May 13, 2009

DOJ Antitrust Chief Announces Dramatic Policy Reversal, Aggressive Antitrust Enforcement

In a May 11 speech before the Center for American Progress, Assistant Attorney General Christine A. Varney—recently confirmed head of the Antitrust Division of the U.S. Department of Justice (DOJ)—repudiated the Bush administration's hands-off approach to antitrust enforcement and announced the federal government will renew its commitment to vigorous enforcement of the nation's antitrust laws.

Explaining that during the past several years "the pendulum has swung too far from . . . vigorous enforcement," Varney explicitly criticized the previous administration's approach of allowing markets to self-correct or police themselves.

This turn-about aligns the DOJ more closely with recent activism at the Federal Trade Commission and signals that businesses can expect much greater antitrust scrutiny than they have received in recent years.

DOJ Antitrust Report Withdrawn

Varney specifically denounced findings of the 2008 DOJ report, Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act, that expressed skepticism regarding the ability of antitrust enforcers and courts to distinguish between anticompetitive acts and lawful conduct of dominant firms. The report further stated that antitrust agencies were "ill-equipped to act as industry regulators."

Announcing the department's formal withdrawal of the report, Varney stated it no longer represents DOJ policy with regard to antitrust enforcement and "should not be used as guidance by courts, antitrust practitioners, and the business community."

In her remarks, Varney rejected the report's conclusion that "antitrust liability for unilateral, unconditional refusals to deal with rivals should not play a meaningful part in Section 2 enforcement." She affirmed her belief that both regulators and the courts must take a more active role to combat anticompetitive conduct in the marketplace.

Varney: Enforcement Key Component in Economic Recovery

Noting that lax antitrust enforcement in the 1920s contributed to the economic dislocations experienced during the Great Depression, Varney suggested the nation's current economic difficulties had been exacerbated by the Bush administration's failure to enforce antitrust laws.

Just as the Roosevelt administration's renewed antitrust enforcement was a cornerstone of the New Deal and helped spur economic recovery during the late 1930s, she expressed her belief that aggressive antitrust enforcement is a critical component of the Obama administration's economic recovery program. Such enforcement "must play a significant role in the Government's response to economic crises to ensure that markets remain competitive," according to Varney.

Businesses to Face Heightened Antitrust Scrutiny

Varney announced federal regulators' commitment to more closely scrutinize market conditions in a broad range of industries and to use all tools at her disposal, including civil and criminal enforcement of Sections 1 and 2 of the Sherman Act and merger and non-merger investigations (especially in high-tech and Internet-based markets), to reinvigorate competition and protect consumers.

While precise contours of the DOJ strategy to revive antitrust enforcement remain unclear, it seems certain that market participants, and especially those in concentrated industries, will face heightened antitrust scrutiny of their business activities in the years ahead.

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