| Book Review | Law and History Review, 25.2

Book Review

Tony A. Freyer, Antitrust and Global Capitalism, 1930–2004, Cambridge: Cambridge University Press, 2006. Pp. xii + 437. $80.00 (ISBN 0-521-81788-2).

This comparative study examines the history of competition (antitrust) policy since the 1930s, mainly in the United States, Western Europe, Japan, and Australia. The discussion is lucid and the footnote documentation rich, giving the serious reader an exhaustive set of primary and secondary sources.

Freyer's focal point is the transformation in United States antitrust policy that took place during and subsequent to the New Deal. Competition policy in other countries developed by initially reacting against the United States lead but eventually embracing it. Beginning in the 1930s New Deal liberals reconstituted American antitrust law so as to incorporate a definition of competition based on institutionalist economic principles, characterized by deep suspicion of the business corporation and only minimal tolerance for efficiencies. In the 1970s, however, American antitrust policy became much more neoclassical, incorporating a more individualistic notion of competition, acknowledging a broader role for efficiencies as a justification for allegedly anticompetitive acts, and developing a more benign attitude toward innovation.

As Freyer observes, America's influence on world antitrust policy has been unmistakable. For the most part Europe, Japan, and Australia adopted policies that initially were reactions against American policy, but eventually came to embrace most of its fundamental values. That change took place largely as a result of the great wave of enthusiasm for all things American that followed World War II. This transformation in competition policy involved an increased accommodation of big business undertaken by individual large firms, but sharply increased hostility toward cartels. At the same time, serious accommodation was fairly slow in coming, largely because both Europe and Japan came from much different traditions that included more benign attitudes toward business cooperation.

During the post-war period not only did American antitrust enforcers pursue a much more individualistic policy, but they also labored to export American antitrust policy abroad, in two different senses. First, they sought to expand the extraterritorial reach of the United States' Sherman Act. Second, they attempted by political pressure, treaty negotiations, and the use of international trade organizations to align foreign antitrust policy more closely with United States policy. This venture had mixed and somewhat lurching success. For example, occupied Japan adopted United States-like antitrust doctrine under duress, but largely abandoned it once occupation ceased.

This book is much more a history of politics and public policy than of theory or ideas. For example, Richard A. Posner, the most important proponent of Chicago School antitrust in the 1960s and after, is not mentioned, probably because he has never held a high enforcement post. Neither is Phillip E. Areeda, the most important spokesperson for a rejuvenated Harvard School and arguably the most influential antitrust scholar in the United States in the twentieth century. Harvard's Donald F. Turner is mentioned briefly, but only because he served as head of the Antitrust Division.

Freyer's book is selective in its coverage of antitrust practices and institutions, as a book of this size must be. He tends to equate antitrust policy with monopoly, cartel and merger enforcement, largely ignoring vertical restraints, which have produced considerable controversy between Americans and Europeans. He also gives short shrift to the "oligopoly problem," or the issue of non-cartel behavior producing anticompetitive results. Since the 1950s antitrust policy, particularly in the United States, has been fairly obsessed with the problem of poor economic performance in concentrated industries. Oligopoly conduct does not fit the classical definition of either monopolization, which requires a dominant firm, or cartelization, which requires an explicit agreement among competitors. Freyer also ignores private antitrust enforcement, even though roughly 90 percent of actions filed in the United States are private and most of the Supreme Court case law from the past three decades has been made in cases brought by private plaintiffs. Finally, his discussion of government enforcement policy in the United States focuses almost exclusively on the Antitrust Division of the Justice Department, ignoring the Federal Trade Commission even though the FTC has often been out in front for novel enforcement initiatives, particularly those that involved monopoly, mergers, and vertical restraints.

Freyer also exaggerates the influence of the Chicago School on American and European antitrust policy, largely ignoring the much greater influence of the reconstituted Harvard School since the late 1970s. To be sure, the influence of the Chicago School on academic thinking about antitrust has been considerable, and it has also influenced the Harvard School itself. But the courts and the government decision makers have not come nearly so far. On virtually every substantive issue that the Supreme Court has addressed in the last three decades (e.g., predatory pricing, vertical restraints, mergers, patent policy, joint ventures) it has followed Harvard rather than Chicago recommendations. Indeed, the "purest" policy statement of Chicago School antitrust, the Justice Department's Vertical Restraints Guidelines, were issued in 1985 during the Reagan administration and withdrawn less than a decade later during the Clinton administration.

These quibbles notwithstanding, this is an important book that should be on every antitrust scholars and business historian's bookshelf.

Herbert Hovenkamp

University of Iowa

Content in the History Cooperative database is intended for personal, noncommercial use only. You may not reproduce, publish, distribute, transmit, participate in the transfer or sale of, modify, create derivative works from, display, or in any way exploit the History Cooperative database in whole or in part without the written permission of the copyright holder.