WASHINGTON-Joel Klein, the Clinton administration’s choice for Justice Department antitrust czar, appears headed for Senate confirmation despite mild grilling at last week’s hearing for approving the Bell Atlantic Corp.-Nynex Corp. merger without the kinds of conditions imposed by some New England states on the $23 billion deal.
Klein, a former Clinton White House deputy counsel, took over as acting head of Justice’s antitrust division after Ann Bingaman resigned last fall.
Klein approved the Bell Atlantic-Nynex joint venture on April 24.
Before that, following the February 1996 enactment of the new telecommunications law, Klein signed off on a $16.5 billion merger between SBC Communications Inc. and Pacific Telesis Group.
Pressed by Sen. Patrick Leahy (D-Vt.) on why the Justice Department didn’t impose any competitive checks on the Nynex-Bell Atlantic transaction, Klein replied the two regional Bells did not compete against each other and that conditions were not warranted under federal antitrust law.
“We took this merger very seriously,” said Klein.
“Once we determined there wasn’t violation of the Clayton Act, it was our view that we should not impose conditions,” Klein stated.
Vermont, Maine, New York and New Hampshire state regulators did impose conditions on the merger.
If approved, Klein would become a key figure in deciding the fate of mega-mergers-now allowed under the new telecom act-between companies based on wireless, wireline, cable TV satellite, computer and other technologies.
Where one technology ends and another begins, and what the market impact is of digital partnerships, are among the major issues Klein will face.
“Today, markets can change rapidly, especially as consumers rush to buy new products and services that are part of a larger network, such as a computer system or a piece of software,” said Klein.
“These so-called `network’ industries are frequently characterized by product standardization and sometimes by market power, not only in one market but in adjacent markets as well,” he added. “The antitrust division must be able to analyze these markets accurately and, where appropriate, to take action in a timely and effective manner.”
Klein said contemporary antitrust thinking relies less on theory and more on actual market power and efficiencies, a philosophy he said he will follow.
Klein also assured Sen. Strom Thurmond (R-S.C.) that his past relationship with the White House will not interfere with Justice antitrust duties and obligations.
The early read on Klein is he will not be the activist that Bingaman was, which is precisely how the telecommunications industry and congressional Republicans want it.
Nevertheless, Klein said Justice will take an active role in providing input to the Federal Communications Commission as regional Bells apply to enter the long-distance market.
Bingaman, Klein’s predecessor, was roundly criticized for ruling that AirTouch Communications Inc.-a wireless spinoff of PacTel-was subject to long-distance and manufacturing restrictions imposed by the court-ordered 1984 AT&T breakup decree on the seven regional Bell telephone companies.
Bingaman agreed to the AT&T Corp.-McCaw Cellular Communications Inc. and Nextel Communications Inc.-Motorola Inc. deals, but subjected each to antitrust-based restrictions.
With Clinton back to the political middle in his second term and trying to reestablish himself as a pro-business New Democrat, it appears Klein will take a kinder and gentler approach to antitrust enforcement and is less likely to get embroiled in high-profile skirmishes with the likes of Microsoft Corp. and other digital giants that Bingaman tangled with.
