In this antitrust slugfest, consumers always lose

Before Google could buy DoubleClick and AdMob, the Internet giant needed to get antitrust approval from the Federal Trade Commission.

But when Google wanted to buy ITA, a leading maker of travel software, the review was conducted by a different agency: the antitrust division of the Justice Department. It was also Justice that earlier nixed the idea of a merger with Yahoo.

Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.

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Now both agencies appear to be quietly, and separately, laying the groundwork for a much broader investigation to determine whether Google is using anti-competitive practices to protect its dominance in the Internet search business. The leaders of both agencies would like nothing more than to bring a high-profile case that would take its place in history along with the government’s landmark challenges of Standard Oil, IBM, AT&T, Microsoft and Intel. The FTC appears to have won the initial coin toss on this round, but don’t count out the team from Justice just yet.

Gee, I thought the idea of the antitrust laws was to encourage competition between businesses, not regulators.

Google is hardly the only turf being fought over by the antitrust cops. Every big merger, it seems, is now the occasion for extended wrangling over who is going to review it. And over the past six months, sharp elbows have been flying in all directions in the fight over which one will oversee the implementation of the new health-care law, which explicitly encourages collaboration among doctors, hospitals and other providers in what are called “accountable care organizations.”

While ACOs hold the promise of reducing costs and improving quality, creating them is likely to reduce competition in certain areas. Both agencies laid claim to the job of formulating the guidelines and approving individual transactions, with FTC officials accusing Justice of wanting to sacrifice the antitrust law to the White House’s political agenda and Justice officials accusing the FTC of trying to undermine health-care reform. Only when the dispute spilled out onto the front page of the Wall Street Journal did the embarrassed regulators sign on to an uneasy truce that divides the work between them.

This rivalry is not new — it’s been going on since 1914, when Justice opposed the law creating the Federal Trade Commission and balked at giving it a concurrent role in antitrust enforcement. But in recent years the flare-ups have become more frequent, more ideological and, at times, more personal. One big reason is that the traditional way that the work has been divided, with each agency specializing in particular industries, has become less useful as changes in technology and supply chains have blurred the boundaries between industries.

William Kovacic, a Republican member of the FTC and a former chairman, says it has gotten to the point that his agency has better relations with competition regulators overseas than it does with fellow American regulators two blocks away.

While old-fashioned bureaucratic rivalry explains much of the bad blood that has developed over the years, there are other reasons behind it.