Ooh, The Germans Are Mad at Me! I'm so scared!

September 19, 2007 10:04 PM by S.M. Oliva | Other posts by S.M. Oliva | Comments (13)

The European Court of First Instance's decision to support the European Commission's Microsoft decision has produced some entertaining public discord between the European and U.S. antitrust authorities. On Monday, Justice Department antitrust chief Thomas Barnett issued comments that were mildly critical of the decision:

In light of the United States' own antitrust case and judgment against Microsoft, and the importance of the computer industry to consumers and to the global economy, the United States has a particular interest in today's CFI decision. The decision is both lengthy and complex, as befits the importance and difficulty of the issues raised by the EC's case against Microsoft. It will therefore be some time before the full impact of today's decision on antitrust policy in Europe will be apparent. We are, however, concerned that the standard applied to unilateral conduct by the CFI, rather than helping consumers, may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition.

The European commissioner for antitrust, Neelie Kroes, responded with the arrogance and contempt for free markets that one has come to expect from the other side of the Atlantic:

It is totally unacceptable that a representative of the U.S. administration criticized an independent court of law outside its jurisdiction … The European Commission does not pass judgment on rulings by U.S. courts, and we expect the same degree of respect.

That's not exactly true. Just last week the Commission sent a letter to the governor of Kentucky urging him to commute a state death sentence--part of the Commission's policy of universally opposing capital punishment. Now I happen to agree with the Commission's position, but it's hard not to classify such activism as criticizing or passing judgment on the rulings of U.S. courts that impose the death penalty.

Returning to antitrust, the problem with Barnett's statement was not his criticism of the European decision, but the lack of conviction. On the one hand, he implies the decision sets a precedent that "may have the unfortunate consequence of harming consumers by chilling innovation and discouraging competition." Yet later in his statement, Barnett says he "looks forward to continuing its wide-ranging and positive relationship with the EC on antitrust matters, including matters affected by today's decision." If the purpose of U.S. antitrust enforcement is, as he says, protecting consumers and competition, and he believes the Europeans are pursuing policies that are anti-consumer and anticompetitive, then why would he continue cooperating with these people?

The EU has committed, for all intents and purposes, an act of war against the United States. The theft of Microsoft property, via fines and orders to release proprietary code, coupled with the Commission's assertion of an unrestricted right to dictate the market share of any industry, violates the most basic liberties of free individuals to engage in mutually beneficial trade. If the U.S. government had any belief in these principles, Congress and the administration would respond by immediately cutting off all antitrust "cooperation" with Europe. What possible benefit is there to American consumers by even having such a relationship in the first place?

The only beneficiaries, of course, are the professional antitrust lawyers like Barnett who, once his service to the DOJ ends, will enjoy a lucrative partnership as head of some firm's antitrust practice group. Barnett may be critical of the EU today, but in a year or so he'll be thanking the antitrust gods everyday, as the Microsoft decision will drive scores of new companies to redeploy their capital from producing value for consumers to subsidizing unproductive antitrust lawyers and their allies.

Barnett's real fear, echoed in his statement, is that the European Commission will now be the preeminent global antitrust regulator, supplanting the DOJ and Federal Trade Commission's mission of world domination. It's not, as some have suggested, that U.S. regulators pursue better antitrust policies; it's that the structural support for antitrust isn't as strong in this country as it is across the Atlantic. In the EU superstate, antitrust is a principal function of the Commission. In the U.S., antitrust is relegated to second-tier status. There's broad theoretical support for antitrust among the political and academic classes, but it lacks depth. U.S. courts also create greater due process and substantive constraints on antitrust expansionism. (Unfortunately, prosecutorial abuse manages to keep all but a tiny fraction of cases out of the constitutional court system.) As the FTC's recent defeat in the Whole Foods case demonstrated, there is still substantial resistance to the type of overt central planning that European antitrusters brazenly champion.

But while European aggression against U.S. citizens should never be appeased, it's important to understand that American antitrust officials commit similar acts of war against European and other non-U.S. citizens on a daily basis. As I reported in a previous LewRockwell.com article, Thomas Barnett ordered the kidnapping of a British citizen charged by the DOJ with "price fixing." Barnett's deputies lied to the British courts about the legal basis for their actions, and they employed an extradition treaty that was not valid law in the U.S. (and which had been "ratified" by former British Prime Minister Tony Blair without parliamentary consent.)

In another case, involving European shipping company Stolt-Nielsen S.A., Barnett violated a signed agreement not to prosecute the company and its executives, then once again ordered deputies to lie in court--in this case to the U.S. Third Circuit Court of Appeals--about the nature of their actions.

And in the Antitrust Division's biggest racketeering operation to date--the "price fixing" probes of the computer memory industry--Barnett conveniently ordered the imprisonment of numerous non-U.S. citizens while letting the only U.S.-based company off without any charge or penalty, affording it a huge competitive advantage in the marketplace over firms forced to pay hundreds of millions in fines.