Friday, March 09, 2007

Antitrust Enforcers Face Criticism at Senate Hearing

This posting was written by John Scorza, CCH Washington Correspondent.

Lawmakers raised serious concerns about the recent track record of the federal antitrust enforcement agencies at a Senate antitrust oversight hearing on March 7. The top regulators of those agencies defended their performance.

"Alarming Decline" in Enforcement

Sen. Herb Kohl (D-Wis.) cited an “alarming decline” in antitrust enforcement under the Bush administration, particularly in the area of mergers. Kohl, who serves as chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, said the antitrust officials have challenged 75 percent fewer mergers under the Bush administration. At the same time, merger reviews have declined by 60 percent.

Nevertheless, the chief of the Justice Department’s Antitrust Division told lawmakers that the division remains “very active” in merger enforcement. Assistant Attorney General Thomas O. Barnett said the division filed 10 merger-enforcement actions in district courts in fiscal 2006. In an additional 6 transactions, the parties restructured the deals as a result of division investigations.

Barnett said the division’s activity in 2006 represents the highest level of merger-enforcement activity since the end of 2001, when the division was reviewing twice as many mergers as a result of what Barnett described as a “merger wave” during that time.

Sen. Russ Feingold (D-Wis.) was among the lawmakers joining Kohl in expressing concerns about allegedly lax review of mergers by the Antitrust Division. In response, Barnett said the division has not changed its approach to merger enforcement. “We are consistently applying the same principles that we have applied for 15 or 20 years,” Barnett said.

Deborah Platt Majoras, chairman of the Federal Trade Commission (FTC), testified that her agency has focused its enforcement efforts on areas of the economy that have the greatest impact on consumers, such as health care, energy, and real estate. In fiscal 2006, Majoras said the FTC had identified 16 transactions that raised concerns for competition. The FTC gained relief in nine cases, while seven transactions were withdrawn or restructured.

The antitrust agencies did receive some support from lawmakers during the hearing, particularly from Sen. Orrin G. Hatch (R-Utah), the top Republican on the subcommittee. “As with any endeavor, I am sure that there is some room for improvement with respect to current enforcement efforts, but I have been generally pleased with the enforcement efforts of both the Antitrust Division and the Federal Trade Commission,” Hatch said.

Consolidations in Several Sectors

Senators asked the heads of the antitrust agencies about consolidation in several sectors of the economy of particular concern to them and their constituents, including the agricultural, railroad, media, dairy, and airlines industries.

Kohl sought and gained assurances that Barnett would take a second look at the proposed takeover of Midwest Airlines by AirTran. Last month, the Antitrust Division closed its mandatory investigation of the merger after fewer than 30 days, Kohl said. Barnett agreed to review any additional comments and evidence generated by Kohl and others. Midwest Airlines serves Kohl’s home state of Wisconsin.

No comments: