Is Antitrust Still Relevant in the Information Age?

At the 2001 World Economic Forum conference in New York, Ken discussed Antitrust in the Information age with Charles James of the US Justice Department, Mario Monti of the European Commission for Competition, and Richard Parsons of AOL Time Warner.

Ken Auletta (KA): To read the antitrust laws, as I did when I was writing my book on Microsoft, is to be shocked at how short and simple they seem to be. And yet if you look at the interpretation over 100 years or the interpretation that say the European Commission applies to it versus how the United States sometimes does, you realize how complex it is. And we saw this, by the way, with the proposed merger of G.E. and Honeywell which was approved by the Justice Dept. and rejected by the European Commission. We seem to see it - and perhaps we don't - but we seem to, with the Microsoft case, which has now entered into another consent decree with the Justice Department, and yet Microsoft continues to be in the crosshairs of the European Commission. We saw it potentially, certainly in Europe, when they turned down Mr. Parson's bid to buy EMI Music and then later Bertelsmann's bid to buy EMI Music. And we debate, what is the meaning of antitrust law in the age of the Internet and information. . . What is the proper role of government? Is big bad or in fact is big an advantage or is it transitory? And how do we harmonize global antitrust policy when you have a different policy enunciated by the United States than by the European Commission? To explore these issues, we have with us today. . . to my immediate right, Mario Monti, the Competition Commissioner of Europe and a man who looms large on the world stage. . . in the middle we have the CEO-designate of the largest media company in the world, AOL Time-Warner, Richard Parsons. . . who takes over the job [from Gerald Levin] in May. And on the far right, though he would dispute whether that's an accurate political description of him. . . we have Charles James, the Assistant Attorney General, in charge of the Antitrust Division. Let me if I could, begin with a question to Mr. Monti first and then to Mr. James. And that is that, there has been talk about the different approaches that the E.C. takes from the U.S. Mr. Monti, I know you work together and you've had conferences but what is the nub of the difference as you would define it, between the way you view anti-trust and say the way the Bush Administration does? 

Mario Monti (MM): It's really hard to tell because these differences are frequently talked about. . . much more difficulties to find them in fact. [sic] If you allow me to the three cases you just mentioned. You presented the three of them as divergences. In fact, one is indeed an actual divergence. . . GE/Honeywell. Then you referred to Microsoft, which is at the very least highly-premature and speculative to mention that as a divergence. Then you mention Time-Warner/EMI which in fact was a very remarkable case of con-vergence, because both the FTC and the E.C. at the time had very similar concerns about this potential deal just as once that was out of the picture, the FTC and the E.C. had largely the same approach in approving the main deal, AOL Time-Warner. So the search for differences is important, especially because if there are, we have to work on them, but equally important is avoiding a misperception about what really are [the] differences. 

KA: Well, if I could just follow up, with someone you may think has a misperception and that's President Bush. When you turned down the G.E./Honeywell merger, he accused the commission of meddling in U.S. domestic policy. 

MM: Well at any rate, that would not be a technical anti-trust divergence. 

(Audience laughs) 

MM: Should I proceed? No. . . 

KA: Well, let me go to Mr. James, we can come back. Mr. James, how would you define whatever difference s between the way you view anti-trust and the way sometimes the E.C. does? 

Charles James (CJ): Well I think one of the premises of your question was that this is was a difference between Commissioner Mario Monti and the Bush Administration. I don't think that that's necessarily the case. I think what we're talking about here is the fact that if you read the U.S. anti-trust laws and you read the European law you would see that structurally they are the same but they have grown out of slightly different traditions and there are some distinctions. I think that Commissioner Monti is bound to respect in his determinations in the same way that I'm bound to respect the distinctions in the U.S. The other point though, that I would make, is that Commissioner Monti is correct in that I think the effort to identify differences has become a consuming passion among people who write about these topics and the differences are perhaps far more subtle than what would appear in some of the things that were written. We did have a difference of opinion about the G.E./Honeywell case. The G.E./Honeywell case occurs in the area of conglomerate merger policy. . . That is an area where the law in the U.S. is not particularly well-developed. Nor is the law in Europe particularly well-developed in this area. The vast majority of things that are within the realm of antitrust enforcement: cartel policy, horizontal merger policy, and the like. . . I think you would find a tremendous amount of convergence and you would see the episodes of divergence as being relatively few and far between. 

KA: Well that raises an interesting question for you Mr. Parsons. . . As the CEO- designate, if I listen carefully. . . what we heard from Mr. Monti and Mr. James is that there is wide harmony in the positions of the two, so that would mean that you as a CEO had predictability: You'd know what you can expect from anti-trust policy and in effect, there's one policy. Do you view it that way, that there's one policy? 

Richard Parsons (RP): Well I do think that there's a lot more harmony and convergence of view than disharmony. I don't think they're precisely, at least in my experience, on the same page all the time but in a 1,000 page book, they're on the same page 950 pages worth. . . And you would expect some dissimilarity between markets. But what I don't necessarily feel is that there is predictability, and that's not because of the differences of view of my two friends and colleagues on either side, it's because we're in a time where the speed at which technology is moving, and the rapidity with which formerly discrete markets are collapsing into one global market, create a lot of turbulence and a lot of uncertainty so none of us are 100 percent clear as to what the outcome will be at all times, and I think there's one other factor, just to be a little provocative this morning. . . I think that not only are those who want to examine these things under a microscope to find out where the differences are, it's just. . . it's news. . . it's become a matter of both public interest and comment and therefore an element of, in my judgment, of politicization has come into it. And by that I mean. . . and fortunately I don't have to refer to either Mr. Monti or Mr. James on this one. . . when we were doing our AOL merger, we were before the FTC for example. . . and there was a tremendous sense on the part of the staff and I think even on the part of some of the commissioners down there, that they were being watched very carefully. And therefore they were asking themselves the question "What will people think about what I'm doing and what I've done, a year or two down the road? Will I be made to look silly? Will it appear that AOL Time-Warner somehow out-foxed me because technology has moved in this direction or enabled that [development] and therefore you get into this kind of political equation of "how does it appear" or "how does it look" as opposed to does this lead to dominance or does this constitute genuine anti-competitive behavior. It leads to a lot of speculation about what COULD happen. Not what IS happening, but what could happen based sometimes on technologies that are not even extant. Because people have a political screen that's opened up now as well as their regulatory screen. 

KA: Mr. Monti, there are no politics in Europe on this are there? He must only be talking about America. 

(Audience chuckles.) 

MM: I'm not pronouncing about America. I believe there is full independence in the anti-trust judgment, of which, after all, America is the historical antecedent to all of us. Concerning the European Union, one could not even ask the question, "do elections, could elections bring about changes in the main thrust of anti-trust policy." Why? Because that is done at the European level by the E.C. in Brussels, and the process. . . take a year like this one which is particularly electoral-intensive in Europe. . . because you have elections, among other places in France and Germany. Altogether not irrelevant member states. Could that leave a minimal effect on the way in which anti-trust policy is conducted? Zero. . . Could I mention, linking to your previous question, one area where we have seen distinctly greater convergence with the Bush Administration than with the Clinton Administration in anti-trust. That is the notion of having within the W.T.O. context an agreement on core principles of competition law. I must say that with my new friends and colleagues, Charles and Tim Uris, it has been easier to come to a common position on this than it was with our previous friends and colleagues from the Clinton Administration and we now have, this language in the (unintelligible) Declaration, just as we have produced, I believe Charles would agree together a tremendous effort to launch the ICN, the International Competition Network, which is something to which in my view the CEO's from around the world, should look with hope. . . because the effort there is to have some convergence not only between Washington and Brussels, but between the many dozens of anti-trust agencies which are inflicting pain, (chuckles) because that is partly their job, on each of you. 

KA: Mr. James, a number of scholars and dispassionate observers have looked at the various anti-trust policies of the E.C. and the U.S. and said there is a basic difference in approach oftentimes that one sees. That is to say that the U.S. worries more about consumers and the E.C. worries more about protecting competition and small business. Is that a fair assessment in your judgment? 

CJ: I think that there is an issue that comes up in the narrow area of conglomerate merger policy, perhaps vertical restraints policy. . . that says that our bias in the United States is to protect the competitive process. We do not perceive ourselves to be regulators of competition. We don't perceive ourselves to be people who are attempting to influence competitive outcomes. We want the market to do that. In the area of conglomerate policy however, we have had a divergence. I think the level of the divergence is a little more subtle than you've described it. But it basically sort of works this way: We took the view in the G.E./Honeywell transaction that if the net effect of the transaction was to allow G.E. to produce more attractive products and services at more attractive prices, that the transaction ought to be approved and that the impact on competitors would be that they better compete harder [and] run faster. I think the ultimate conclusion in the European Union, as I've heard Commissioner Monti describe it, is one that focuses on competition in his view, but I think we have a little bit different view of it. In particular, I think the conclusions as I've understood them were that the impact of G.E. getting to be stronger and more efficient would have an adverse impact on the competitors in that it might discourage their investment in these products and it might cause them to exit and over the longer term, that there would be some consumer affect if these firms were to exit. There are certainly a million factual questions that are associated with that and I think that they ought to be addressed and Commissioner Monti and I, though a merger task force that's ongoing, are attempting to look at these portfolio effects theories, conglomerate effects theories, and come to a closer understanding of what each of us is doing, hopefully in the view toward moving toward convergence. But I think the distinction between the two policies is really very subtle. 

KA: Dick Parsons? Let me follow up with that by asking you a question. You're a noted diplomat. And yet you failed to successfully persuade the Commission to approve your acquisition of EMI. When they turned it down, what did Mr. Monti and the Commission miss? Where were they wrong? 

(Audience laughs.) 

RP: (Serious tone) First of all, they didn't turn it down. We withdrew the application because we were trying to work through a series of issues that the Commission had expressed some concern about. Now understand that unlike the situation in the U.S., in Europe, the timetable for action on these applications for, in our case, combination or merger, is very tightly-constrained. So we were working against time, there were a number of issues having to do with the effect of combining, interestingly enough, the music publishing sides of our business, as opposed to the recorded music sides, in discrete markets throughout Europe. And we were trying to shift portfolio around and do some things and at the end of the day, we simply ran out of time and rather than have it get turned down, we withdrew the application with a view toward living to fight another day. Now, for a number of reasons, we didn't chose to make that latter-day fight, and the effect of this was that we "failed to achieve the Commissions approval" as opposed to [thinking of it as] "we got turned down," so that may be semantic. So to your question in the context of what did happen: "Why did we fail to achieve the Commission's approval?" I think there was a concern. . . We had a difference in point of view. . . I think the Commission was concerned about something that they call "collective dominance." This is going to be a little longer answer than I think you asked for because it also relates to some of the differences between U.S. application and European application. Remember in the U.S., if you allow something to go forward and it turns out badly down the road, you can commence an action to break it up. In Europe, you really have to take your shot up front. Because there really isn't the same kind of after-the-fact ability to move in and break up a dominant or monopolistic enterprise. I think the Commission was concerned that by allowing the five major music companies in the world to go to four, that might result in a collective dominance of the remaining four players that would not inure [or work to] the benefit of consumers or to competition. And so we spent an awful lot of time on that issue and I think we actually got to a point of resolution on that issue but that left us no time to spend on the smaller but nevertheless important issues of share-of-market-in-discrete-European-territories, of the music publishing piece. So where we have a difference of opinion, my own view was and is that even allowing five to go to four would not have resulted in the "collective dominance" that the Commission was concerned about and that other people who testified before the Commission were concerned about. . . I think that the music industry was in such a state of transition, and consolidation globally that in fact it would have helped competition by making stronger competitors, but we had a difference of view there. 

KA: Mr. Monti, you mentioned. . . and I did earlier, the Microsoft case. If we could just segue to that case. . . Could you just bring us up to date on where the Commission is and what the status is. 

MM: With pleasure, but will I miss my turn on "consumers versus competitors?" 

(Audience laughs.) 

KA: No, why don't you as a consumer, do that now? 

(Audience laughs.) 

KA: Why don't you start with that? 

MM: No clearly, we are there to protect the competitive process and therefore consumers. There is no question about that. Incidentally, we have one more dimension to that task which you don't have in the U.S. because you are a more established single market. In Europe we also have to make sure that companies do not harm consumers by having obstacles to the smooth functioning of a single market. For example, we fined Volkswagen, Mercedes, and Opal Netherlands, for huge amounts because they obstructed parallel trade of cars. So we also have that emphasis to consumer protection because we are building up a single market. We certainly do not close our door, necessarily, when competitors come and complain. But hearing somebody does not necessarily mean following their arguments. To very recent examples. . . Fujitsu/Siemens was not delighted about or approval of HP/Compaq. In fact, they presented submissions of remarkable concern. We did not find those concerns founded and we cleared the merger. Equally, we are dropping complaints about Intel which we don't find well-founded. There are cases where competitors, by complaining, are helpful in the process of establishing competition. U.P.S., not a European company. . . if I am well informed. . . had complained against Deutsche Post for a number of reasons. We found THAT complaint well-founded. We fined Deutsche Post, we even accepted a commitment of structural separation. And therefore there will now no longer be cross-subsidization, predatory prices, and things like that. That was thanks to a process which was triggered by a complaint of a competitor. 

KA: Let me, if I could just segue to the Microsoft question. And here's the question if I could crystallize it: "The U.S. Government has entered into a consent decree with Microsoft which allows the company to integrate new products in, with the Windows operating system. The E.C. is looking into the question of whether that is anti-competitive. Is it conceivable that you will rule, perhaps sometime this year, that Microsoft, which is allowed to bundle or "integrate" in the U.S., might not be allowed to in Europe. 

MM: I'm afraid it's not as simple as that, if that were to be simple. . . Well, where are we concerning Microsoft, first of all? Our investigation is still going on. . . We have two statements of objections to Microsoft. Microsoft has withdrawn the request to have a hearing but in spite of this there is of course the interaction of the comments of Microsoft to our statement of objections. Of third party's comments to that, and vice versa. Now, one key focus of our investigation is Microsoft's move into the enterprise software market, in particular the server market, and whether this move remains within the boundaries of what is permitted under competition rules. Our preliminary view, as was expressed in the statement of objections addressed to Microsoft, is that the company leverages its dominance in the PC and low-end server markets in ways that are anti-competitive. Companies which set out to produce complimentary software but which lack adequate access to Microsoft's dominant products, risk not being able to offer their customers viable products. In that way, so goes the allegation. . . in that way in the medium-term Microsoft's behavior might reduce consumer choice. The other aspect which we have addressed in the statement of objection is Microsoft's tying of Windows Media Player to the PC operating system. And there, our preliminary review is that this conduct reduces consumer choice for such multimedia playback software as well as innovation. Now, these are the objections raised in the statement of objections. We are in the process of conducting the investigation. It is at this stage premature also for us to draw conclusions regarding the impact of the proposed U.S. settlement on our case. So, sorry to take a bit of time, but as you can see, the cases are not identical. It is premature to say what our conclusions will be. I wish I knew. And I think it would be even more premature to speculate about whether THAT conclusion might indicate an effective divergence. 

KA: In the case of the United States, Mr. James. . . obviously it's not premature. You've entered an agreement. To those who would say that Microsoft was found guilty of being a monopoly and seeking to maintain that monopoly by two courts. And they say that your settlement looks like a gift. How would you defend the settlement as not a gift to Microsoft but in the public interest? 

CJ: Well, I would say a couple of things. Whenever I talk about the Microsoft case, the very first thing I do is distinguish between Microsoft the public spectacle and Microsoft the lawsuit. And my job really is to focus on Microsoft the lawsuit and I will leave the public spectacle to you. Within the context of Microsoft the lawsuit, we started out a case that was very broad. . . started by the Justice Dept. and nine states. Commissioner Monti, for example, just mentioned the question of monopoly leveraging, which is one of the issues that is most often talked about in terms of the Microsoft case. A little-known fact that people very rarely focus on is the fact that the law in the U.S. is very hostile to the notion that there is a legal violation for monopoly leveraging. There's a whole well-developed body of law that was developed during the days when people were concerned about Kodak selling both its cameras and its film and the courts, set forth a pretty strong doctrine, that a firm. . . even one with market power. . . is able to move from one market to another and to take advantage of the advantages it might have in its dominant position in an adjacent market. Now, in the Microsoft case, and again perhaps I'm speaking about this too much like a lawyer, but the states initially brought a count in the Microsoft case or monopoly leveraging. (Audio drop out. . . comments are unintelligible.) Microsoft was accused of attempting to monopolize the browser market. The Court of Appeals dismissed that part. Microsoft was charged with exclusive dealing. The District Court dismissed that part. Microsoft was charged with tying. That portion of the case was not sustained by the Court of Appeals and ultimately we were told in the Court of Appeals' opinion that if we wanted to revive that portion of the case our cases of success would be de minimus because of the preclusions of proof that they had imposed. So what I say to the world about the Microsoft consent decree, is "READ THE OPINION." Read the opinion and read it as a lawyer would read it and I think you will very clearly come to the conclusion that the relief is adequate. Now, we're going through a process here. The Microsoft case is "different" in a lot of respects because of the public focus on it and the broad industry interest in the case. I know that if I were looking at the Microsoft case and looking at the Microsoft monopoly maintenance finding, and I were a competitor of Microsoft's, what I would want is the company dismantled. I would want a rule that says they cannot compete with me. I would like a rule that says that I get access to all their intellectual property. . . 

RP: (wryly) Is that so wrong? (Audience laughs and then claps.) CJ: Dick, I will tell you something. If I were Microsoft's competitor? That's what I would want. I can probably think of a lot of other things I would ask for. KA: Dick Parson's company has brought a lawsuit that implicitly says the Justice Dept.'s settlement doesn't go far enough and has sued Microsoft, for damages. Dick, you want to explain that position? RP: I'll start by paying homage to a time-honored saying in the law that "reasonable minds can differ." And with respect we do differ and I do differ from the conclusion that Charles James just went through in the following respect. Here you have a competitor that has been, regardless of the plethora of charges that we started out with, that has been found guilty on several counts of unlawful monopolistic behavior. In other words, of managing the monopoly position that Microsoft has in the operating system environment, to preclude competitors and to expand their dominance in that marketplace and adjacent marketplaces. Our view. . . well first of all, our suit was based on two things. Number one, it was specifically found both by the District Court and the Court of Appeals, to have acted in an unlawful way with respect to Netscape in terms of competition in the browser market. And so as the owners if you will, of that cause of action, we felt that we're almost as fiduciaries required to pursue that portion of the case and to determine the damages, that the shareholders of Netscape, now our shareholders because we own Netscape, are entitled to as a result of those already-adjudicated violations of the anti-trust law. But more fundamentally, and more strategically from our point of view, we aren't looking for Microsoft to be dis-aggregated, as it were, or broken-up. . . but we do think this notion, and particularly when you have someone who has been adjudicated. I'll try to put this as fairly as I can to them. . . to have engaged in anti-trust and monopolistic behavior in a course of conduct that is replete with monopolistic behavior over time, that to permit that competitor. . . that has an acknowledged position of real dominance. . . monopoly position, in fact, in the operating system environment. . . to leverage that dominance by bundling in products in adjacent spaces. . . and not offering those products, except on a bundled bases. . . is improper. The only basis on which one could justify that, it seems to me, is that somehow it serves the public interest to allow Microsoft for example to bundle in a media player or a browser with its operating system, and to require those OEM's that need the operating system to take their bundled product. . . the only basis on which you could justify that is if there was some public good and I can't see it. It seems to me that requiring them to offer them separately and we call our remedy "open desktop." Microsoft has and presumably they gained through fair competition, a position of dominance in the operating system environment, but they shouldn't be allowed to leverage that through anti-competitive ways into other areas. 

KA: If I could digress here, instant messaging, which AOL dominates in the world. . . is that part of your "open desktop?" Can everyone communicate with AOL's Instant Messager? 

RP: There's two things I'll say about instant messaging. Number one, anybody can get access to it. For example, what we've argued in the Microsoft case is that OEM's should be able to get access to the operating system as a discrete piece and then tie with it, or add to it whatever additional functionality from whatever source, they want. You can go online now and get access, to the AOL Instant Messaging system, and download it on any computer and you can bring it into your environment. And number two, if you look at market share, Microsoft is probably pulling even with us, in terms of market share, in the instant messenger market. The notion that AOL "dominates" instant messaging just factually isn't true. 

KA: Let's move on if we can. . . Mr. James would you like to respond? 
CJ: No, no, no. He's doing fine. 

KA: Let me ask the question we posed with this session, Mr. Monti. . . Is anti-trust law still relevant in the age of the Internet where you have an arguably open distribution system. And therefore asks us to re-look at some of those laws. 
MM: I think your very initial remark this morning was about the generality of competition rules. . . I think this is also the explanation of the resilience of competition rules in the face of changing technological and economic environments. So I believe that the rules can be applied in a context of technological change in the context of the new economy. Of course the application is difficult because it requires an enormous amount of knowledge and some capacity to anticipate the evolution of markets. I regard an application of anti-trust law to the new economy as part of a process of alliance. I believe the new economy and competition are inherently allies. For a number of reasons of course I.T. and the new economy stresses the competitive features of the marketplace, on the other hand there are aspects which could stifle the innovation process and precisely to prevent that from happening, a fairly light application of anti-trust rules is indeed necessary. 

KA: Mr. James, let me ask a variation of that question of you. . . In light of Enron, the Bush Administration comes in with a more deregulatory agenda than the previous administration and then Enron happens and people would argue that that maybe suggests that there is a more important role for government check and balance than the Bush Administration acknowledges. Are you rethinking policy in light of what happened with Enron. 

CJ: Fortunately the Enron controversy does not appear to have an anti-trust spin on it so I will not characterize that aspect of it. And I think that there are so many presumptions that go into who we are as an Administration and who we are supposed to be as enforcers of the law. It's always interesting to me that there seems to be a presumption that light anti-trust enforcement is something that should be anticipated because it is a form of regulation. I personally have never viewed anti-trust as a form of economic regulation. I view it as a form of law enforcement and as law enforcement it ought to go forward because the laws are on the books and that's the way that we go. Now, insofar as the tech sector, one of the interesting things about it is that ten years ago, or perhaps even less. . . there was a prevailing view that anti-trust shouldn't be relevant to the technology sector. The general view was number one, that the technology sector was infinitely growing and the markets were self-correcting and too dynamic for the "old economy" approaches that anti-trust law typically uses. Secondly that the tech sector was doing just fine because whenever there was an issue, somebody just went out to the garage and invented something new and that became the new thing. The fact of the matter is that we've come to the portion of the technology world where we don't see demand being infinitely capable of growth and you don't see as many people inventing things in garages because the garages now have Ferrari's in them and not software designers. So the issues of dividing up the pie and how it's going to be divided and all of those issues are natural issues for anti-trust and it's very important for the anti-trust laws to play a market protection function in this sector just like it pays in every other sector. And I think that's certainly what we're about and I wouldn't anticipate that that's going to change from administration to administration. We are going to enforce the law as the courts have dictated to us. 

KA: If we can go out and get some questions from the audience. If I could just ask that you identify yourself before you ask your question. (Long pause). No volunteers? Then I'll ask another question. Dick, I mention the word "harmonize." What would you like to see as a CEO. Would you like to see one world anti-trust policy? A global policy? 

RP: The short answer is sure you would. But that's not realistic. At least not at this point in time. I think the fact of the matter is, we talked a moment ago about the accelerating pace of technological change and the collapsing of markets into one. Certainly from my company's perspective we think about the global marketplace, when we think about the markets in which we operate. But it's going to take some time to evolve to a place where presence in markets, approaches to markets, state of competition in the global market is such that you can have one place where you can go for an answer. I mean any business manager at the end of the day, it's almost less relevant what the answer is, so long as you can get an answer quickly and move on. So in the abstract sense yeah, you'd want one stop shopping: one place where you go for your anti-trust clearance and one place where you go for whatever else you need and either you're done or you move on to the next deal but that's not realistic. I think that actually what is happening and what's been happening is increasing levels of communication between anti-trust regulators. While on a case-by-case basis, that may not always work to your advantage, generally speaking that is a good thing. 

KA: Mr. Monti, do you want to talk about if it's possible to have a United Nations of Anti-Trust Policy? 

MM: It might in the very distant future. I believe it is not a realistic, medium term perspective right now. And I believe that talking about it might reduce the probabilities of achieving more pragmatic near-term or medium term steps because the sensitivities in each country or in each regional grouping in our case, about sovereignty are there and why discuss prematurely about the surrendering of sovereignty when there is so much that can be done and is being done in terms of a coordinated exercise of sovereignties that can stay where they are. 

CJ: I think both Dick and Mario are absolutely correct. One-stop shopping would be a lovely thing. We are a long distance away from that, largely because we have different legal systems, we have different economic circumstances, we have different doctrines in terms of our application of these laws and I think we are very suspicious about not only what the rules should be but who should enforce them and to what effect? So it is a very distant prospect for having a world competition code or a world competition agency. 

DP: I don't disagree with what Commissioner Monti said about talking about things prematurely, and it doesn't help. But a good place to start would be right here in the U.S. Right now, depending on what sector of the economy you're involved in, you may end up at Justice or you may end up at the FTC, and sometimes there's a little intramural struggle down there about who's going to get what. I think there was an initiative to try and concentrate and collect up as much anti-trust regulation, at least on the M&A side in Justice, as possible so from a U.S. industry perspective, you kind of knew who you were dealing with and what the framework was, and I hope that gets back on track, let's put it that way. I thought that that would have been a very positive move from the point of view of not only anti-trust regulation but from the point of view of the conduct of business here, that seems to have gotten derailed and I hope it gets back on the railing. 

KA: We have a live question from the audience. 

Audience Member: Thanks, I'm Esther Dyson. I was founding chairman of ICAN, which in fact is an example of a not yet completely mature attempt at setting and enforcing anti-trust policy on the Internet, specifically in the area of the domain names system. And I'm curious what the regulators think of that. At ICAN, we didn't see it as taking away soverignty, because there was in fact no legal standing for any of this. Verisign, the incumbent monopolist, had a contract with the government. ICAN was created by the worldwide Internet community to crack that open. 

KA: Mr. Monti, do you want to take the first crack at that? 

MM: Yes, I must say we are investigating the area of Internet domain names. We have had a number of complaints against registries of domain names located in both Europe and in the U.S. and I would only add to that because cooperation takes place in the concrete, that we are cooperating on this both with the Justice Dept. and with the Dept. of Commerce. 

CJ: This is an easy one for me. I'm recused. ICAN is a former client of my law firm and so whatever is happening with regard to it at the Justice Dept. is happening without me. 

KA: But you know, Esther's question provokes another. Which is one of the concerns that people have, is whether the broadband Internet is really going to be open and they worry about cable companies like Mr. Parsons' might preclude access or not have open access for everyone else. 

CJ: Well from the U.S.' perspective obviously, the issues associated with the development of broadband and how that market will emerge is something we will watch very closely both from a pure anti-trust and from a regulatory perspective. Now one of the interesting things about this is that you have a tremendous amount of Congressional interest in it in the form of legislation. You have the FCC very much involved in the process through their regulatory issues and through state public utility commissions and other things dealing with the question in terms of pricing and what have you. From an anti-trust standpoint, we certainly will look at these issues, with a view toward allowing the marketplace to emerge but trying to prevent any kind of artificial constraints on competition that might take place in this space. The interesting dimension to it is that people are very unclear about what shape this is all going to take. People say we need a big platform for broadband but as of the present time the so called "killer ap" has yet to emerge and that is really going to be what's going to drive a lot of the competitive considerations on how this all works. So we're watching it. I don't think we have a particular take on what needs to be done at this present time. 

MM: Really nothing to add to that. Perhaps in a related area I would like to mention one example which is indicative of our approach. When there was the Vodafone management merger, we approved it under conditions. One condition was that the merged entity should provide access to its wireless network across Europe to competitors at the same rates that it was providing it to its subsidiaries. That was to allow a competition to emerge but we put that condition only for a limited period, three years, so that others would have the incentive to replicate the network. But on the main answer, I would completely agree with Charles. 

Question From The Audience: Peter Price (Television USA): I don't' know if this is a question for Dick Parsons as a movie man or Dean Rubin as a scholar, but I saw the movie "A Beautiful Mind" on Saturday night and it turns out at the very end that the Nobel Prize winner Dr. Nash finds that the application of his equilibrium in economics applies to the anti-trust laws to help sort through those things. Any connection of the dots there so that we can understand what that means. 

RP: I do think as regulators look at the relative. It is as Ken said in the beginning. A few simple words that constitute the framework or the skeleton of the anti-trust laws is the application and the interpretation of those words that create all the interesting challenge. And how you evaluate and, we were talking before about collective dominance as a theory or network effect which is what's really kind of underlying the whole Microsoft thing, how you weigh the impact of that in the marketplace is almost economic/mathematical exercise sometimes as opposed to just looking at consumer behavior. I'd like to touch on something that was underlying Ken's last question and that Dean Rubin talked about at the outset which is we're living in a world where massive consolidation is happening all around including in the media space and the question is do people legitimately have the right to be afraid that somehow a small group of people will come to dominate or I'll use a word that I personally have no familiarity with in my personal business life but I've heard used before, "monopolize" the media. Access to information, to news, to perspective to what's going on around the world. I think that the reality is, as much as it's spoken about and argued about in regulatory halls and policy maker halls, the reality is just the opposite. I think we have more voices that are being heard. More access to more information. Less control over what gets out to a global public than we've ever had at any time in the history of the world. You can go from small examples like 30 years ago there were three major networks that basically bought you your news at least in electronic form. Now there are still those networks. There are any number of cable channels here in the U.S. and then there's this thing called the internet where anyone can be a publisher of news and once its out its out. I think in fact if you sort of step back from the edge of the cliff and look at the broader picture that what technology has bought us is a world of proliferating points of access to information and to all forms of media and that precisely the opposite of what peoples concern is which is that somehow those points of access are going to be choked off as happening. I think the reason for the consolidation is entirely based on size of market and the scale you need to attack those markets but the technology has in fact opened the door to more and more and more access and less concern about whether someone is monopolizing information we receive.