Wednesday, January 14, 2004

Antitrust News: Foreign Preemption

Yesterday I noted the FBI existed to serve the Justice Department, not the government as a whole. Today the Bureau demonstrated what I meant. The Wall Street Journal reports that last weekend, "[FBI] agents subpoenaed Philippine executives attending an industry conference in Hawaii, ordering them to appear before a Honolulu grand jury this week." Is this a new terrorism case? Hardly. The grand jury is investigating antitrust charges against several Philippine phone companies. Specifically, the Justice Department is meddling in a year-long dispute between the Philippine companies and their American counterparts, who claim to be the victim of a price-fixing conspiracy involving fees charged by the foreign telephone companies for processing international calls originating in the U.S.

According to the Journal, this dispute was largely settled before the DOJ convened its grand jury. Over the last few months, U.S. and Philippine companies settled their differences over the fees. In other words, the market took care of itself. But that has little impact on the DOJ's thinking. After all, DOJ lawyers need to justify their budgets and offices, and they can't do that by accepting a private settlement of a private business dispute.

And incidentally, the Journal also reports that neither the FBI nor the DOJ bothered to inform the Philippine government of this investigation beforehand. Philippine President Gloria Arroyo--a strong U.S. ally--"demanded that the U.S. explain the Justice Department's action". Arroyo is right to be angry: Price-fixing is not illegal in the Philippines. But the DOJ "has long claimed the authority to prosecute foreign firms or individuals if their actions affect U.S. commerce." In Bush administration parlance, this means the U.S. will engage in "preemption" against foreign businesses who follow their nation's laws but don't share the DOJ's enlightened view of antitrust.

Meanwhile, the U.S. needs the Philippines as an ally in the battle against Islamic militants (aka the "War on Terrorism"). Given that the FBI, the nation's chief domestic counterterrorism agency, is spending its time harassing our friends over a non-issue, one must question whether the Bureau is more interested in protecting Americans from terrorism, or protecting the jobs of their bureaucratic overseers at the DOJ's Antitrust Division.

No comments: