------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (October 2007)

Tony A. Freyer, _Antitrust and Global Capitalism, 1930-2004_. New 
York: Cambridge University Press, 2006. xii + 437 pp. $80 (cloth), 
ISBN: 0-521-81788-2.

Reviewed for EH.NET by B. Zorina Khan, Department of Economics, 
Bowdoin College.


This well-written book presents a modern history of global antitrust 
in six and a half chapters. As in the author's previous work, 
_Regulating Big Business: Antitrust in Great Britain and America, 
1880-1990_ (Cambridge University Press, 1992), the reader is 
impressed by the range and plethora of details that inform this 
account of the development of competition policy and its variation 
across countries. These diverse facts are marshaled in a magisterial 
fashion to support the theory that antitrust policies evolved to 
accommodate the particular needs of regions that modified American 
rules and standards to suit their own circumstances. Initial 
objections to American-style antimonopoly rules and practices 
subsequently gave way to strong enforcement across these countries, 
and today the internationalization of antitrust policies is integral 
to debates about the autonomy of the state in a global society.

The global history of antitrust, according to Freyer, should be 
divided into three eras: the period from the Great Depression to 
World War II; the postwar phase through 1970; and more recent years. 
In that first phase up to the Second World War, the United States was 
unique in its strong enforcement of antitrust, as chapter one 
relates. Chapter two considers policy choices in Europe, Australia 
and Japan between 1930 and 1945. Chapter three assesses American 
antitrust since 1945. The final three chapters bring the reader up to 
date on the competition policies of Japan, Europe and Australia after 
the Second World War, and are followed by a brief conclusion.

This work examines antitrust through the prism of personality 
(officials, entrepreneurs, legal experts, even economists). Freyer 
further dissects bureaucratic structures (ITO, WTO, GATT, RTAA, SCAP, 
FBI (no, Federation of British Industries), FTC (no, Fair Trade 
Commission of Japan), USTR ...) to expose the individuals, committees 
and decisions that produced proposals and actual policies. The first 
chapter elaborates on his conviction that American-style antitrust 
was constructed by such vigorous Department of Justice enforcers as 
Thurman Arnold and Robert Jackson. Arnold, in particular, engaged in 
a "large-scale assault" (p. 37) on U.S. multinational corporations 
that were party to international cartel agreements, and he linked the 
prosecution of antitrust infractions to questions of national 
security.

Other countries ultimately tended to be supportive of cartels and 
trade policies, which they regarded as essential for domestic 
stability and for ensuring their competitiveness in international 
markets. Between 1930 and 1945, Europe, Australia and Japan chose to 
engage in "protectionism over competition" based on preferences that 
owed to their national identities and cultural choices. Germany 
viewed cartels as part of a new self-regulated world economic order, 
and Japanese authorities also did not disfavor market cartelization. 
Britain and Australia vacillated but ultimately did little to 
dissuade cartelization and monopoly. To other countries, the American 
approach seemed to advocate unproductive conflict and confrontation 
rather than workable cooperation between government and business.

After the war both private and public antitrust lawsuits increased in 
the United States, and this period "witnessed the most effective 
antitrust enforcement in U.S. history" (p. 399). These heightened the 
costs of lateral expansion and propelled firms into diversified 
organizational structures. At the same time, American antitrust 
authorities also challenged the activities of foreign subsidiaries of 
domestic multinational firms, raising questions of 
extraterritoriality and the appropriate reach of domestic laws. In 
Japan, the Antimonopoly Law of 1947 and its amendments received an 
ambivalent response from many segments of society, given the 
prevalence of oligopolies, holding companies and cartels. Unlike the 
U.S., private antitrust suits were rare in Japan. During the 1990s, 
consumer interests in Japan were articulated more clearly and the 
need to maintain global competitiveness led even big business to turn 
to antitrust as a means of increasing Japanese economic standing in 
the global marketplace. An implication of the exposition seems to be 
that American antitrust influenced the restructuring of large 
enterprise, but in Japan the causality was reversed to some extent.

Postwar Europe established competition policy as the keystone for a 
strategy of regional integration, albeit within a context of business 
regulation to promote social welfare that was more aligned with the 
Japanese model. In recent years, international cooperation and 
convergence have occurred in the approach to price-fixing, resulting 
in record numbers of actions and fines against multinational cartels. 
However, some disparities still exist in the area of mergers, 
monopolies and trade-related competition. Similarly, Australians have 
tended more towards American-style antitrust but they also attempt to 
achieve a balance between notions of economic efficiency and the 
pursuit of public interest objectives. In short, for more than a 
century the United States government has engaged in a quest to ensure 
the integrity of the marketplace and to countermand attempts at 
monopolization by large firms. Other countries initially resisted the 
adoption of Americanized policies but have gradually come to adopt a 
modified version of U.S. antitrust that still is consistent with 
their own culture and institutions. In the arena of the international 
political economy of antitrust, the counterpoints and interplay 
between domestic agendas, bilateral treaties and international 
organizations are still being worked out.

Tony Freyer is University Research Professor of History and Law at 
the University of Alabama, and the lucid exposition is very much in 
the pure historical style, with an ample array of valuable footnotes, 
but no tables, statistics, or attempts to fully articulate implied 
hypotheses. It should also be noted that the book deals almost 
entirely with the horizontal structure of firms (mergers, cartels and 
monopolies) and does not really explore other facets of allegations 
of anticompetitive conduct such as vertical restraints, patent abuse 
or predatory behavior. This feature is especially curious because the 
focus for the U.S. is exclusively on the Department of Justice, 
rather than the Federal Trade Commission which has a greater fraction 
of the merger cases on its docket.

Economic historians are advised that no shrift, short or otherwise, 
is given to empirical findings that might lead us to question some of 
the key premises (such as the notion that American antitrust owed to 
a popular reaction against the overweening power of corporations and 
their managerial masters; or that cartelization has recently been 
driven by short-termism on the part of management). The more jaded 
among us might propose that antitrust statutes resulted from the 
machinations of otherwise obsolete small firms trying to retain their 
place in a world in which they risked losing their competitiveness, 
and that such policies have since been propagated on the basis of 
faulty theorizing. Moreover, rather than embracing innovation, one 
can argue that recent antitrust decrees in a significant number of 
cases tend to depreciate the intangible assets of innovative 
enterprises in ways that seem unwarranted. For those who wish to 
conduct further research into such questions this excellent book 
comprises an essential resource.


B. Zorina Khan is Associate Professor of Economics at Bowdoin College 
and a member of the National Bureau of Economic Research. Her book, 
_The Democratization of Invention: Patents and Copyrights in American 
Economic Development, 1790-1920_ was awarded the Alice Hanson Jones 
biennial prize for an outstanding work in North American economic 
history.

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