Changed antitrust rules could curb tech mergers

Computerworld - A shift in U.S. Department of Justice antitrust policy announced last week could blunt the expansion or merger plans of IT vendors, according to legal experts.

In speeches last week before the Center for American Progress and the U.S. Chamber of Commerce, Christine Varney, assistant attorney general in charge of the DOJ's antitrust division, said that the agency is repealing a policy established under George W. Bush that "raises many hurdles to government antitrust enforcement." The move signals a more aggressive approach to antitrust enforcement under President Barack Obama.

The short-lived Bush administration policy, included in a report released by the DOJ last September, had called for the agency to proceed slowly when investigating potential abuses of antitrust laws, Varney said.

The change in policy could mean that the department will look more closely at technology vendors such as Google Inc., Oracle Corp. and IBM, which, according to critics, have taken actions that raise antitrust concerns in recent months.

For example, Google continues to face critics who contend that it has a near monopoly in online search advertising. In fact, the DOJ late last year would not approve a proposed advertising partnership between Google and rival Yahoo Inc.

Google officials note that the company has initiated meetings with lawmakers, journalists and others in an effort to explain its positions on business competition and perhaps ease critics' fears.

"As Google has grown, the company has naturally faced more scrutiny about our business principles and practices," acknowledged Adam Kovacevich, senior manager for global communications and public affairs at Google, in a blog post earlier this month. "We believe that Google promotes competition and openness online, but we haven't always done a good job telling our story."

Varney said her comments weren't directed at any one company or industry, but she did note that the DOJ would take a close look at the ever-changing high-tech and Internet industries.

"We plan to devote attention to understanding the unique competition-related issues posed by [high-tech] markets," she said in the speech. "In the past, the antitrust division was a leader in its enforcement efforts in technology industries, and I believe we will take this mantle again. In so doing, I am cognizant that we must find the right balance to ensure that when intellectual property is at issue, competition is not thwarted through its misuse or illegal extension."

Steve Newborn, an antitrust lawyer at Weil, Gotshal & Manges LLP, said that the DOJ move could simply shift antitrust enforcement back to the standards long upheld before last year's changes. However, he suggested that companies with dominant positions in their markets should closely watch how the new policies play out. "The rules have changed," Newborn said.