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Justice Dept. Stokes Antitrust Machinery

Business: Enforcers target alleged corporate abuses with a vengeance. But some say they've 'missed the boat.'


WASHINGTON — In the biggest crackdown on business abuses in a generation, the Justice Department is flexing its antitrust muscle with newfound vigor, fresh from a string of high-profile assaults on corporate icons.

American Airlines, Microsoft Corp., major credit card companies and European vitamin giants are just a few of the companies to face the recent wrath of regulators, part of a forceful campaign to fight alleged monopolies and price-fixing.

The aggressive posture has been driven by a mix of political opportunism, frustration with past missteps, attractive inducements to whistle-blowers and other factors.

"Make no mistake about it, this is a very ambitious agenda. It's been 20 years since the government took on so many major figures of American commerce and accused them of abuse of power," said George Washington University law professor William E. Kovacic, an antitrust specialist.

Despite all the Justice Department has done, however, some frustrated consumer advocates and antitrust experts question whether the high-profile attacks mask a more troubling trend. A number of multibillion-dollar telecommunications mergers have gone virtually unchallenged by the department, foreshadowing continued rate hikes in everything from cable television to phone service and computer software, some consumer advocates warned.

"Those are the cases that have much broader implications for the public, and [Justice Department regulators] have been much too timid," said Gene Kimmelman, co-director of Consumers Union. "They've missed the boat."

That criticism aside, however, few deny that the corporate community, both here and abroad, has been put on notice by the Justice Department's tough talk and some impressive results.

"The message is, if you violate antitrust laws, it's going to be very, very costly," said Gary Spratling, head of criminal antitrust matters.

Indeed, one gauge of the trend--the amount of fines collected from antitrust violators--has increased sharply. Fines have ballooned from $26.8 million in 1996 to nearly a billion dollars already this year, a result of the Justice Department's deliberate decision to go after big multinational firms and leave small-time price-fixers to local authorities.

Antitrust regulators have been able to move more forcefully in part because the Clinton administration is nearing an end and is less vulnerable to political criticism, some observers suggested.

Big, complicated cases often are launched in the waning days of a political administration after the evidence has been gathered and the political climate might not matter as much. The Justice Department's 1969 landmark antitrust case against IBM Corp., for example, was launched in the waning days of the Lyndon B. Johnson administration, and it was quietly killed a decade later at the beginning of the Ronald Reagan administration.

Campaign Is Several Years in Making

Chief antitrust officer Joel I. Klein, meanwhile, has appeared more receptive to new ideas in economic theory and is close to Atty. Gen. Janet Reno.

The campaign is several years in the making. One attorney familiar with the process said that it has its roots in a losing effort in 1994 to prosecute a price-fixing case in the diamond industry.

The frustration and disappointment of that defeat prompted the department's enforcement section to take stock of its methods, particularly those that bear on growing international markets. In recent years, antitrust regulators have moved forcefully to target international cartels, strengthen their contacts with overseas authorities and develop a leniency program for corporate whistle-blowers willing to cooperate.

"The amount of analysis that the antitrust agencies are doing is more elaborate," and that takes time, said Phil Verveer, a veteran Washington antitrust lawyer who helped the government bring the case that, ultimately, in the early 1980s broke up the old AT&T monopoly on telephone service.

With about 30 grand juries investigating international cartels in different industries, and hundreds of millions of dollars in fines already levied this year, "we're now seeing the fruits of that focus," Verveer said.

Indeed, the antitrust fines have been flying at a pace that would have made Theodore Roosevelt and his monopoly busters proud.

Earlier this month, the Justice Department reported a record antitrust fine of $135 million against a German company for fixing prices of graphic electrodes used in the steel industry. The next day, a German food manufacturer was slapped with a $36-million fine because of its scheme to jack up the prices of chemical preservatives used in processed foods.

And on Thursday, the record was broken again as Reno and Klein announced a $500-million fine against a Swiss vitamin maker for leading a decade-long price-fixing "cartel." A $225-million fine also was levied against a German firm that conspired in the scheme.

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