By Mark A. Lemley and David McGowan | Special for Calmatters
Years ago, the conservative legal scholar Robert Bork criticized the view that antitrust law should not worry about economic problems but should, like a mythical small-town sheriff, just walk down the street and pistol-whip a few people every so often.
His point was that the law should be coherent, not random. But still less should the sheriff be allowed to walk down the street and pistol whip only those who stand up to him. That is not just legal incoherence, but a perversion of the law.
The Department of Justice appears determined to play the role of that sheriff. It has decided to investigate car manufacturers that agreed with California to establish a framework setting parameters for compliance with California’s greenhouse gas emissions standards.
Federal antitrust law provides no basis for the Department of Justice investigation. Antitrust law aims to prevent businesses from restricting competition for their own gain. It favors practices that tend to increase productivity because those practices also increase society’s wealth.
Antitrust law does not aim to restrict states from governing. Antitrust law also does not stop businesses from seeking to influence government regulation. That is true even when states adopt rules that restrict competition.
Supreme Court precedent dating to the early 1940s is clear on these points. Businesses that work with the government on regulations are immune from antitrust liability for such efforts even if they seek regulations that explicitly restrain trade.
The U.S. Supreme Court has stated the rule so succinctly it could fit into a tweet:
“Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition. Such conduct is not illegal, either standing alone or as part of a broader scheme itself violative of the Sherman Act.”
In other words, even if the car companies got together to try to influence the state to regulate them, that wouldn’t be illegal. But of course that’s not what happened.
This rule means that automakers have no antitrust liability for working with California. It would be an easy case even if the framework agreement were anti-competitive, but on its face it is not.
Regulating emissions is a real economic problem, California has the legal authority to regulate them, and the framework has obvious productivity benefits. It is more efficient to make cars that can be sold in all 50 states than to try to modify them for differing rules. As such the framework promotes rather than harms competition.
Because the Justice Department’s investigation is meritless from every angle, we are led back to the rogue sheriff.
Antitrust has had its problems over the years, but never has it been wielded so explicitly as a tool to make businesses kowtow to the whims of a president. The Justice Department’s investigation is on par with efforts by the Nixon White House to use the IRS to harass his enemies.
That is why the House investigation is so important. Even when the Justice Department investigation founders on the law, as it inevitably will do, there is a risk that the threat of such investigations will lead companies to toe the administration’s line in the future, even when it makes no economic sense to do so.
The House can and should ensure that the companies can rely on the law to guide their decisions and to protect them from the malignant abuse of the law.
The business community has had to put up with a lot from this administration. But there is a difference between intemperate and erratic policy behavior, and the use of investigative power as a form of payback.
Unfortunately, the law on this point is so clear that payback seems the only logical explanation. The U.S. Department of Justice must do better. It must be better.
C is the William H. Neukom Professor of Law at Stanford Law School and the director of the Stanford Program in Law, Science and Technology. David McGowan is the Lyle L. Jones Professor of Competition and Innovation Law at the University of San Diego School of Law. They wrote this commentary for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.
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