Monday, May 11, 2009

Antitrust Chief Withdraws 2008 Report on Single Firm Conduct

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Marking a shift in enforcement policy, Christine A. Varney, Assistant Attorney General in charge of the Department of Justice Antitrust Division, on May 11 withdrew, effective immediately, the Antitrust Division's September 2008 report, entitled “Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act.”

The report reflected the Justice Department's enforcement policy with respect to single-firm conduct under Sec. 2 of the Sherman Act. The text of the withdrawn report (CCH Trade Regulation Reporter ¶50,231) appears here on the Department of Justice website.

“Withdrawing the Section 2 report is a shift in philosophy and the clearest way to let everyone know 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,” said Varney. “The Division will return to tried and true case law and Supreme Court precedent in enforcing the antitrust laws.”

The report outlined an approach for analyzing unilateral conduct that was intended to avoid over-enforcement that would deter aggressive, but lawful conduct.

Thomas O. Barnett, the Assistant Attorney General in charge of the Antitrust Division, who signed off on the report, had suggested that the Antitrust Division took a middle ground in its enforcement policy toward dominant firms.

Varney said that the report advocated hesitancy in the face of potential abuses by monopoly firms. She said that implicit in this overly cautious approach is the notion that most unilateral conduct is driven by efficiency and that monopoly markets are generally self-correcting.

“The recent developments in the marketplace should make it clear that we can no longer rely upon the marketplace alone to ensure that competition and consumers will be protected,” Varney added. She announced the withdrawal of the report at a May 11 speech at the Center for American Progress.

The report was issued after a series of joint hearings, involving more than 100 participants, that the Department and the FTC held from June 2006 to May 2007 to explore the antitrust treatment of single-firm conduct.

When the Justice Department's report was released last September, three of the four FTC members—Commissioners Pamela Jones Harbour, Jon Leibowitz, and J. Thomas Rosch—jointly issued a statement saying that if the report were adopted by the courts, the it “would be a blueprint for radically weakened enforcement of Section 2 of the Sherman Act.”

The three commissioners contended that “[t]he Department's premises lead it to adopt law enforcement standards that would make it nearly impossible to prosecute a case under Section 2.” (See Trade Regulation Talk entry, September 8, 2008)

The May 11 news release on the withdrawal of the report appears here on the Department of Justice website.

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