The Justice Department's top antitrust official announced on Monday a return to a more aggressive approach to dealing with dominant companies that use their position to crush competition.

Christine Varney, head of the department's antitrust division, announced the withdrawal of a Bush administration policy report on the issue and said the department will be aggressively pursuing companies that abuse their monopoly positions.

Speaking to the Center for American Progress, Varney also lamented the lack of recent scrutiny for mergers by companies in the same supply chain, and wondered if antitrust enforcers should oppose mergers on the grounds that they would create a company that was too big to fail.

Varney said the antitrust division under former President George W. Bush has not been as active as it could have been.

Guidelines for corporate monopolies issued last year said the goal was to stop abuses while avoiding interfering in the rough and tumble of beneficial competition.

Varney said this policy raised too many hurdles to effective antitrust enforcement. I am hereby withdrawing the (Bush) report, she said. The withdrawal had been widely expected in antitrust circles.

Section 2 of the Sherman Act prohibits illegal attempts to monopolize or to maintain a monopoly.

At issue is monopoly behavior by dominant companies such as software giant Microsoft and chip maker Intel , which won huge market shares in their industries and were then accused of abusing that dominance to stay on top.

Leading Internet search firm Google has begun to come under increasing scrutiny in Washington. It dropped its advertising deal with Yahoo Inc last year in the face of opposition from the Justice Department under the Bush administration.

The department is also looking at Google's deal to digitize millions of books, and the U.S. Federal Trade Commission, which also has antitrust responsibilities, has a probe into Google and Apple Inc's overlapping board members.

Asked about Google, Varney said she was not speaking of any particular firm or industry but added: When you become successful... you have to pay attention to the rules.

Varney said the antitrust division would take a harder look at vertical mergers, which are deals to combine companies that do not compete but are in the same supply chain. Enforcement of vertical deals has gone cold, she said.

Ticketmaster and Live Nation , the world's largest concert promoting company, have proposed merging in a deal that is considered a mostly vertical merger. Varney did not mention either company.

Varney waded into the debate over whether antitrust enforcers should move against deals that might create companies that are too big to fail and later require government rescues to prevent damage to the wider economy.

Is too big to fail a failure of antitrust? she asked in her speech. Asked about it later, she said: That's the question I'm raising, I don't have a conclusion at the moment.

(Reporting by Diane Bartz; Editing by Dave Zimmerman and Tim Dobbyn)

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