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Antitrust lawyers say Obama may be optimistic

WASHINGTON (Reuters) - Democratic presidential candidate Barack Obama has promised more vigorous enforcement of antitrust law if elected, but antitrust experts said on Monday that the courts could trip him up.

Democratic presidential candidate and Senator Barack Obama speaks in Billings, Montana May 19, 2008. REUTERS/Rick Wilking

Obama told reporters in Oregon on Sunday that he expected rapid globalization to lead to changes in antitrust law but added a criticism often heard in antitrust circles: that the Bush administration has been lax, particularly in enforcing merger law.

“If you talk to members of the antitrust division of the Justice Department, the career folks who came in before George Bush took office, there’s a sense that there’s not a real interest in antitrust prosecutions,” the Illinois senator said.

But Phillip Zane of the law firm Baker Donelson pointed out that even when the Justice Department and Federal Trade Commission challenged a merger during the Bush administration, they often lost the resulting court fight.

“Most of the judges appointed by the Republican administrations, particularly beginning with Reagan ... are more skeptical of antitrust enforcement,” Zane said.

Howard University law professor Andrew Gavil agreed. “If you read the decisions, you really scratch your head and wonder what would have satisfied the judge.”

For example, the FTC failed to get a preliminary injunction to stop the merger of Wild Oats and Whole Foods even though Whole Foods’ chief executive said in an e-mail that the deal would “avoid nasty price wars” in several cities.

Steve Axinn, of Axinn, Veltrop and Harkrider LLP, said firms were wrapping up deals in the belief that any of the candidates -- Republican Sen. John McCain, Democratic Sen. Hillary Clinton or Obama -- would oversee tougher merger reviews than the Bush team has.

“People are working quickly to get things done during this administration. They have for some time,” Axinn said.

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Leiv Blad, an antitrust lawyer with Clifford Chance, agreed. “It’s generally understood that if Obama wins, that the enforcement priorities of the DOJ would change,” he said.

In particular, the Justice Department’s March approval of the merger of the only two U.S. satellite radio companies, XM and Sirius, caused eye-rolling among antitrust lawyers.

SHOULD INTEL WORRY?

A key issue for a new administration will be whether to launch a full-fledged investigation of dominant chip maker Intel, which rival Advanced Micro Devices has accused of acting illegally to push it out of the market.

Intel is already under investigation in the European Union and South Korea. The FTC has declined to move beyond an informal probe.

Antitrust experts disagreed over whether Intel would face more scrutiny if a Democrat won in November.

“They (Intel) do have such an outsized market share that anything they do can be linked to a section two case,” said Axinn, referring to a law against predatory acts to maintain a monopoly.

Gavil agreed. “Companies like Intel, yes, you’re more likely to see cases brought,” he said, adding that Bush’s Justice Department brought no dominant firm cases while the Clinton administration had brought one or two a year.

But Evan Stewart, an antitrust lawyer with Zuckerman Spaeder LLP, argued that Intel’s troubles outside the United States did not hint at lax U.S. enforcement.

Stewart also urged caution in reading too much into Obama’s comments: “This strikes me as sort of traditional on the stump talk. Look, no one ever runs for president saying ‘you can count on me for lax antitrust enforcement.’”

Additional reporting by Jeff Mason; Editing by Tim Dobbyn

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