Tuesday, May 12, 2009

Obama Administration To Take Antitrust Laws Seriously

Embarking upon yet another positive reversal of Bush administration policy, the Obama administration is taking antitrust policy seriously. Christine A. Varney (left), head of the antitrust division of the Justice Department, made the announcement this week:

President Obama’s top antitrust official...plans to restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share.

The new enforcement policy would reverse the Bush administration’s approach, which strongly favored defendants against antitrust claims. It would restore a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.

...The administration is hoping to encourage smaller companies in an array of industries to bring their complaints to the Justice Department about potentially improper business practices by their larger rivals. Some of the biggest antitrust cases were initiated by complaints taken to the Justice Department.

The Bush administration's antitrust track record was so weak that it literally didn't exist:

As a result of the Bush administration’s interpretation of antitrust laws, the enforcement pipeline for major monopoly cases — which can take years for prosecutors to develop — is thin. During the Bush administration, the Justice Department did not file a single case against a dominant firm for violating the antimonopoly law.

The previous administration's lack of enforcement was based on its reverence for the free market under all conditions:

Conservative antitrust experts, some judges and defendants in such cases have said that the line is too difficult to draw and that it is better to let rivalries play out in the marketplace than in the courts.

The irony of this laissez-faire approach is that by allowing corporations to elbow out small companies, they dominate their industries to the point that no competition is left. Without competition, what is left of the free market? In addition, where's the incentive to lower prices for consumers? Once again, the best policy is, as stated above, to "reverse the Bush administration's approach."

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