Christine Varney, head of the Department of Justice’s antitrust division, said Congress “may well want” to look at the overlapping responsibilities of the DOJ and the Federal Trade Commission to meet a call by business to make merger reviews more consistent and predictable.
“I would leave to Congress how they would like to resolve the overlapping and sometimes inconsistent jurisdiction between the agencies,” Varney, 55, said in an interview April 14 in Washington. “I think what business does need is clarity, certainty and understanding of the legal framework within which their deals will be evaluated.”
As the Obama administration looks for ways to streamline the federal government and boost efficiency, the time may be ripe to wring costs out of antitrust oversight, Varney said. Having the FTC handle consumer protection while the Justice Department addresses competition and monopoly is “certainly one option,” said Varney, a former FTC commissioner who has run the division since April 2009.
Varney commented against the backdrop of increasingly public jockeying between the two agencies over merger reviews involving such technology companies as Google Inc. (GOOG) and Apple Inc. (AAPL) as well as over nascent medical organizations mandated by the health-care overhaul enacted last year.
A consolidation might also reinforce Varney’s push to settle cases by approving deals that impose conditions the department then monitors under court decree, making the trust busters more of a regulator, said Bert Foer, the president of the American Antitrust Institute in Washington.
“Varney is bringing in a new philosophy of handling mergers,” Foer said. “This approach shows a willingness to compromise, to allow the new organization to come into existence and then to constrain it against certain effects with regulatory oversight in the courts. The traditional view has been to say ‘yes’ or ‘no’,” he said.
The Justice Department’s April 8 decision on Google’s $700 million purchase of ITA Software Inc., a maker of travel information software, is the latest example of Varney’s approach. The eight-month review ended with the acquisition approved, yet imposed conditions on the world’s most popular search engine. They include making travel data available to search-engine rivals, setting up firewalls to protect client information and letting the government review complaints of unfair conduct.
‘Protect the Innovation’
The Google-ITA agreement “allows the efficiencies of the deal to go forward, while attempting to protect the innovation platform that exists today,” Varney said. “I would call it not throwing the baby out with the bathwater.”
Other deals forged with Varney’s constraints include the settlement for Comcast Corp.’s purchase of NBC Universal in January and the department’s approval of Ticketmaster Entertainment Inc.’s merger with Live Nation Inc. in January 2010.
The Comcast agreement imposed safeguards to keep the largest U.S. cable company from restricting online video content. The Live Nation merger required Ticketmaster to license its software to AEG Live, its largest customer.
“I don’t mean to say there aren’t precedents, but she’s charting a new path,” Foer said.
To monitor settlements, Varney established a centralized compliance committee under the division’s general counsel, Robert Kramer. It will oversee teams for the conditional settlements that include lawyers who worked on each decree.
The Obama administration is more willing to use post-deal oversight than the previous one, said Deborah Garza, the division’s acting head from 2008 to 2009.
During the Bush administration, the Justice Department was criticized by lawmakers and consumer groups for allowing consolidation in the telecommunications industry and mergers such as Whirlpool Corp. (WHR)’s takeover of appliance rival Maytag Corp.
In those years not a single monopolization case was filed and the number of investigations dropped to eight from an annual average of 12 during the Clinton administration, according to the American Antitrust Institute.
As the economy recovers, antitrust reviews are on the rise. The combined number of transactions reported to the Justice Department and the Federal Trade Commission rose 63 percent in the fiscal year ending September 2010 from a year earlier, when the economic crisis restrained dealmaking, according to annual figures filed by the two agencies.
Both the Justice Department and the FTC have authority to decide if mergers are anticompetitive and to review whether dominant companies are abusing their market power. They negotiate which will handle major antitrust investigations, with the decision turning on their respective expertise in an industry.
“The FTC works productively with DOJ to provide clarity and joint guidance for businesses, and we expect to do so in the future,” said FTC spokeswoman Cecelia J. Prewett. “We’re going to focus on antitrust enforcement and not turf.”
Efforts to end the FTC’s antitrust authority or leave only criminal, anti-competitive cases with the Justice Department have come up before and never found support in Congress, Eleanor Fox, a law professor at New York University, said in an interview.
The debates usually split those favoring less antitrust enforcement and those who wanted more.
“No one would design the system we have if we were starting a new antitrust regime today in the U.S.,” said Sean Heather, executive director of global regulatory cooperation at the U.S. Chamber of Commerce.
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