DOJ Signals More Aggressive Antitrust Enforcement By Withdrawing September 2008 Report On Monopolization
By Jason Hicks
On May 11, 2009, Assistant Attorney General Christine A. Varney, Chief of the DOJ's Antitrust Division announced a policy shift in the Department of Justice regarding single-firm conduct under Section 2 of the Sherman Act. In her speech, Varney announced that the DOJ was withdrawing its report Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act, which had been unveiled during the last few months of the Bush Administration.
Varney explained that the DOJ, under the Obama administration, believed the report "misses the mark" because it "raise[d] the hurdles to government antitrust enforcement." She explained that the report "characterize[d] a dominant firm's ability to act efficiently as a core concern in evaluating any possible anticompetitive impact of its conduct." Although this is an important aspect of the analysis under Section 2 of the Sherman Act, Varney stated that the report "goes too far in evaluating the importance of preserving possible efficiencies and understates the importance of redressing exclusionary and predatory acts that result in harm to competition, distort markets, and increase barriers to entry." Varney said the repudiation of the report represents "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."
There is no doubt that Varney's speech is part of a larger effort by the Department of Justice to "reinvigorate" its antitrust enforcement policies, which some say were too lax during the prior administration. What this will mean for antitrust law, however, is yet to be seen. The Department of Justice may be more willing to bring cases, but the scope of the antitrust laws is determined by the courts--not the DOJ.
However, given the cost of responding to and defending a DOJ investigation, businesses should not simply view Varney's speech as a symbolic gesture. A recent headline in the US News and World Report reads: "Obama's New Antitrust Rules Have Big, Powerful Companies Sweating." This begs the question: who is a "big, powerful company"? Market definition and identification of monopoly power are just as (if not more) important issues in an antitrust case than whether the alleged monopolist misused its monopoly power. Varney's speech did not address those issues. The question is not whether "big, powerful companies" should be worried. Of course they should. The real question is whether your company is big and powerful enough to be worried.
Varney explained that the DOJ, under the Obama administration, believed the report "misses the mark" because it "raise[d] the hurdles to government antitrust enforcement." She explained that the report "characterize[d] a dominant firm's ability to act efficiently as a core concern in evaluating any possible anticompetitive impact of its conduct." Although this is an important aspect of the analysis under Section 2 of the Sherman Act, Varney stated that the report "goes too far in evaluating the importance of preserving possible efficiencies and understates the importance of redressing exclusionary and predatory acts that result in harm to competition, distort markets, and increase barriers to entry." Varney said the repudiation of the report represents "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."
There is no doubt that Varney's speech is part of a larger effort by the Department of Justice to "reinvigorate" its antitrust enforcement policies, which some say were too lax during the prior administration. What this will mean for antitrust law, however, is yet to be seen. The Department of Justice may be more willing to bring cases, but the scope of the antitrust laws is determined by the courts--not the DOJ.
However, given the cost of responding to and defending a DOJ investigation, businesses should not simply view Varney's speech as a symbolic gesture. A recent headline in the US News and World Report reads: "Obama's New Antitrust Rules Have Big, Powerful Companies Sweating." This begs the question: who is a "big, powerful company"? Market definition and identification of monopoly power are just as (if not more) important issues in an antitrust case than whether the alleged monopolist misused its monopoly power. Varney's speech did not address those issues. The question is not whether "big, powerful companies" should be worried. Of course they should. The real question is whether your company is big and powerful enough to be worried.
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