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— Dealmakers —
Varney, 53, was nominated Jan. 23 as the assistant attorney general for antitrust. In addition to deciding whether to approve or challenge proposed mergers, she will also have a raft of competition policy decisions to make at a time when the nation is slipping deeper into a recession. During the days leading up to her confirmation hearing before the Senate Judiciary Committee, Varney is sure to follow the protocol of the nomination process, saying only that she "looks forward to my hearings, where I'll answer all the questions."
Because she is known to the antitrust establishment, her peers are already speculating about what will happen when Varney moves to the DOJ. Within the broader spectrum of antitrust enforcement, she's more widely known as a lawyer focused on consumer protection and privacy issues and not for strong views on merger enforcement, though she has experience advocating for mergers before the government. But more importantly, she's known as a smart, pragmatic and politically savvy lawyer who is willing to fight for her goals. Now a partner at Hogan & Hartson LLP in Washington with a large pool of high technology clients, Varney is both a seasoned legal practitioner and a savvy political operator. After graduating from the State University of New York, Albany, in 1977 and earning a master's degree in public administration at Syracuse University in 1978, Varney came to Washington, where she earned her law degree at Georgetown University Law Center in 1986. From 1989 to 1992 she was general counsel to the Democratic National Committee and later worked in the White House, where she served as an assistant to the president, and was secretary to the Cabinet, serving as a key contact point between the Oval Office and the various agencies. According to another experienced Washington lawyer, Varney was such a hit with the Clintons that she likely would have been considered for a Cabinet-level slot had Hillary Clinton won the White House. Once Barack Obama was nominated, Varney worked as a fundraiser; when he won the election, she served on the transition team, vetting many of the presidential nominees. Facing her own Senate confirmation hearings won't be a novelty -- she appeared before the Commerce, Science and Transportation Committee after she was tapped to join the FTC in 1994. That appointment was considered a plum job for a young lawyer who had proved her mettle to the White House. As a commissioner, she wielded more power than the average non-chairman member, according to people who worked with her. Her ability to build support for her ideas, including the idea that products still in the research and development pipeline need to be evaluated during merger reviews, suggests her interest in pushing the corners of the antitrust envelope. That could herald a change for the DOJ, where seeming unwillingness to explore new legal theories and go to court on close merger cases has demoralized the staff. Her clients also suggest an area of interest: the Internet. She helped create the Network Advertising Initiative and Online Privacy Alliance, which develops Internet best-practices policies. An early Netscape Communications Inc. adviser, Varney took a position against Microsoft Corp. in the 1990s, which could mean she'll pay special attention to other high-tech companies keen on carving out monopolies. Whatever her pet projects might be, she must make it a priority to address the perceived sins of the Bush administration's Justice Department. Under former Assistant Attorney General Tom Barnett, who has since returned to his law practice at Covington & Burling LLP, antitrust lawyers and economists complained that DOJ leadership was too permissive toward mergers and other competitive transgressions. One failure critics note is that the illegal development or maintenance of monopolies was largely ignored. Barnett wasn't inactive. Last year he was prepared to challenge the cooperative agreement between Yahoo! Inc. and Google Inc., but the companies abandoned the effort when it was apparent Barnett had decided to sue. And he instigated two challenges of completed mergers, one of which is a newspaper deal in Charleston, W.Va., that remains under way. The most common course, however, has been for the DOJ to approve deals after requiring companies to make limited divestitures. Still, that's a far cry from the FTC's recent efforts, which resulted in three deals being abandoned in the past three months, and two ongoing court cases. But any change from the status quo will likely be "far more subtle" than many antitrust lawyers might like, says Daniel Sokol, antitrust law professor at the University of Florida's Levin College of Law. "The courts and case law are stacked against serious reinvigoration," Sokol says. That doesn't mean Varney will sit on her hands. "She's very ambitious," says one Washington practitioner, who adds that to be seen as a success, she must hit the ground running. And, he predicts, the degree to which she can make a mark will depend on the strength of the team she assembles for senior antitrust jobs. She "wants to get senior, big-name people" as deputies. The deputy assistant attorneys general, he predicts, will more likely be the policy wonks, while Varney will coordinate the effort and make the final decisions after the internal process brings matters before her. "She'll find the contours of antitrust analysis in her DAAGs; people she regards as the best and brightest," one former government lawyer says. Those individuals are likely to have greater impact than Varney will have on her own, and it's not clear whom she's likely to pick as a principal deputy. Varney must also select an economist to lead the agency's economic analysis of mergers and other competition issues. There has been discussion that Varney may tap either Georgetown University professor Steven Salop or University of California, Berkeley, professor Carl Shapiro, both of whom have previously worked in the antitrust division. The two economists are known for independent thinking. Shapiro's most recent paper suggests a view, somewhat heretical in antitrust circles, that the government doesn't need to define a relevant market when it tries to stop a merger in court. Instead, he proposes looking at likely future price effects. Salop, however, was one of several who promoted a novel approach to combating predatory pricing back in the 1990s. Internationally, Varney will also have a challenge. When George W. Bush came into office, the Clinton DOJ had just given a nod to the massive global merger between General Electric Co. and Honeywell International Inc. That deal cratered despite the effort of Bush's appointee, Assistant Attorney General Charles James, and his deputy assistant attorney general, Deborah Platt Majoras, who urged their European counterparts to clear the deal. After that, the relations between the U.S. and the European Union foundered, and the DOJ's international staff increasingly was viewed with skepticism. At the same time, the FTC's international outreach flourished, especially when then-Chairman Timothy Muris selected William Kovacic to be the FTC's general counsel. Kovacic, now FTC chairman, is one of the most highly sought speakers on the international antitrust circuit and is known for his efforts to promote competition policy efforts worldwide. It will be up to Varney to find a DAAG who can restore the Justice Department's credibility on the international front. And criminal enforcement will be a new aspect of antitrust for Varney. The current DAAG for criminal enforcement, Scott Hammond, is acting AAG. A staff lawyer, he will likely remain in the division, where anti-cartel enforcement has been on the rise. The number of cases and the punishment in terms of both fines and jail time for cartel participants were rare areas where the Bush administration intensified enforcement. Varney will likely continue where they left off. |
For more than two years, antitrust professionals in Washington have been wondering whether a change in the White House would reinvigorate antitrust enforcement at the Justice Department. In the first week of March, 
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