Rising Antitrust Enforcement Making Companies Jittery

The U.S. Antitrust Act is so formidable, one company says shutting down is preferable to paying the fines.

The law, which regulates corporate cartels and trust, has been applied less stringently in the United States since 2000, but Washington is moving to toughen its enforcement. As Europe is also poised to beef up enforcement of its antitrust rules, multinational companies are on high alert.

○ Toughening antitrust regulations

Reuters and the Wall Street Journal yesterday said the European Union will impose a fine of up to one billion euros on the world’s largest chipmaker Intel for violating antitrust law.

Intel allegedly paid rebates to PC makers that used its chips and hindered fair trade for its rival AMD. The fine is a record and more than twice the amount EU levied on Microsoft (497 million euros) in 2004.

Christine Varney, head of the antitrust division at the U.S. Justice Department, announced a plan to proactively regulate unfair trade practices, a shift from the previous Bush administration`s pro-business policy and effective easing of antitrust regulations.

Varney said the Bush administration was extremely passive in preventing the abuse of power by monopolistic companies, adding the government must intervene in areas where fair trade is being threatened.

Certain analysts say the U.S. move is partially a result of fears that the attempted merger attempts by Google and Microsoft for Yahoo! could increase market share for certain companies.

○ Companies on high alert

The U.S. government had spearheaded a global campaign on antitrust regulations up until the Clinton administration.

The move resulted in a 2000 decision for the split of Microsoft and a crackdown on Korean companies such as Samsung Electronics and Hynix Semiconductor in succession. The Bush administration backed off from the campaign, however, saying such strong regulations could put pressure on corporate operations.

While the U.S. eased regulations, the EU wielded stronger muscle in antitrust regulations. It even conducted its own probe and imposed fines for an M&A deal negotiated outside the union, saying “The merger has influence on the European market.”

A case in point is the EU’s decision to halt the merger of the U.S. companies GE and Honeywell. The EU probed the acquisition of the Norwegian cruise shipbuilder Aker Yards by Korea’s STX, and is also investigating a cartel between air carriers, including Korean Air.

If the U.S. and the EU race to strengthen antitrust regulations, emerging economic powers are set to join the foray. The New York Times reported most conglomerates in telecom, energy, finance, medicine and agriculture could be the targets of antitrust regulations.

lightee@donga.com