Monopoly-busting action is by no means certain. But it's a safe bet that regulators will closely scrutinize -- if not reject -- Microsoft Corp.'s attempt to buy WebTV Networks Inc., antitrust specialists said last week.

Under federal law, large companies such as Microsoft must request permission from the Federal Trade Commission and the U.S. Department of Justice before completing mergers. Such deals may not go through if they reduce competition in the marketplace.

George Washington University law professor Thomas Morgan said the recent rejection of a merger between two office-supply chains, Office Depot and Staples, suggests that a holdup -- if not outright ban -- on the deal is forthcoming.

The WebTV deal "sounds as though it's an acquisition of someone who would at least be a potential competitor in the future," he said.

Since Microsoft already holds a near monopoly on operating systems for desktop PCs -- the main gateway to the Internet -- the deal could be seen as forestalling competition for Internet access.

Microsoft officials said they believe the deal will go through.

However, the FTC and the Justice Department have previously blocked acquisitions of companies whose products didn't directly compete with their prospective buyers. A proposed merger between Clorox Inc. and Procter & Gamble Co. failed because regulators didn't want to let the world's biggest maker of detergents merge with the world's biggest bleach maker.

But Charles Kennedy, professor of law at the Catholic University of America, said he is less sure. Though the proposed merger would undoubtedly get significant scrutiny, he said, it is less clear that regulators will draw a parallel to the Clorox case.

"It would depend on whether they can somehow tie the purchase to the [Windows] operating system," he said.

For even though P&G would have forestalled competition by buying Clorox, Clorox was, nonetheless, a large established company with significant market penetration. WebTV, by contrast, remains a small company with fewer than 1 million units sold -- hardly a Clorox by any means, he said.

"WebTV does not monopolize access to the Internet, and it's not clear how big they'll become," Kennedy said. "It's not clear how much competition you'd foreclose by buying them."

Source: Inter@ctive Week