Antitrust Law for the New Administration

As President Barack Obama completed his first week in office, the University of Colorado’s Silicon Flatirons Center invited a distinguished lineup of experts to campus January 26 to discuss the state of U.S. antitrust law and its direction under the new administration.

by Eric Schmidt

As President Barack Obama completed his first week in office, the University of Colorado’s Silicon Flatirons Center invited a distinguished lineup of experts to campus January 26 to discuss the state of U.S. antitrust law and its direction under the new administration.

The conference brought attorneys, academics, and Federal Trade Commissioner Jon Leibowitz to the University of Colorado Law School’s Wittemeyer Courtroom to explore a range of issues, including monopolization, merger review, the connection between antitrust and regulated industries, and a research agenda for competition policy. Presented by Silicon Flatirons and the American Antitrust Institute (AAI), the event coincided with the publication of a new report entitled “The Next Antitrust Agenda: The American Antitrust Institute’s Transition Report on Competition Policy to the 44th President of the United States,” available at

Commissioner Leibowitz delivered a keynote address outlining what will – and will not – change about the government’s antitrust efforts under the Obama administration.

“At the FTC, antitrust is going to be about change, but it’s also going to be about continuity,” Leibowitz said. “There will be some areas where we’ll do relatively more than we have in the recent past, and maybe we’ll do a few things differently. But I think we’ve been a pretty aggressive law enforcement agency for some time now, and I think that’s going to be true no matter who the next chairman is.”

For the first time since the days of Woodrow Wilson, the country now has a president interested in antitrust law, and Obama’s comments on the campaign trail “revealed a strong interest in ramping up enforcement,” Leibowitz said. He said that a principal antitrust priority of the new administration will be health care competition, specifically the elimination of “pay-for-delay settlements,” in which brand pharmaceutical companies pay compensation to generic competitors to stay out of market. The FTC also will expand its efforts under Section 5 of the FTC Act to fight unfair methods of competition that do not rise to the level of antitrust violations.

Leibowitz said he also hopes to see “fewer fault lines” between the FTC and the Department of Justice, which in 2008 issued a controversial report on antitrust enforcement under Section 2 of the Sherman Act. He said he was among several FTC commissioners who objected to the report on grounds that it “demonstrated overriding concern for protection of dominant firms at the expense of competition.”

“In our vigorous , balanced approach to antitrust enforcement, we are going to try to make sure that we recognize both the efficiency concerns that characterize much of today’s antitrust law, as well as the need for competition and rivalry to make sure that the benefits of efficiency are passed on to consumers,” Leibowitz said.

A panel discussing monopolization and intellectual property issues included Ed Black, president and CEO of the Computer and Communications Industry Association; Richard Brunell, senior fellow and director of legal advocacy for the American Antitrust Institute; Karma Guillianelli, a partner at Bartlit Beck; and Mark Popofsky, a partner at Kaye Scholer. The group picked up on Leibowitz’s discussion of the Justice Department’s Section 2 report as well as examined the implications of the Justice Department’s antitrust suit against Microsoft.
The Supreme Court and DOJ may not have a conscious agenda of dismantling Section 2 of the Sherman Act, but recent decisions show more fear of over-deterring anticompetitive conduct than under-deterring such violations, panelist Brunell said. He said that philosophy seems to be based on an assumption that monopolies have a positive effect on innovation. Panelist Black said the development of the high-tech industry in Silicon Valley has shown just the opposite: that competition fosters innovation, and dominance of a single firm slows the pace of progress.

A second panel discussed merger review, featuring Bill Kolasky, a partner at WilmerHale; Robert Davis, legal advisor to FTC commissioner Leibowitz; and Milton Marquis, a partner at Dickstein Shapiro. The group agreed it may be time to revisit the government’s Herfindahl-Hirschman Index (HHI) guidelines for when a merger is presumed to be anticompetitive, which have not been substantially revised since 1992. The scale sets a “danger zone” at 1,800 out of 10,000 – representing a market where five firms have 20 percent market share each – but panelists said it is very unlikely that today’s antitrust enforcers would intervene in such conditions.

“There’s no question in my mind that we ought to go back and take a hard look and the merger guidelines and see whether they need to be updated,” panelist Kolasky said. “In some areas they plainly do, such as the HHI thresholds at which agencies would challenge mergers, because they are just plainly out of synch with modern practice.”

A panel on antitrust and regulated industries included John Kwoka, professor of economics at Northeastern University; Sean Lindsay, associate general counsel for Qwest; Diana Moss, vice president of the American Antitrust Institute and adjunct professor of economics at the University of Colorado; and Jonathan Sallet, Silicon Flatirons senior adjunct fellow and a partner at The Glover Park Group. The panel discussed the overlap – and tension – between antitrust law enforcement and regulation by agencies such as the FTC and Federal Communications Commission.

Both approaches work together toward the goal of protecting consumers, but that relationship can break down, panelist Moss observed. “Antitrust serves an important purpose in promoting competition,” she said. “Regulators then tend to take over, and courts are happy to defer to regulators.”
A final panel, titled “Strategic Planning, Institutional Strategies, and Toward a Research Agenda for Competition Policy,” featured Makan Delrahim, a partner at Brownstein Hyatt Farber & Schreck; Bert Foer, president of the American Antitrust Institute; and Maurice Stucke, a law professor at the University of Tennessee.

In light of the nation’s economic slowdown, it will be vital to monitor corporate downsizing and consolidation for antitrust concerns, Foer said. Stucke said the time is right for a paradigm shift toward empirical merger review that would increase transparency and make antitrust less ideological.
In any case, panelists agreed, antitrust officials in the new administration can score political points by offering common-sense solutions over elaborate regulatory schemes and showing consumers that the laws are meant to protect them, not make life harder.

“It really shouldn’t be called anti-trust,” Sallet said. “It’s just bad messaging. What we really ought to say is that we’re for competition, for choice, and for consumers.”

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