Antitrust, The Smart Way

At a time when corporate mergers are dominating the headlines, the resolution of the Microsoft Corp. case provides a sensible model for antitrust policy in today's economy. In essence, the Clinton Administration's antitrust team was able to use antitrust policy as a scalpel rather than a bludgeon. The settlement, signed on July 15, requires Microsoft to stop some of the sales practices that Justice says it was using to bully competitors and customers, but it doesn't impair the software powerhouse's ability to innovate.

What lessons can be drawn from the Microsoft case? In contrast to the torpor of the Reagan era, this Administration is right to aggressively investigate allegations of monopolies and other activities that squelch competition. Although the Microsoft investigation was initiated during the Bush years, Anne K. Bingaman, Assistant Attorney General for antitrust policy, has picked up the pace, starting scores of new investigations. The mere knowledge that someone is standing watch may deter some companies from stepping over the line.

Second, in an era of global competition, the Justice Dept. used sound judgment by working closely with European governments. This also frees companies from having to defend the same case twice. Finally, the Justice Dept. deserves credit for employing sanctions that are sparing and precise. To be sure, some of Microsoft's competitors might have been happier if the Justice Dept. had explicitly prohibited Microsoft from using its dominance in operating systems to achieve an advantage for its spreadsheet and other applications programs.

But coming down too hard on Microsoft, one of the country's technological leaders, would have been a mistake. In the fast-changing and highly competitive software industry, wielding antitrust tools gingerly is all the more desirable and effective. And if Microsoft oversteps the boundaries of fair competition in the future, the Justice Dept. can take additional action against the company. The Clinton Administration has found a good balance between preserving competition and fostering innovation.

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