EU-US antitrust divergence?

It seems my admonishing post of last week concerning pretzels, antitrust, and bureaucrats merely presaged a more substantive story this week: the European Commission’s objection to Oracle’s purchase of Sun Microsystems, claiming the deal would be anticompetitive. U.S. antitrust authorities have already blessed the acquisition.

Are we witnessing a divergence of antitrust policy across the Atlantic?

This isn’t the first time that the European Union’s take on antitrust and competition law has flown in the face of American authorities, particularly in the technology sector. But the example of Microsoft involved alleged anticompetitive behavior, such as the bundling of music players and browsers with its Windows operating system. What about merger policy?

In a speech given in Los Angeles five years ago, Mario Monti – the European Commissioner who started Microsoft’s competition trouble – was confident enough about cross-Atlantic policy harmonization to assert:

“Put simply, the EU and US agree on what competition policy should be all about. We share a common fundamental vision of the role and limitations of public intervention. We both agree that the ultimate purpose of our respective intervention in the market-place should be to ensure that consumer welfare is not harmed.”

One wonders if he feels the same way today.

To me, the crux of the matter isn’t so much the application of tested economic theories to mergers vis-à-vis market competition, but making sure we don’t stack the deck against small and mid-cap companies. If gaining merger clearance becomes an overly expensive process, only big companies – like Oracle Corporation – will have the wherewithal to pursue strategically important acquisitions. And at that point, the fine line that often separates a regulatory thumbs-up from a thumbs-down becomes less meaningful. As important as economic impact and economic theory are to merger policy, they cannot be the only considerations, and yet, when we compare the approval granted to Oracle with last week’s dropped pretzel deal, one begins to wonder if the costs associated with greater antitrust enforcement aren’t falling disproportionately upon smaller businesses.