Feds probe major carriers over possible anti-trust violations

Posted by Aharon Etengoff

San Francisco (CA) - The US Department of Justice (DoJ) has reportedly initiated a wide-ranging review of major telecommunications companies over possible anti-trust violations. According to the Wall Street Journal, federal officials will examine whether corporations such as AT&T and Verizon are "abusing the market power they have amassed in recent years."

The probe, which is likely to scrutinize exclusive distribution agreements between various companies, could be an indication that the Obama administration is preparing to crackdown on alleged anti-trust misconduct. Indeed, Christine Varney, Assistant Attorney General in charge of the Department's Antitrust Division, recently withdrew a report detailing monopolization offenses under antitrust laws issued in September 2008.

US Department of Justice

Varney explained that report, titled "Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act," raised "too many hurdles to government antitrust enforcement" and would no longer reflect government policy.

"Withdrawing the Section 2 report is a shift in philosophy and the clearest way to let everyone know that the Antitrust Division will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers," said Varney. "The Division will return to tried and true case law and Supreme Court precedent in enforcing the antitrust laws. The recent developments in the marketplace should make it clear that we can no longer rely upon the marketplace alone to ensure that competition and consumers will be protected."

Meanwhile, the US Senate has launched its own investigation of exclusive relationships between carriers and handset manufacturers. Four legislators - including former Democratic presidential candidate John Kerry - informed the FCC (Federal Communications Commission) of their intention to hold a hearing that will help determine if "exclusivity agreements" effectively limit a consumer's choice of handsets.

Although the Senators did not specify which companies they intended to review, the hearing is likely to include an examination of the exclusive agreement between Apple and AT&T, in which the latter has been named the sole distributor of the popular iPhone. Similar arrangements between various carriers and manufacturers, such as Sprint and Palm, are expected to be discussed.