The Politics of Delegation: Constitutional Structure, Bureaucratic Discretion, and the Development of Competition Policy in the United States and the European Union, 1890-2017

Abstract

Over the last three decades, European competition enforcement has become both more intensive and extensive. Meanwhile, American antitrust enforcement has stagnated. Why has the European Union, a supranational organization created by governments with long histories of organized cartels and state direction of the economy become the world’s competition policy leader? And why is the United States, the birthplace of antitrust, and a polity with less of a cartel and industrial policy tradition, now a competition policy laggard? I argue that the divergent pattern has depended on differences in the construction of administrative power in each system. In Europe, a broad zone of bureaucratic discretion allowed the European Commission to intensify competition policy enforcement following the diffusion of neoliberal economic ideas during the final decades of the 20th century. In the United States, antitrust regulators had similar policy preferences but were comparatively constrained: by their narrow legislative mandate, the adversarial legal enforcement system, and extensive ongoing political controls that limited bureaucratic autonomy. Drawing from archival material, comprehensive enforcement data, and an extensive secondary literature in history, economics, sociology, and law, I use systematic process analysis to demonstrate that the dissimilarity in the design of bureaucratic discretion in the competition policy field is rooted in the distinct political origins of each regulatory regime, and the way in which bureaucratic delegation was shaped by the constitutional organization of power within each political system. The agrarian populist origins of the American antitrust laws, together with the congressional dominance of lawmaking under the U.S. Constitution, led to the establishment of a regulatory regime characterized by a narrow zone of bureaucratic discretion and a judicial system of enforcement. In Europe, by contrast, the integrationist origins of competition law, combined with the executive-dominated organization of political power under the European Treaties, led to the creation of a comparatively broad zone of bureaucratic discretion, including the establishment of an administrative system of enforcement, and the delegation of significant policymaking and enforcement autonomy to the European Commission. A close analysis of institutional design choices over more than a century of political development, points to some of the ways that the organization of powers within each political system has systematically conditioned subsequent reforms, leading to the maintenance and reinforcement of the core institutional features of each regulatory regime. Through a comparative analysis of the pattern of competition enforcement within key sectors from 1975 to 2017, I highlight also some of the consequences of the design of bureaucratic discretion for regulatory capacity. With little risk of political intervention or judicial sanction, the Commission has been able to use competition law to systematically reform economic development policy, promote regulatory liberalization, and restructure the behavior of dominant firms—in the process, creating a more integrated and competitive European economy. By contrast, the more limited discretionary authority possessed by U.S. regulators has tied antitrust enforcement to electoral outcomes and judicial opinion, limiting the ability of federal regulators to use antitrust law to support liberalization and public subsidy reform, and thereby allowing dominant firms and subnational governments to maintain significant barriers to competition in the American economy.