President Obama yesterday announced his first antitrust
appointment – Christine Varney will head the DOJ's
Antitrust Division. Ms. Varney, who served as an FTC Commissioner
under President Clinton, has a reputation as an aggressive, but
reasonable, antitrust enforcer. Her appointment, together with D.C.
rumors about other likely antitrust leaders, signals the prospect
of a more aggressive antitrust regime.
During the campaign, President Obama openly criticized the Bush
Administration for its lax antitrust enforcement, vowing that his
administration would reinvigorate U.S. antitrust policy. Vice
President Biden too has pro-enforcement antitrust views. During the
last Congress, he cosponsored legislation to reverse the Supreme
Court's decision in Leegin and return minimum resale
price maintenance agreements to per se illegal status.
Much of the Obama Administration's criticism has focused on the
antitrust enforcement policies of the DOJ's Antitrust Division.
During the campaign, the President denounced the agency's
complacency, pointing both to the absence of a single Section 2
enforcement action by the DOJ during the Bush Administration and
the DOJ's release of a report advocating a lenient approach to
single firm conduct.
The President's appointment of Ms. Varney will likely lead to
a more activist Antitrust Division, especially with respect to
single firm conduct. While at the FTC, Ms. Varney voted to reject a
proposed settlement in the Staples/Office Depot merger. She also
wrote the Commission's decision that found that rules imposed
by the International Association of Conference Interpreters
amounted to a per se illegal pricing scheme. In private
practice, Ms. Varney successfully represented Netscape in a
monopoly suit against Microsoft Corp. When asked about a proper
remedy for Microsoft's anticompetitive conduct, Ms. Varney
responded that "serious antitrust violations call for serious
remedies" and indicated that, in her opinion, even the breakup
of Microsoft would be "on the table." She also has been
quoted as condemning the recent proposed advertising deal between
Google Inc. and Yahoo! Inc.
The President has not yet made his other major antitrust
appointment – the Chairman of the FTC. Speculation inside
the Beltway, however, is that current Democratic FTC Commissioner
Jon Leibowitz will likely be chosen for the job. Like Ms. Varney,
Commissioner Leibowitz has made his activist leanings clear. In a
recent workshop, Leibowitz argued for the increased use of Section
5 of the FTC Act to defeat anticompetitive conduct that does not
fall strictly within the confines of the Sherman Act. In his
speech, he suggested that the FTC faces a "federal judiciary,
and especially a Supreme Court, that is hostile to vigorous
enforcement of the antitrust laws." Commissioner Leibowitz
also takes a tough stance on competition in the pharmaceutical
industry and has argued that the FTC should more frequently seek
disgorgement, asserting that "malefactors should not keep the
ill-gotten gains of their illegal acts."
President Obama's influence on FTC policy, however, will be
broader than his appointment of the Chairman; he also has an
opportunity to fill a vacant spot on the Commission. This
appointment combined with the departure of Commissioner Pamela
Jones Harbour in September could result in a Commission with a
Democratic majority as soon as the Fall of 2009.
Companies with market power and those considering mergers are most
likely to be affected by the Obama Administration's proposed
re-invigoration of antitrust enforcement, as these companies would
face increased scrutiny under an activist antitrust agenda. These
companies can take some comfort, however, in the fact that the
Obama Administration's tougher stance on antitrust enforcement
will likely need to take a backseat to the more pressing issues
underlying the current domestic and global financial crisis.
Moreover, President Obama has indicated that he will not seek and
does not believe the U.S. antitrust agencies should seek to prevent
or delay mergers that are not likely to harm consumer welfare. Even
Ms. Varney, during her tenure as an FTC Commissioner, voted in
favor of the Boeing/McDonnell Douglas merger. Her reputation as a
fair-minded (although proactive) enforcer may be precisely the
balance required given the current economic conditions and the
divergence between the DOJ and the FTC, which has made clear it
disagrees with the DOJ's lenient take on Section 2.
Thus, another result of the Obama Administration's appointment
of Ms. Varney will likely be a gradual reduction in the divergence
between the U.S. antitrust agencies – and the application
of more consistent and predictable antitrust policies. The
President's campaign statements – and his appointment
of Christine Varney – suggest that change will come. The
change, however, will likely be gradual rather than sudden, and
moderate rather than revolutionary.
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