Antitrust issues for Verisign buying Thawte

Status

The Department of Justice opened an investigation of Verisign's acquisition of Thawte. My contact there is Kent Brown <kent.brown@usdoj.gov> 202-307-6146

Entrust filed a suit against Verisign - see below for the URL.

Background

My letter to newcase.atr@usdoj.gov 1999-12-21:

As a long-time observer of the Internet I'm alarmed to see that
Verisign, the dominant provider of certificates for secure on-line
browsing, is trying to buy their main competitor Thawte.

Verisign already has too much market power in this segment.  The
certificate industry is very susceptible to market domination.
Barriers to entry are huge - you need to get your root certificates in
nearly all deployed browsers, which can take years even if you get it
in all newly shipping browsers.

Verisign makes this clear in their own press release:
 http://www.verisign.com/press/1999/corporate/1220_thawte.html

 [Verisign and Thawte] are also the only two digital certificate
 providers with commercial availability of 128-bit website
 certificates, which enable highly strong encryption in both domestic
 and export versions of Microsoft and Netscape browsers.

And also this threat to sew up the very standards by which this
stuff is implemented:

 As a combined entity, VeriSign and Thawte will be able to implement a
 consistent set of global standards for the issuance and management of
 digital certificates for websites and software developers. VeriSign
 currently serves all of the Top 40 e-commerce sites and Fortune 500
 companies with a web presence, and thousands of other sites with its
 range of Secure Site, Global Site and Code-Signing certificate
 services.  Thawte has built a strong franchise through a widely
 distributed agent network in over 22 countries around the
 world. Together, the companies have over 3300 ISPs, ASPs and Web
 Hosting companies acting as resellers of their services.

Thawte is the only important competitor to Verisign.  They have a number
of innovative practices which may be threatening to Verisign,
obviously including their much lower prices.

Read the many other comments at
 http://slashdot.org/article.pl?sid=99/12/20/1431223&&threshold=2

Please help prevent this merger.  It hurts web site
operators, e-commerce, privacy, and consumers.  We need more
competition in this space, not less!

Some legal background

Clayton Act prohibits anticompetitive mergers

The Clayton Act prohibits mergers or acquisitions that are likely to lessen competition. Under the Act, the government challenges those mergers that a careful economic analysis shows are likely to increase prices to consumers. All persons considering a merger or acquisition above a certain size must notify both the Antitrust Division and the Federal Trade Commission. The Act also prohibits certain other business practices that under certain circumstances may harm competition.

Enforcement

There are three main ways in which the federal antitrust laws are enforced: criminal and civil enforcement actions brought by the Antitrust Division of the Department of Justice, civil enforcement actions brought by the Federal Trade Commission and lawsuits brought by private parties asserting damage claims.

A provision in the Clayton Act permits private parties injured by an antitrust violation to sue in federal court for three times their actual damages plus court costs and attorneys' fees. State attorneys general may bring civil suits under the Clayton Act on behalf of injured consumers in their states, and groups of consumers often bring suits on their own.

Most states also have antitrust laws closely parallelling the federal antitrust laws. The state laws generally apply to violations that occur wholly in one state. These state laws are enforced similarly to federal laws through the offices of state attorneys general.

Effective antitrust enforcement requires public support. Public ignorance and apathy can weaken antitrust enforcement more than anything else. Whether you are a business person or a consumer, if you encounter business behavior that seems to violate the antitrust laws, do not hesitate to inform the enforcement agencies of your suspicions

Send complaints to newcase.atr@usdoj.gov as suggested at US Department of Justice - how to complain about antitrust violations

Some Barriers to entry in the Certificate markets

Helpful pointers


Neal McBurnett <neal@bcn.boulder.co.us>
Last modified: Fri Mar 3 10:15:55 MST 2000