Identifying a Maverick: When Antitrust Law Should Protect a Low-Cost Competitor
Shortly after taking office, President Barack Obama announced that his Administration would pursue a policy of vigorous antitrust enforcement in order to ensure healthy competition in the economy.' In two of the highest-profile antitrust cases that have followed, the United States Department of Justice ("DOJ") sought to block two proposed mergers in which the target companies were low-cost competitors in their industries. The DOJ won a judgment in November 2011 that blocked retail-tax giant H&R Block from acquiring 2nd Story Software, maker of the low-cost digital tax- preparation program TaxACT. A month later, the DOJ scored another "victory" when AT&T dropped its bid to acquire the low-cost telecommunications provider T-Mobile USA. These enforcement actions provide a relatively rare glimpse into the government's interpretation of section 7 of the Clayton Act,5 which is designed to stop potentially problematic mergers before the reduction in competition causes consumers harm. Since the acquiring firm in each of these proposed mergers was the second largest in its industry, the mergers could have been seen as facilitating competition by making the second-place firms more efficient or innovative and thus more capable of competing against the first-place firms. But the DOJ did not see the mergers that way. Instead, the DOJ moved to protect the low-cost competitors from acquisition on the theory that their independence was an essential ingredient for competition in the industry. These markedly similar enforcement actions might suggest that the government has a new focus in antitrust enforcement; at very least, they provide a ripe opportunity to identify and evaluate the specific theory of anticompetitive harm that the government argued in those cases and might argue in the future. This Note refers to that specific theory as "the maverick-firm theory of anticompetitive harm." Both federal agencies in charge of antitrust enforcement-the DOJ and the Federal Trade Commission ("FTC")-use the "maverick" label to ...