Antitrust and Regulation in the EU and US

Antitrust and Regulation in the EU and US

Legal and Economic Perspectives

New Horizons in Competition Law and Economics series

Edited by François Lévêque and Howard Shelanski

The diverse and excellent set of authors assembled in this book sheds light on the continuing and conflicting calls for deregulation and re-regulation of important industries and informs the ongoing, increasingly global, policy debate over the evolving line between regulation and general competition policy. The purpose of this book is to understand the debate and its policy implications, focusing on the traditionally regulated sectors of telecommunications and energy, and comparing approaches in the European Union and the United States.

Chapter 1: Synthetic Competition

Douglas H. Ginsburg

Subjects: economics and finance, competition policy, law and economics, law - academic, competition and antitrust law, law and economics


Douglas H. Ginsburg In the 1960s academic lawyers and economists began focusing upon economic regulation, that is, regulation by an administrative agency typically limiting market entry, fixing prices, and setting other terms of competition. These scholars asked what turned out to be an embarrassing question for regulators and regulated firms alike: Where did economic regulation come from in the first place? In time, the answer to this question and the insight gleaned from it would lead to the deregulation of some industries and the advent of a regulation-driven form of competition, which I call “synthetic competition”, in others. The latter development – a hybrid of New Dealstyle economic regulation and orthodox antitrust or competition policy – has challenged many, particularly judges, to reconsider the standards by which agency regulations should be reviewed. I. NEW DEAL REGULATION The crucial intellectual event in the creation of the modern regulatory state in the United States was the New Deal experiment with corporatism. Prior to the New Deal, commerce was “regulated” solely on economic grounds almost exclusively through antitrust law, starting with the Sherman Act of 18901 and the Federal Trade Commission Act of 1914.2 Enforced by the Department of Justice and the Federal Trade Commission respectively, these statutes prohibit firms from entering into contracts, combinations, or conspiracies in restraint of trade, and from engaging in anticompetitive behavior and unfair methods of competition;3 they are not tailored to any specific industry or industries. The New Deal, with its emphasis upon regulation rather than competition and...

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