US Antitrust Chief Battles Crosscurrents
ANN BINGAMAN came to the Justice Department with guns blazing.
The Clinton administration's No. 1 corporate watchdog set out 16 months ago to revitalize the antitrust division -- Uncle Sam's check on illegal mergers, monopolies, and consumer ripoffs. It is the bureau that took on Standard Oil and AT&T and stood for a fair shake for small business -- but was cut in half during the Reagan years of ''merger-mania.''
Since then, Ms. Bingaman has opened a record number of investigations. The chief trustbuster has wrestled the Microsoft leviathan, battled Mitsubishi's monopoly on fax paper, and examined price-fixing charges on behalf of rock group Pearl Jam. (Microsoft, Page 9).
Yet Attorney General Janet Reno's assistant is also finding some hard going. Conservatives call her antibusiness. On the other side, Ms. Bingaman is criticized for being all sound and no fury -- particularly in the much-publicized Microsoft settlement she negotiated last summer.
On Tuesday, in fact, a federal judge rejected the settlement that would prohibit Microsoft from anticompetitive licensing practices, saying the scope of the Justice Department's inquiry into the software giant's behavior was too limited:
''Simply telling a defendant to go forth and sin no more does little or nothing to address the unfair advantage it has already gained,'' said Judge Stanley Sporkin, of the Washington federal district.
Still, it is clear that under Bingaman antitrust has become more active. Data obtained by the Monitor show that last year her division began 1,135 civil investigations; the average prior to Bingaman was 450.
The division took on 22 monopoly cases last year -- more than in all four years of the Bush administration. As a former Justice official put it, ''Bingaman came in and told the lawyers to stop dotting the i's and crossing the t's, and to get out and investigate.''
Under two Republican administrations, the antitrust staff had been cut from 1,000 staffers to 500; it is now at 700. Moreover, say current and former employees, the division's confidence had waned because of a lower litigation success record. During the ''merger-mania'' 1980s, prosecuting illegal mergers sank from 185 to 72; monopoly cases dropped from 20 to five.
Bingaman, who came into the post as a civil litigator rather than as the more typical button-down legal scholar, said in a Monitor interview that the conventional wisdom about lax antitrust enforcement in the 1980s is too simplistic. She credits President Reagan's antitrust chief William Baxter with pushing through the break-up of AT&T, ''which revolutionized telecommunications,'' though others say the division was gutted.
So far, the new activity has led to only a modest increase in actual prosecutions. Advocates say she is trying, during a more complex time, to put corporations on notice that they are being watched. ''She has been aggressively clever,'' says former US deputy assistant attorney general Joe Sims, now a Washington lawyer. ''She has settled for a greater number of smaller victories.''
These include innovative deals, and some pioneering international antitrust efforts. A recent MCI/British Telcom case, for example, kept the British market open for AT&T and Sprint; a deal between two Florida health-care companies partly blocked a merger, but helped the firms cut a two-way deal that lowered consumer prices.
Yet the Microsoft case highlights the tougher side of antitrust. Attorney General Reno announced the Microsoft deal with great fanfare last July. Critics said the settlement was too little, too late -- that Microsoft has already established the necessary dominant position. Not to be outdone by critics, even Microsoft owner William Gates said this.
Then, last month, Bingaman defended the deal before Judge Sporkin who, presented with evidence of alleged Microsoft predatory behavior, questioned if Bingaman's inquiry had been broad enough. She argued vehemently that it had -- putting her in the odd position of siding with the corporation she had prosecuted. ''People think she let Bill Gates off the hook,'' says one Justice source. ''They aren't sure why.''
Bingaman defends herself by saying the Microsoft deal would not even have been made if she hadn't picked up the case after it had been dropped by the Federal Trade Commission.
Antitrust sympathizers say enforcement is more complex today. Gone is the heroic period that ended with the AT&T case in 1982. Anticompetitive methods are more sophisticated and difficult to prove due to the pace and scale of business.
Bingaman agrees that the globalization of industry has changed things -- US industry faces stiff competition abroad. The political implications are obvious says a Washington antitrust expert: ''No White House wants to be seen having a trustbuster hindering US business at a time when foreign firms threaten competitive advantage.''
For such reasons, Bingaman is finding herself in swift currents. She is a genuine populist -- plainspeaking and common-sensical (''I mean, she has people over for pool parties,'' says an admirer).
But while she champions White House desires to advocate the ''little guy,'' she is under pressure from ''New Democrats'' in the administration not to appear too activist. She resists earlier portraits of herself as a potential giant-killer. ''I'm vigorous but centrist,'' she says, echoing the White House's own position.
Indeed, Bingaman goes out of her way to say the new increase in activity is only an effort to be efficient. She wants quicker decisions -- six to eight months -- on prosecuting cases: ''I'm as proud to be closing cases as I am to be opening them,'' she says. ''That tells management that we are on top of what's going on. We aren't opening cases and sitting there letting them drag on.''
Bingaman is also criticized for de-emphasizing classic criminal cases, such as hotel room or airline ticket price-fixing, where wrongdoing is clear cut. The division is taking on civil cases that require more subjective criteria. Many of these are ''vertical restraint'' cases where large firms close out competition by entering exclusive agreements with only one other company.
Bingaman denies her emphasis has shifted. But data obtained by the Monitor show a marked decrease in the number of criminal cases in 1994. As for civil cases, she says the complaints that government looks into ''come from other businesses.''
Still, several antitrust lawyers, who asked not to be named, say the test of Bingaman's tenure and legacy will be Microsoft. The company's new Windows NT operating system and its recent acquisitions make it poised, they say, to become the Standard Oil of the computer world.
Microsoft, they argue, is a classic antitrust case: The company is not threatened by overseas competitors. Its intent to dominate the market is publicly stated by billionaire owner Gates. Microsoft recently acquired Intuit, for example, a leading personal accounting software company. Last week Microsoft bought UUNet, which is linked to America On Line and Compuserve.
Moreover, as lawyer Gary Reback points out in a brief against Microsoft on behalf of three anonymous California companies last month, Justice's own recent case alleges that between 1988 and 1994 Microsoft ''used a variety of illegal tactics to maintain its monopolistic share in the operating systems market'' -- increasing its ''installed base'' from 18 million to 120 million users. ''Has Microsoft stopped its predatory behavior,'' Mr. Reback asked in an interview. ''What is Bingaman waiting for?''
Justice is investigating the Microsoft Intuit purchase. But Bingaman admits the investigation is on limited grounds, not a full-scale monopoly case.
When asked if the antitrust division has closed the book on Microsoft, Bingaman says quickly ''no.'' When asked if there are any new investigations pending she says, ''no comment,'' but adds a moment later: ''We are absolutely open for business for any and all facts, and complaints . If I see a case that I believe in my heart of hearts I have 50-plus percent chance of winning I will file.''
Bingaman, whose husband is Sen. Jeff Bingaman (D) of New Mexico, says the hardest thing she faced in taking the position ''is the awe this office is held in.''