Obama's Antitrust Policy: Speak Loudly and Carry A Big Stick

Obama's antitrust enforcement (or percieved lack thereof) is the subject of a frontpage story in today's Washington Post. The story begins: "When President Obama took office, he promised to undo eight years of what he called the weakest antitrust enforcement in half a century. Consumer advocates [and businesses] held their breath for a dramatic shift [in antitrust enforcement].... A year and a half later, they're still waiting."

The premise of the article is that the Obama administration has not lived up to his tough rhetoric because DOJ has obtained consent decrees from most of the targets of its investigation and has not brought a case against a corporate titan or blocked a large merger. Instead of litigating cases, DOJ has negotiated consent decrees. Instead of blocking mergers, DOJ has forced the merging companies to make changes, such as spinning of part of their business.

The fact that there is not a lot of litigation does not strike me as proof that DOJ is weak on antitrust enforcement. As the article points out, Obama's selection of Christine Varney and her tough speeches in 2009 "stoked excitement among antitrust advocates--and jangled nerves in the business community." That tough talk (and the economy's slowdown) may have as much to do with the lack of government antitrust litigation than anything else. Businesses are less likely to go forward with a risky merger or transaction if they know there is an aggressive antitrust cop on the beat. And it takes two to tango, as they say. The target of an antitrust investigation has to agree to the consent decree to avoid litigation. Varney is quoted in the article as saying: "I'm happy to litigate. I think everyone knows that." That type of attitude is very effective at the negotiating table.

Unlike Teddy Roosevelt, Obama and Varney do not "speak softly" but the DOJ Antitrust Division does carry a "big stick." If you speak loudly and carry a big stick, you won't have to use it very often.