Bush is giving trust-busters room to roam

US handling of Microsoft, United Airlines cases keeps Clinton's antimonopoly stance.

By

The expectation was that, with George W. Bush presiding over Washington, the government's trust-busters would be sidelined and corporate mergers could proceed unhindered.

But five months into the new administration, expectation and reality are not coinciding when it comes to antitrust law. In fact, many experts and business leaders so far see little difference between Mr. Bush's policies and those of the aggressively antimonopoly Clinton administration.

Those views solidified this week, with United Airlines' announcement that it was looking to abandon a merger with US Airways because the government disapproved. It is the latest in a string of moves that have some reconsidering exactly where the Bush administration stands.

Recommended: Default

"I take the view that antitrust will be in Bush II what it was in Bush I - fairly similar to what it was during Clinton," says Robert Pitofsky, former chairman of the Federal Trade Commission (FTC). A "wait and see attitude" should still prevail, he says, but early signs point to small changes, not large ones.

Many similarities

It's far too soon to make definitive statements about Bush's approach. For one, Bush's selection for assistant attorney general for antitrust, Charles James, was just confirmed in mid-June. Mr. James faced fairly limited questioning in his Senate confirmation hearing, revealing little.

But three items have caught people's eyes.

Monday's announcement by United Airlines seems to indicate that Justice Department regulators are keeping close tabs on mergers and are concerned about how consolidation may affect competition.

Then, in the wake of last Thursday's court ruling vacating the order to break up Microsoft Corp., the Justice Department gave no hint of retreat. In fact, Attorney General John Ashcroft called the ruling a "significant victory" in that "the court unanimously found that Microsoft engaged in unlawful conduct."

Finally, in a less-heralded move, the Justice Department is appealing a ruling that American Airlines did not violate antitrust laws when it lowered fares and added flights to knock out small, regional air carriers. Many expected Justice not to appeal.

"The Bush administration so far has not represented a new day for big business," says Bert Foer of the American Antitrust Institute. "You look at what's happened so far,... and you begin to see a rhetorical continuity with the previous administration."

Mr. Foer also notes that the Bush budget has increased funding for two offices that investigate antitrust: Justice's antitrust division (a 17 percent increase) and the FTC (6 percent).

None of which is to say that things will be exactly the same as they were in the Clinton years. But changes are not likely to be large doctrinal shifts like those Ronald Reagan put into place. Under President Reagan, anti-trust budgets were slashed, and some types of cases were simply declared off limits, Foer says.

The Bush administration will likely alter the antitrust landscape more subtly by changing things like how markets are defined - broadly as opposed to narrowly. Altering those definitions can mean big changes in how antitrust regulators work.

In 1997, Staples sought to merge with Office Depot. The FTC argued against the merger, saying Staples and Office Depot were part of a narrow market of office-supply superstores, and together the stores would control 70 percent of it. Staples, on the other hand, argued that it was part of a broad market that included all outlets that sell office supplies, and that together the two stores would control only 5 or 6 percent.

A federal court ruled against the merger. But if not for the

FTC's definition of the market, the merger might not have been challenged at all.

Mergers are likely to be a big issue in the next few years. In 1993, about 1,500 mergers were reported to federal antitrust agencies. By 1998, the number had climbed to 4,500. A slowing economy has cut into the proliferation of mergers, but the number is still high.

Microsoft case: a barometer?

Of course, the Microsoft case still looms, headed back to federal district court for a new remedy. Many antitrust watchers still believe the Justice Department's next steps will be a good indicator of just how aggressive the Bush administration wants to be on antitrust.

Many say the administration will be looking to settle with Microsoft, but the question is what kinds of changes will it seek?

"Overall, that appeals-court opinion is ... a big win for the Justice Department," says Mr. Pitofsky. "If they want to push a hard settlement, there is a lot of room in there for them to do that."

(c) Copyright 2001. The Christian Science Monitor

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...