Varney Departure Closely Watched as DOJ Pushes Forward on AT&T/T-Mobile Review

"I would hope that any merger being reviewed by us or the Department of Justice be given a full, fair, thorough and expeditious review,” Commissioner Robert McDowell said in an interview Thursday, reiterating some of the points he made in response to a question at a House hearing earlier in the day (see related story). “The departure of one person from the team reviewing any merger should not hold up completion of a process."

Varney took office in 2009, vowing to take a tough line on anticompetitive practices by American business. In recent months, under her leadership, DOJ has effectively killed some mergers thought to lead to more concentrated markets, including NYSE/NASDAQ and H&R Block’s proposed acquisition of TaxAct. Varney’s ultimate replacement will have to be confirmed by the Senate. Varney is supported by five deputies in the antitrust division so it’s unclear who will take her place on an acting basis.

Industry officials said Varney’s deputies are handling the merger review on a day-to-day basis anyway. “I guess it could be used as an excuse to delay, but it shouldn’t be,” one official said. “The real work doesn’t depend upon one person.”

"It can matter, but it doesn’t have to matter,” said a former DOJ official of the Varney departure, in an interview Thursday. “I think it was fairly well recognized that Christine Varney, in addition to her excellent antitrust analysis and skills, also was quite politically well-attuned. That would make decision making, perhaps, more subject to lobbying of the administration and Congress and influences outside the four corners of a traditional, straightforward antitrust analysis. Typically, if you have an acting assistant attorney general you're going to have a much less politically attuned review and it would be more of a strict antitrust focus."

"AT&T is going big on the politics, and Varney is politically attuned, so this can’t be a good thing from AT&T’s perspective,” said MF Global analyst Paul Gallant. Sanford Bernstein analyst Craig Moffett said the effect of the change at DOJ is hard to gauge. “Nobody really had any indication of which way Varney was leaning, and nobody knows who will replace her,” Moffett said. “But it certainly adds an air of uncertainty."

"We can speculate all we want, but the truth is that it is impossible to know the impact of Varney’s resignation without knowing who her successor will be,” said Free State Foundation President Randolph May. “Despite some initial overblown ’trustbusting’ rhetoric, Varney’s actions during her tenure put her within the mainstream of antitrust law, albeit more prone to imposing regulatory conditions, for example in the Comcast-NBCU merger, than I think desirable. I expect her successor to be in the mainstream as well."

AT&T/T-Mobile merger opponents hope the next antitrust chief won’t take a softer line on major transactions.

"It is imperative that the White House makes the right choice by allowing the Department to do its job and decide the case on the merits, thereby protecting the process,” Public Knowledge President Gigi Sohn said. The role of the White House will play in the merger remains to be seen, said Harold Feld, the group’s legal director. “I think the important thing here is whether the administration lets the agency run its course on the merits or whether they want to influence the process politically. I think this is very likely to get decided by an acting [antitrust chief], probably a career staffer, unless there is some change in the Senate confirmation process,” he said. “The question is whether the White House will trust the agency to make a decision on enforcement, or whether they will insist on ‘vetting’ the decision. If the latter, that opens the door to all manner of improper political influence."

Varney began the process of turning around “a tanker ship that was stalled and going down,” said Albert Foer, president of the American Antitrust Institute. It’s still unknown whether Varney’s conduct-oriented, rather than structure-oriented, remedies in major merger cases will preserve competition, he said. The Bush Administration probably would have let these mergers go through without conditions, he said. But the problem is “we aren’t sure her conditions will make a difference, and the consolidations (in airlines, media, entertainment, and the Internet) they permitted are now facts on the ground.” Varney should get credit for quickly revoking the Bush Administration’s antitrust policies, but the division has done little to re-invigorate anti-monopoly enforcement, he said.

CompTel, the Rural Cellular Association, the Rural Telecommunications Group and Sprint Nextel all put out statements praising Varney for her work at DOJ.