The Justice Department recently concluded that a deal by Google to buy a travel search firm would “substantially” reduce competition, stifle innovation and leave consumers with fewer choices.
Then it approved the merger — after adding limits on Google’s behavior that will require years of monitoring by the department’s antitrust division.
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In two other high-profile mergers, involving Comcast and Ticketmaster, the government threatened to take the cases to court but instead greenlighted the deals after laying out rules for the companies, which the Justice Department will now have to watch.
Not since antitrust officials took on Microsoft in the 1990s has the department taken on this much responsibility enforcing restrictions on some of America’s most dominant companies.
Some experts worry that the agency, now reviewing the blockbuster deal between AT&T and T-Mobile, is trying to regulate complex businesses when it should instead be blocking controversial mergers in court.
“DOJ is not a regulatory agency. That’s not what they’re set up for,” said Ken Davidson, an antitrust lawyer who spent nearly three decades at the Federal Trade Commission. “They’re not set up to regulate the telecommunications industry. They’re not set up to regulate the travel industry,” he said, adding that the FTC has the same weakness.
Justice officials bristled at the notion that they are acting as regulators, arguing that they are not intervening in the markets nearly enough to earn that label. Instead, Justice officials say they are trying to use “traditional law enforcement tools” to fix mergers that would otherwise hurt consumers and competitors.
“There are always ideologues on both sides of the debate. Some want us to block every deal, and some want us to allow every deal to go through,” said Christine Varney, assistant attorney general and head of the Justice Department’s antitrust division. “I’m not an ideologue. I’m a law enforcer making decisions based on the facts and the law.”
In antitrust law, there are broadly two ways to handle a merger that poses a threat to competition. Officials can require a solution that alters a company’s structure — for instance, asking a firm to spin off part of its business. Or, they can limit a company’s behavior in some way.
Observers say Varney has shown an inclination toward the latter. Nowhere has this been more evident than in the division’s recent handling of Google’s acquisition of the software firm ITA.
Google’s purchase gives it control of the technology running most online flight searches. Travel sites including Orbitz and Kayak were initially concerned that Google — which wants to launch its own travel search service — could cut them off from ITA’s technology or charge them exorbitant amounts. The agreement hatched by the Justice Department addresses this worry by requiring Google to license ITA’s technology to existing customers at a fair price for the next five years.
But Davidson, who made sure companies followed their agreements with the FTC, said such remedies can be “very, very difficult to enforce.” Determining the fair price for Google to charge could be hard once ITA is attached to a firm that is motivated to give its own product an edge.
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