In a dramatic repudiation of Bush Administration policies, the Antitrust Division of the Department of Justice has withdrawn its recent report setting standards for the prosecution of monopolization offenses. Announcing the change of policy, Christine A. Varney, Assistant Attorney General in charge of the Antitrust Division, stated that "...the Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers."
The withdrawn report, "Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act," was issued in September 2008, after a series of hearings conducted by the Department of Justice and the Federal Trade Commission from June 2006 to May 2007. It was controversial from the start. The Federal Trade Commission declined to join the report after three of the commissioners called it a "blueprint for radically weakened enforcement" against anticompetitive practices.
Ms. Varney's announcement confirms the Obama Administration's plan to more vigorously enforce the antitrust laws. While President Bush's Justice Department focused on preservation of competition in the marketplace, Ms. Varney signaled that the goal of her tenure would be to protect "consumer welfare." The new policy more closely aligns the Antitrust Division's views with those of antitrust regulators at the European Commission.
As part of the new enforcement initiative, the Antitrust Division hopes to encourage smaller companies to report potential antitrust violations by their larger competitors. In order to investigate and prosecute the anticipated complaints, the Division has added several veterans of the Clinton Administration to its senior ranks.
The withdrawal of the 2008 report may also impact existing civil litigation that does not involve the Antitrust Division. Private litigants will no longer be able to cite the Antitrust Division's report as the government's official view of antitrust enforcement.
As a result of the change in position, the Antitrust Division is more likely to closely examine the conduct of companies with significant market power. For example, we expect the Antitrust Division to bring more cases for predatory pricing, tying, exclusive dealing and unilateral refusal to deal with rivals. There may also be increased scrutiny of bundled and loyalty discounts offered to certain customers. When analyzing unilateral conduct by a market-dominating company, the Bush Administration usually took a cautious approach that erred against chilling legitimate competition. We anticipate that the new Administration will pursue a more aggressive, consumer-focused analysis.
We also expect that the Obama Administration will consider further changes to antitrust enforcement, including new legislation intended to overturn some recent United States Supreme Court decisions. For example, in 2007 the U.S. Supreme Court held that minimum resale price maintenance should no longer be consideredper se illegal and, instead, should be judged under the rule of reason. Leegin Creative Leather Products v. PSKS, Inc., 127 S. Ct. 2705 (2007). That decision was widely criticized by consumer advocates and discounting retailers. Last month, the Maryland legislature passed a new law that effectively reversed Leegin and reinstated the per se rule for minimum resale price schemes that affect sales in Maryland. Several members of Congress are on record as seeking similar federal legislation.
Clients, particularly clients with significant market power, are advised to tread carefully when considering policies that may have a negative impact on consumers, competitors or competition.