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Last week’s announcement by Justice Department antitrust chief Charles James that he is stepping down to become general counsel of the Chevron Texaco Corp. shocked members of the antitrust bar. But then again, antitrust isn’t what it used to be. Where news of the Microsoft case and the AOL Time Warner merger once led newscasts and filled front pages, the economic slump and fall-off in merger activity have made antitrust a far sleepier practice these days. Further, after the attacks of Sept. 11, the visibility of the Antitrust Division within the Department of Justice has been eclipsed by anti-terrorism concerns. “The opportunity to be in the forefront of headline cases has diminished through no fault of [James'],” notes Jonathan Jacobson, a New York-based partner at Akin Gump Strauss Hauer & Feld. During the 15 months of James’ tenure, there was a sharp drop in the number of Hart-Scott-Rodino filings seeking approval for pending mergers. Companies filed just 1,500 such filings, compared with more than 4,500 in each of the two previous fiscal years. “Obviously, if there are a lot of interesting mergers coming in the in box, that provides exciting, stimulating work,” says Wilmer, Cutler & Pickering partner Douglas Melamed, former acting DOJ antitrust chief. “On the other hand, when the division is swamped with mergers it tends to crowd out nonmerger work and policy work.” The Antitrust Division’s historic rival, the Federal Trade Commission, has used the downtime to expand enforcement efforts, winning kudos from overseers in the Senate for cracking down on the health care industry. By contrast, at a recent oversight hearing, Senate Judiciary antitrust subcommittee Chairman Herbert Kohl (D-Wis.) was critical of James’ efforts at the DOJ. “We have heard a growing sense of unease about the direction of the Antitrust Division in the last year, Mr. James,” Kohl said. “The sense of skepticism about the division’s activity is founded on several things, from a decline in actions taken by the division, to the high-profile Microsoft settlement, to the consolidation trend in media, cable, telecom, and airlines, to name a few industries, that seems to be meeting little, if any, resistance from the Antitrust Division.” James responded by pointing to the division’s strong record in criminal enforcement (an area where the FTC has no statutory authority), winning nearly $125 million in criminal fines over the past 15 months. In addition, the government has 99 open grand jury investigations, he said. According to James, while the overall number of merger filings has plummeted, the division has opened investigations in a higher percentage of reported mergers — 5.3 percent of merger filings triggered preliminary investigations in 2002, as opposed to just 2.8 percent in 2000. For local antitrust lawyers, the slowdown in merger activity has translated into less transactional antitrust work, structuring deals and securing merger clearance. Practices heavily weighted toward filing merger notifications with regulators have felt the pinch, particularly those that staffed up dramatically amid the merger boom of the late 1990s. “The level of merger activity for the firm in 2001 was utterly unprecedented. I don’t think anyone expected it to continue,” says Howrey Simon Arnold & White partner James Rill. But, he adds, “Litigation activity has more than compensated for the temporary drag in merger activity.” Other groups with strong litigation and criminal investigation components say their practices have weathered the slowdown. “We’ve always done a very heavy load of civil litigation and criminal investigative work,” says William Baer, who chairs Arnold & Porter’s antitrust group. “That work has actually picked up. We’re actually bigger today than we were a year ago.” The ebb in merger activity allowed James to pursue other objectives. Among them: an ambitious internal reorganization and improved coordination with international antitrust enforcers. Within the DOJ’s antitrust shop, James created units focused on particular industries in order to centralize expertise on critical sectors of the economy. Yet a related initiative to reduce squabbles with the FTC, by establishing which agency would have jurisdiction in specific industries, was abandoned after Senate Commerce Committee Chairman Ernest Hollings (D-S.C.) threatened to withhold funding for the agencies. It was an embarrassing defeat for James and FTC Chairman Timothy Muris, who had called a joint press conference to announce the agreement, only to scuttle it after reporters had already assembled. Lingering criticism over the Microsoft settlement also dogged James throughout his tenure. “His legacy will be forever entwined with the Microsoft settlement,” says Jacobson of Akin Gump. “There is a wide consensus that the settlement did not go far enough, with too many avenues for Microsoft to evade.” James has defended the settlement as the best method to restore competition after the U.S. Court of Appeals for the D.C. Circuit overturned many of the lower court’s findings. In the global arena, James worked to forge relationships with foreign antitrust officials. In the aftermath of the European Commission’s rejection of the GE-Honeywell merger — a deal approved by U.S. regulators — James began discussions with the EU to ensure harmonious antitrust policies. “He did more to make the place work well than anyone in recent memory,” says Jones, Day, Reavis & Pogue partner Joe Sims. The criticism from the Senate, Sims continues, came mainly because “Charles sort of prides himself on not being a politician. It helps if you’re a little more politically attuned, as Tim [Muris] is.” For James, it seems the Chevron offer was too good to refuse. In a statement, he called it “a unique personal and professional experience.” “Suppose someone said to you, ‘Would you like to be general counsel of a Fortune 100 company, make a ton of money, and move to the West Coast?’ which you had always wanted to do. What would you say?” says Sims, who worked with James at Jones, Day for more than a decade. At Chevron, James will oversee a legal department of 200-plus attorneys and sit on the company’s six-member executive committee. His appointment has particular significance for Pillsbury Winthrop, which has counted Chevron as its biggest client for years, with the last three general counsel coming from the ranks of what was then Pillsbury, Madison & Sutro. But firm Chairwoman Mary Cranston says she is not worried that the longstanding relationship is in jeopardy. “We are delighted to hear of Charles James’ appointment,” she says. “[We] actually expect to continue to have the same, if not better, relationship with Chevron that we’ve always had.” James will start his new job at the firm’s San Francisco headquarters on Dec. 9, but has not announced his exact departure date from the DOJ, nor has a successor been named. Antitrust lawyers speculate that one of James’ deputies, Deborah Majoras or R. Hewitt Pate, is likely to serve as acting assistant attorney general for the Antitrust Division. As for a permanent replacement, previous candidates such as Clifford Chance partner Kevin Arquit, Latham & Watkins partner Tad Lipsky, or Fried, Frank, Harris, Shriver & Jacobson partner Deborah Garza have been mentioned as possibilities. While a few big deals remain pending before the DOJ, including EchoStar Communications’ purchase of DirectTV and the Comcast Corp.’s acquisition of AT&T Broadband, the job doesn’t have quite the same prominence as it did during the recent antitrust heyday. “The attorney general,” notes Howrey’s Rill, “has a lot to worry about beyond satellite mergers.”

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