September 8, 2008 / 6:42 PM / 9 years ago

UPDATE 2-US Justice Dept issues monopoly guide; FTC dissents

4 Min Read

(Adds additional FTC comment, analysis)

By Diane Bartz

WASHINGTON, Sept 8 (Reuters) - The U.S. Justice Department issued antitrust guidelines for corporate monopolies on Monday, but drew a rebuke from members of the Federal Trade Commission who declined to endorse the report.

The department said the guidelines were aimed at stopping abuses while avoiding "interfering in the rough and tumble of beneficial competition."

At issue is monopoly behavior by dominant companies such as software giant Microsoft (MSFT.O) and chip maker Intel (INTC.O), which won huge market shares in their industries and were then accused of abusing that dominance to stay on top.

"(We) need objective and clear standards ... so that businesses know where the line is," said Thomas Barnett, the assistant attorney general for antitrust.

But FTC commissioners Pamela Jones Harbour, Jon Leibowitz and Thomas Rosch said the report was "chiefly concerned with firms that enjoy monopoly or near monopoly power, and prescribes a legal regime that places these firms' interests ahead of the interests of consumers."

The commissioners also accused the Justice Department of claiming more consensus than existed on the issue of how far dominant firms could go in defending their market share.

The Justice Department guidelines are not binding, and Barnett's successor could decide to ignore them once a new president is inaugurated next January.

Sen. Herb Kohl, the Wisconsin Democrat who chairs the Senate antitrust subcommittee, said the report "represents an abandonment of the command of Section 2 of the Sherman Act, which prohibits illegal attempts to monopolize or to maintain a monopoly."

Evan Stewart, an antitrust lawyer with Zuckerman Spaeder LLP, said the dispute between the FTC and Justice Department should not be overblown and would not change how he advises clients.

"From a practical standpoint, does that (the report) really make much of a difference?," he asked. "In the short term, no."

University of Baltimore law professor Robert Lande almost dismissed it: "It doesn't matter. It's the end of the administration. We all know the FTC is more interventionist than the DOJ."

But Andrew Gavil, who teaches antitrust law at Howard University, argued the report could not be brushed aside.

"The reason you can't just dismiss them (outgoing administration officials) is that the courts have been agreeing with them," said Gavil.

Gavil described the Justice Department antitrust enforcers as "radical non-interventionists."

"This should not be portrayed as the U.S. versus Europe," he said, referring to Europe's reputation for tougher enforcement. "It's the Department of Justice versus everybody."

Elements of the Justice Department guidelines include:

-- A monopoly firm's conduct would be unlawful if the anticompetitive effects of that behavior are "substantially disproportionate to any associated procompetitive effects."

-- the department considers a firm to have monopoly power when it has held at least a two-thirds share of a market for a significant period and is unlikely to see an erosion in its position.

-- "The historical hostility of the law" to forcing customers to buy one product in order to buy another is unjustified and inconsistent with modern U.S. Supreme Court decisions.

-- Exclusive-dealing arrangements which block less than 30 percent of existing customers should not be illegal.

In Brussels, the European Commission issued a discussion paper in 2005 aimed at writing guidelines covering the same area. They are still undergoing review. (Additional reporting by Randall Mikkelsen; Editing by Tim Dobbyn)

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