Obama’s Justice Dept. plans more aggressive antitrust investigations

Justice plans new antitrust effort

WASHINGTON — The Obama administration warned corporate America on Monday that the government will more aggressively investigate big firms that hurt smaller competitors, contending that lax enforcement by the Bush administration contributed to the current economic troubles.

Assistant Attorney General Christine Varney said the Justice Department is abandoning legal guidelines established by George W. Bush’s administration in September 2008. Critics complained that the earlier instructions made it difficult to pursue antitrust cases against big firms.

The move could have serious implications for two corporate giants, Intel Corp. and Google. Intel is already enmeshed in an antitrust case with European Union regulators, and Monday’s change is seen as shifting the U.S. toward the European approach to anti-monopoly enforcement.

Varney laid out the new policy in a speech to the Center for American Progress, a left-leaning think tank.

She said some of the economy’s problems were due to the lack of enforcement in the previous 10 years — a clear jab at the Bush administration, which, she said, raised too many hurdles to antitrust investigations.

“There was a high cost to standing aside. We must change course and take a new tack,” said Varney.

Thomas Barnett, who helped craft the Bush guidelines as the then-head of the antitrust division, disputed the claim they had taken a passive role in enforcement.

“We were involved and engaged,” said Barnett, who added that the Obama administration should issue new guidance to explain where officials will now draw the line on corporate conduct.

The new rules mark a return to the antitrust policies of the Clinton administration, which brought a major action against Microsoft Corp. These days, similar questions are being asked about the market dominance of Google.

The Justice Department is reviewing a proposed legal settlement with authors and publishers that would expand Google’s digital library of books, after some librarians and consumer activists complained that the proposed settlement will give Google a digital monopoly on millions of books.

Asked about Google, Varney insisted her remarks weren’t aimed at any particular company or industry, but wanted all companies to get the message.

“Look, when you become successful and you have market power, however you define it, you need to pay attention to the rules,” she said.

Bruce McDonald, a lawyer and former antitrust official in the Bush Justice Department, said Varney’s comments gave no clear indication whether the government will challenge Google’s conduct.

“We now know what direction Ms. Varney wants to take the antitrust enforcement, but exactly how far she will go will only be known when it’s played out in particular cases,” he said.

Ed Black, president of the Computer and Communications Industry Association, said Varney’s remarks showed firms should “do some self-correcting before they get corrected” by the government.

“It’s clear we have a new sheriff in town and I think there is so much that has been left ignored and not dealt with,” said Black.

The Justice Department is following up on a campaign pledge by President Barack Obama, who said the Bush administration had “what may be the weakest record of antitrust enforcement of any administration in the last half-century.”

Varney said the Obama administration would try to follow the historic lessons of The Great Depression in pursuing antitrust cases even in a troubled economy.

Varney, 53, served as a Federal Trade Commissioner during the Clinton administration, specializing in Internet-related competition issues.

Last month, the government asked a judge to extend its oversight of Microsoft to May 2011, following a 2002 settlement over antitrust issues.

Ineffective government regulation, she argued, is contributing to the current economic problems.

“As antitrust enforcers, we cannot sit on the sidelines any longer,” she said, adding that new legislation may be needed to improve policing of the marketplace.

Her division has also launched a program designed to find fraud or anticompetitive collusion surrounding the government’s $787 billion economic stimulus package.

On the Net:

Center for American Progress: www.americanprogress.org/