[Corp. Watch] Economic crisis focuses attention on corporate size, power

[Corporation Watch]

Obama Vows Anti-Trust Crackdown

  Justice Department official reverses Bush administration report
  that limited government's ability to pursue anti-trust violations

By David Goldman

(CNN, May 11) -- President Obama's top anti-trust official said Monday  
that the administration will aggressively crack down on anti-trust  
violations, reversing a Bush-era policy that had weakened the  
government's ability to take on monopolies.

	"As anti-trust enforcers, we can no longer sit on the sidelines,"  
said Assistant Attorney General Christine Varney, speaking Monday at  
the Center for American Progress in Washington.

	As part of her remarks, Varney retracted a September 2008 report that  
amended Section 2 of the Sherman Anti-Trust Act. Section 2 deemed it  
illegal to make any attempt at creating a monopoly, but the amendment  
had loosened those rules.

	"The report ... raised too many hurdles to government anti-trust  
enforcement," Varney said. "Withdrawing the report is a shift in  
philosophy, and the clearest way to let everyone know that the Anti- 
Trust Division will be aggressively pursuing cases where monopolists  
try to use their dominance in the marketplace to stifle competition  
and harm consumers."

	Though the report had followed more than a year of hearings conducted  
by the Justice Department and the Federal Trade Commission (FTC), the  
FTC never actually signed the document.

Changing landscape

	The Bush administration brought historically few anti-trust cases to  
trial, but Varney said those days are over. She promised a return to  
"tried and true case law and Supreme Court precedent."

	For example, Varney said the United States could start seeing more  
cases like the 1998-2001 U.S. v. Microsoft case in, which the software  
giant was found to have forced out Internet browser competition like  
Netscape and Opera.

	There's a good chance that the Justice Department's decision will not  
only lead to more anti-trust complaints, but also to a more receptive  
ear, said Joe Angland, partner in White & Case's anti-trust practice.

	"The administration signaled that, in certain areas, it will adopt  
stricter rules to deal with dominant firms," he said. "It will likely  
lead to more investigations of the firms' abilities to deal with  
competitors."

	But Angland added that the decision does not herald a return to the  
"bad old days" of the 1950s and '60s, when the government aimed to  
take down corporations it deemed too large.

	He said the repeal of the report likely means a return to Clinton-era  
policies which he described as "stricter, but not anti-business."  
Angland also believes that the Obama administration is not looking to  
target any specific companies or sectors.

	Instead, the shift will likely lead to more investigations of loyalty  
discounts and refusals to deal with competitors -- two areas in which  
the Supreme Court has not issued a ruling.

	"The administration can't change Supreme Court decisions; they can  
only step in where there is not a ruling," said Angland.

European shift

	After Bush became president in 2001, many plaintiffs started opting  
to take anti-trust cases to European courts.

	Among the bigger cases, Microsoft was fined $1.2 billion by the  
European Commission in February 2008 after it was found to be pricing  
out rivals and refusing to comply with the court's previous antitrust  
decision.

	Similarly, European Union anti-trust regulators are expected to say  
Wednesday that Intel Corp. unfairly paid computermakers to delay or  
even cancel products that contained chips made by rival AMD, according  
to reports.

	Varney, a former FTC commissioner under the Clinton administration,  
said the U.S. Justice Department plans to closely align itself with  
the European Union to streamline anti-trust regulation. "I don't think  
you'll get a better result from one jurisdiction than another," she  
said.

	Angland said the Justice Department's new anti-trust enforcement will  
slow the movement of cases to European courts, but not end it  
completely.

Too big to fail ... really?

	Varney said a major failure of the previous administration was  
allowing corporations to grow to such an extent that they essentially  
did become too big to fail.

	That's because many had become so intertwined with other businesses  
within their industry that a failure would have posed a systemic risk  
to the entire sector.

	"Too big to fail [is] a failure of anti-trust," Varney said. "The  
recent developments in the marketplace should make it clear that we  
can no longer rely upon the marketplace alone to ensure that  
competition and consumers will be protected."

	Varney suggested a "back-to-basics" approach to anti-trust  
enforcement. "When companies compete, you get better programs at lower  
prices," she said.