Antitrust Enforcers Swamped

The federal agencies enforcing antitrust law are scrambling to keep up with anticompetitive behavior cropping up everywhere, particularly in the technology industry.

Just today, the Justice Department confirmed it was investigating whether publishers and Apple colluded on the pricing of electronic books to prevent discounting. The Federal Trade Commission, meanwhile, continues to investigate Google, to make sure the Internet search giant isn’t stifling innovation.

Preserving the Internet’s “dynamism” is “critically important,” said FTC Chairman Jon Leibowitz.

Leibowitz and Sharis Pozen, acting attorney general for the Justice Department’s antitrust division, testified today at a House hearing on antitrust enforcement.

Both agencies are scrambling to keep up with anticompetitive behavior wherever they find it. In fiscal 2011, the FTC challenged 17 mergers that it believed would be anticompetitive. It’s challenged three more mergers this fiscal year, which began Oct. 1.

The Justice Department, meanwhile, filed 90 criminal cases in fiscal 2011, involving antitrust violations ranging from price-fixing in the auto parts industry to bid-rigging in the municipal bond investment market. That’s up from 60 criminal cases in fiscal 2010.

Representative John Conyers, the ranking Democrat on the House Judiciary Committee, acknowledged that these agencies are doing more to enforce antitrust law than they were in previous years, but said “that doesn’t give me much comfort.” Too many huge corporations are still getting away with anticompetitive practices, and the “economy has become too concentrated,” he said.

“When we see a problem, we go after it,” Leibowitz told Conyers, but he conceded that some companies are getting away with anticompetitive behavior.

That’s “an unacceptable answer,” Conyers replied.

Pozen, meanwhile, said she is shocked at the “level of pernicious behavior” that the Justice Department is continuing to find in corporate America, despite the $520 million in criminal fines the agency was able to obtain against companies and business executives last year.

“I am astonished, like you, at what I see,” Pozen told Conyers.

The technology industry poses particular challenges, not necessarily because of criminal behavior, but because of how quickly things change. The FTC, for example, was initially concerned about the anticompetitive effects of the merger of Google and AdMob, but closed its investigation in May 2010 after learning that Apple “was poised to challenge Google in the future in the mobile advertising space,” Leibowitz said.

“This reflects a balanced approach of focusing on the facts as they develop in real time, which helps the commission assess what competition is likely to look like in the future, even in fast-paced technology industries,” he said.

The Justice Department, meanwhile, announced last week that it had decided Google’s acquisition of Admeld Inc., would not substantially lessen competition in the sale of online display advertising. It promised to “continue to be vigilant” in protecting competition in Internet advertising, however.

Leibowitz, however, wouldn’t comment on his agency’s overall investigation of Google, which involves consumer protection as well as antitrust concerns, since that case is ongoing.

Representative Zoe Lofgren, a Democrat who represents California’s Silicon Valley, brought up the conflict between antitrust law and patent law, as tech companies like Google gobble up other companies primarily for their patent portfolios.

“This is a huge emerging issue in the tech sector,” Lofgren said.

Leibowitz acknowledged the tension involved in preserving intellectual property rights while preventing companies from abusing their market power.

“Hopefully we get this issue generally right,” he said.

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Kent Hoover is the Washington bureau chief for bizjournals.