Opinion: A new day for antitrust enforcement

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

The business community has a number of good reasons to fear the Obama administration, particularly on taxes, carbon emissions, pay rules and regulations generally. Lately, the fear has focused on the Justice Department’s new antitrust chief, Christine Varney, and the prospect of her imposing a European Union-style competition policy, to wit, one that’s much more hostile to market-leading companies and friendlier to their rivals.

The European Commission’s decision today to levy a record $1.45 billion fine on Intel Corp. provides a good illustration of the difference. It ruled that Intel violated European law in part by offering what amounted to exclusionary volume discounts. In particular, the commission said Intel gave rebates to four computer manufacturers that agreed to buy 80% to 100% of their chips from the company. Intel denies that it did so, saying instead that it simply competed on price and that it sold no chips for less than it cost to make them.

Under the Bush administration’s Justice Department, antitrust experts say, big firms could compete aggressively on price as long as they didn’t sell below cost. If natural efficiencies in their operators enabled them to price competitors out of the market, so be it, because consumers paid less for the products. The Intel case, however, shows that the European Commission expects firms to change their pricing behavior once they become dominant in a market. In the EC’s view, preserving a meaningful degree of competition is critical to promoting innovation and deterring gouging.

The U.S. Justice Department won’t play a similar role in the dispute between Intel and microchip rival AMD; the Federal Trade Commission is investigating Intel, and a federal court in Delaware is hearing AMD’s antitrust lawsuit against the company. But Varney, an FTC commissioner during the Clinton administration, made it clear in a speech Monday that she’ll be tougher on dominant firms than her predecessors in the Bush administration were. According to Varney, the previous administration’s approach put too much weight on preserving possible efficiencies of big firms, and it allowed ‘all but the most bold and predatory conduct to go unpunished and undeterred.’ She didn’t mention the EC or cite any overseas precedents, but the message was clear enough.