EU's gain is U.S. loss in influence on antitrust

By David Lawsky

BRUSSELS (Reuters) - The European Union's antitrust agency is becoming more influential just as its U.S. counterparts have grown more cautious and inactive, experts say.

The European Commission's recent success in forcing Microsoft (MSFT.O) to carry out antitrust sanctions underscores the differences, and academic researchers say the U.S. is also hanging back in merger challenges.

That makes Brussels, more than Washington, the place where companies must go to get their deal through and where companies must ready themselves against possible antitrust action. It also means competition agencies around the world look to Brussels, as South Korea did in taking action against Microsoft.

"There seems to be a sundown atmosphere in Washington," said Angelo Cardani of Milan's Bocconi University, once a senior aide of former European Competition Commissioner Mario Monti.

"Brussels is not affected by electoral politics and shines out in moments when other agencies are caught up in the political cycle," he said.

Research by two leading U.S. antitrust economists, who both served as antitrust agency chiefs during the Democratic Clinton administration, shows U.S. merger enforcement under the Republican Bush administration at a nadir.

Jonathan Baker, who ran the economics bureau at the Federal Trade Commission, and Carl Shapiro, who was chief antitrust economist at the Justice Department, praised modern, economics-based evaluation of mergers.

They now believe "the pendulum has now swung too far in the direction of non-intervention". Merger challenges by the Justice Department antitrust division and the Federal Trade Commission have sunk to the lowest level on record, they found.

Statistics on the European Commission Website show essentially no change in enforcement by Brussels.

Baker and Shapiro say the problem originates partly with U.S. District Judge Vaughn Walker, who in 2004 rejected a Bush Justice Department bid to halt Oracle's (ORCL.O) takeover of rival software maker PeopleSoft.

Walker "failed to understand the basic economics" used by the Justice Department, they wrote, adding: "There is unfortunately some evidence that the Oracle decision has ... caused the Justice Department to scale back its merger enforcement efforts".

THE MICROSOFT DIFFERENCE

Most obvious have been public differences between Washington and Brussels to abusive monopolies, especially Microsoft.

The Justice Department has filed no cases about abuse of monopoly power in the Bush administration, unlike all other major antitrust agencies in the same period.

Justice Department antitrust chief Thomas Barnett criticized a landmark European Union court decision backing EU sanctions against Microsoft last month. Barnett said the decision could