www.justice.gov/atr/case-document/file/1329131/download [https://perma.cc/7SM5-EDYG]. A number of other state attorneys general appear to be preparing to file a monopolization complaint against Google that alleges a broader range of anticompetitive conduct. Diane Bartz, Google’s antitrust legal woes far from over if Biden wins, Reuters (Oct. 22, 2020), https://www.reuters.com/article/usa-election-google-biden- idUSL1N2HA1ZP [https://perma.cc/GLX5-PPU7] (reporting comments by Colorado Attorney General Phil Weiser, who indicated that various state attorneys general will conclude their investigation of Google “in the coming weeks”). The FTC is reported to have met recently to discuss the status of its inquiry into Facebook and the possibility of bringing a case against the social media giant. Tony Room, FTC said to huddle privately to discuss Facebook antitrust probe, signaling advanced stage, WASH. POST (Oct. 22, 2020), https://www.washingtonpost.com/technology/2020/10/22/facebook-ftc-antitrust/ [https://per ma.cc/BXD6-FGR7]. 7. On July 29, 2020, the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law held hearings to take testimony from the chief executive officers of Amazon, Apple, Facebook, and Google. During the proceedings, the panel’s Chair (Rep. David Cicilline) and several of his colleagues called for new legislation to strengthen the existing antitrust laws to control dominant technology platforms. Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google Before the Subcomm. on Antitrust, Com., and Admin. L. of Just. Of the H. comm. On the Judiciary, 116th Cong (2020)(statement of Rep. David Cicilline). On October 6, 2020, the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law released a majority staff report calling for sweeping changes to the U.S. antitrust system, including the creation of new regulatory mechanisms to oversee leading digital platforms. Investigation of Competition in Digital Markets: Majority Staff Report and Recommendations, Subcommittee on Antitrust, Commercial and Administrative Law, House Committee on the Judiciary 376-405 (2020) [hereinafter Majority Staff Report], available at https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf [https://perma.cc/Z7JL-KKZV] (presenting antitrust and regulatory reform recommendations). 52 U. OF PENNSYLVANIA JOURNAL OF BUSINESS LAW [Vol. 23:1 modern era, a period that, in critical commentary, begins in 2000 and sometimes extends back to roughly 1980.8 The