Justice's Monopoly Guidelines Assailed
Tuesday, September 9, 2008
The Justice Department issued a report yesterday establishing how and when it will crack down on misbehaving monopolies, but its approach was immediately assailed as too lax and the work of an administration willing to allow big business to run roughshod over consumers.
A bipartisan majority of the Federal Trade Commission characterized the report as "a blueprint for radically weakened enforcement" against monopolies that engage in predatory pricing and other illegal tactics.
Sen. Herb Kohl (D-Wis.), chairman of the Senate Judiciary Committee's antitrust subcommittee, called the report an assault on the Sherman Act, the basis for much U.S. law on monopolies.
"If followed, the Justice Department's interpretation of this fundamental law written nearly 120 years ago . . . could make it virtually impossible to prevent many forms of abusive conduct by dominant firms, such as predatory pricing and tying" goods to a sale, Kohl said in a statement. "This report represents another anti-competition and anti-consumer decision by this Antitrust Division."
The report comes as the Justice Department has faced criticism for failing to take a more aggressive stance to foster competition and protect consumers in antitrust matters.
Notably, the Justice Department has allowed the mergers of the Whirlpool and Maytag appliance companies and of satellite radio providers XM and Sirius. The department is investigating a partnership of Google, the dominant provider of search advertising, and Yahoo, its nearest competitor in the field.
Thomas O. Barnett, assistant attorney general in charge of the department's antitrust division, defended the legal outlook outlined in the report as being "pro-consumer" and a synthesis of commonly accepted legal standards.
While the report is not law, judges in antitrust cases, as well as plaintiffs and defendants, are likely to look to it for guidance.
By establishing clearer guidelines, he said, the report will make it easier to undertake antitrust actions and for firms to comply with the law.
There is a need to prohibit monopolistic aggression, he said, but there is also a need "to avoid interfering in the rough and tumble of beneficial competition that drives innovation and economic growth."
"I think that the report that the Department of Justice issued is both a reaffirmation of the importance of enforcing Section 2 of the Sherman Act and a modest step toward making that enforcement more effective," he said in an interview. "What we've set forth here is consistent with the overall framework that has been endorsed by courts and scholars."
But a bipartisan majority of the Federal Trade Commission -- Pamela Jones Harbour, an independent; Democrat Jon Leibowitz and Republican J. Thomas Rosch -- disputed the notion that the report protects consumers or reflects a consensus of judicial opinion.
"The final report's descriptions and conclusions . . . cannot be said to represent the consensus or even the prevailing view of the myriad stakeholders," the FTC group said.
The group took issue with a number of findings in the report, including many of the threshold tests that would determine whether the Justice Department can take action against a firm engaging in monopoly tactics.
"In almost every case, the Department adopts standards that are tougher -- and in some cases much tougher -- than existing standards," the FTC group said.
Those tougher standards would make it far less likely for the Justice Department to act against a market bully, officials said.
"As an inevitable consequence," the FTC group said, "dominant firms would be able to engage in these practices with impunity."