Originally published at Yale JREG Notice & Comment blog
Before he was appointed as Assistant Attorney General for Antitrust, Jonathan Kanter spent over a decade in private practice arguing on behalf of his clients that Google was violating antitrust law in many ways. That history was part of the basis for a year-long Justice Department (DOJ) investigation to determine whether Kanter is too biased against Google to participate in cases involving Google. DOJ just concluded that investigation and determined that Kanter is not too biased to participate in cases involving Google. Kanter then immediately took actions that raise serious questions about the accuracy of that decision.
Under Kanter’s leadership, the antitrust division of DOJ filed a complaint in which it alleged that Google is monopolizing the market for online advertising in violation of Section 2 of the Sherman Act. That complaint has many unusual features. First, for the first time in half a century, DOJ is seeking money damages in a civil case brought under Section 2 of the Sherman Act. The reason for that unusual move became apparent when DOJ requested a jury trial. DOJ has not asked for a jury trial in a civil case to enforce Section 2 in over half a century.
The reason for the request for a jury trial becomes obvious when you compare the allegations in the complaint with existing law. Thus, for instance, Google has 29% of the market for online advertising. The Supreme Court has never held that a firm that has that small a share of a market is monopolizing the market. The lowest market share that the Court has accepted as evidence of monopolization is 60%.
DOJ would have no chance of persuading a judge to ignore Supreme Court precedents and decide the case in favor of the government. Kanter is hoping that a jury composed of people who dislike large high tech firms will decide the case in favor of the government. He then hopes that circuit court judges and Supreme Court Justices will not overturn a jury verdict in favor of the government even though they disapprove of the theory of the government’s case and believe that the evidence that the government presented was inadequate to support a decision in favor of the government.
That reasoning is dubious, but even if Kanter is making the right educated guess on that issue, his decision to ask for a jury trial is likely to backfire on him for other reasons. First, it will significantly prolong the trial. When DOJ decided to file a civil action against Microsoft for allegedly violating Section 2 during the Clinton administration, it confronted a major problem. Section 2 cases are famous for requiring at least many years, and often decades, to resolve.
DOJ addressed that problem by agreeing to a bench trial and then persuading the trial judge to adopt many unusual procedures that greatly expedited the trial. Those procedures included use of pre-filed written direct testimony and strict limits on the duration of cross-examination. In the Microsoft case, the D.C. Circuit upheld the decision to adopt those procedures in the context of a bench trial, but they are not compatible with a jury trial. Without those procedures, a jury trial will take much longer than the trial in Microsoft.
Second, even if DOJ is successful in persuading a court to conduct a jury trial and obtains a favorable verdict, it cannot obtain the remedy it wants. Kanter has often said that divestiture is the only effective remedy in a case of this type. A jury can award money damages, but it cannot impose the remedy of divestiture. That is an extraordinary equitable remedy that only a judge can impose after first conducting a separate bench trial and finding that divestiture is the only effective remedy. DOJ has no chance of persuading a trial judge to impose the remedy of divestiture and then persuading a circuit court to uphold that remedy.
That is an issue that DOJ lost in the Microsoft case. After persuading both the trial court and the D.C. Circuit that Microsoft had violated Section 2, DOJ tried to persuade the courts to adopt the remedy of divestiture. DOJ was successful at the trial court, but the D.C. Circuit rejected the remedy of divestiture. It held that divestiture is an extraordinary remedy that a judge can impose only after conducting a separate trial in which the judge finds that no other remedy is adequate.
The history of the divestiture remedy provides good reasons for courts to be reluctant to impose the remedy. It was last imposed by a court in 1968. In that case, a court found that a company that had 75% of the market for shoemaking equipment had monopolized the market. It first adopted the remedies of requiring the company to modify the terms of its leases and make its products available for sale. When the court conducted another trial fifteen years later, it found that those remedies had not been effective in eliminating the monopoly. Only then did it adopt the extraordinary remedy of divestiture. The case did not have a happy ending. The mandatory divestiture contributed significantly to the financial collapse of the company and to the end of U.S. dominance of the market for shoemaking equipment.
Kanter is obviously trying to get a quick decision in the Google case. That is why he filed it in the Eastern District of Virginia even though there was a pre-existing case that raised many of the same issues that was already pending in the Southern District of New York. The Eastern District of Virginia is often referred to as the home of “the rocket docket” because it is famous for making rapid decisions. That decision is also likely to backfire, however. The applicable substantive law in the Fourth Circuit is particularly unfavorable to the government, and the Eastern District of Virginia is likely to grant Google’s motion to transfer the case to the Southern District of New York. The fight over venue will just add more delay to a case that is bound to take many years to decide.
As I look at the many inexplicable errors of judgment that are reflected in the combination of actions that DOJ has taken in the Google case, I cannot avoid drawing the inference that Kanter’s animosity toward Google is so intense that it precludes him from engaging in the kind of common sense reasoning process that should underlie any decision that DOJ makes.
Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at George Washington University.