New Antitrust Chief Promises
Tougher Enforcement
In an abrupt reversal of Bush administration policy, the new head of the Department of Justice Antitrust Division has promised stricter antitrust scrutiny of actions by dominant firms.
In a May 11 speech at the Center for American Progress,1 Christine Varney publicly repudiated a controversial DOJ policy statement 2 that had called for caution in challenging dominant firm conduct under Section 2 of the Sherman Act, which prohibits monopolization as well as attempts and conspiracy to monopolize. When the policy statement was announced in September 2008, it was criticized by three of the four sitting FTC Commissioners, who said that it imposed heavier burdens on enforcers than were called for by existing case law and would serve as a “blueprint for radically weakened enforcement of Section 2.”3 In her remarks formally abandoning the prior policy, Ms. Varney echoed that criticism, contending that the policy statement reflected “excessive concern with the risks of overdeterrence” and “effectively straightjackets antitrust enforcers,” resulting in an “overly lenient approach to enforcement.” She went so far as to assert that “inadequate antitrust oversight” — reflecting what she characterized as a misplaced faith in the ability of markets to self-correct — has “contributed” to the current economic crisis.
In place of the repudiated policy statement, Ms. Varney declined to endorse any single standard to evaluate conduct under Section 2. Instead, she said that the Antitrust Division would be guided by case law that sets forth “clear limitations on how monopoly firms are permitted to behave.” As examples she cited and discussed a 1951 Supreme Court decision condemning a newspaper’s refusal to accept ads from merchants who advertised with a local radio station, a 1985 Supreme Court decision holding that Section 2 prohibited a ski operator from abandoning a joint marketing arrangement with a smaller competitor and the D.C. Circuit’s 2001 en banc decision that a number of Microsoft’s business practices violated Section 2.
It is clear that the Antitrust Division under Ms. Varney’s leadership will be more willing to challenge dominant firm conduct than it was under its prior leadership, and that the Division is not likely to view economic distress as grounds for leniency. Determining the contours of the new policy, however, is difficult at this point. Although Ms. Varney indicated that the Division’s reinvigorated enforcement efforts will reflect “tried and true standards,” the extent to which the case law provides “clear limitations” to guide practitioners, businesses and courts is debatable. For example, the Microsoft court itself acknowledged that “[w]hether any particular act of a monopolist is exclusionary, rather than a form of vigorous competition, can be difficult to discern.”4 Moreover, in recent cases including Trinko and Linkline, the Supreme Court has emphasized that there are relatively few situations where Section 2 imposes a duty on dominant firms to deal with their rivals or otherwise aid their competitors.5 Nonetheless, in light of the major shift in enforcement policy announced this week, firms that hold dominant positions in particular markets will need to use renewed caution when considering actions or policy changes that could be deemed exclusionary because they foreclose competitors from a significant portion of the marketplace.
1 “Vigorous Antitrust Enforcement in This Challenging Era,” Remarks Prepared for the Center for American Progress (May 11, 2009). Ms. Varney repeated her speech on May 12 before the U.S. Chamber of Commerce.
2 U.S. Department of Justice, Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act (2008).
3 Statement of Commissioners Harbour, Leibowitz and Rosch on the Issuance of the Section 2 Report by the Department of Justice (September 8, 2008), available at http://www.ftc.gov/0s/2008/09/080908section2stmt.pdf.
4 United States v. Microsoft Corp., 253 F. 3d 34, 58 (D.C. Cir. 2001).
5 See Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004); Pacific Bell Telephone Co. v. Linkline Communications, Inc., 129 S.Ct. 1109 (2009).
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