March 12 (Bloomberg) -- Economist Carl B. Shapiro, who endorsed the Clinton administration’s plan to break up Microsoft Corp. as an expert witness, has rejoined the U.S. Justice Department as the antitrust division’s chief economist, people familiar with the appointment said.

Shapiro’s choice is fresh evidence the Obama administration plans aggressive antitrust enforcement. He criticized Bush administration decisions not to challenge such mergers as Whirlpool Corp.’s 2006 takeover of appliance rival Maytag Corp. In an October 2007 article, Shapiro and American University economist Jonathan Baker said the Whirlpool case “is indicative of an overly lax approach to merger enforcement.”

A professor at Haas Business School at the University of California in Berkeley, Shapiro was an expert witness for the states that joined the Justice Department’s 1999 proposal to break up Microsoft following a court’s finding it had illegally protected its Windows monopoly.

“He is not afraid of doing something” when warranted because he believes “antitrust intervention is critical” to restore competition, said Phil Malone, one of the lead government lawyers in the Microsoft case. “We will see a much more active effort” by the agency to stop anticompetitive practices, said Malone, who directs Harvard Law School’s Cyberlaw Clinic.

Shapiro, who began work this week at the Justice Department, didn’t return telephone messages left at his office yesterday. Justice Department spokeswoman Gina Talamona declined to comment.

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Shapiro served as the top economist in the antitrust division from 1995 to 1996, when Bill Clinton was president.

The sworn declaration Shapiro filed in the Microsoft case “provided a really core set of justifications” for the government’s breakup proposal “and why it would solve the problems” identified in the case, Malone said in an interview yesterday.

Research by a group of economists, including Shapiro, on the economic power of networks, such as computers linked by the Internet, was “really fundamental to be able to say why Microsoft had a monopoly, one that was durable and powerful,” Malone said.

A judge overseeing the case ordered Microsoft split into two companies, one that would make the Windows operating software and another that would make computer software applications. The breakup order was overturned by an appeals court in 2001, and Microsoft settled the case with the Bush administration.

‘Remedial Failure’

Shapiro, who was a consultant for states pursuing tougher remedies than those Microsoft negotiated with the Bush administration, described the case in a 2007 paper as “a remedial failure.”

The remedies in the settlement didn’t restore competition because they “looked backward at the technological threats facing Windows in the mid-1990s” instead of to the “technological threats likely to face the Windows monopoly” in the future, Shapiro wrote.

Also involved in the case against Microsoft was Christine Varney, nominated by President Barack Obama to head the antitrust division. Varney represented Netscape Communications Corp. when it lobbied the Justice Department to bring the case, which accused Microsoft of squelching a challenge to its dominance in personal computing operating software.

Varney on March 10 told a Senate confirmation hearing on her nomination that she plans to bring “new rigor to the economic analysis that underpins any prosecution.” Shapiro was among those in the hearing’s audience.

Shapiro is a former director of Boston-based CRA International Inc., an economic consulting firm. He received $1.4 million in compensation from the company in 2007, according to Bloomberg data. He resigned as a director of CRA, which was formerly known as Charles River Associates, in June while remaining as one of the company’s economic consultants.

He is also a co-author, with Google Inc.’s chief economist, Hal R. Varian, of “Information Rules: A Strategic Guide to the Network Economy.”

To contact the reporter on this story: James Rowley at jarowley@bloomberg.net

Last Updated: March 12, 2009 00:01 EDT