Speaking before the Senate Judiciary Committee, James gave no indication of whether or not the Bush administration would shift course on the Microsoft lawsuit, arguably one of the most important antitrust cases of this century.
Thomas Penfield Jackson, the judge presiding over the case, sided with the Justice Department and ruled that Microsoft had engaged in anti-competitive business practices and abused its monopoly power in the desktop operating systems market. Microsoft appealed the ruling to the US Court of Appeals. The decision could come anytime.
Once the appeals court rules on Microsoft, the Bush administration would have to decide its next course of action; whether or not to seek a new round of settlement talks or to continue the legal battle in the US Supreme Court.
The only insight that James offered on the future of Microsoft and other pending antitrust cases was that the department will "look as closely as possible to preserving victories and rectifying defeats". James was an antitrust official in the Justice Department during the administration of George Bush, the current president's father.
Committee chairman Orrin Hatch, who has repeatedly expressed concern about Microsoft's power, did not ask James about the Microsoft case directly. Instead, he questioned whether "network effects" made the high-tech industry more susceptible to monopolies than other industries. As more people use a particular technology in a push for standards, it becomes more valuable, creating the network effect.
"Do you think monopoly power is more likely to occur in high-tech industries than in other industries? If so, what are the implications of your conclusion for antitrust enforcement?" Hatch asked the nominee.
James, in response, said that issue was "one of the top priorities" for the antitrust division. The company that is first to market with a product "may have a prevailing market position for some period of time", James said, and the Justice Department did not wish to "discourage" innovation.
James said study is needed on how networks are formed and how they interact with third parties. "I can tell you that the antitrust division is looking very closely at those issues," he said.
The rapid pace of change also has to be considered in evaluating high-tech industries, James said. "However, I think that these industries need to be competitive just like other industries, so there is a continuing role for antitrust."
With the Microsoft case pending, committee members seemed to recognise that James was not in a position to discuss the case. Senator Maria Cantwell, a former vice president of RealNetworks, a Microsoft competitor, avoided the issue and questioned James on the apple industry (not the computer maker), which is a big player in Washington's agricultural industry, and on Orbitz, an online travel agency that is being developed by the nation's five largest airlines. James said he was unable to discuss Orbitz because of an ongoing Justice Department inquiry.
Senator Patrick Leahy questioned whether James, as someone who has represented clients against government antitrust enforcement actions, can do a "180-degree turn now and enforce antitrust laws".
James, a partner at the law firm Jones, Day, Reavis & Pogue in Washington, said his intention is to avoid any "ethical complications" or appearances and will do whatever the Justice Department's ethics staff tells him to do "without question".
At a telephone press briefing earlier this week, supporters of the government's antitrust action against Microsoft, including Whitewater special prosecutor Kenneth Starr, who is also a former judge on the Washington appeals court, said nobody could draw conclusions about how James would treat the Microsoft case.
Starr, in particular, said Justice Department case work is driven by the "continuity principle", or the orderly administration of justice, and is not as susceptible to shifts in policy. He believes James "will be guided by the facts".
James could be confirmed in the position as early as this week, Hatch said.