The views expressed herein are entirely those of the author and are not purported to reflect those of the U.S. Department of Justice.

Tony Freyer's book, Antitrust and Global Capitalism, 1930–1940, opens (almost) with the stuff of film noir: In the run-up to world war, international cartels organized by German conglomerates secured control of munitions-relevant industries; antitrust agents effectively intervened; in the aftermath of war, certain cartels attempted to reconstitute themselves thus inviting further enforcement action. That is how things appeared, at least, in Gilda (1946) with Glenn Ford and Rita Hayworth. According to Joseph Borkin, the energetic chief of what was then the Patents and Cartels section of the Antitrust Division, such a characterization may not have been far off the mark.Footnote ¹

The book is not an encyclopedic account of major antitrust issues over the last 80 years. Rather, the book explores just what the title suggests: the intersection of “antitrust” and “global capitalism.” “Antitrust” is presented as an American innovation that was fitfully exported to other countries where it was subsequently tailored and amended. “Global Capitalism” is largely identified with the extension of what Alfred Chandler has recognized as the “managerial revolution” to corporations that developed multinational presences.

By my reading, the book is roughly organized around three sets of questions. First, the label “multinational” highlights still-pressing questions about how any one country's antitrust authority should deal with the conduct of a corporate entity whose activities extend across several countries. What, for example, might the authorities do were a corporate entity to conspire with foreign entities in ways that implicate domestic commerce? Candidate answers to such questions lead inexorably to other questions about how antitrust authorities might coordinate enforcement. Second, the early development of countries' antitrust regimes was complicated by competing understandings of horizontal concerns—specifically, about the relative merits of “cooperation” and competition between firms. The book opens, for example, with an account of debate within the administration of Franklin Roosevelt between those “who believed that the Depression presented an opportunity to transform American capitalism into a scientifically planned cooperative economy” (p. 10) and those who “envisioned a liberal regime in which the government [would use] antitrust to hold big business accountable” (p. 17). Third, the narrative of the book makes contact—not always explicit—with vertical concerns. How, for example, might vertical contracting practices, “conglomerate mergers,” or vertical Japanese keiretsu pose problems?

The main body of the book is presented in six chapters. All together, the chapters use the commentaries of policy-insiders to recount the constitution—and, in the American case, the reconstitution—of antitrust policy and enforcement in the United States, Britain, Germany, Japan, and Australia. The first two chapters recount the preoccupation in the run-up to war of policymakers with enabling cooperation or, the same thing, with containing “excessive competition” between firms. The next four chapters recount developments in antitrust institutions and policies in these countries in roughly two intervals: from the end of the war and into the 1970s, and from the 1970s to the present.

One can organize this chronological sequence of three intervals around three themes. The Depression-era experience reflected enthusiasm for promoting horizontal agglomerations (cartels). Part of this enthusiasm may have stemmed from efforts to contain deflationary pressures, but, as the book makes clear, much of the enthusiasm was consistent with larger efforts to impose economic planning. In the immediate aftermath of war, the United States was busy dismantling industrial groups in Germany and Japan, but by this time it had already outgrown its enthusiasm for promoting horizontal agglomerations and started turning attention (negative) to vertical agglomerations and vertical contracting practices. Since the 1970s, however, the orientation of antitrust practice toward vertical issues shifted markedly, although important divergence between American and European approaches remains. Yet, as observers such as Herbert Hovenkamp have noted, vigorous debate over vertical issues reaches back to at least 1904 and has yet to be resolved.Footnote ² Such debate will not soon end.

The book makes for a demanding read, and the most crisp statements about the book's objectives are situated in the concluding chapter. Even so, the book offers cues and clues about interesting subjects that a reader might subsequently develop. Let me indicate two, both of which illuminate vertical issues. First, consider American efforts during the occupation of Japan to institute antitrust apparatus and to dismantle the vertical agglomerations known as zaibatsu. The entire exercise constituted an experiment in institution building, an experiment that seemingly failed in that the zaibatsu largely reconstituted themselves within new agglomerations known as keiretsu. The book is largely silent on what functions these vertical structures served and why they proved so resilient. Yet, while it might be tempting to appeal to “culture” to rationalize these phenomena, there is some research that poses and empirically tests economic rationales for such vertical structures.Footnote ³

Second, the narrative about the postwar German experience provides some clues about the emergence of the concepts of “dominance” and “abuse of dominance” in the European approach to antitrust. The dominance concept affords the European Commission extra degrees of freedom in the way it may deal with vertical issues (“exclusionary practices”), and the Commission appealed to these concepts in its move to block the proposed merger of General Electric and Honeywell in 2001. From Freyer we learn that notions of “abuse” showed up early in the German postwar experience with antitrust, albeit in a context involving horizontal concerns (cartels). At that time debate revolved, it seems, around perceived tradeoffs between outright “cartel prohibition” and “proscriptions against abuse.” A familiar rules-versus-discretion tradeoff obtains: prohibition involves the problem of drawing bright lines; proscriptions can require heavy, case-specific interpretation which in turn may lead to less predictable application of the law.