After eight years of light antitrust scrutiny under a Republican White House, the technology and telecommunications industries are bracing for stepped up oversight by the Obama administration’s Justice Department.
Christine Varney, the head of the department’s antitrust division, vowed in a May speech that her office will take a tough look at potential abuses of market power across some of the nation’s biggest industries, including high tech and telecom.
Now the U.S. government is putting out feelers to determine whether one industry giant, IBM Corp., has exploited its dominant position in the market for massive data-processing computers known as mainframes. The probe, which the Justice Department has not yet publicly acknowledged but has been confirmed by IBM and an industry trade group, is still in a very preliminary stage and will not necessarily lead to a formal investigation.
But it is part of a broader fact-gathering effort by the feds, who are seeking to get their arms around a rapidly changing sector that is a major engine for U.S. economic growth. No matter where the IBM review leads, the entire industry is on notice that the current Justice Department is likely to take a much more active approach to antitrust enforcement than the previous one.
“The last administration was not focused on competition, but with the Obama administration there is a recognition that overconcentration in the economy can have unhealthy consequences,” said Ed Black, head of the Computer and Communications Industry Association, a trade group that helped bring concerns about IBM’s behavior in the mainframe business to the attention of the Justice Department. “They recognize that there is value in having multiple players in a market.”
In scrutinizing the technology and telecom industries, antitrust enforcers have a huge market to examine. They are expected to look at everything from consolidation in the wireless sector –…