Recent Developments at the U.S. Department of Justice, Antitrust Division

December 28, 2009

This bulletin summarizes recent developments and activities of the U.S. Department of Justice, Antitrust Division, and enforcement priorities under the new administration.

Shift in Enforcement Priorities by the New Administration

Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division, has made it clear that the new administration intends to take a sharp turn away from the generally self-policing antitrust policy of the Bush administration. Her first speech as head of the Antitrust Division was titled “Vigorous Antitrust Enforcement in this Challenging Era,” and focused most heavily on the Division’s approach to enforcing Section 2 of the Sherman Act, which prohibits monopolization or attempts to monopolize. Notably, the Justice Department did not commence a single Section 2 case during the Bush Administration.

In an effort to depart from the antitrust policies of the previous administration, Ms. Varney withdrew the Justice Department’s report on “Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act,” which the Justice Department had issued in September 2008 under the Bush administration and had spelled out its enforcement intentions regarding single-firm conduct. Thus, the Justice Department under the Obama administration will likely move away from the prior administration’s efforts to secure bright-line tests and safe-harbors in Section 2 cases, and instead move towards more aggressive enforcement of Section 2 cases.

Updating the Horizontal Merger Guidelines: The First Three Workshops

The Department of Justice and the Federal Trade Commission have begun conducting a series of workshops to review the Horizontal Merger Guidelines. The purpose of the workshops is to explore whether and how the agencies should update the Horizontal Merger Guidelines in response to recent changes in case law, economic developments, and current antitrust practices.

In the first workshop, panels of leading antitrust attorneys and economists addressed the relevance and use of direct evidence of competitive effects, market definition, and unilateral effects. The second workshop on December 8 focused on working with international and state authorities, market concentration and structural presumption, and merger remedies. The third workshop, held on December 10, addressed entry, unilateral effects, efficiencies, and direct evidence of competitive effects.

Two additional workshops will be held in January 2010 in Stanford, California, and Washington, D.C. It is anticipated that the remaining workshops will discuss price discrimination, the overall method of analysis used by the agencies, and/or geographic market definition. Interested parties are invited to submit comments and suggestions.

International Competition Network (ICN) Adopts Recommended Practices to Improve Merger Analysis

Assistant Attorney General Christine Varney, along with 450 delegates from over 80 antitrust agencies, attended the eighth annual ICN conference in Zurich, Switzerland. The ICN was created in 2001 to provide a forum for antitrust agencies from around the globe to address enforcement and policy issues of common interest and promote international cooperation and convergence on antitrust policy. The 2009 conference focused on the results of several working groups in the areas of unilateral conduct, mergers, cartels, advocacy, and competition policy implementation. The ICN adopted new Recommended Practices for substantive merger analysis and presented two new reports on the analysis of tying, bundled discounting, loyalty discounts and rebates under unilateral conduct laws.

ICN members adopted three new Recommended Practices for Merger Analysis: (1) engaging in competitive effects analyses in horizontal merger reviews; (2) assessing whether a merger will create or enhance the merged firm’s ability or incentive to exercise market power independently (in analyzing the potential for a merger to result in anticompetitive unilateral effects); and (3) assessing whether a merger increases the likelihood that firms in the market will successfully coordinate their behavior or strengthen existing coordination (in analyzing the potential for a merger to result in anticompetitive coordinated effects).

Justice Department and USDA To Jointly Explore Competition and Regulatory Issues in the Agriculture Industry

The Department of Justice and the U.S. Department of Agriculture (USDA) recently announced several joint public workshops that will explore competition and regulatory issues in the agriculture industry. The goals of the workshops are “to promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector.” The workshops represent the first joint DOJ/USDA project discussing competition and regulatory issues in the industry.

Workshops will be held in Iowa, Alabama, Wisconsin, Colorado, and Washington, D.C., from March through December 2010, and will address issues related to crop farmers, the poultry industry, the dairy industry, the livestock industry, and price margins.