Wed, May 13, 2009 page10

• US vows tougher antitrust enforcement

  ABOUT-FACE The Justice Department said it would pursue big firms that abuse their monopolies, contending that the Bush administration had been lax in this area

  • REUTERS
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  The US Justice Department’s top antitrust official announced on Monday a return to a more aggressive approach to dealing with dominant companies that use their market power to crush competition.

  Christine Varney, head of the department’s antitrust division, announced the withdrawal of a Bush administration policy report on the issue and said the department “will be aggressively pursuing” companies that abuse their monopoly positions.

  Speaking to the Center for American Progress, Varney also lamented a lack of recent scrutiny of mergers by companies in the same supply chain, and wondered if antitrust enforcers should oppose mergers on the grounds that they would create a company that was too big to fail.

  Varney said the antitrust division under former US president George W. Bush had “not been as active as it could have been.”

  Guidelines for corporate monopolies issued last year said the goal was to stop abuses while avoiding “interfering in the rough and tumble of beneficial competition.”

  Varney said this policy raised “too many hurdles” to effective antitrust enforcement.

  “I am hereby withdrawing the [Bush] report,” she said.

  The withdrawal had been widely expected in antitrust circles.

  While companies can legally obtain a monopoly by luck or better products, Section 2 of the Sherman Act prohibits a company from using its market power to maintain a monopoly.

  Firms such as software giant Microsoft and chipmaker Intel won huge market shares in their fields but were then accused of abusing that dominance to stay on top.

  Leading Internet search firm Google has begun to come under increasing scrutiny in Washington. It dropped its advertising deal with Yahoo Inc last year in the face of opposition from the Justice Department under the Bush administration.

  The department is also looking at Google’s deal to digitize millions of books, and the US Federal Trade Commission, which also has antitrust responsibilities, has a probe into Google and Apple Inc’s overlapping board members.

  Asked about Google, Varney said she was not speaking of any particular firm or industry but added: “When you become successful ... you have to pay attention to the rules.”

  “It’s a new attitude of ‘We’re not beholden to defendants. We’re looking for the right way to enforce the antitrust laws,’” said Bert Foer, president of the American Antitrust Institute. “It sounds like a much more aggressive, less ideological approach.”

  Varney said the antitrust division would take a harder look at vertical mergers, which are deals to combine companies that do not compete but are in the same supply chain. Enforcement of vertical deals has “gone cold,” she said.

  Ticketmaster and Live Nation, the world’s largest concert promoting company, have proposed merging in a deal that is considered a mostly vertical combination. Varney did not mention either company.

  She waded into the debate over whether antitrust enforcers should move against deals that might create companies that are too big to fail and later require government rescues to prevent damage to the wider economy.

  “Is too big to fail a failure of antitrust?” she asked in her speech.

  Asked about it later, she said: “That’s the question I’m raising, I don’t have a conclusion at the moment.”

  James Smith, an antitrust lawyer with the law firm Bryan Cave, said he expected corporations to seek more legal advice, adding: “They will and should seek more counseling before they try to capitalize on their market strength.”
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