SAN FRANCISCO — European regulators are investigating U.S. tech firms while U.S. officials are going after violators abroad in the latest saga in global antitrust prosecutions.
So why this focus on foreign companies in both cases?
The most obvious reason, legal experts said, is that European and U.S. officials have emphasized two different aspects of antitrust law — monopolistic behavior and price fixing — a difference that has tended to determine which companies draw their wrath.
The European Union made headlines last week for its $1.45 billion fine of Intel Corp. for unfair competition against rival microprocessor maker Advanced Micro Devices. It was the largest fine the EU has levied for anticompetitive behavior and some U.S. business groups cast the action in anti-American light.
Jim Hawley, acting chief executive of the influential lobby, TechNet, talked about “the troubling trend of targeting American high-tech firms.” It was an oblique reference to an ongoing EU investigation of Microsoft Corp.'s marketing of Internet Explorer and a probe of U.S. cell phone maker, Qualcomm.
But the complaints about possible EU bias overlook a series of antitrust cases, initiated by Bush administration Justice Department officials, that caught high-tech companies in South Korea, Japan and Germany fixing prices for computer components.
Gary Reback, a Silicon Valley antitrust attorney who was involved in the 1990s browser wars between Netscape and Microsoft, said antitrust officials in the European Union have been more prone to investigate allegations of bad behavior by big companies than their American counterparts. Such concerns form the heart of the EU case against Intel, which itself follows similar actions by antitrust regulators in Japan and South Korea.
In contrast, U.S. officials have focused on antitrust's second evil, price fixing, said Keith Hylton, a law professor at Boston University. Hylton said the focus on price fixing makes sense because the practice clearly harms consumers and such wrongdoings are relatively easy to prove. In recent years, he said, U.S. regulators have tended to think that markets rather than courts are the best way to restrain unfair competition by dominant firms, especially in fast-moving fields like technology.
The results of this differing emphasis are easy to discern. Antitrust authorities in Europe and elsewhere have been receptive to bullying charges against market leaders, who tend to be American, while U.S. officials have focused on price-fixing allegations against manufacturers that tend to be based elsewhere.
In April, for instance, U.S. officials announced the latest action in a price-fixing probe of memory chip makers including South Korea's Samsung and Hynix and the German firm Infineon. U.S. authorities have imposed more than $700 million in fines on memory manufacturers who jacked up the prices they charged U.S. computer firms such as Apple, Dell and Hewlett-Packard.
U.S. antitrust regulators have also probed the liquid crystal display market. Executives of LG Display Co. of South Korea, Chunghwa Picture Tube of Taiwan and Sharp Corp. of Japan have already admitted to having rigged LCD prices. The recent indictment of an executive of the Japanese firm, Hitachi, is the latest action in that U.S. price-fixing probe.
But U.S. antitrust thinking may be shifting, Reback said. Last year, the U.S. Federal Trade Commission, which shares antitrust authority with the Justice Department, began a formal investigation of Intel similar to the European, Japanese and South Korean probes. The tight-lipped FTC has given no indication of the outcome but taking on the case brings U.S policy closer to European enforcement views.
More recently, Christine Varney, top antitrust official in the Obama Justice Department, signaled a reversal of the laissez faire attitudes toward big companies that had prevailed under Bush. In a speech delivered shortly before the EU's Intel decision, Varney said self-policing hadn't worked and it was time to rethink government's role in curbing “monopolistic practices.”
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