How Microsoft-Yahoo deal can get regulatory OK
The prospect of a stronger competitor to Google could be enough to satisfy antitrust regulators in the U.S. and Europe, observers say. But the size of a unified company will bring scrutiny.
WASHINGTON -- The U.S. Justice Department said today it would review Microsoft Corp.'s proposed $44.6-billion takeover of Yahoo Inc., if accepted, foreshadowing the intense scrutiny such a deal would face from U.S. and European regulators because of its size and Microsoft's previous antitrust problems.
But the prospect of a stronger competitor to Google Inc. in Internet search and advertising would overwhelm concerns about Microsoft's checkered past, antitrust experts said.
"The simple notion is competition is good for consumers," said Robert Hahn, executive director of the Center for Regulatory and Market Studies at the American Enterprise Institute, a Washington think tank. "Google may have a real rival now in online search and be subject to more competitive pressures in advertising. Regulators would take that into account."
Regulators already are paying attention.
The Justice Department's antitrust division would look at the deal if Yahoo accepted Microsoft's bid, spokeswoman Gina Talamona said. European regulators also would have to give their approval before the deal could go forward.
Sen. Herb Kohl (D-Wisc.), chairman of the Senate's antitrust subcommittee, promised to hold hearings.
"We will need to scrutinize the deal carefully to insure that it will not cause any harm to the competitiveness of what has been a vibrant high-tech marketplace, nor negatively impact the privacy rights of Internet users," Kohl said in a statement.
Microsoft said it expected the proposed takeover of Yahoo to receive all the necessary regulatory approvals to be completed in the second half of the year.
Antitrust regulators in the U.S. and European Union are familiar with Microsoft, dating to battles that began in the 1990s. A U.S. judge this week extended court oversight of Microsoft until November 2009. Judge Colleen Kollar-Kotelly has been monitoring Microsoft's compliance since the 2002 settlement of a landmark antitrust case against the Redmond, Wash., company for abusing its dominance in the computer operating software market.
The European Union this month announced two new investigations of Microsoft related to whether it used its dominance in word processing and spreadsheet programs to squelch rivals and illegally tied its Internet browser to its Windows operating system.
The probes followed Microsoft's decision last fall to overhaul its businesses practices and pay a $739-million fine, ending a nine-year fight with European officials over antitrust issues.
