Legal News

Obama DOJ Files Long-Promised Monopolization Case

By Thomas Catan

WASHINGTON – Well, that took a while.

Business was aflutter when Barack Obama came into office vowing to "reinvigorate" antitrust enforcement after the perceived laxity of the previous administration. Christine Varney further fanned expectations when she was appointed head of the Justice Department's antitrust division.

In one of her first acts,  Varney tore up controversial guidelines issued just eight months earlier that had significantly raised the bar for bringing a monopolization case under Section 2 of the Sherman Act. (Section 1, which relates to price-fixing and other restraints of trade, has been enforced similarly by Democratic and Republican administrations.)

At the time, she made her meaning crystal-clear: A new Sheriff was in town. Said Varney at the time:

“Withdrawing the Section 2 report is a shift in philosophy and the clearest way to let everyone know that the Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers.”

Business braced for the next Microsoft case. But then, well, nothing happened. The Justice Department did file antitrust suits against companies such as American Express and Blue Cross Blue Shield of Michigan. But never under Section 2.

The delay caused some uncomfortable questions for the Justice Department. Was Varney all bark and no bite?

Her defenders offered some explanations. Landmark section 2 cases simply don't come along every day, they said. They also take a really long time to develop. Anyway, Varney hadn't intended to unduly raise expectations of a new monopolization case. She had merely wanted to clarify that they weren't going to follow the Bush-era rules.

Now the long wait is over — but not many people will have noticed. For one thing, the action takes place in Wichita Falls, Texas. For another, the Justice Department announced the case on Friday evening, when most lawyers were heading home for the weekend.

The Justice Department said it had reached a settlement with United Regional Health Care Systems of Wichita Falls, banning it from entering into contracts that allegedly stopped insurers from dealing with its competitors. Click here for the Justice Department’s release.

The department trumpeted the fact that this was the first time since 1999 that it had challenged an alleged monopolist with engaging in "traditional anticompetitive unilateral conduct," – that is, of the type that was challenged in famous cases like Microsoft, IBM or AT&T.

So there you have it: The Justice Department has now filed its first Section 2 case. Now if they'd only stop releasing these things on Friday night, they might even get some attention for them.

Full post as published by Law Blog - WSJ.com on February 28, 2011 (boomark / email).