The Antitrust Carnival

July 14, 2005 10:09 PM by S.M. Oliva (Archive)

Tuesday’s Wall Street Journal had a glowing profile of Daniel Goldberg, the 29-year-old head of antitrust enforcement at Brazil’s Justice Ministry. Goldberg told the Journal his motto was, “[s]elective, albeit effective, intervention.� Most of Goldberg’s accomplishments apparently stem from preventing corporate mergers—he’s currently appealing a Brazilian court’s attempt to thwart his veto of Nestle’s purchase of a local chocolate company. The article also tells a gripping tale of Goldberg’s raid and conquest of a flint cartel (flint is a rock used in toolmaking.)

The Journal said Goldberg was part of a new breed of Latin American antitrust regulators that have adopted U.S. and European Union-style tactics: “subpoenas, unannounced raids and prosecutorial deals offering immunity from cooperation.� This is not by accident. The Journal noted that Brazil’s Goldberg “has been trying to overcome his agency’s scant resources� by sharing intelligence from U.S. and European regulators.

What the Journal doesn’t mention is that antitrust imperialism is part of the U.S. government’s foreign aid policy. The U.S. Agency for International Development has been financing junkets for Federal Trade Commission and Justice Department lawyers to instruct foreign governments in the art of antitrust enforcement. A series of five workshops was sponsored by USAID in 2002 in capitals throughout South America, including one on “regulated industries� in Hugo Chavez’s Venezuela.

In a 2002 report, USAID said its antitrust spending—about $86 million from 1999 through 2001 alone--was part of the Bush administration’s international trade agenda:

Experts from the United States Department of Justice (USDOJ) and the United States Federal Trade Commission (USFTC) have worked with foreign antitrust officials to develop policies, draft antitrust laws or amend existing laws, analyze individual cases, and provide advise on a wide range of issues that antitrust officials might encounter. Technical assistance has included: helping local officials understand investigative techniques; providing recommendations for the structure and administration of agencies that address competition and antitrust issues; and conducting legal and economic analyses of issues such as market definition, market dominance, horizontal and vertical agreements, merger review, and privatization.

The USDOJ and USFTC administer a Competition Policy Technical Assistance Program to improve the enforcement of competition laws in Central and Eastern Europe, the republics of the former Soviet Union, Latin America, the Caribbean, and South Africa. This program is funded through interagency agreements with USAID and provides these countries with long- and short-term technical assistance in developing the legal, institutional, regulatory, and policy framework for the promotion of competition and the protection of consumers. Assistance has included internships, conferences and on-the-job training for antimonopoly officials from developing and transition countries in law enforcement strategies.

In Brazil and Argentina, for example, the program has promoted the overall goal of the Free Trade Area of the Americas (FTAA) agreement through events such as a series of competition seminars in which members of the smaller MERCOSUR regional grouping participated with members of the Andean Community grouping. Future plans are to extend the assistance program to all five Andean Community members and Panama in late 2001. The program utilizes existing partnerships with larger economies of the hemisphere, such as Brazil and Argentina, to extend competition policy training to smaller countries in the region. One accomplishment of the program has been an antitrust cooperation agreement between the United States and Brazil and a prospective agreement with Argentina.

This last sentence is critical. None of this antitrust “assistance� has anything to do with building free markets or generating benefits for U.S. consumers. Instead this entire program is designed to expand the influence and control of U.S. antitrust regulators throughout the world. It’s certainly no coincidence that R. Hewitt Pate recently left his post as head of the Justice Department’s Antitrust Division to spearhead a foreign antitrust practice for the law firm of Hunton & Williams; Pate spent most of his tenure at DOJ guaranteeing his future private-sector business by entering into “cooperation agreements� with foreign antitrust regulators that he molded in his image.

As a postscript, Daniel Goldberg bragged to the Journal that he had used wiretaps in his criminal antitrust probes, noting, “[t]his is the dream of U.S. regulators.� It’s true that the DOJ cannot tap phones in antitrust investigations, but that may soon change, as Republican Sen. Mike DeWine of Ohio has introduced legislation to give the executive branch such powers. For more information on what that might lead to, please read my legislative analysis of DeWine’s bill.