Varney Confirmation Hearings

Josh Wright —  11 March 2009

Webcast and testimony are available. Here is the paragraph from the testimony setting forth objectives for the new DOJ enforcement regime with some brief commentary below:

There are three main areas that, if confirmed, I will focus on as the Assistant Attorney General for Antitrust.

First, we must rebalance legal and economic theories in antitrust analysis and enforcement. The Antitrust Division can provide strong intellectual leadership in competition policy by advancing our collective understanding of competitive behavior and adapting our thinking to reflect our ever evolving markets.

Second, we need renewed collaboration between the Antitrust Division and the FTC, whose policies and processes have unfortunately diverged too frequently in recent years. Policy disputes and jurisdictional squabbles between agencies with overlapping enforcement mandates lead to uncertainty for consumers, business, and for overseas’ antitrust enforcers who look to the US for consistent guidance.

Third, we must continue our cooperation with worldwide antitrust authorities, discussing our differences with international enforcers respectfully and engaging with emerging antitrust regimes such as China and India as they implement new antitrust laws. Working with the committed and talented staff at the Division, I am sure these goals can be achieved.

With respect to the first, rebalancing legal and economic theory in antitrust law sure sounds unobjectionable doesn’t it? But what does it mean? Presumably something about how the law has failed to adopt the Post-Chicago economics view of markets and needs some adjusting. But its unclear. No matter the interpretation, it is difficult to square any type of economic theory with Varney’s prior claim that there is “no such thing as a false positive.” There are economists and lawyers who believe that the incidence of false positives is lower than others presume. There are also those who argue we underestimate the social costs associated with false negatives. But there is consensus that the right way to think aboutCo setting optimal antitrust rules involves minimizing the social costs associated with both types of errors. I just don’t see how to square this with the claim that they do not exist. Perhaps Carl Shapiro or the excellent staff of DOJ economists can persuade their leader otherwise.

Collaboration between the agencies seems like a good thing. Though as I’ve written before, e.g. here and here, there are tradeoffs associated the increased convergence. While convergence can be desirable, for example by increasing business certainty, converging on bad ideas is not something to cheer. What matters most is the adoption of superior substantive rules and decision-making processes motivated by the best available economic theory and evidence. So I will wait and see what kind of convergence we get both between the DOJ and FTC as well as internationally.

The third priority gives me some hope (as does Varney’s earlier statement that the European approach to monopolization was too extreme) that the new DOJ does not plan on surrendering on the battle of ideas taking place with respect to monopolization and single firm practices to the Europeans entirely.

I don’t have a transcript yet.  But will post it when I get it.