Antitrust Institutions and Policies in the Globalising Economy

According to the philosopher Immanuel Kant, ideas — or the ‘rose-coloured glasses of morality’ we all wear — are the tools we use to perceive and determine our understanding of reality (see Kant, 1788/2008). On this premise, the present book neither seeks to analyse Kant’s philosophical thought nor does it attempt to understand why reality should be necessarily perceived as ‘rosy’. Rather, it is aimed at investigating a much narrower topic namely, the role ideas play in inspiring and sustaining the development of antitrust policies in a globalising economy.

According to Harvey (2013, pp. 6–7), ‘competition is one of those vague terms which are freely used in all discussion of social subjects; it conveys some meaning to all who utter or hear it; but this meaning as a rule is undefined and therefore inconstant; the word has different suggestions for different people’. Proceeding from Harvey’s definition, this chapter attempts to understand why antitrust policies can be perceived in different ways and how ideas can influence their evolution. Therefore, in order to explain how ideas have been able to modify political actors’ perceptions of antitrust or competition regulations over the course of history, we need to clarify the essence of competition as well as its general connotations. The notions of antitrust, competition policy and competitiveness are all semantically eclectic (see: De Gaay Fortman, 1966, p. 1; Neumann and Weigand, 2004, pp. 9–10). They do not only refer to a condition of rivalry in the market; they are also considered natural promoters of economic efficiency and welfare. Thus, this chapter will first seek to achieve a broader understanding of those main concepts, forming as they do the backbone of this research.

The choice of a pan-institutional approach to study the development of national and international antitrust institutions invites an extended explanation of the theories of ‘varieties of capitalism’. Varieties of capitalism is a theoretical framework that explains why countries all over the world have applied and enforced capitalistic models through different institutions, which in turn reflect specific — and local — logics of growth and interests (Howell, 2003, pp. 103–124; Lane, 2005, pp. 227–247; Nölke and Vliegenthart, 2009, p. 670). Indeed, while models of capitalism generally determine the limits of what is locally accepted as beneficial, within such frames, institutions shape social actions and might well evolve as new interests and ideas influence local society. With this in mind, this chapter first identifies the model of capitalism and so antitrust that characterise the US, Europe, Japan and the BRICS. Secondly, it provides an analysis of the main ideas underpinning national understandings of competition and competitiveness. Indeed, it is because of their different cultural and ideological traditions that the US, Europe, Japan and the BRICS could develop distinct models of capitalism and so introduce structural peculiarities in their antitrust institutions.

The success of antitrust institutions is normally associated with the degree to which the economic conditions they create are conducive to the achievement of interests such as profits or welfare. In this respect, the role of interests in determining social constructions and influencing the social realm has long been considered prominent. However, from being marginal, the study of ideas in the process of economic structural change has acquired a central role, bringing to light a new set of theories that seek to explain institutional transformation from a more ontological point of view, i.e., in terms of ideological constructs and their influence on the social realm.

This chapter aims to offer an historical illustration of the evolution of American antitrust following the pan-institutional model hitherto presented. Since the beginning of the 20th century, American presidential administrations have been enforcing various antitrust approaches through the appointment of ad hoc experts at the head of the Federal Trade Commission and/or the Antitrust Division. By acting as a sort of issue network, this group favoured the translation of particular antitrust ideas into institutionalised policies, regulations and practices in order to overcome economic downturns and address business needs.

Crises are not the unique determinant of institutional changes. For instance the current recession has not manifested any modification of the institutional antitrust setting yet. However, crises are likely to favour political economic answers in the form of market and antitrust reforms. In this respect, the purpose of this chapter is firstly to illustrate whether and how American antitrust ideas have been influencing the development of competition policies in Europe and in Japan in the aftermath of the Great Depression, the Oil Crises. Secondly, the chapter aims at analysing the current situation in order to hypothesise possible institutional evolution.

BRICS emerged in the international panorama quite recently, compared to dominant economic powers such as the US, Europe and Japan. The term ‘BRICS’ was created by James O’Neil, who in 2001 defined Brazil, Russia, India and China as the new vectors of the world’s economic growth. South Africa was added to the grouping only later. In fact, according to O’Neil, South Africa has a ‘too small economy’ and its ‘inclusion has somewhat weakened the group’s power’ (Smith, 2013). Although O’Neil was right in pointing out ‘that there are not many similarities with the other four countries in terms of the numbers’, the development of antitrust policies by South Africa has shown certain commonalities with the other BRICS (Smith, 2013). In fact, their path towards becoming emerging economies has been characterised by the adoption of competition policies emulating ‘Western’ ideas. Such emulation was inspired by American antitrust cognitive ideas, which were integrated with local understanding of efficiency and welfare, because of specific needs to foster economic growth. In this respect, the institutionalisation of antitrust is here interpreted as a key factor in the evolution of BRICS economies, and not as a consequence. Moreover, the institutional pathways, embraced by the BRICS on their way to developing into emerging markets, have been quite various, and to date, while integrating antitrust institutions inspired by Western models and Chicago ideas, they have developed very different economic systems.

The major premise of this book has been that the development and the evolution of antitrust policies in the US, Europe, Japan and the BRICS has been determined and influenced by the institutionalisation of American antitrust theories within various social and cultural frameworks and in response to specific interests. In this context, the pan-institutional approach here adopted appears to be a fundamental tool for analysing such phenomenon. Indeed, starting from Douglass North’s theoretical constructions, pan-institutionalism allows us to assess the evolution of competition policies and regulations by taking into consideration the role of both cognitive (e.g., theories) and normative (e.g., local culture) ideas together with contingent interests in influencing the social realm. This is particularly relevant because there are no such studies of antitrust from an international political economic approach. Typically antitrust is analysed according to economic and juridical points or view as the set of regulations and policies enforced by governments to foster market competitiveness. Indeed, the desirability of competitiveness lies in its capacity to efficiently increase profit and the general wellbeing, as long as market conditions are respected.