High-Tech Sector Needs Light Antitrust Touch, Lawyers Say
The federal government should tread carefully when it comes to using antitrust laws as way to regulate the high-tech sector, a group of antitrust attorneys said Wednesday at a Federalist Society luncheon. “Antitrust authorities ought to be very skeptical about jumping in to start cases against them,” said Ronald Cass, chairman of the Center for the Rule of Law at George Mason University and ex-U.S. International Trade Commission member. Government has “a real problem of foresight” and that’s especially so in high-tech, he said. “The more we do to try to rein in the leaders in the field, the more we discourage investment and innovation, and the more we risk taking steps that harm American consumer health."
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The panelists uniformly agreed that antitrust laws and regulation are essentially synonymous. Antitrust is a “regulatory event,” said James Miller III, senior advisor at Husch Blackwell and former director of the Office of Management and Budget. A government lawsuit, or even the threat of an investigation, can divert a firm’s resources, he said. “Wielded with effect and with prior design, antitrust policy may be used to orchestrate what used to be called industrial policy over a broad segment of the American economy."
In the information technology sector, monopoly power is eroded very quickly and so government should step back and allow IT to churn and experience “creative destruction”, Miller said. Often, alleged antitrust violations in the IT market are “based on theories that are out of the mainstream” and are not necessarily sound enough to survive judicial challenges, he said. “Before you tamper with something that’s very successful, know darn well what you're doing."
The Obama administration has been particularly restrained in allowing vertical mergers to go through, said Robert Skitol of Drinker Biddle, and a former attorney-advisor to the FTC chairman. When the Department of Justice determined Comcast’s acquisition of NBCUniversal could foreclose competition in online video distribution by denying independent distributors access to content, it could have tried to kill the deal but instead allowed it with conditions, he said. Critics call this “regulation by consent decree,” he said: “And while that may be an accurate label for them, that does not mean that DOJ overreached. DOJ deserves credit for experimenting with a middle course” between approving mergers wholesale and blocking them altogether.