Prepared remarks: The Rule of Law and Antitrust, at New York University Law School (April 20, 2024)
The rule of law is a term we are hearing more and more these days. I recognize that there are lots of definitions for this term; let me offer this one—law enforcement actions should not differ based on who is the target and legal standards should not be bent to serve political agendas. Our First Amendment, as a feature of our constitutional system and point of pride, protects all speech, whether we like it or not. That means that all speakers, no matter how repugnant their words, have certain rights to say them. The same holds true in other areas of law, such as antitrust law. That means that antitrust law must be applied faithfully across a range of cases, not based on whether enforcers like the content of the actions at issue.
The ideal of the rule of law as applied fairly and faithfully is under great strain. Indeed, our institutions are now facing a fundamental challenge—can we honor the basic commitment of providing equal justice for all based on the facts and legal principles in any given case? In short, we live in a time when, on account of rising political polarization and demonization, the rule of law as an institution is being tested.[1] I recognize that the pressures undermining this institution are powerful. That’s why I worry about their impact on State Attorneys General.
For State Attorneys General, there is a temptation—and a risk—that we will make selective enforcement threats against American businesses that are consistent with, or even driven by, political priorities. Unfortunately, we have seen some examples along these very lines. To defend the rule of law, we must evaluate rigorously—in the First Amendment arena, the antitrust arena, and other domains—whether a particular action would be taken if the subject of the action were different. The point of my talk today is how important it is that we keep asking this question.
1. Three Case Studies
To set the stage, let me outline three scenarios, raising the question as to whether antitrust law should treat them differently.
First, consider the hypothetical scenario of a set of major technology companies that commit to follow the National Institute of Standards and Technology (NIST) standard for safe, secure, and trustworthy artificial intelligence (AI). This commitment includes a pledge to disclose publicly that they will follow the NIST standard and that they will allow a Responsible AI Consortium to audit their behavior accordingly. The consortium will, in turn, allow them to use the “Responsible AI” trademark on their products. The members of the consortium, moreover, commit to lobby the federal government to ensure that it continues this standard, invests in resources to support it, and works to advance effective regulatory oversight in this field.
Second, consider the real case of the Marine Stewardship Council (MSC), which was founded by the World Wildlife Fund and Unilever to encourage fisheries to operate in a sustainable fashion. This organization, as one commentator explained, “administers standards for sustainable fisheries, updates the standards periodically with input from a stakeholder advisory group, evaluates fisheries, and allows those fisheries that meet certain criteria to label their fish as MSC-certified.”[2] The development of these standards, which are advertised by the companies who use them, has resulted in maintaining sustainable fish stocks. The impact of this program is significant, as consumers have voted with their pocketbooks and an increasing number of companies decided to follow the standard.[3]
Third, consider the case of the Net Zero Alliance, a group of companies that commit to make their best efforts to act responsibly in connection with the challenges of our changing climate. These companies all commit to a set of general principles, none of which prescribe any specific course of conduct or are subject to any binding enforcement mechanism. Commitment one, for example, states that how a member aligns with the relevant target “is up to the member at the firm level.”[4] As the Alliance describes it, its goal is to provide consumers with information about the companies’ values and goals, enabling them to make informed decisions. The members of the Alliance also agree to lobby governments to pursue policies that address the challenges of climate change.
2. Self-Regulation and the Rule of Law
Each of these regimes reflects a different form of self-regulation about issues of public concern. The last scenario provides, as best I can discern, the most general form of a commitment—making decisions at the member level to pursue decisions that advance a general goal. The other two scenarios, by contrast, pursue more specific goals through more specific commitments. As a matter of antitrust law, a threshold question is whether there is a specific agreement among competitors or whether there is merely a general and aspirational commitment.[5]
Even if the Net Zero Alliance imposed more specific requirements, the relevant question for that situation—like the others mentioned above—is whether those requirements relate to the dimension of competition where coordination would be potentially anticompetitive. To the extent that none of the scenarios outlined above involve restrictions on competition, the mere fact of cooperation should not be singled out in one case simply because of the particular goal—say, addressing climate concerns.[6] To be sure, this is not unique to antitrust; as I noted above, First Amendment standards do not vary based on whether the government approves of the speech being protected.[7] Unfortunately, a September 13, 2023 letter from a group of Attorneys General singled out the Net Zero Alliance as presenting an antitrust concern without articulating a legal principle that would not also undermine the legality of the other scenarios outlined above.[8]
Based on what I can discern from public statements, it is curious that the group of Attorneys General would attack the Net Zero self-regulatory program based on so little evidence that the program advanced an anticompetitive scheme. To be sure, self-regulatory programs merit scrutiny when they fail to follow appropriate safeguards or appear to advance an anticompetitive scheme. At the same time, such programs can merit praise when they operate as an effective means of addressing complex issues consumers care about, whether managing fisheries in a sustainable manner, ensuring trustworthy use of artificial intelligence, or addressing concerns related to a changing climate. As the U.S. Federal Trade Commission Chair under President George W. Bush, Deborah Majoras, explained: “Self-regulation is a broad concept that includes any attempt by an industry to moderate its conduct with the intent of improving marketplace behavior for the ultimate benefit of consumers.”[9] With respect to self-regulatory organizations, she further explained: “Membership in such organizations may provide credibility for new firms, and the organization may devise industrywide rating systems or standards that provide product or behavioral advantages for the industry as a whole.”[10]
Finally, it merits note that a self-regulatory program can serve the purpose of providing consumers with valuable information. Examples of how consumers value this, and similar, information are legion. Companies regularly advertise, for example, that their products are made from recycled material or are “green.” Because consumers value this information, the FTC published “green guides” over the last 30 years.[11] The very foundation of such guides is that consumers benefit when they have more trustworthy information and can vote with their pocketbook.
In short, antitrust law long has condoned collaborative efforts to provide consumers with additional information—including businesses’ commitment to using best practices to address climate issues—because so doing can enable more informed choices in the marketplace and allow consumers to use their purchasing power to drive progress on issues they care about. Moreover, antitrust law has long permitted self-regulatory programs to advance public policy goals, recognizing that they can provide policymakers with a living laboratory and comply with antitrust law (when they follow key safeguards).[12] To attack a program within this tradition because it is disfavored is a challenge to our free market system; after all, companies should be given latitude to make commitments on public issues and provide consumers with information that they can choose to act on (or not to act on).
3. Antitrust Law Allows for Private Collective Action Centered Around Public Policy Goals
A second point raised by the September 13 letter is even more mystifying. In addition to suggesting that the general commitment of the Net Zero Alliance violated antitrust law, that letter called out the set of companies for working together to lobby on climate policy issues. This commitment, however, falls comfortably within the Noerr-Pennington doctrine and is thus not subject to antitrust attack; that doctrine provides that joint action by companies on regulatory and legislative policy issues do not violate antitrust law.[13]
It merits emphasis that the Noerr-Pennington doctrine applies even when the joint action is motivated by anticompetitive goals. (Notably, there is no evidence that this is true in the Net Zero Alliance case.[14]) In the Noerr case, for example, a number of railroad companies ran a public relations campaign to encourage legislation to harm a competing industry, interstate trucking transportation—an emerging rival in the long-distance hauling business.[15] In that case, the railroad companies admitted the goals of their collective action was to disadvantage a rival. Nonetheless, this action did not violate antitrust law because companies have a First Amendment right to petition the government—and can do so through collective action.[16]
* * *
State Attorneys General are powerful antitrust enforcers. From my experience in the federal and state arenas, I’ve learned firsthand that the mere threat of antitrust enforcement can shape the direction of individual businesses and whole industries. It is a sobering responsibility to express concern to a firm or an industry. Threats of legal action need to measure up to a key tenet of the rule of law: following clear and fair processes for enforcing laws and not opportunistically invoking the specter of law enforcement to advance political goals or to reward (or punish) specific parties. How my colleagues and I choose to operate shapes our nation’s business environment. It also shapes how—and whether—the American economic engine can operate to solve human problems.
Of the three case studies I have discussed and numerous others like them, it merits emphasis that only one has drawn collective fire from some State Attorneys General: the Net Zero Alliance. It remains difficult for me to understand how the September 13 letter captures concerns that justify potential antitrust action. I am thus left asking how is it that some of my colleagues, whom I know to be careful, thoughtful, and committed attorneys, chose to issue this threat about this issue.
Upon my review, I cannot see how the Net Zero Alliance targeted by this letter is a threat to competition. Consequently, singling it out as such—and not acting against comparable efforts—undermines confidence that State AGs are acting based on a commitment to impartial and fair law enforcement. More broadly, efforts to undermine actions by businesses based on their policy goals are on the rise. Just weeks before the September 13 letter, another group of State Attorneys General issued a broadside to all Fortune 100 CEOs about diversity, equity, and inclusion programs that their firms have in place or might be thinking about. That argument, as I have explained in a legal opinion,[17] misses the mark.
As I noted at the outset, political polarization is a rising threat to the rule of law. Before she passed away, Justice Ruth Bader Ginsburg commented that “a loss of the willingness to listen to people with views other than one’s own” is a threat to the rule of law.[18] As an antirust enforcer, I am committed to the position that we cannot allow antitrust law to be used as a tool to advance or undermine the expression of political views or prevent consumers from voting with their pocketbook on issues they care about. To that end, it is most unfortunate and dangerous to have letters targeting particular self-regulatory programs based on their content. Rather, responsible law enforcement—under the antitrust laws, consumer protection laws, and other laws—should proceed using appropriate procedures and not ignore well-established legal standards based on the public policy area at issue.
We are living in a very challenging time. With extreme political polarization and rising demonization, Congress is barely able to function and the rule of law as an institution is facing difficult headwinds. At the State AG level, we must resist these forces, which are fueling actions that look more like intimidation than traditional law enforcement.
Antitrust law can and must remain a bipartisan endeavor guided by rule of law principles. That means that we must take seriously collective action by business to fix prices or gain monopoly power, as that harms consumers. By contrast, when businesses work together to protect, for example, consumer privacy, to safeguard natural resources, or to share information about the impact of our changing climate change and how they are responding to it, that advances public welfare and does not offend the antitrust laws.
At this moment, it is important both that businesses stand up to intimidation efforts not grounded in the rule of law and that State AG enforcers resist temptations to use their authority opportunistically to advance political agendas through nominal law enforcement efforts.
[1] I have discussed this challenge on prior occasions. https://coag.gov/blog-post/weiser-state-ags-the-rule-of-law-collaborative-problem-solving-9-30-2021/; https://coag.gov/blog-post/the-ginsburg-scalia-initiative-8-13-21/
[2] Michael P. Vandenbergh, Private Environmental Governance, 99 CORNELL L.REV. 129, 138, 149 (2013).
[3] Significantly, as one commentator concluded that, for the complex problem of managing private fisheries, private regulation is a more effective tool than public regulation. Patricia A. Moye, Private Certification Versus Public Certification in the International Environmental Arena: The Marine Stewardship Council and Marine Eco-Label Japan Fisheries Certification Schemes as Case Studies, 43 VAND. J. TRANSNAT’L L. 533, 564 (2010).
[4] Net Zero Financial Service Providers Alliance, Commitment, available at https://www.netzeroserviceproviders.com/our-commitment/
[5] See FTC, Other Agreements Among Competitors, available at https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-competitors/other-agreements-among-competitors (explaining how a trade association’s mandatory code of ethics might constitute an unreasonable restraint on competition) (emphasis added).
[6] To be sure, while there is considerable contention on climate policies, a substantial majority of the American public is interested in seeing action on this front. As one recent poll found, for example, “73 percent of Americans said they were at least somewhat concerned about climate change,” and “61 percent of Americans said they had changed their behavior ‘some’ or ‘a lot’ because of [these] concerns.” Kaleigh Rogers and Zoha Qamar, Americans Are Well Aware Of Climate Change — But Not About The Government’s Efforts To Fight It, FiveThirtyEight (Aug. 19, 2022), available at https://fivethirtyeight.com/features/climate-change-inflation/.
[7] West Virginia Board of Education v. Barnette, 319 U.S. 624, 642 (1943) (“If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein.”).
[8] https://www.nationalreview.com/wp-content/uploads/2023/09/State-AGs-NZFSPA-Letter-9-13-2326.pdf
[9] Deborah Platt Majoras, Self Regulatory Organizations and the FTC, Speech to the Council of Better Business Bureaus (April 11, 2005), available at https://perma.cc/53ZF-Q4Y3, at 2 (“Majoras Speech”). The letter’s suggestion that an agreement among non-competitors to establish a standard on climate commitments is violative of antitrust law is a strange one. After all, as the antitrust agencies have long made plain “consumers may benefit from [even] competitor collaborations in a variety of ways” and that the “potential efficiencies from competitor collaborations may be achieved through a variety of contractual arrangements including joint ventures, trade or professional associations, licensing arrangements, or strategic alliances.” Federal Trade Commission and U.S. Department of Justice, Antitrust Guidelines for Collaborations Among Competitors 6 (2000). If the NetZero Alliance did violate antitrust law by establishing basic standards on climate action, a range of other trade organizations and self-regulatory organizations presumably would as well. Any such suggestion is wrong and irresponsible.
[10] Majoras, supra, at 4.
[11] FTC, Environmentally Friendly Products: FTC’s Green Guides, available at https://www.ftc.gov/news-events/topics/truth-advertising/green-guides.
[12] As FTC Chair Majoras explained, such efforts must include appropriate safeguards. Id. at 7-9. Notably, private associations that promulgate safety standards and other forms of self-regulation must do so based on the merits of objective expert judgments and through procedures that prevent standard-setting and other processes from delivering biased results based on individual members’ economic interests in stifling product competition. See, e.g., American Soc’y of Mech. Eng’rs v. Hydrolevel, 456 U.S. 556, 577 (1982) (holding that antitrust liability can attach in a case where “we do not face a challenge to a good-faith interpretation of an ASME code reasonably supported by health or safety considerations”). Because bona fide standard setting efforts are generally procompetitive, courts tend to apply the rule-of-reason analysis in evaluating their conduct.
[13] Eastern R. R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657 (1965); Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 510 (1988) (“Petitioner, and others concerned about the safety or competitive threat of polyvinyl chloride conduit, can, with full antitrust immunity, engage in concerted efforts to influence those governments through direct lobbying, publicity campaigns, and other traditional avenues of political expression.”)
[14] For a collective plan to address public policy issues to violate antitrust laws, it must both not only be motivated by an anticompetitive purpose, but it also must be a sham. The absence of any suggestion that the Alliance is a front for anticompetitive purposes and is not genuine coalition to advocate for climate policies underscores that participation in this Alliance is not a violation of the antitrust laws. As the Supreme Court explained in the Noerr case, a sham is a scenario when action “ostensibly directed toward influencing governmental action is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor.” Id. at 144; see also Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 59 (1993) (the Court has “repeatedly reaffirmed that evidence of anticompetitive intent or purpose alone cannot transform otherwise legitimate activity into a sham.”).
[15] Noerr, 365 U.S. at 129-30.
[16] Id. at 135. To the extent the September 13, 2023 letter insinuates that Net Zero Alliance members are acting jointly, but not petitioning legislators, an antitrust claim under federal or state law would require, as discussed above, more evidence of an anticompetitive agreement than a generic, unenforced, and unenforceable call to arms. Moreover, the letter’s reference to illegal concerted activity, citing the concept of a group boycott, also misses the mark. Such an anticompetitive concern, if plausible, would presumably resemble a case like Nat’l Soc. of Professional Engineers v. United States, 435 U.S. 679, 693-95 (1978), where a trade association rule prevented members from quoting prices to prospective customers. In the case of the Net Zero Alliance, however, there are no reasons cited or any apparent basis to believe that there is any concerted conduct afoot that limits competition. Rather, those joining the Alliance are making aspirational commitments to achieve broad climate goals and determining, on an individual basis, what are the best means of achieving them. See, e.g., Consol. Metal Prod., Inc. v. Am. Petroleum Inst., 846 F.2d 284, 292 (5th Cir. 1988) (holding that “a trade association that evaluates products and issues opinions, without constraining others to follow its recommendations, does not per se violate section 1 when, for whatever reason, it fails to evaluate a product favorably to the manufacturer”).
[17] Colo. Op. Att’y Gen. No. 23-02 (Oct. 4, 2023).
[18] https://www.cnn.com/2020/02/07/politics/ruth-bader-ginsburg-senate-partisan-polarization/index.html