Posted: 2/2002

DOJ’s Antitrust Division Gets Hip

By Kim Sunderland

The U.S. Department of Justice plans this month to modernize the antitrust division to create a structure that better addresses new industries, network competition and other emerging trends in the economy. For the telecommunications industry, these division changes could mean more regulatory oversight, according to a Washington policy watcher.

The purpose of the modernization effort, according to Assistant Attorney General Charles A. James, is to redefine areas of responsibility and streamline reporting. This should help improve the overall efficiency of the antitrust division, which makes recommendations on telecom industry mergers, Bell entry into long-distance markets and other issues. The move also transforms certain task forces into full-fledged sections, James said.

“The modernization is good government,” James said. “It positions the antitrust division to address the challenges of the New Economy in the 21st Century while strengthening enforcement capability in traditional industries.”

The modernization will concentrate investigations and enforcement expertise and resources for goods within a particular section and minimize enforcement efforts across sections.

The modernization plan takes into consideration the emergence and future importance of certain areas of the economy and the need for concentrated, focused expertise in these industries, James said.

“This plan will improve the division’s ability to effectively marshal and deploy its resources and expertise in investigating and enforcing the antitrust laws in these as well as all other areas,” according to the DOJ.

But there’s another way to look at these changes, says James V. DeLong, a senior fellow for the Project on Technology and Innovation at the Competitive Enterprise Institute (CEI), a think tank in Washington.

“Those who believe that minimal regulation and the free market are best for the tech business should worry, DeLong says. “Not panic — that would be excessive — but worry.”

DeLong notes that while much of the DOJ’s shuffling looks like routine “bureaucratics” designed to even out workloads and reflect the current balances of internal power and competence, the operative word to consider in this reorganization is ‘enforcement.’

The existing Telecommunications Task Force, for instance, will become the Telecommunications and Media Enforcement Section, while the Computers and Finance Section will morph into the Networks and Technology Enforcement Section.

The DOJ’s organization chart shows that both sections will fall under a deputy assistant attorney general and they will constitute two-thirds of his bailiwick, with about 30 lawyers in each. The rest are in a section on Transportation, Energy & Agriculture, DeLong notes.

“Why worry?” asks DeLong. “Because in government morphology is destiny, and restructuring/renaming sends powerful signals of activism to come.”

The history of telecom regulation is a sorry one, he adds.

For 70 years, the Federal Communications Commission (FCC), on its own, and in league with Congress, has hobbled technological innovation through such moves as attacking cable and satellite service, protecting the Bell monopoly, creating cable monopolies, and, most recently, inhibiting broadband, he says.

“The saga is driven by corporate capture, by political corruption, and by the hubris of people who think they can devise appropriate industrial policy for high tech,” DeLong contines. But “the antitrust division could be a counterbalance.”

Once upon a time, the division’s role was supposed to be to press the FCC) to stop all the regulating and free up the market, DeLong says. Now, that the division is caught up in the coils of the Telecommunications Act of 1996, and the only comments it files with the FCC nit-pick about the adequacy of the Bell companies’ efforts to open up local markets before they are allowed to enter long-distance.

He adds that the division usually comes down on the side that more regulation is needed, not that the markets should be unchained. DeLong says he surmises this stance bodes ill for future division actions on telecom.

“It also raises a distressing possibility that an industrial policy mindset will be engrafted onto analysis of efforts to restructure the media world to reflect the realities of new technologies.”

Meanwhile, the DOJ says that each of the antitrust division’s five deputy assistant attorneys general has oversight of a specific major program area, which includes civil enforcement, regulatory matters, criminal enforcement, economic analysis and international enforcement.

The House and Senate appropriations subcommittees have authorized the modernization effort. A copy of the new organization chart will be available online at
www.usdoj.gov/atr.