The Antitrust Division of the U.S. Department of Justice, the Federal Trade Commission, and state attorneys general, as any antitrust aficionado knows, have dramatically improved the level of communication, cooperation, and coordination among themselves in the investigation and prosecution of antitrust violations during the past decade.1 Two important examples of such coordination are the 1998 Protocol for Coordination in Merger Investigations Between the Federal Enforcement Agencies and State Attorneys General (“Merger Protocol”) 2 and the 1996 Protocol for Increased State Prosecution of Criminal Antitrust Offenses (“Criminal Protocol”). 3

Additionally, in 1993, the states, through the National Association of Attorneys General (“NAAG”), reissued and revised their Horizontal Merger Guidelines. 4 Although the 1993 NAAG Guidelines do not achieve complete convergence with the 1992 revisions to the DOJ/FTC Horizontal Merger Guidelines, 5 it is certainly fair to conclude that state and federal enforcers have gone a very long way toward establishing a single antitrust methodology for the evaluation of mergers and acquisitions. Moreover, in 1995, NAAG reissued it Vertical Restraints Guidelines 6 following the withdrawal I 1993 of the DOJ Vertical Restraints Guidelines. 7 NAAG’s current version of its Vertical Restraints Guidelines eliminates the political rhetoric found in the earlier document and, again, while not necessarily achieving convergence with either DOJ or FTC policy and enforcement, does create an environment much more conducive to coordination with federal enforcers. 8

The development of the aforementioned protocols has been accompanied by numerous examples of coordinated federal/state enforcement activities. These include many initiatives in health care in which both state and federal enforcers allege violations of the antitrust laws in a single coverage and resolve their respective concerns in a single consent decree. 9 Most recently, of course, the states and the Antitrust Division coordinated the filing of their respective complaints against Microsoft on May 18, 1998. 10

There are now so many examples of such coordinated conduct the collaboration between state and federal enforcers is seen as commonplace. 11 Sophisticated corporations have come to appreciate that there are significant risks if one chooses to ignore the potential impact that a state attorney general may have upon a transaction. 12 In short, since the first term of the Reagan Administration, which began with a fundamental lack of respect, and virtually no coordination, between state and federal enforcers, we are now at a stage in which the states are seen as co-equal members of the “Antitrust Triad.” 13

The logical question is, of course, “where do we go from here?” In 190, in a provocative law review article, Professor Robert H. Lande proposed a type of allocation scheme in which federal and state antitrust enforcers would maintain distinct primary areas of merger enforcement. 14 The criteria were primarily based upon the size of the transaction and the effect of the transaction upon a particular state. 15

At the time that Professor Lande’s article was published, I was serving as Chair of the NAAG Multistate Antitrust Task Force. While Professor Lande’s article was both creative and inviting, I also thought that it was a bit premature. The states had not yet achieved the requisite respect from either the private bar or the federal enforcement agencies that would be essential for such a plan, or any similar protocol, to work.

Much has occurred since the Lande article was published in 1990. Indeed, we now have a federal/state Merger Protocol that seeks to define in some detail, not the areas or primary state/federal responsibility, but rather the mechanics of joint activity (e.g., confidential treatment of information) as well as the conduct of joint investigations and settlement discussions. The Merger Protocol is a very important document in the maturing relationship between federal and state antitrust enforcers because, more than anything else, it acknowledges the central role of the states in antitrust enforcement.

Importantly, the Criminal Protocol does allocate responsibility primarily upon the basis of local impact, at least with respect to those states that have both the interest and the capacity to prosecute price fixing and bid rigging criminally.

In light of the central role played by the states in competition policy, and despite the focus of the Criminal Protocol upon local impact, it is almost certainly politically untenable for state antitrust enforcers to cede general antitrust responsibility to the federal government based solely, or even primarily, upon either size or location of the transaction. Ironically, now that the states have achieved a type of parity with the federal agencies, the Lande proposal, premature at conception, is past its prime.

My suggestion is both modest and quite simple. The operative principal is resources. The federal government and the states do not have sufficient antitrust enforcement resources, i.e., personnel, to continue to prosecute the same transactions. Without citing gruesome statistics, it is absolutely clear that there exist many more antitrust matters to investigate and prosecute than there are state and federal enforcers available to do the work. Other than instances in which the states seek treble damages for injuries to the business or property of the state, its political subdivisions or its citizens 16–that which the federal government cannot do-it does not seem wise for the states and the federal government on a regular basis to prosecute the same antitrust matters.

The myriad cases prosecuted by the states, including Microsoft and Delta Dental, have sent an important message to the business community that the states are indeed the third prong in the antitrust triad. The states have finally achieved the measure of respect that they have sought for so long. It is, in the words of another government official speaking about matters unrelated to antitrust enforcement, time to move on.

It is, I suggest, now time for the Antitrust Division, the FTC, and NAAG to develop a new protocol, not limited to either mergers or criminal enforcement, but rather inclusive of all antitrust enforcement, that will allocate in the most efficient manner possible, the limited human resources available to enforce the Magna Charta of free enterprise. I do not presume to suggest, however, how such a protocol would work in operation. From my years of government service, I know enough to realize how extraordinary difficult it would be to allocate responsibility between state and federal antitrust enforcers. I also know that it would be worth the effort to try.

Endnotes

1 See, e.g. R. Langer, The States Will Continue to Be Central Players in the Development of Antitrust Policy, Antitrust Rep., May 1993, at 3; R. Langer, the Maturation of Coordinated Activity by State Attorneys General, Antitrust Rep., Sept. 1994, at 7; R. Langer, Getting Edge Issues in State Antitrust and Consumer Protection Enforcement, Antitrust Rep., Dec. 1995, at 3.

2 For the text of the Merger Protocol, see Antitrust Rep., May 1998, at 34; 4 Trade Reg. Rep. (CCH) ¶ 13,420. The Merger Protocol is the culmination of earlier efforts by state and federal enforces to coordinate their efforts. See FTC Information Sharing Protocol, reprinted in 4 Trade Reg. Rep. (CCH) ¶ 13,212; see also DOJ Information Sharing Protocol, reprinted in 62 Antitrust & Trade Reg. Rep. (BNA) 338 (March.12, 1992).

3 For the text of the Criminal Protocol, see 70 Antitrust & Trade Reg. Rep. (BNA) 362 (Mar. 28, 1996).

4 For the text of the NAAG Horizontal Merger Guidelines, see Antitrust Laws and Trade Regulation: Primary Source Pamphlet 281 (Matthew Bender 1997) [hereinafter Primary Source Pamphlet]; 4 Trade Reg. Rep. (CCH) ¶ 13,406.

5 For the text of the DOJ/FTC Horizontal Merger Guidelines, see Primary Source Pamphlet, supra note 4, at 109; 4 Trade Reg. Rep. (CCH) ¶ 13,104.

6 For the text of the NAAG Vertical Restraints Guidelines, see Primary Source Pamphlet, supra note 4, at 263; 4 Trade Reg. Rep. (CCH) ¶13,400.

7 For the text of the DOJ Vertical Restraints Guidelines, see Primary Source Pamphlet, supra note 4, at 79; 4 Trade Reg. Rep. (CCH) ¶ 13,105.

8 See R. Langer, Proposed Revisions to the NAAG Vertical Restraints Guidelines, Antitrust Rep., Feb. 1995, at 3.

9 See e.g., United States and Arizona v. Delta Dental Plan of Arizona, Inc., 1995-1 Trade Cas. (CCH) ¶ 71,048 (D. Ariz); United States and State of Florida v. Morton Plant Health System, Inc., 1994-2 Trade Cas. (CCH) ¶ 70,759 (M.D. Fla); United States and State of Connecticut v. HealthCare Partners, Inc., 1996-1 Trade Cas. (CCH) ¶ 71,337 (D. Conn.) Such coordination is, of course, not limited to health care, See, e.g., United States v. Thompson Corp., 1997-1 Trade Cas. (CCH) ¶ 71,754 (D. Conn.) (states involved were California, Connecticut, Illinois, Massachusetts, New York, Washington, and Wisconsin).

10 See 74 Antitrust & Trade Reg. Rep. (BNA) 495 (May 21, 1998).

11 See e.g., Roundtable Conference with Enforcement Officials, 65 Antitrust L.J. 929, 942-43 (1997) (remarks of Kevin J. O’Connor, Chair, NAAG Multistate Antitrust Task Force).

12 See, e.g., R. Blumenthal, R. Langer & W. Rubenstein, Antitrust Review of Mergers by State Attorneys General: The New Cops on the Beat, 67 Conn. B.J. 1 (1993).

13 To gain a sense of the sea change in the dynamic relationship between state and federal antitrust enforcers, see, for example, 60 Minutes with Robert M. Langer, 61 Antitrust L.J. 211 (1992); 60 Antitrust L.J. 197 (1991); 60 Minutes with Michael F. Brockmeyer, 59 Antitrust L.J. 25 (1990); and L. Constantine, Antitrust Federalism, 29 Washburn L.J. 163 (1990).

14 R. Lande, When Should States Challenge Mergers: A Proposed Federal/State Balance, 35 N.Y. L. Sch. L. Rev. 1047 (1990).

15 Under the Lande proposal, a state would have primarily responsibility if the merger does not affect interstate commerce or the merger primarily affects one state or a portion of a state, i.e., where at least 2/3 of sales or purchases within the relevant market potentially affected by the merger are within a single state. Notwithstanding the foregoing, a state would not have primary responsibility if the aggregate worldwide sales of both companies exceed $2.0 billion and the merging companies each have sales of at least $250 million. I.d. at 1088.

16 One example is the multitude of resale price maintenance cases brought by the states in their parents practice capacity. See R. Langer, A Cautionary Tale; State Enforcer’s Perspective on Vertical Restraints, Antitrust (ABA), Spring 1994, at 9.