Commentary by AAI President Bert Foer: Antitrust Continuity in a Recession

Although the Administration has plenty on its mind, another matter has arrived that will help signify the Obama direction going into the election campaign. A key political appointee, Assistant Attorney General for Antitrust Christine Varney, returned to the private sector in early August. Her replacement should play a vital role in shaping the Obama economic message. Varney’s Chief of Staff, Sharis Pozen, has been appointed by Attorney General Holder as Acting AAG. The job should be filled soon on a permanent basis and not be left to an acting head until the next Administration takes office.

Examples of important matters that arose under AAG Varney include the Tickemaster-Live Nation merger, the Comcast-NBC Universal merger, the Google-ITA merger, the Continental-United and Southwest-Air Tran mergers, and the Google book deal. Today, it is especially important to have strong leadership for the Antitrust Division. Pending is a merger decision of major importance to the future of wireless communications, AT&T’s proposed acquisition of T-Mobile. The government’s policy on this politically-charged case should be decided by a presidential appointee who has independence from a pending confirmation process. Moreover, the public is highly concerned about the “too big to fail” problem revealed by the banking crisis, and many citizens of both liberal and conservative stripes desire their government to be more actively opposed to the creation of mega-corporations that are not justified by a substantial promise of public benefit.

Some question whether aggressive enforcement of the antitrust laws is a good idea when the economy is currently so troubled. In fact, when an economy is not doing well, this is the time that vigorous antitrust enforcement is most needed. In a downturn, companies use the argument that they must consolidate through mergers to achieve new efficiencies or they must cooperate through cartels in order to reduce capacity and “better serve the public.” Of course they can usually downsize independently, so consolidation isn’t normally required. It is well documented that pro-merger forecasts of efficiencies tend to be dramatically overstated while actual efficiencies of any significance are rarely achieved by merger and probably never by collusion. Rather, industrial consolidation typically exacerbates reduction of output, with resultant loss of jobs.

AAG Varney’s replacement ought to be no less experienced in antitrust law and economics, and should be committed to strong enforcement, open-minded as to facts and theories, not viewed as partisan, and capable of being approved by the Senate in a reasonable timeframe. The American people, however conflicted on other economic questions, still believe in and desire competitive markets where consumers have a wide range of choices, where prices are set by the interplay of supply and demand rather than being administered by highly concentrated industries or centralized government regulation, where innovation is spurred through the rivalry of independent firms each seeking to build the famous better mousetrap. That is what is at stake.

When President Franklin Roosevelt found that the Depression was not being reversed by policies aimed at compromise with Big Business, he brought in the reform-minded Thurman Arnold and a newly aggressive attitude toward antitrust. This did not and could not turn the economy around all by itself, because antitrust is only one element in a complicated system, but it is an important part and deserves a place within President Obama’s obviously stressed focus.

Albert A. Foer is President of the American Antitrust Institute.

Contact: Albert Foer, 202 276 6002,