Antitrust Law History: US Sherman Act to EU Competition

Competition law employs two analytical approaches: (1) Per Se Illegal automatically prohibits practices without proving harm, indicated by 'dilarang' keywords in provisions like price-fixing (Pasal 5), price discrimination (Pasal 6), bid-rigging (Pasal 10), and closed agreements (Pasal 15); (2) Rule of Reason requires proof that practices cause actual competition harm, indicated by 'dapat mengakibatkan' keywords in provisions like oligopoly (Pasal 4), predatory pricing (Pasal 7), and resale price maintenance (Pasal 8). The key distinction lies in whether additional economic analysis is needed to establish illegality.

Competition law distinguishes between per se illegal practices (clearly harmful) and rule of reason practices (requiring economic analysis). Per se rules apply to obvious anticompetitive conduct like price-fixing, while rule of reason applies to practices with mixed effects. Applying per se rules too broadly can prevent legitimate business collaborations, such as competitors coordinating promotions during crises. The correct approach applies per se rules only to clear cases of market harm, allowing rule of reason analysis for practices with potential pro-competitive justifications.

Antitrust law distinguishes between per se violations (automatically illegal without competition analysis) and rule of reason analysis. Per se violations include price fixing and market division, based on Adam Smith's principle that competitors inevitably conspire to fix prices. The rule of reason examines both pro-competitive benefits and anti-competitive aspects to determine legality. This framework applies to vertical restrictions like territorial sales limitations. The FTC and DOJ apply these principles to healthcare, examining whether provider conduct constitutes an unreasonable restraint of trade or market power assertion.

Section 1 of the Sherman Act prohibits contracts that unreasonably restrain trade. Agreements are classified as per se illegal (most harmful to competition, no legitimate business rationale matters, often charged criminally) or rule of reason (fact-specific analysis weighing harms against business justifications). Per se illegal categories include price-fixing, market allocation, and customer allocation. Rule of reason arrangements have lower risk exposure because plaintiffs must prove violations.

All regulation involves trade-offs and unintended consequences. The classic example is housing policy, which simultaneously made it difficult for Black Americans to build wealth while making housing unaffordable. The US and EU have fundamentally different antitrust approaches: the US focuses on finding laws that have been broken (Sherman Anti-Trust Act from 1890), while the EU proactively analyzes whether markets lack competition and implements new regulations. The US focuses on low consumer prices, while the EU views competition as an objective in itself that produces better products and experiences.

European antitrust policy focuses on preventing dominant firms from raising prices, while US antitrust policy focuses on preventing exclusionary practices that prevent competition. The European approach may be too focused on protecting existing firms from competition, while the US approach better maintains market contestability. When a firm dominates a market and charges higher prices, this may actually be a signal that the market is contestable and that new entrants could profitably enter. The appropriate response is not to prevent the firm from charging market prices but to ensure that the market remains contestable. When monopolies expand to scale, they often achieve efficiencies that benefit consumers. The focus should be on ensuring that markets remain contestable, allowing new entrants to challenge established players, rather than preventing firms from growing.

The fundamental difference lies in legal philosophy: American antitrust law historically requires demonstrating actual consumer harm in rigorous economic terms before taking action, while European competition law has been more willing to impose structural obligations preemptively based on market power alone. Despite having antitrust tools like the Sherman Act and active DOJ enforcement against Google's search dominance, the US has not pursued Microsoft's browser default practices since the early 2000s settlement. The EU's DMA represents a more proactive regulatory approach that applies because a company is big and powerful, regardless of whether specific harm has been proven. This structural difference explains why EU users receive neutral browser choice screens while US users continue facing the same frictionary default experiences.

The EU approach to privacy protection is based on privacy as a fundamental right and question of dignity, while the US approach is fragmented and different. EU competition law is multi-dimensional, providing for a range of policy goals including freedom of choice and fairness. US antitrust policy is more price-focused due to the influential Chicago School, which excluded political and social goals and believed markets self-correct. EU competition law can address exploitation of consumers, not just foreclosure of competitors. This fundamental difference explains why EU competition law is better placed to accommodate privacy concerns in digital markets.

The US and EU have fundamentally different approaches to anti-trust regulation. The US system allows free competition and busts monopolies only when they harm consumers through high prices or poor service, as demonstrated in the Alcoa Aluminum case. The EU requires dominant companies to actively facilitate competition regardless of how they achieved their market position. Microsoft's case originated in the US, where anti-trust laws were first applied, but the EU escalated enforcement. Companies must weigh compliance costs against risks of losing market access, as Microsoft did by paying the fine and licensing technical information for €10,000 flat rate.

The US Senate is proposing two major antitrust laws to regulate Big Tech companies like Google, Apple, and Amazon, which would prohibit platforms from giving preferential treatment to their own products in search results and app stores, and would require companies to allow third-party app installations and payment systems outside their proprietary platforms. These laws aim to address monopolistic practices where companies use their dominant market positions to eliminate competition through self-preferencing, closed ecosystems, and other anti-competitive behaviors, though tech companies have lobbied against them by arguing such regulations would harm innovation and security.

The Department of Justice's successful antitrust case against Google (Alphabet) demonstrates how government enforcement can address monopolistic practices in digital markets, with proposed remedies including prohibiting Google's payments to device makers for default search agreements and potentially forcing divestiture of Android and Chrome to restore competition.

Big Tech companies have become gatekeepers that engage in illegal tactics to maintain monopolies, such as punishing sellers who offer lower prices elsewhere and increasing platform fees, which inflates prices for consumers; the FTC has successfully demonstrated that existing antitrust laws apply to these digital monopolies, with landmark victories against Google and ongoing cases against Meta and Amazon, proving that government enforcement can effectively address corporate monopolization without requiring new legislation.

Major tech companies (Google, Amazon, Facebook, Apple) have gatekeeping power over information and commerce, used to silence conservatives and crush small businesses. When Parler was created as an alternative to Twitter, Google and Apple removed it from the App Store, and Amazon removed it from the internet. Google controls 97% of internet advertising, making over $120 billion annually with no competition. Lawsuits against Google are designed to recover illegally obtained money and change company structures so they cannot control free speech. The panel argues conservatives believe in free market principles, but a functioning market requires competition.

The hosts discussed the regulatory challenges facing big tech companies. Amazon filed a petition requesting that FTC Chair Lina Khan be recused from the Facebook antitrust case, arguing she had prejudged the situation by publishing articles about breaking up Facebook. The DC Federal Court dismissed the FTC's case against Facebook, ruling that the FTC failed to demonstrate monopoly power. The hosts discussed the bipartisan support for regulating big tech (21 Republicans joined Democrats) stemming from concerns about free speech restrictions. They argued that while Facebook's monopolistic impact is harder to prove, the arguments against Amazon, Google, and Apple are stronger due to clear market dominance.

Most deals above a certain size involving publicly traded companies require filings with antitrust authorities. In the US, both the FTC and Department of Justice review mergers. Foreign reviews can also cause problems, as demonstrated by the GE-Honeywell merger in October 2000, where the European Commission blocked the deal despite US regulators clearing it—the first time foreign officials broke a merger between two American corporations already approved domestically. Additional requests for information from authorities extend timelines and can materially affect or break deals.

The European Commission uses Article 22 of the Merger Regulation to address killer acquisitions, where large established companies acquire innovative startups that could become future competitors, as demonstrated by the prohibition of Illumina's acquisition of GRAIL despite a US court approval; while the Commission prefers structural remedies over behavioral commitments due to their permanence, the current regulatory framework is considered sufficient without requiring fundamental reform, though international coordination with the FTC remains important for addressing cross-border merger concerns.

The Direct TV-Dish Network merger illustrates geographic market analysis—combined dominance in rural areas prevented new competitors despite acceptable national concentration. The FCC declined the merger because combined market share in remote areas exceeded acceptable levels. The EU maintains stricter merger controls than the US, potentially blocking mergers approved domestically. Regulatory agencies include FTC, FCC (telecom/media), FAA (airlines), and DOJ. The Hart-Scott-Rodino Act requires pre-merger notification and HHI index evaluation. Recent proposed mergers include DuPont-Dow Chemical and GE-Westinghouse, demonstrating ongoing regulatory scrutiny of major corporate combinations.

This segment analyzes the Microsoft $69 billion Activision acquisition and global merger control challenges. A federal court ruled in favor of Microsoft, denying the FTC's injunction, with the FTC leaning toward appeal. The UK's CMA previously blocked the deal with similar concerns. The UK and EU agreed on cloud gaming market problems but disagreed on remedies—the UK took a strict line while the EU was more permissive. The CMA has made its final decision but there is wiggle room under legislation. If the FTC's appeal succeeds, the case returns to the CMA; if it fails, the decision stands. The CMA has a better process for blocking mergers than the FTC, which must persuade a judge. Many argue blocking mergers is bad for investment and growth, while the CMA argues monopolies do not drive growth and innovation—open markets do. Economic literature shows monopolies get stale, and having too few players worldwide is not good for the future. The UK faces challenges in keeping big tech companies like ARM in the country rather than seeking financing from Softbank and listing in the U.S.

The Department of Justice historically maintained political independence in merger review, a norm established after the Nixon administration interfered in the ITT merger case. Congress passed the Tunney Act to require judicial review of DOJ merger decisions to prevent political interference. This independence has been maintained in spirit by subsequent administrations, but the current administration has undermined both the FTC law and DOJ norms.