May 11 (Bloomberg) -- The Obama administration today revoked a Bush administration antitrust policy, calling it an impediment to the government’s ability to fight anticompetitive conduct by dominant companies.

The approach under former President George W. Bush “raised too many hurdles” to limiting monopolistic practices, Christine Varney, the top antitrust official at the U.S. Justice Department said. “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.”

The Justice Department “will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers,” Varney said in a speech to the Center for American Progress, a Washington-based group founded by former members of the Clinton administration.

The Bush administration, in a report released in September, said government should avoid interfering in what Varney’s predecessor, Thomas Barnett, said is “the rough and tumble of beneficial competition.” The report said that, to prove an antitrust violation, enforcers must show a business practice’s harm to competition is “substantially disproportionate to any associated pro-competitive” benefit.

Guidance for Courts

With her speech today, Varney made it clear that courts should no longer refer to the Bush administration policy when considering antitrust cases.

“What you are going to see now is companies who feel they are being treated unfairly by their competitors will complain to the Department of Justice,” said Richard Parker of the O’Melveny & Myers LLP, a former head of the Federal Trade Commission’s Bureau of Competition.

Varney said the Bush approach “favored extreme caution” in enforcing antitrust policy. She noted that the Federal Trade Commission, which shares responsibility for protecting business competition, didn’t sign the 2008 report.

Without naming any companies, Varney suggested that a more vigorous antitrust policy in the financial markets may have helped avert the current economic crisis. She noted that in the decades leading up to the Great Depression of the 1930s the government took a hands-off approach to antitrust enforcement.

‘Too Big to Fail’

“The country’s prior experience raises the question, at least in my mind, whether relaxed antitrust enforcement has contributed to the current state,” she said. “Is too big to fail, a failure of antitrust?”

U.S. regulators have provided more than $90 billion to Citigroup Inc. and Bank of America Corp. and more than $180 billion in loans to American International Group Inc. to ensure the survival of the financial services companies in the wake of a global economic crisis.

Last year, Varney, who headed the Internet practice at Hogan & Hartson, described Google Inc. as a monopolist. Today, she declined to comment on Google specifically, while saying the Internet has “introduced radically different economic models.” She said her staff will study the impact of those new models on antitrust policy.

Stacey Anne Mahoney, an antitrust lawyer with Gibson Dunn & Crutcher LLP, said Varney wanted to move quickly on the new guidelines because the courts are being asked to review antitrust cases in the context of the now revoked Bush administration policy.

“She wanted to make it as clear as she could that this administration had a new position that was no longer an authority to be relied on,” Mahoney said.

To contact the reporter on this story: Chris Stern in Washington at cstern3@bloomberg.net

Last Updated: May 11, 2009 16:32 EDT