And the Nominee for Antitrust Is . . .

Shortly after being named acting chief of the Department of Justice Antitrust Division last fall (he was officially nominated for the position last week), R. Hewitt Pate gave a rare interview.

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Since joining the Antitrust Division of the Justice Department almost two years ago, R. Hewitt Pate hasn’t left much of a paper trail. Although he has given numerous speeches, he has never released a text of his remarks, and he’s rarely quoted in the news. “He is a bit of a mystery man,” says Albert Foer, president of the American Antitrust Institute. But corporate lawyers are increasingly interested in what Pate has to say. After Charles James resigned from the post last fall to become general counsel at the Chevron Texaco Corp., the White House picked Pate as the division’s acting head. Last week he was officially nominated for the position. According to several antitrust attorneys, as many as four Republican law firm partners were considered for the permanent post, but withdrew their names from consideration. These candidates were apparently deterred by a variety of reasons: the pay cut a government job would entail, Attorney General John Ashcroft’s reputation as a difficult boss, and Pate’s close ties to the White House, which made him seem the likely nominee. A 1987 graduate of the University of Virginia Law School, Pate clerked for U.S. Supreme Court Justices Anthony Kennedy and Lewis Powell Jr. He went on to become a litigation partner at Hunton & Williams in Richmond, where he worked on antitrust and intellectual property matters. “I was not a merger lawyer,” he says, “and I was not an agency lawyer.” That didn’t prevent him from going to work for a merger agency, though. Since joining the Antitrust Division in July 2001 as a deputy assistant attorney general, he has overseen several high-profile prosecutions, including the suit that blocked the EchoStar Communications Corp.’s $17 billion purchase of DirecTV. He reviewed many of the controversial airline alliances, and he has also been involved in the various requests by regional Bell operating companies to offer long-distance service. Shortly after being named acting antitrust chief, Pate gave a rare interview to reporter Jaret Seiberg of The Deal (an affiliate of Legal Times) . Jaret Seiberg: The Antitrust Division historically has been receptive to “fix it first” remedies, in which companies make divestitures without a consent decree and before they get antitrust clearance. Will the Justice Department remain open to this approach? R. Hewitt Pate: In appropriate cases, they can be useful because the parties are able to identify a fix that alleviates our competitive concerns. But there must be sufficient certainty that the benefits from the fix will happen. Seiberg: Do divestiture orders effectively restore lost competition? Pate: We work very hard for remedies that are appropriate and that solve competitive problems. [But] one problem is that it is very difficult — because markets change — to go back and determine with precision how well a remedy has worked. Seiberg: A big focus of the Antitrust Division, under Charles James, was on internal reforms to expedite the merger review process. Will this continue? Pate: We have not had as big of a test [of those reforms] as we might otherwise have had, because of the decline in merger activity. But anecdotally, Charles’ merger process reform has had very beneficial effects. The impetus behind it was his view that the value of surprise is overrated with merger reviews. We want, when appropriate, to be very transparent with what our concerns are and to give the parties an opportunity to respond. Seiberg: [In 2001], under political pressure, the Antitrust Division abandoned a merger clearance accord with the Federal Trade Commission. Are there any plans to revive it? Pate: We obviously thought it was good public policy and a good idea. . . . But at the same time, because of the low level of merger activity and because of some procedural things we have done with the [Federal Trade Commission] to avoid needless disputes, the problems with clearance are not as acute as when Charles came into office. Seiberg: A major antitrust topic over the past two years has been “coordinated interaction,” which is the theory that some deals harm competition by making it easier for the remaining competitors to collude. Do you plan to continue that focus? Pate: It is fair to say it was an initiative of Charles’ to look into whether coordinated effects were being forgotten. [It was] his view, and a view I share, that it is often appropriate to use coordinated effects in putting together the story on the effect on competition. Seiberg: How should merging parties present economic efficiency arguments? Pate: Parties should understand that the more concrete the case can be made for efficiencies, the more those efficiencies are likely to influence decision making. At the same time, inflated or speculative efficiency arguments will not be very effective. Efficiencies that are likely to be passed through to some significant extent to consumers will . . . be particularly persuasive. Seiberg: Do vertical mergers raise antitrust concerns? Pate: Vertical mergers can raise competitive problems, but all things being equal, they are less likely to pose a problem than a horizontal merger. But we certainly have not said we would never pursue enforcement against a vertical merger — and in some cases, a merger said to be vertical could have such effects on a competitor that it could be considered a horizontal [merger]. This article was distributed by the American Lawyer Media News Service. Jaret Seiberg is a reporter at The Deal.

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