Reversal of policy on antitrust planned

WASHINGTON — President Obama's top antitrust official this week plans to restore an enforcement policy that would reverse the Bush administration's approach, which strongly favored defendants against antitrust claims.

It would restore a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.

The head of the Justice Department's Antitrust Division, Christine Varney, is to announce the policy reversal in speeches today and Tuesday, her first public appearances since she took office last month.

The administration is hoping to encourage smaller companies in an array of industries to bring their complaints to the Justice Department about potentially improper business practices by larger rivals.

Varney is expected to say the administration rejects the impulse to go easy on antitrust enforcement during weak economic times. Rather, she will assert that severe recessions can provide dangerous incentives for large and dominating companies to engage in predatory behavior that harms consumers and weakens competition.

Pending cases

The announcement is aimed at making sure no court or party to a lawsuit could cite the Bush administration policy as the government's official view in any pending cases.

In the speeches, Varney is expected to explicitly warn judges and litigants in antitrust lawsuits not involving the government to ignore the Bush administration's policies, which were formally outlined in a Justice Department report last year. The report applied legal standards that made it difficult to bring new cases involving monopoly and predatory practices.

Interpretation of laws

As a result of the Bush administration's interpretation of antitrust laws, the enforcement pipeline for major monopoly cases — which can take years for prosecutors to develop — is thin. During the eight years of the Bush administration, the Justice Department did not file a single case against a dominant firm for violating the antimonopoly law.

Many smaller companies complaining of abusive practices by their larger rivals were so frustrated that they went overseas to the European Commission and to Asian authorities to find receptive enforcement officials.

Varney's new approach more closely aligns American antitrust policy on monopolies and predatory practices with the views of antitrust regulators at the European Commission.

"This will be bad news for heavyweights in the tech industries — companies like Google and Microsoft," said Herbert Hovenkamp, a leading antitrust scholar regarded as a centrist who teaches at the University of Iowa College of Law.

While Varney is not expected to mention any specific companies or industries vulnerable under the new policy, those who have talked to her about the speech say she is aiming at agriculture, energy, health care, technology and telecommunications companies.

Reviewing conduct

She may also be reviewing the conduct of some in the financial-services industry, which is undergoing a wave of consolidation as a result of the financial crisis.

Varney, a former partner at the Hogan & Hartson law firm who headed the firm's Internet practice group, served as a commissioner at the Federal Trade Commission in the 1990s after working in the White House during the early years of the Clinton administration.

Signaling her intent to revive a moribund antitrust program, she has recruited a collection of senior aides, many of whom are seasoned antitrust litigators or worked in the Clinton administration and the FTC and were involved in many prominent cases, including the one against Microsoft.

Antitrust policy is set by Washington, D.C., in two ways: by the interpretation of laws announced by the Justice Department and the Federal Trade Commission through guidelines for the courts and private litigants; and by the enforcement cases that those agencies decide to bring.

The government's guidelines are often cited by lawyers and given considerable weight by judges in antitrust cases.

It is not unlawful for a company to become a monopoly. It becomes unlawful if the monopolist engages in conduct to exclude or harm competitors with no business justification.