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Antitrust expert Sanford Litvack to examine Google-Yahoo deal

By A. James Memmott

September 11, 2008 at 10:15am

In a move that could signal its intention to go to court against two Internet giants, the U.S. Justice Department has hired the former head of its antitrust division to look at a revenue-sharing deal between Google and Yahoo Inc.

Sanford M. Litvack, who is also a former vice chairman of the Walt Disney Co., has been asked by the Justice Department to see if there is an antitrust case to be made against Google and Yahoo.

At dispute is an arrangement the companies agreed to in June that allows over Google to sell search ads on Yahoo.

At the time, the move was seen as an effort on Yahoo’s part to enhance its revenues and fend off a hostile takeover by Microsoft Corp.

Google and Yahoo have held off implementing the plan until October. They’ve said the delay would give the Justice Department time to review its implications.

Google and Yahoo assert the partnership would increase competition and not violate antitrust laws. Critics contend it would have the opposite effect, giving Google even more control over the pricing of online advertising than it already has.

In breaking the news about Litvack’s hiring, The Wall Street Journal noted that the Justice Department does not often seek this sort of outside help, though it turned to super litigator David Boies in 1998 when it sued Microsoft on antitrust charges.

In choosing Litvack, who led the antitrust division during the Carter administration, the department chose a veteran of boardroom battles at Disney and at Hewlett-Packard Co.

Litvack was at Disney from 1991 to 2000, serving first as general counsel and senior vice president before be became vice chairman of the board. Throughout this time, he was an adviser to Michael Eisner, then the company’s CEO.

A key player in Disney’s purchase of Capital Cities/ABC, Litvack also was involved in two highly controversial and expense personnel cases.

In the first, Jeffrey Katzenberg, the former head of motion pictures at Disney, sued the company for money he said he was owed after his forced resignation. The case was eventually settled out of court for $280 million.

In the second, shareholders sued Disney’s board over $140 million given Michael Ovitz after his brief stint as president of Disney in the mid-1990s. Litvack testified in defense of the severance package. After a lengthy trial, the suit was dismissed in August 2005.

Shortly after he left Disney, Litvack joined the board of Compaq Computer Corp. That company and Hewlett-Packard came together in 2002 in a merger pushed by Carly Fiorina, HP’s CEO and chairman. Litvack then became a member of HP’s board.

He resigned from the board in February 2005 and was replaced by Thomas Perkins, a former board member and a Fiorina opponent.

Fiorina was then asked to resign by the board.

Litvack has not commented on his new role in the possible Google and Yahoo litigation. However, his hiring has been interpreted as a sign that the Justice Department might press forward on an antitrust suit.

“They wouldn’t bring in a special counsel unless they were preparing to litigate,” Sam Miller, an antitrust lawyer, told The New York Times.

Other observers have said that Google might back away from the agreement with Yahoo rather than take on an expensive defense of the pact.

A weakened Yahoo might then face another takeover bid from Microsoft, they add.

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