‘Stay Tuned’ for DoJ Antitrust Action on Internet Companies, Varney Says
Successful Internet companies must “pay attention to the rules” of antitrust the same as those in any other industry, said Christine Varney, assistant attorney general at the Antitrust Division. She spoke publicly Monday, at a Center for American Progress event in Washington, for the first time since winning Senate confirmation. Audience members pressed Varney, a former FTC commissioner and founder of one of the country’s first Internet law practices, for clues on how the department will treat Google’s growing market power in several fields.
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Varney’s major action Monday was making clear that the DoJ is becoming much more active in antitrust enforcement. She withdrew the department’s report on “monopolization offenses” under section 2 of the Sherman Act, issued in September. The report raised “too many hurdles” to antitrust enforcement of single-firm conduct, she said. The department assumed that it was too difficult to distinguish anti- competitive from lawful conduct, that vigorous enforcement would lead to “over-deterrence,” and that market “self- correction” was a preferable path to competition. “These views, held in good faith, have not borne out” as the U.S. economy has plummeted, Varney said.
DoJ will analyze the “overall state of competition” in the industries it reviews, not act on a “case-by-case basis” as in the last administration, Varney said. The department’s pursuit of Microsoft in the Clinton administration is a good indicator of DoJ’s new approach, she said. “As antitrust enforcers we can no longer sit on the sidelines.” One big change: DoJ will file “quite frequently” as a friend of the court in antitrust cases, Varney said. Antitrust defendants have put a “fair amount of potential reliance” on the section 2 report, and the department wants to discourage that, she said.
Consider the “hypothetical” example of an Internet company that dominated search, advertising, e-mail, photo- sharing, online video and maps, and was expanding its reach to browsers and online payments, Marc Rotenberg, executive director of the Electronic Privacy Information Center, told Varney. “Hypothetically, is there anything that the Department of Justice might do in this situation?” Varney refused to take the bait. “In America we reward success and I applaud the companies that have been very successful in the past decade,” but they “need to pay attention to the rules” under section 2, she said.
The Internet has created “radically new economic models,” Varney said. DoJ’s new chief economist, former economics Prof. Carl Shapiro of the University of California, Berkeley, has written extensively about “networked industries” and he’s in a good position to evaluate competition in them, she said. Shapiro recently testified that the newspaper industry shouldn’t get further protection from antitrust enforcement because of the classified and other ad revenue it has lost to the Internet (WID April 22 p7). “Stay tuned,” Varney said. “I think we'll have a lot to say about it over the next several years.”
Asked whether she could reverse the trend of U.S. companies going to Europe to file antitrust claims that wouldn’t interest DoJ, Varney said she has often heard of the practice. The European Commission is pursuing cases including against Microsoft over browser tying and Intel over payments to computer makers not to use AMD chips. The Wall Street Journal said Monday that the EC will fine Intel in the case Wednesday. DoJ will coordinate more closely with European counterparts than it has, Varney said. “I would discourage any company from forum-shopping” in hopes of finding more assertive antitrust authorities, she said.