"I intend to become a vigorous antitrust enforcer," says John H. Shenefield, who becomes a deputy assistant attorney general in the Antitrust Division of the Justice Department on April 4. "I wouldn't take the job if I didn't."
When Shenefield's appointment became public knowledge two weeks ago, some persons on Capitol Hill, in the private antitrust bar, and in the division expressed concern about just how vigorous a federal antitrust official Shenefield would be. Among other things, his appointment appeared a political reward for his early support of President Carter and work as Democratic city chairman in Richmond. In addition, his appointment as a deputy to the department's chief antitrust official, Assistant Attorney General Donald I. Baker, was made by Attorney General Griffin Bell without prior consultation with Baker. Baker, a holdover from the Ford administration with nearly 10 years' experience with the division and a reputation as though and professional antitrust enforcer, had been widely believed to have a good chance to stay on in the Carter administration.
Most importantly, Shenefield's work as an antitrust lawyer was cited. As a lawyer with the Richmond firm of Hunton and Wiliams, Shenefield in some recent important cases represented clients whose positions were diametrically opposite the Justice Department's. The cases, involving areas in which the department spent substantial resources over the last five years, dealt with increasing competition in regulated industries and professional occupations.
Shenefield filed an amicus curaie (friend of the court) brief on behalf of General Public Utilities Corp. and others in one case which resulted in a Supreme Court decision that regulated electric utilities are not exempt from the antitrust laws, even though they are regulated. In another, Shenefield represented the Fairfax County Bar Association in a suit brought by Mr. and Mrs. Lewis A. Goldfarb charging that the minimum fee schedule issued by the Fairfax Bar and enforced by the Virginia State Bar violated the antitrust laws. The Supreme Court ruled in 1975 that the professions did not have the automatic exemption from the antitrust laws they believed they had and the fee schedule did violate the law.
"He was doing his job and doing it well," says one one lawyer who observed Shenefield in one of those cases, "What's important now is whether he was just representing his client's views or whether it was an articles of faith with him."
It wasn't, Shenefield insisted in an interview in his office last week. "I hope my clients aren't too shocked.
"As a predominantly defense lawyer, obviously my job has been to beat the Department of Justice when it opposed us, and when we were involved in civil suits, my job was to beat the person on the other side," he says. "So it doesn't really surprise me that there are people in the division who are a little uneasy, a little edgey - not so much because my philosophy is hostile, but they don't know, and they have never seen me, I guess, in any other role than someone who is out to beat them, and beat them as badly and as fast as possible.
"I think it's probable that those who know me in that capacity, as well as my clients, are likely to be a little surprised when my won views . . . become relevant," he says, adding that he doesn't know how relevant his views as a deputy are. To the extent they are, he:
Has a strong belief in the role of competition as the "best tool" for allocting resources in the economy.
Believes the Justice Department, for a variety of reasons including budget limitations, has not enforced the antitrust laws as effectively "as it really should."
Says that there is a fair amount of antitrust violation abroad in the land.
"It's going to be my job, along with the other deputies and the assistant attorney general, to make the division do the job that it historically has set out for itself," he says.
Because Baker objected to Shenefield's taking the slot now held by Jonathan Rose - deputy assistant attorney general responsible for regulatory matters - Shenefield will take Joe Sims' position as deputy assistant attorney general responsible for administration, appellat, policy planning and evaluation matters, and Sims will move into Rose's sport (Rose is leaving). But Shenefield suggests that he will be a storn supporter of the division's efforts in the regulated-industries sector.
"I guess I start back at proposition number one, which is that competition is better than regulation, other things being equal," he says. "So I view this sort of situation as one in which regulation is required to justify itself, and it ought to be able to do that every few years or so."
Going industry by industry, Shenefield says the government should ask: What are the public purposes that are asserted to be served by regulation? Are those valid public purpose? Are we trying to attain those purposes and those ends by the most efficient and the least restrictive way possible, or are there some less restrictive ways to do it?
"If the answer to be the last question is yes, there are less restrictive ways of doing it absent regulation, it seems to me we ought to do it," he says. "I would certainly be in favor of moving down through the regulated industries in an orderly way going for, where possible, deregulation."
Continued division participation in the proceedings of other agencies, such as the Federal Power Commission, Civil Aeronautics Board, Interstate Commerce Commission, and Federal Communications Commussion - which has taken an increasing amount of the division's budget in recent years - is "absolutely essential," Shenefield says. "The division is the only voice that speaks 100 per cent for competition policy, and there's got to be an advocate in that process," he says. "There's an advocate for everything else."
What about antitrust in the learned professions? "I wrote the brief in that case and lost it, and lost it nine to nothing, and in this country that usually answers the question," he says. "The learned professions are subject to the antitrust laws; they ought to be enforced . . . pretty much across the board, it seems to me. No exceptions come to mind."
He says he's unhappy about the myraid of mostly-state-originated, so-called ethics codes and restrictions, which he termed "regulatory Mickey Mouse that has nothing really to do with the ultimate product and is essentially protectionist.
"There's certainly a lot of that in the legal professions," he admits. "One hopes that the bar, out of its own enlightened self-interest, is going to get rid of a lot of that . . ."
Because the American Bar Association has been a client of his, Shenefield says he would not take part in any decisions which need to be made at the divisions case challenging the ABA's advertising restrictions. As a general proposition, he believes bans on advertising - whether by lawyers, doctors, for eyeglasses or prescription drugs - are restrictive and should be eliminated. "The more information you have, the better, " he says. "So long as you have laws, which we do in this country, against deceptive advertising, you ought to be pretty well protected." Though a consumer might be hurt because of some misleading advertising, "on balance, I think society benefits if there's advertising."
On other antitrust topics, Shenefield:
Rates "structure" cases pretty high. "If you have a situation where, for one reason or another - that is to say, for reasons of antitrust violations or not - the structre is such that you just are not getting the kind of competition that you ought to have out of an industry, then I think structure cases are necessary," he says. "There may have been on antitrust violation in the background of a company and yet you may still have something that needs redressing." He leans toward the use of the courts in those situations but is worried about the, time those cases take and would like to see the process streamlined somehow, maybe through the use of some sort of per se approach.
Thinks the division should put a lot of resources into the energy area. "I think the energy situation may be the single most important domestic problem we face, and I think antitrust has got to be part of that solution," he says. As a starting point intellectually, he is skeptical that a company in one energy source should be able to own resources in another. As to the more controversial "vertical" antitrust issues, he is worried about situations which appear to bar independents or new entrants, tax policies which appear to favor the integrated producer, leasing policies which appear to favor the big company with a lot of cash, and "the kind of tremendously complex, interlaced network of joint ventures among these same companies that appear really to preempt a lot of the new exploration. "I know it takes a lot of money and I don't have any conclusion at this point, but I get worried about it," he says.
A member of Hunton & Williams since he graduated from Harvard Law School in 1965, Shenefield considers Supreme Court Justice Lewis F. Powell, with whom he first worked at the firm, "a professional mentor." Because he then set up the firm's "senior antitrust lawyer."
In 1974, he was one of the members appointed by the Virginia General Assembly to a commission which wrote a new antitrust statute for the state. It includes the standard Sherman Act prohibitions on restrains of trade and attempts to monopolize, and also includes language similar to the Robinson-Patman Act, legislation designed to prevent price descrimination as a protection to small business but which some, including a recent Justice Department study, suggest may not achieve its stated goals and which may impose other costs on the consumer and the economy. The Virginia statute also gave the state law enforcement officials important enforcement tools, among them civil investigative demand power Congress granted the antitrust division only last year.
Shenefield says he has been promised the job of assistant attorney general for antitrust when Baker leaves at the end of May, but admits he hopes that he'll be considered for it.
Whether or not he is probably depends on how key officials assess his first months in office. At least one early critic has softened his initial reaction. "He's had a rough introduction to Washington," he said. "Let's give hima a break and see what hecan do."