US DOJ takes more aggressive approach to antitrust

Tech firms may need to be careful, experts say

The U.S. Department of Justice has repealed a policy seen as being lax on antitrust violations, signaling a more aggressive approach toward antitrust enforcement under the administration of U.S. President Barack Obama.

The DOJ's Antitrust Division has withdrawn a September report that "raised too many hurdles to government antitrust enforcement and favored extreme caution" toward antitrust enforcement action, the DOJ said.

The change in policy could mean that the DOJ looks harder at the actions of technology vendors such as Google, Oracle and IBM, as detractors have raised antitrust concerns about all three in recent months.

Christine Varney, assistant attorney general in charge of the Antitrust Division, said her comments, made during a speech Monday, weren't directed at any one company.

She did say, however, that the DOJ should take close looks at the high-tech and Internet industries and new ways of measuring antitrust activity there. Varney also said the DOJ would look hard at mergers and their impact on competition.

"Withdrawing the... report is a shift in philosophy and the clearest way to let everyone know that the Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers," Varney said during a speech.

"The division will return to tried-and-true case law and Supreme Court precedent in enforcing the antitrust laws."

Spokesmen with Google and Intel declined to comment on the change in policy. The U.S. Federal Trade Commission has an open antitrust investigation of Intel and the DOJ's change in policy wouldn't affect that.

In recent months, several detractors have raised concerns that Google has a near monopoly in online search advertising. In late 2008, the DOJ's concerns over a proposed advertising partnership between Google and Yahoo killed the deal.

Google recently has been meeting with lawmakers, journalists and others in an effort to explain its positions on business competition. Google's main message has been that competition with the search giant is "one click away."

"As Google has grown, the company has naturally faced more scrutiny about our business principles and practices," Adam Kovacevich, senior manager for Google's global communications and public affairs, wrote on the Google public policy blog Friday.

"We believe that Google promotes competition and openness online, but we haven't always done a good job telling our story."

An antitrust expert at Boston University questioned the DOJ's decision. It's no surprise that the Obama administration would take a different approach than former President George Bush's administration, said antitrust expert Professor Keith Hylton.

Varney talked about cartels and price-fixing and praised the DOJ for working hard on those types of issues. There are a handful of industries where cartels still exist because of "powerful interest groups," and new actions against those industries would be welcome, Hylton said.

But in most industries, a more aggressive approach may not be needed, he said.

"Opening up the doors (or opening the doors wider) of the Department of Justice to complaints from firms against their rivals will encourage a different form of interest-group politics," he wrote in an e-mail.

The change in policy may mean that tech companies will have to look hard at mergers before going through with them, added Bruce McDonald, a lawyer with the Jones Day law firm, and former deputy assistant attorney general in the DOJ's Antitrust Division.

High-tech and other companies may be more reluctant to go through with mergers, even though only a handful of merger cases ever lead to DOJ enforcement actions, he said.

With Varney signaling that the DOJ will look at new ways to measure antitrust behavior in tech industries, the DOJ will be a "little less predictable," McDonald said.

"You very likely will see new enforcement actions," he added.

Varney's decision could mostly shift antitrust enforcement back to standards that were long recognized before the Bush administration's changes late last year, added Steve Newborn, an antitrust lawyer with the Weil, Gotshal & Manges law firm. But companies with dominant positions in their markets, including Google, should be careful as they watch the new policies play out, he said.

"The rules have changed," he said.

The Computer & Communications Industry Association, a trade group that supports stronger antitrust enforcement, praised the policy shift.

"It's clear we have a new sheriff in town," said Ed Black, the group's president and CEO. "There's so much that was left ignored by the last administration, so a main job will be catching up."

Varney's announcement suggests the U.S. intends to return to the "main track" of antitrust enforcement and operate in parallel with the European Union, Black said in an e-mail.

It appears as if the DOJ is "going to be aggressive, but careful, and I think that's going to be an appropriate balance," he said.

Tags antitrustUSA governmentlegaldoj

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Grant Gross

IDG News Service

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