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FINDINGS AND RECOMMENDATIONS OF THE

ANTITRUST MODERNIZATION COMMISSION

HEARING

BEFORE THE

ANTITRUST TASK FORCE

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MAY 8, 2007

Serial No. 110–23

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

ANTITRUST TASK FORCE

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

ANTHONY D. WEINER, New York 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

STEVE CHABOT, Ohio 

RIC KELLER, Florida 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

BOB GOODLATTE, Virginia 

CHRIS CANNON, Utah 

DARRELL ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

LAMAR SMITH, Texas, Ex Officio 

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

(III)

C O N T E N T S 

MAY 8, 2007

OPENING STATEMENT 

Page 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Chairman, Antitrust Task Force ................................. 1

The Honorable Steve Chabot, a Representative in Congress from the State 

of Ohio, and Ranking Member, Antitrust Task Force ...................................... 3

WITNESSES 

Ms. Deborah Garza, Chair, Antitrust Modernization Commission 

Oral Testimony ..................................................................................................... 4

Mr. Johnathan R. Yarowsky, Vice Chair, Antitrust Modernization Commission 

Oral Testimony ..................................................................................................... 6

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Joint Prepared Statement of Deborah Garza, Chair, Antitrust Modernization 

Commission; and Johnathan R. Yarowsky, Vice Chair, Antitrust Modernization Commission ................................................................................................... 8

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Lamar Smith, a Representative in 

Congress from the State of Texas, and Ranking Member, Committee on 

the Judiciary ......................................................................................................... 79

Prepared Statement of the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Antitrust Task Force ..... 81

Biographies of Deborah Garza, Chair, Antitrust Modernization Commission; 

and Johnathan R. Yarowsky, Vice Chair, Antitrust Modernization Commission ........................................................................................................................ 90

Prepared Statement of Glenn English, CEO, National Rural Electric Cooperative Association and Chairman, Consumers United for Rail Equity ............... 91

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FINDINGS AND RECOMMENDATIONS OF THE 

ANTITRUST MODERNIZATION COMMISSION 

TUESDAY, MAY 8, 2007

HOUSE OF REPRESENTATIVES, COMMITTEE ON THE JUDICIARY, Washington, DC.

The Task Force met, pursuant to notice, at 2:19 p.m., in Room 

2141, Rayburn House Office Building, the Honorable John Conyers, 

Jr. (Chairman of the Task Force) presiding. 

Present: Representatives Conyers, Berman, Jackson Lee, Chabot, 

Smith, Keller, and Issa. 

Staff present: Stacey Dansky, Majority Counsel; Stewart Jeffries, 

Minority Counsel; and Brandon Johns, Staff Assistant. 

Mr. CONYERS. Good afternoon. The hearing on the Antitrust Task 

Force will come to order. 

We are now examining the findings and recommendations of the 

Antitrust Modernization Commission. 

And I yield first to the Ranking Member of the full Committee, 

Lamar Smith. 

Mr. SMITH. Mr. Chairman, I thank you very much for yielding. 

All I want to do is thank you for convening this very first hearing 

of the Antitrust Task Force and for your initiative on creating one. 

I unfortunately have to be over at the Capitol in 10 minutes, so 

I am not going to be able to stay, so I would like to ask unanimous 

consent that my particularly articulate and persuasive opening 

statement be made a part of the record. 

I thank you, Mr. Chairman. 

Mr. CONYERS. Without objection, so ordered. 

I apologize for my lateness. President Preval of Haiti has just arrived in the Capitol, and I was detained longer than I thought I 

would be. 

We are delighted to welcome both the chair and vice chair of the 

Antitrust Modernization Commission and appreciate both of you 

being here to report on the Commission’s findings and recommendations: Ms. Deborah Garza and, of course, John Yarowsky, 

the vice chair. 

For the past 3 years, our witnesses, along with 10 other commissioners, have been analyzing the antitrust laws to determine 

whether they are fully effective as is or if they could benefit from 

refinement to reflect changes in technology and the marketplace. 

For over a century now, antitrust laws have served as our economic bill of rights, providing the ground rules for fair competition. 

The antitrust laws are our chief bulwark against schemes by cartels and monopolists to deprive consumers and our economy of the 

2

benefits of competition and innovation—that is lower prices, better 

products, and greater efficiency. 

The AMC’s report is an ambitious one with over 300 pages of 

analysis and recommendations. The AMC covered a lot of ground. 

Some of their recommendations are particularly useful; for example, its recommendation that immunities from antitrust laws 

should be disfavored and only created when the heavy burden is 

met of clearly demonstrating that the exemption is necessary to 

satisfy a specific societal goal that trumps the benefits of a free 

market. 

It is a good starting point for Congress as it moves forward with 

various proposals. 

Other recommendations do not receive such glowing reports. I 

lower my head to mention the Robinson-Patman Act. That provides 

a set of guidelines for marketplace behavior by guaranteeing that 

everyone competing in any given marketplace has a level playing 

field. It does this by prohibiting sellers from offering different 

prices to different purchasers of commodities where there is no procompetitive justification. 

Robinson-Patman helps ensure that small businesses and momand-pop stores have the ability to compete with big power retailers 

like Wal-Mart. In its recommendations, the AMC suggests repeal 

of Robinson-Patman, claiming it is not performing its intended 

function and that it conflicts with the goals of modern antitrust 

law. 

Admittedly, the Act has flaws, is structurally complex and very 

hard to administer, and it is not used often as an enforcement tool. 

But these problems should not mean we should repeal the law altogether. Instead of repealing the act, it is my hope that we can find 

a way to make it work better. 

I also have concerns about the Commission’s ambiguous recommendation on the repeal of Illinois Brick and Hanover Shoe Supreme Court cases. In these two cases, the Supreme Court ruled 

that only direct purchasers, not indirect purchasers, may sue for 

damages from price fixing and that antitrust defendants in these 

cases cannot use the defense that the direct purchaser passed on 

the over-charge to the indirect purchaser or the consumer. 

Illinois Brick has been controversial since it was adopted, but 

many States have adopted policies that allow indirect purchasers 

to sue. I applaud the Commission for attempting to resolve this 

issue and I agree that allowing indirect purchasers to sue will enhance consumer welfare. 

I am more skeptical, however, of the Commission’s proposal because of the potentially adverse effect it could have on direct purchaser actions. If each direct purchaser must determine how much 

of the over-charge was passed on downstream, it might be very difficult for them to pursue these actions. The result could be an overall decrease in holding price-fixers and monopolists accountable. 

This is an issue we shall continue to study carefully. 

I also want to mention that no matter how current or modern the 

antitrust laws are, the positive effects of such laws cannot be felt 

without adequate enforcement by the agencies. The AMC says that 

the U.S. merger policy is fundamentally sound and that there does 

not appear to be a systematic bias toward either over-enforcement 

3

or under-enforcement. Yet in the past few years with technological 

and marketing innovation occurring at breakneck speed, we have 

seen a wave of consolidation in some of our key industries. 

According to Thomson Financial, this year was the fourth largest 

in history for mergers and acquisitions. The fact that the Department of Justice has failed to challenge any of these massive industry-consolidating mergers makes me worry about the AMC’s conclusion here. 

I look forward to hearing from the two senior commissioners and 

appreciate the incredible amount of work that has gone into this 

endeavor over the last 3 years. And I want to continue our dialogue 

about the importance of our antitrust laws. This Antitrust Task 

Force was created specifically to get us into the inquiring of how 

we can make this area of our law better. 

I would now recognize Steve Chabot, our Ranking minority Member on this Task Force, for an opening statement. 

Mr. CHABOT. Thank you. And I would like to thank the distinguished gentleman from Michigan, Chairman Conyers, for holding 

this important hearing. 

I was privileged to speak a few weeks ago at the American Bar 

Association’s Annual Spring Antitrust Conference, and I happened 

to be seated next to our witnesses. One of our colleagues, one of 

your colleagues, Commissioner Valentine, had the opportunity to 

discuss with some of the folks there the significance of the Antitrust Modernization Commission report. 

And in particular, I acknowledged the importance of the Commission’s report to Congress, specifically as it provides us with a backdrop against which this Task Force can better analyze the specific 

antitrust issues which we have identified for review over the next 

6 months. This report is very timely for this Task Force. 

At the very heart of the creation of the Commission and its directive to study our Nation’s antitrust laws was Congress’s concern 

that rapidly advancing technology was incompatible with competition and consumers. As we have all witnessed, technology has dramatically changed the marketplace and the nature of competition. 

Technology that we viewed as science fiction years ago has now become a part of our daily lives. 

Our first hearing reviewing the XM and Sirius Satellite Radio 

merger held just a few months back highlighted the uncertainty 

that consumers, businesses, regulators and the courts face in the 

21st century. 

Most of the issues that the Commission examined and will report 

on today were not contemplated at the time of our Nation’s antitrust laws upon their enactment almost 118 years ago and while 

the courts have done a good job in balancing innovation against 

competition within the antitrust framework, this new informationdriven economy has forced us all to take a look at the effectiveness 

of our antitrust structure. 

The good news is that the Commission, after a thorough review, 

found our Nation’s antitrust laws to be ‘‘fundamentally sound.’’ 

This finding of soundness is important because it reaffirms that 

competition and consumers continue to be adequately protected 

even in this new age of technology and innovation. It also alleviates 

concern that our laws are not flexible enough to respond to change. 

4

Our challenge in the 110th Congress is to ensure that competition continues to flourish. However, we must be mindful that too 

much Government intervention and regulation can also be harmful. 

The Commission’s report, findings and recommendations provide us 

with a much needed starting point to move forward. 

Again, I thank our witnesses for being here. 

And I want to thank the Chairman. I know we all look forward 

to hearing in more detail the findings and recommendations of the 

Commission. 

And, Mr. Chairman, I might note that I have to appear before 

the Rules Committee at 3:00, so I will have to leave, but I will 

come right back as soon as I appear. 

I yield back. 

Mr. CONYERS. Thank you, Steve Chabot. 

Our witnesses: Deborah Garza has been a member of the Antitrust Modernization Commission in Washington, where she served 

as chair. She was a member of the law firm where she was a partner at Fried, Frank, Harris, Shriver & Jacobson, handling antitrust 

counseling and litigation. She has also been a partner at Covington 

& Burling and was in the antitrust division of the Department of 

Justice as Chief of Staff and Counsel to the Assistant Attorney 

General through the years of 1987 and 1989. 

In addition, of course, she is now the Deputy Assistant Attorney 

General for Regulatory Affairs at the Antitrust Division. We offer 

our congratulations, although she is not testifying here in that capacity, of course. 

John Yarowsky, became a member of Patton Boggs Public Policy 

Practice Group in 1998, after serving 3 years as special associate 

counsel to President Bill Clinton. His practice at the firm is diverse, spanning a broad range of legislative and public policy areas 

while at the same time providing strategic counseling to clients on 

antitrust, telecommunications, intellectual property and administrative practice and procedure. 

I am going to submit both of their bios for the record and proceed 

to hear them. 

Both Ms. Garza and Mr. Yarowsky have submitted a joint statement to the Task Force. Without objection, it will be made a part 

of the record and any other opening statements will be included as 

well. 

And I would like to include for the record the other members on 

the Antitrust Modernization Commission and the Commission 

staff. 

We welcome you today. We are here to talk about the high points 

and the points where there might be differences of view. And I 

think I would ask the former chairperson, Ms. Garza, to begin, 

please. 

TESTIMONY OF DEBORAH GARZA, CHAIR,

ANTITRUST MODERNIZATION COMMISSION 

Ms. GARZA. Thank you, Chairman Conyers, Ranking Member 

Chabot, Members of the Antitrust Task Force, for inviting us to 

testify today on the findings and recommendations of the Antitrust 

Modernization Commission. 

5

We really are delighted to be here to be able to respond to any 

questions you have and to open what we hope will be a very productive dialogue, because as you recognized, Chairman Conyers, 

these are very difficult issues deserving of a lot of discussion and 

consideration. 

Before I begin, I would like to acknowledge that the AMC staff 

is all sitting behind us in the first row. They are really the backbone and the reason why we were able to get the report out at all 

much less on time and under budget. 

I think that I can speak for all of the commissioners in saying 

that it was an honor to be entrusted with the large task of studying the U.S. antitrust laws and reporting to the President and Congress on whether they need to be modernized for today’s economy. 

We took that trust seriously and we took to heart Congress’s direction that we solicit and consider the views of all interested persons. 

We did that, and after 3 years of work and many, many days of 

hearings and deliberation, we produced a consensus report in 

which all the commissioners joined. 

Our Nation’s antitrust laws have served the U.S. well for more 

than 100 years and are a model for the rest of the world. In fact, 

I spent this morning discussing with the members of the delegation 

of the Chinese National People’s Congress, which is considering 

adopting their own antitrust laws, what our antitrust laws provide. 

And this I think is an indication that the whole world appreciates 

the role, thanks to I think the U.S., of competition law and the role 

it has played in helping to ensure innovation and investment that 

is essential to a healthy and growing economy. 

The report is over 500 pages long. In total, we made about 80 

recommendations. Rather than trying to summarize our findings 

and recommendations in 5 minutes, I thought I would touch on just 

a very few high points, or what I consider to be high points and 

important points. 

First and foremost, the report is an endorsement of free market 

principals. Free trade unfettered by either private or Government 

restraints promotes the most efficient allocation of resources and 

the greatest consumer welfare. 

Second, the report concludes that the state of U.S. antitrust law 

is essentially sound. Certainly there are ways in which enforcement can be improved, and we suggest some of those. On balance, 

however, the Commission believes that U.S. antitrust enforcement 

has achieved an appropriate focusing on: one, fostering innovation; 

two, promoting competition and consumer welfare rather than protecting competition; and, three, aggressively punishing criminal 

cartel activity while carefully assessing other conduct that may officer substantial benefit. 

And, third, the Commission does not believe that new or different 

rules are needed to address so-called ‘‘new economy issues.’’ Consistent applications of the principals that I just noted will ensure 

that the antitrust laws remain relevant in today’s environment and 

tomorrow’s as well. 

The U.S. antitrust laws, as written, are sufficiently flexible to be 

consistently modernized through the interpretations and actions of 

the courts, the enforcement agencies and under the supervision of 

Congress. 

6

And with that, to leave us with plenty of time the address specific questions we have, I will complete my statement. 

Mr. CONYERS. Thank you so much. Excellent beginning. 

Mr. Yarowsky, we welcome you back again to the Committee, 

where you have been before, and we would appreciate hearing from 

you now. 

TESTIMONY OF JONATHAN R. YAROWSKY, VICE CHAIR,

ANTITRUST MODERNIZATION COMMISSION 

Mr. YAROWSKY. Thank you, Chairman Conyers, Ranking Member 

Chabot, Subcommittee Chairman Berman and other Members of 

the Task Force who may appear. 

I am honored to have had your confidence to serve on this Commission, and I am honored to have served with such distinguished 

individuals from such diverse backgrounds and with such an amazing staff, as you have heard. You will hear a lot about that. 

Ever since 1938, Commissions have been created, primarily by 

Congress, to review the state of antitrust policy. This has happened 

with almost clockwork precision every 20 or 25 years. And I think 

as you stated in your opening statement, and as Chairwoman 

Garza has said, yes, the state of antitrust is ‘‘good.’’

That is not a small statement, because after 13 days of hearings, 

over 120 witnesses and many days of public deliberations, the Commission found that no changes were needed in the following areas: 

changing Section 7 of the Clayton Act, that sets out the merger 

standard; changing Section 2 of the Sherman Act, that creates the 

monopolization standard; changing the filing requirements, the initial filing requirements for the Hart-Scott-Rodino Act; whether to 

create different rules for different industries; answer, no; changing 

the fundamental enforcement architecture of the antitrust laws 

that provides for dual enforcement roles for both the Federal Government and the States; for having two separate agencies, the DOJ 

and the FTC; and for leaving the central features of the remedial 

system, treble damages and attorney’s fees, in place. 

It is easy to say everything ultimately was recommended to stay 

the same, at least in these main features, but it was not easy to 

get to that point. There were very vigorous debates about leaving 

the current structure in place, and where we have come out took 

a lot of dynamic energy, to say the least. 

But you know what is interesting to me, having lived up here for 

a long time, is that many of the things I just listed are really the 

handiwork of Congress. Much of the architecture of what you all 

have done in past Congresses has been recommended to stay in 

place. Where we have advocated change—and we have advocated 

a number of, I think, important legislative changes—these other 

areas are where there is either confusing case law or administrative issues, whether in the courts or in the agencies. 

However, this vote of confidence for leaving so much of the underlying policy in place, comes in the face of a torrent of developing 

economic reasoning into the competitive analysis in the past 25 

years. The central role of economics is no longer an ideological debating point. It certainly was 20 years ago, about the right weight 

to give to economic analysis. And it has led to more institutional 

7

continuity and enforcement over a series of different Administrations in the past 15 years. I think this is all for the good. 

But with the central role played by economics, comes a real possibility that the courts and Congress may be left behind when it 

comes to discussing issues such as the three-part test to determine 

whether bundled discounts or rebates violate section 2 of the Sherman Act. What I mean by that is that Congress must stay deeply 

involved with all of the economic discussions that are going on with 

the larger policy views, so that Congress continues to shape the 

contour and structure of the antitrust laws. 

For about a year and a half in the White House I was connected 

with judicial selection, and one of the observations I had, personal 

observations, was that very few of the candidates—and this is not 

a criticism—for the bench really had very little background in antitrust and were particularly daunted by the economics that were developing and whether they would be up to dealing with that. 

They did take some comfort, however, in reviewing the statutes 

of Congress as well as the legislative history as a starting point, 

and that was their entry point. And that just reinforced for me 

what I came to believe, working here and since then, that we need 

a very active Committee here. 

The Committee has fought long and hard to make sure that they 

will stay relevant. Some of the great moments of this Committee 

history and in this room, for Members now on the dais and those 

looking down from the walls, have come from the often bipartisan 

coming together to defend the antitrust laws, to vigorously assert 

jurisdiction over certain regulatory initiatives that are occuring in 

other Committees for which they have primary jurisdiction. 

If it had not been for the effort of this Committee, then telecommunication policy, energy policy and many other policies would 

not have had the benefit of a competitive slant. That is going to 

be increasingly more important as we go forward. 

So with that, I can say that I am honored to be here again. We 

look forward to your questions. 

[The joint prepared statement of Ms. Garza and Mr. Yarowsky 

follows:]

8

JOINT PREPARED STATEMENT OF DEBORAH A. GARZA AND JONATHAN R. YAROWSKY


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Mr. CONYERS. Thank you so very much. 

I wanted to bring to your attention from the outset, and you 

probably know it, that the Commission itself was the work product 

of Jim Sensenbrenner, the former Chairman of this Committee, 

and it is one of the issues we agreed upon. And I just wanted his 

name to get into the record, because I think that it was a good 

idea, and we frequently agree on many of the antitrust issues. 

I am going to just raise a few and let you field them as you will. 

The first thing that I congratulate you on is trying to figure out 

how to narrow the exemptions. To me, that is worth celebrating, 

because with more than 30 exemptions on the books, more being 

applied for and also sometimes given other names, I think that this 

is very, very important. 

I also agree with the regard for a division, a more efficient division of labor between the two antitrust enforcement agencies, the 

Department of Justice and the Federal Trade Commission, FTC. 

And here your recommendations were very well received. 

Transparency was another one that was very important. 

Now, the Robinson-Patman repeal leads me to temper some of 

my enthusiasm for the list of things that I supported. You confused 

me on repealing Illinois Brick but sticking Hanover Shoe onto it, 

which seems to me to make things more difficult. The contribution 

in claims reduction provision attracted some negative feedback in 

some quarters. 

And so let me ask you to comment on any of those items that 

you choose to. 

Ms. GARZA. Well, I will start off with easy, with something you 

like, immunities and exemptions. 

I mentioned that earlier this morning we were with the delegation from China and actually the discussion was all about immunities and exemptions. And the question they had is, we see your 

antitrust law, we understand it, but can you please explain why 

you have 30 statutory exemptions. And then also they had questions about State action, another issue. 

And so we discussed with them a little bit the history of exemptions and immunities and, you know, some of the most sweeping 

exemptions I think exhibited an ambivalence about the antitrust 

laws and a fear, even, of competition. There was a concern that 

some industries just weren’t fit for competition and there was a belief that some industries were national monopolies. That thankfully 

has changed a lot beginning in the 1970’s and into today as we 

have recognized that very few industries if any are not suitable for 

competition. 

So what we have seen over time is actually a contraction, I think, 

in the immunities and exemptions and a focus on much more limited immunities for specific conduct or immunities that limit liability to single damages, et cetera. 

With that as the background in recognizing how difficult it can 

be to take away an immunity that has been granted, we decided 

rather than to attack specific immunities and exemptions, to try to 

offer you all a framework that you might be able to use in considering whether to adopt immunities and exemptions in the future, 

but also to use in considering perhaps the repeal of existing exemptions. 

67

And one of the things that we do recommend as well is that to 

the extent Congress does decide that other societal values have to 

trump the antitrust laws in a particular area and does enact an exemption, we recommend it that there be considered a sunset provision, which would change the dynamics perhaps that exist today 

and ensure that after some period of time, in order to keep on, 

there has to be a reevaluation and the parties who were the proponents of the immunity have to come forward to you with evidence to show that there is a net gain to the U.S. economy consumers as a result of the exemption. 

Mr. YAROWSKY. I would just add one thing. Many of those 30 exemptions did not come from this Committee. A number of them did. 

But where they came from were other Committees, looking at other 

initiatives, and then they threw them in, because they happened to 

have jurisdiction over those industries, or they were thrown in during the process of a conference report. Which again reinforces that 

your vigorous assertion of jurisdiction, even if it has to be sequential referrals, is absolutely critical to guard against further erosion 

in this area. 

Mr. CONYERS. You know, the wave of mergers and consolidation 

and the lack of challenges is something I have to raise on my list. 

I don’t want you to try to address it now. Maybe I will get it a little 

bit later. 

But I now choose to turn to Mr. Chabot, the Ranking Member. 

Mr. CHABOT. Thank you very much, Mr. Chairman. 

Hopefully I can get in a few quick questions and things here and 

get your responses. 

First of all, I think we all are aware that gas prices are on the 

rise once again, causing real harm to real people in this country, 

all across this country. And obviously when this happens, there are 

calls for Congress to increase regulation of the oil and gas industry 

or modifying the standards for oil and gas mergers. 

What are the implications of the Commission’s recommendations 

regarding regulated industries with respect to such calls for increased regulation, for oil and gas, for example? 

Ms. GARZA. Well, the Commission specifically found and recommended that there should not be a separate standard for evaluating mergers in various industries, and while we didn’t specifically 

mention the oil and gas industry, that was something that we were 

obviously conscious of. We were aware of the fact that Congress 

was considering whether it was appropriate to have a different or 

higher standard for mergers in the oil and gas industry. 

And the Commission’s conclusions were that there wasn’t any 

need to do that. Section 7 and the way that it is enforced by the 

courts and enforced by the antitrust authorities, is sufficiently 

flexible in order to take account of all of the relevant acts. 

Now, in the regulated industries area, which we also looked at, 

we recommended that the antitrust agencies should have the primary role of assessing the competitive implications of mergers and 

that the regulatory agencies, the non-antitrust regulatory agencies, 

such be involved only to the extent that there are some other noncompetition related societal goals that are important to ensure that 

cannot be safeguarded through application of the antitrust laws. 

68

Mr. CHABOT. What are the implications of the increasing 

globalization of antitrust law? What are some likely consequences, 

for example, if America retains its shipping antitrust exemption in 

light of the E.U.’s recent decision to rescind its exemption? And 

what are the implications for potential internationalization of the 

Robinson-Patman Act, also? 

Mr. YAROWSKY. I will just start out with that, Mr. Chabot. 

Obviously, there is a convergence in many ways now with some 

of the foreign antitrust laws and the U.S. antitrust laws. In some 

ways, that will be a very good thing, I think, is the general sense, 

procedural aspects of, let’s say, merger review. There has been a 

lot of discussion about why, in a global merger, where it is being 

reviewed here in America as well as at the E.U., why are there different time frames for review? It would be much better if there was 

a more consistent, harmonized procedure that people could rely on 

and get results and answers quickly. 

The issue of substantive antitrust law convergence is a really difficult one. Do we really want it to be an issue like the GATT talks, 

trade talks, where suddenly there is a uniform global antitrust law 

in this area. We have different traditions. I guess one could say 

that about trade and everything else. 

But I think the general sense is you have got to go much more 

cautiously about imposing a substantive standard across the board 

and certainly being very careful about throwing antitrust into kind 

of trade talks that could be decided in kind of an international diplomatic situation instead of a substantive situation with antitrust 

analysis. 

Mr. CHABOT. Thank you. 

Go ahead, Ms. Garza. 

Ms. GARZA. I just quickly wanted to react to two things you mentioned. One was ocean shipping and the other was the RobinsonPatman Act. 

On the ocean shipping front, I think the commissioners did feel 

that the fact that we are now the only developed Nation that continues to support an exemption for ocean shipping price setting 

should be a bit of an embarrassment to us, and we think that the 

action that the Europeans took is perhaps a good opening for us 

to follow and do the same. 

On the Robinson-Patman Act, I guess I will be brave enough to 

address that, Chairman Conyers. The one thing that moved me, at 

least, in agreeing with my fellow commissioners on our recommendation was the fact that it does become difficult to explain 

to non-U.S. competition authorities what the Robinson-Patman Act 

does. 

As the report indicates, we think that in many ways the Robinson-Patman Act operates in a way that is antithetical to the antitrust laws. And we try to discourage foreign competition authorities 

from enacting strict price regulations when they are looking at 

adopting competition regimes. 

But it becomes very difficult for us to in effect say, ‘‘Well, don’t 

do as we do; do as we say,’’ while we have got the Robinson-Patman Act on the books, but it is really not enforced very much and 

there are ways to enforce it so it is not as harmful. And it makes 

69

it more difficult for us, basically, to convince other Nations that 

they should not enact similar statutes that really police pricing. 

Mr. CONYERS. Thank you so much. 

Howard Berman? 

Mr. BERMAN. Thank you, Mr. Chairman. 

I would like to focus the witnesses attention on the recommendations and the antitrust and patents section and have you expand 

a little on the recommendations. I mean, you come down on the 

side of saying that while there is a tension, we can have our patent 

laws and have our antitrust laws and maintain a climate that 

incentivizes innovation and at the same time avoid the most negative anticompetitive implications of granting exclusive rights. But 

you worry about features of our current patent system. 

Could you highlight for us which of the recommendations of the 

Federal Trade Commission and the National Academy of Sciences 

that would constitute reforms of the patent system that you think 

are the most important and that Congress should pay attention to 

adjusting? Either of you. 

Mr. YAROWSKY. I will take the first crack at this, but I do want 

to say before I do that I am working on patent reform and so I 

want that——

Mr. BERMAN. Is that why you look familiar? 

Mr. YAROWSKY. Yes, that is probably why I look familiar. 

The recommendations of the FTC, the National Academy of 

Sciences and other expert groups really focus initially on patent 

quality. If too many patents are issued with not precise quality, 

that has a devastating affect on competition, because remember, 

patents do have exclusive rights, monopoly rights. 

If too many patents are issued, that space, the competition space, 

gets filled with these little monopolies, and so they better be defined very carefully and precisely so that you don’t occupy any 

more space than you have to. 

Obviously, the first look then is at the patent office. Applications 

have gone up probably 300 percent in the last 15 years for the 

PTO. That is fine. We have great examiners. But that is a terrible 

burden for them. There is a 500,000, 600,000 patent backlog that 

is currently hanging over everyone’s head, which then delays the 

issuance of patents. 

If patents are of poor quality or questionable quality, that leads 

to disputes later on. Well, disputes then spill over into our courts 

for many years. If there was an alternative dispute mechanism 

that was expeditious, that would be wonderful, but there isn’t really one that currently exists in the Patent and Trademark Office. 

And so at that point, the patent system, which is supposed to drive 

economic growth, competition and innovation becomes a problem in 

and of itself and drags down kind of the competitiveness of many 

companies. 

So I think the first strand is to enhance the resources of the PTO 

to keep up with this increase in applications, then have clarification about quality. The Supreme Court just came out last week 

with a decision about clarity—about what is novel and what is just 

obvious. I think it will be very helpful. And then look at how dispute resolution is being handled both in the courts and at the PTO. 

Ms. GARZA. I don’t know that I have anything to add to that. 

70

We do recognize that a patent doesn’t necessarily signify an antitrust monopoly. And so we think that is important to keep in mind. 

But on the other hand, there can be a problem if the patent system 

is abused, if obvious inventions are patented. 

And so our recommendation is that in particular the recommendations of the Federal Trade Commission and the National 

Academy of Sciences that direct themselves to ensuring the quality 

of patents be taken up by Congress. And I do agree with John that 

the Supreme Court seems to be taking steps itself to adjust some 

of what it apparently believes is, if not an abuse, a problem with 

the current patent system. 

But we agree that, you know, if the patent system is out of 

whack, then you could potentially have a competitive impact, and 

we agree however that both systems should be able to coexist and 

both systems should have as the common goal stimulating innovation and competition. 

Mr. CONYERS. Thank you. 

The gentleman from Florida, Ric Keller? 

Mr. KELLER. Thank you, Mr. Chairman. 

Ms. Garza and Mr. Yarowsky, I want to just ask you about the 

Robinson-Patman Act repeal. I don’t necessarily disagree with your 

recommendation, but just to draw out that a little bit. 

Ms. Garza, can you give us the top three policy reasons why your 

Commission recommended that the Robinson-Patman Act should 

be repealed in its entirety? 

Ms. GARZA. Well, you know, I don’t know that I have a list of 

three, but the reason we think that it should be repealed is because 

it does arguably prohibit the kind of price discounting that the 

antitrust laws otherwise are intended to encourage. 

Mr. KELLER. When you say price discounting, are you talking 

about volume discounting essentially? 

Ms. GARZA. Volume discounting. Various kinds of discounting can 

be vulnerable under the Robinson-Patman under the Robinson-Patman Act, and because of difficulties that defendants can have in 

proving justification and meeting other standards of the act, it can 

really just have a chilling effect. 

And I think that, you know, you may not see a lot of litigation 

nowadays, but in my experience, and maybe other people’s experience, is that it does have a chilling effect, and in a way it provides 

almost an excuse for not competing as hard as companies can compete. 

Mr. KELLER. Let me cut you off there. 

Mr. Yarowsky, do you have anything to add to that? Any other 

policy reasons other than it inhibits volume discounting? 

Mr. YAROWSKY. No. But at some point, now or later, I would like 

to explain my position on Robinson-Patman. 

Mr. KELLER. Let me ask you a couple of questions, and then I 

will give you a chance. 

It is my understanding from talking with friends of mine who are 

car dealers that a car dealer, say, who sells Toyota Corollas, and 

he sells 1,000 cars a year, versus a smaller car dealer who sells 

Toyota Corollas at only 100 per year, both pay the exact same 

amount from the manufacturer and they don’t get a volume discount from the manufacturer. 

71

Is that your understanding, Ms. Garza? 

Ms. GARZA. I don’t really have an understanding of how pricing 

works in the auto industry, but I will say that our feeling is that 

a manufacturer should have—we start with the proposition that 

unless the manufacturer has market power, they have an incentive 

to basically expand output, to basically make sure that they get 

distributors who are selling a lot and that the volume discounts 

and other things that they employ are meant to basically reward 

the most efficient and successful distributors and distribution techniques. 

Mr. KELLER. Well, that is my understanding, and I think it is 

based on Robinson-Patman. 

Do you disagree with that, Mr. Yarowsky? 

Mr. YAROWSKY. No, not——

Mr. KELLER. Okay. Let me give you a simple example. And I like 

the corner grocery stores as much as anyone. I go to the one right 

here on 4th and East Capitol every week. I am probably one of 

their best customers. 

But does Wal-Mart and the little corner grocery store both pay 

the same amount for the same size can of Campbell’s Soup under 

the Robinson-Patman Act, Mr. Yarowsky? 

Mr. YAROWSKY. They may not necessarily pay the same amount. 

I mean, it really is an individualized set of agreements about what 

retailers pay. They may well pay the same amount. I think the volume discount exception to Robinson-Patman which could justify differential pricing, that was there from the very beginning, 1936. The 

question is how it is interpreted and there is been a lot of confusion 

even about that, which seems pretty obvious. 

Mr. KELLER. I am somewhat confused for a couple reasons. It 

seems like I gave you a chance to give me, both of you, three policy 

reasons why you want to get rid of Robinson-Patman Act and you 

can only come up with one, and that is volume discounting, and so 

when I ask you does Wal-Mart pay a cheaper price that a corner 

grocery store, I would kind of expect you to tell me no, they all pay 

the same under this law. 

Mr. YAROWSKY. There are some other reasons that have come 

out. One, it may limit more discounting activity, and that would be 

a perverse, ironic result. There have been a lot of studies showing 

that fear of this act, and again I——

Mr. KELLER. Take the remaining time to tell me what you wanted to get out about Robinson-Patman. 

Mr. YAROWSKY. Here is my view of Robinson-Patman. I agree 

with all of the commissioners that it is not working well and there 

is a real problem. It is not being enforced by the agencies and there 

is a lot of substantive confusion in the law. 

However, rather than just closing your eyes and repealing Robinson-Patman, I don’t agree with that. I think Congress needs to revisit Robinson-Patman, that the same forces, the same constituencies that have cried out for Congress to look at it, are still here. 

The problem is, I think you need to downsize and re-sculpt the 

act, if possible, so that it does work, it is lower to the ground, it 

may not be so convoluted. Remember, what Congress is now having 

to do is create mini-Robinson-Patman Acts because the larger one 

doesn’t work. 

72

The program access rules—Congress helped stimulate the production of those because, for example, satellite was at a perceived 

disadvantage from cable in getting content, programming, when 

they first started out. And the answer was, well, we are giving a 

volume discount to cable, and the small satellite companies said, 

well, we can’t survive on that. So program access rules came into 

effect just for that little sphere. 

Net neutrality. This Committee really dug into that last year. 

Without going into the pros or cons of net neutrality, there was 

also concerns pushing that consideration about price discrimination. Again, if Congress had passed a net neutrality bill, it would 

not have been a generic bill at all that would have applied across 

our economy. It just would have been for a small sector. 

I think if you repeal Robison-Patman, you are going to see a proliferation of these mini price discrimination regimes. I don’t think 

that is a good idea. I would rather see Congress draw back, do a 

tough evaluation, spend the time, go over it and see if they can recraft a workable Robinson-Patman Act across the board. 

Mr. CONYERS. Thank you so much. 

The gentleman from California, Darrell Issa? 

Mr. ISSA. Thank you, Mr. Chairman. 

I don’t want to sound like a one-trick pony, but I am going to 

pick up on the patent reform and how it relates here. I think everyone that has been on the dais and probably everyone that will come 

in and out during the hearing agrees that the major thrust of patent reform is to get better patents. And recognizing that we do 

have a high failure rate when they stand the test of the brightest 

sunshine in major litigation. 

But one question I have is, let’s assume for a moment that they 

are valid and should be enforced. I think I was hearing, you know, 

that there are still many antitrust violations, and I just want to 

make sure that it is clear for the record that, assuming they are 

valid, they are a right to a monopoly and a right to dominate an 

industry and a right to get premium prices and the Federal Trade 

Commission tends to resent that. 

Is that a fair statement? I am noticing some wincing, so I will 

assume that you are going to disagree. 

Ms. GARZA. I don’t know if everything you said is fair, but I don’t 

know——

Mr. ISSA. If I were still a Chairman, it would be. But I am not. 

Ms. GARZA. Here is the thing. I would say that you are right, and 

I think the Commission agrees that a validly issued patent confirms the right of exclusion on the owner, and we say in our discussion of Section 2 as well as the patents that you have the right to 

command whatever price you can command. 

Now, having a patent doesn’t mean that you have dominance by 

any stretch of the imagination, because you could have a patent 

but that doesn’t mean that that technology that is embodied in that 

patent is superior to other patented or non-patented technology. 

So the one thing that is important to keep in mind is that a patent doesn’t equal dominance. A patent equals the right to exclude. 

It does not necessarily equal market power or dominance. 

73

Mr. ISSA. Sure. And following up on that, because you said exactly what I wanted said, in a sense, not because I asked you to 

say it, because I was a devil’s advocate instead. 

When we look at pharmaceuticals, it seems like in many Committees of Congress we are constantly trying to make them provide 

medicines cheaper and thus breaking down the inherent right of 

their patent to create exclusion for the life of the patent, and we 

happen to have this life plus the time we took away in administrative function, but it is still life of the patent, and thus say that they 

should not get the high price. 

When we are looking at antitrust, isn’t it fair to look at these 

pharmaceuticals as not different for purposes of their right to get 

what might be enormous profits if they hit a winner and of course 

with the enormous loss if it isn’t a dominant product or in fact it 

doesn’t get approved. 

Ms. GARZA. Well, antitrust policy I think says that if you have 

a valid patent, you have the right to recover whatever profits you 

can, and if it is a winning drug, then that’s an important incentive 

to others to invest in developing other drugs. 

And as you have indicated, and I don’t know, I can’t recall right 

now what the percentage of success is, but the percentage of successes, but the percentage of success is really quite low for pharmaceuticals and the investment required is quite high. So that really 

illustrates, in some sense, what we said in the report about the importance of preserving incentives to innovate. 

So where there is a valid patent and you allow them to recover 

the rewards of their investment, then you are in essence encouraging further innovation in new patents. That is assuming that 

there is no other sort of abuses or anything. 

Mr. ISSA. Sure. But it is not encouragement. It is a constitutional 

right based on its encouragement. Did you have anything to add 

on that? 

Ms. GARZA. No. 

Mr. ISSA. And I made this point, and the Chairman knows all too 

well, because many of the Committees of Congress right now seem 

to want to strip away some part of that for the greater good of society, not for the greater incentive to innovate. 

Mr. Yarowsky, earlier, though, you said that the lack of an effective administrative process was part of the problem with patents. 

And I know that wasn’t on point to antitrust, but in the last 

minute or so, if in fact the reexamination process were open, transparent, open in the sense that you could see and you could make 

input, would that change your feeling on the administrative remedies? 

Mr. YAROWSKY. From my view, as long as you can get a postgrant process, I mean, there are many names being hurled around 

in the——

Mr. ISSA. And I use reexamination because we understand what 

they are that people aren’t using. 

Mr. YAROWSKY. Right. But if I am able to just use a more general 

phrase like post-grant process, if that process would allow more information to come in with a transparency so there is a public dimension, I think that would help crystalize more quickly the validity question, and the validity question is the key, because once you 

74

feel confident about that, then everybody goes about their own 

business to innovate further, which is what we all want, and that 

leads to a more competitive economy. 

So I would agree with you, if that post-grant process could be 

more transparent and lead to validity determinations more clearly 

and more quickly, I think that would be a very positive result. 

Mr. ISSA. Thank you. 

And I know the Chairman is looking forward to the Subcommittee marking up just such a bill in the relatively near future. 

With that, I yield back. 

Mr. CONYERS. Thank you very much. 

I apologize for not calling on Sheila Jackson Lee before Darrell 

Issa, but I do now. The gentlelady from Houston is recognized. 

Ms. JACKSON LEE. Thank you, distinguished Chairperson. 

In our anteroom is a number of Russian parliamentarians. It 

means that this room has many diverse opportunities and responsibilities, and as Chairman they are admiring your leadership. I 

apologize if I was in and out dealing with a number of members 

from the Russian Duma. I know that they are there as they are 

listening to this process of democracy. 

With that in mind, let me thank the commissioners for their 

work. I think that the principals that you have enunciated, the 

commitment that we have to the free market competition, should 

remain a touchstone of the United States economic policy and the 

recognition of the core antitrust laws, that they are sound and help 

safeguard the competition of today’s economy, are all good points. 

And I think you had one other point that I am noting, possibly that 

new or different rules are not needed for industries in which innovation, intellectual property and technological innovation are central features. 

I have a second thought to that and I raise a particular industry. 

I heard you mention in briefly and I would like to have some comment on that as well as to follow up some of the questions of my 

colleagues. 

We have watched the oil and gas industry over the decades have 

a metamorphic change, whether it is caterpillar to butterfly, butterfly to caterpillar. But we see the large combinations of ExxonMobil. We see the large combinations of Chevron-Texaco, ConocoPhillips, and it goes on and on. 

For some reason, I thought the innovativeness of the industry, 

the broadness of the industry, was far more vibrant and challenging when there was less of this huge oil monopolies, and I happen to come from what has been claimed to be the energy capital 

of the world and we proudly claim that in Houston, Texas. But I 

have watched my independence be dominated and domineered, a 

word that I have just crafted, by these large conglomerates. 

It seems that rules do need to be changed in order to create a 

vibrant, competitive industry. Where are the independents in the 

energy industry? What value do we get out of the large conglomerates? Do we get new technology? We certainly don’t get a sensitivity in pricing. In fact, that is one of the major challenges of our 

legislative agenda this year, is gasoline pricing. Of course, some 

people will look at it from the perspective of conservation, alterVerDate 0ct 09 2002 12:59 Aug 09, 2007 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6601 H:\WORK\ANTITRUS\050807\35243.000 HJUD1 PsN: 35243
75

native fuels, but why are we not looking at it in the very staid, 

rigid monopolistic focus that the industry has crafted. 

I know I can’t see any real documentation of any new technology, 

new intellectual innovation in the energy industry, based upon 

their large size. Do you see any? 

So my question would be, when is it time to look at a monopoly 

or monopolies and sense that there needs to be new rules? 

My second question would be to again try this question on Robinson-Patman. I am glad, Mr. Yarowsky, that you have indicated that 

we don’t need a repeat of it, but I am interested to find out how 

price discrimination can be prohibited by the Robinson-Patman Act 

or prevented by other antitrust laws. 

And if you could start with those two questions. The first one, 

I really want to have both of you elaborate on. I think we need to 

keep an open mind on industries that seemingly have harmed the 

consuming public through their largeness. 

Mr. YAROWSKY. Sure, okay. Why don’t I take a stab at going first 

on both of those. 

On the oil and gas mergers, Congresswoman, the only thing that 

we definitively came up with that is relevant, and then I will mention another factor, but I don’t mean to represent it as a Commission deliberation or recommendation but to be very responsive as 

I can to you, is that we agree that the merger standard to evaluate 

mergers shouldn’t be different industry by industry. Because if you 

started doing that, there might be some purpose served in the immediate time to do that for one industry, but then time would go 

on and you would be left with different standards for different industries and it would be very difficult to run a uniform policy. 

So that doesn’t answer all your questions, but that was the one 

recommendation we did have. 

We had a second recommendation, I think it is relevant, though, 

it is more general, but it goes to what you described. A second recommendation we had was that we recommended that the agencies 

develop what we call kind of vertical merger guidelines. I mean, 

what the guidelines mainly do, the merger guidelines, are horizontal mergers, and you were describing some of those, where the 

same type of company merges with another like type of company 

and creates a more powerful, consolidated entity. 

But there are also vertical mergers, so that you then integrate 

manufacturing, distribution and retailing. Those have powerful effects on innovation. I am not saying they are all bad or all good, 

but they do have very strong effects on issues like innovation and 

competition and can influence what happens downstream with the 

consumer, the ultimate consumer, which is something we all live 

with. Those guidelines, we think, need to really be revisited, because they really haven’t been looked at for many years, and reissued. 

And I think they would have bearing on oil and gas mergers that 

we have seen as well as other mergers. I think that is something 

tangible that we recommended that should be done. 

On Robinson-Patman, the real question, Congresswoman, is this. 

The antitrust laws generally have a certain meaning, the words, 

because they have been there now for over a century. So when 

someone talks about antitrust injury under any of the antitrust 

76

laws, it has a meaning that the courts have developed over time. 

Robinson-Patman, and this isn’t a criticism, it is just what happened in 1936, used different words than existed in the basic antitrust law statutes, which had to do with restraints of trade and 

monopoly. 

And it was a much more intricately designed statute, and it was 

really the result of a crying out—this was during the Depression 

and post-Depression as small businesses were completely swallowed up. There was a real reason why Congress addressed this 

and has continued to look at it seriously. But it was a very kind 

of difficult statute to craft and courts in some ways have made the 

effort to try to harmonize the words of that statute with the general antitrust statute. Some have tried, some have thrown up their 

hands and said, well, they are different and so the meanings are 

different. 

Well, I don’t think that is a good result. And my feeling is, 

though it is going to be very difficult, I have seen that this Committee can do very difficult things and achieve them. And I just 

think it is worth the energy, if there is time in the agenda, to devote a lot of time to seeing if there is a way to re-craft RobinsonPatman to get a more harmonized meaning that the courts will understand, probably downsize it because it is very voluminous, and 

then I think you can build consensus that it should be enforced by 

the agencies, which has not occurred. For 15 years, it has not been 

enforced. That is a terrible thing because it builds no confidence in 

the system. 

And, you know, the States also have their little mini-RobinsonPatman Acts, some of them do, so even if you would just repeal 

Robinson-Patman, those acts would still live on. 

So I just think it is worth the effort and time to see what might 

be done to re-craft Robinson-Patman. And so my vote on the Commission, not to defend my vote, was simply that it is not working. 

I have to agree with that. It is not working. But my hope is that 

you can revisit it, create definitions that would work and then 

achieve the same social goals that people feel are very important. 

Ms. JACKSON LEE. Mr. Chairman, I thank you for indulging——

Mr. YAROWSKY. I am sorry for such a long answer. 

Ms. JACKSON LEE. Can Ms. Garza make a quick response to 

those two questions? 

Thank you very much, Mr. Yarowsky. It was a very thoughtful 

answer. 

Ms. GARZA. Let me address your question about mergers in the 

oil and gas industry. 

To clarify, the reason we didn’t think it was appropriate to have 

a special standard is because the standard that exists today is very 

broad—the statutory standard. It basically prohibits mergers and 

acquisitions that would substantially reduce competition in any 

line of trade. And the test that the courts and the agencies apply 

are all focused on identifying whether a merger and acquisition—

what effect it would have on output and price. So they are looking 

at the right thing; what effect is this transaction going to have on 

output and price. Is it going to reduce output and raise price? 

And the analysis that they undertake itself is very complex. But 

we are sensitive to the concerns that you raise. And it is not a good 

77

situation for public confidence in the laws, for example, for people 

not to understand the basis for enforcement decisions, and by that 

I mean both cases that are brought and cases that aren’t brought. 

So we do actually make a number of recommendations that are 

designed to help ensure that the Congress in your oversight capacity understands the basis for enforcement generally, but also in respect to specific transactions, and also that the public does. 

Now, the FTC and the DOJ have done a very good incredible job 

at that with guidelines and speeches and others. But we have recommended that they go even further, with more closing statements, we call them, basically explanations when there is a transaction that people have an expectation might be challenged and 

there is a decision taken not to challenge it, that there be an effort 

to explain as well as can be done, respecting confidentiality concerns, why the agencies didn’t take the steps they took. 

Now, that is a burden on the agencies, but we think it is very 

important for them to have to do that so people understand the 

bases for enforcement. Otherwise you lose your respect for the antitrust laws and the enforcement, and that would be problematic. 

We would like to see these laws as being basically as self-enforcing as possible and we would like the public to have confidence 

that they are, that their welfare is being looked after. So we agree 

with you on that, and we think that one answer to that is substantially increase transparency. 

Ms. JACKSON LEE. My only conclusion, Mr. Chairman, is that 

there is a great input by the merged oil and gas industries and 

there is a great price increase, and that seems to be ongoing. 

I thank the witnesses. 

I thank the Chairman. 

Mr. CONYERS. I want to thank you all. This has been very helpful. 

I want to say that we raised some questions that certainly need 

to be examined even though this is a several-year product that you 

have before us. But it is an important one, because this Antitrust 

Task Force is committed to trying to generate a little more challenge to the enormous number of mergers that have taken place 

over the last period of years. 

And Chairwoman Garza, Vice Chairman Yarowsky, you have acquitted yourself well on behalf of your fellow commissioners and 

the staff that labored so diligently on this matter, but we want to 

keep 5 legislative days open for any questions that may come to 

you that we can include in the record. 

And so, without objection, the Members will have 5 additional 

legislative days to submit questions which we will forward to you. 

And, without objection, the record will be open for 5 legislative 

days for the submission of any other material. 

We thank you for your excellent testimony and hard work. 

The hearing is adjourned. 

[Whereupon, at 3:25 p.m., the Task Force was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE LAMAR SMITH, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS, AND RANKING MEMBER, COMMITTEE ON THE

JUDICIARY

Mr. Chairman, thank you for convening this hearing of the Antitrust Task Force. 

Vigorous, unimpeded competition sustains our economy and keeps it strong. It 

leads to innovative products that better our lives and keep prices low. The Judiciary 

Committee has a long history of oversight to ensure that American markets retain 

healthy competition. 

At the heart of that competition is the Sherman Act, which the Supreme Court 

has dubbed the ‘‘Magna Carta of free enterprise.’’ Sections 1 and 2 of the Act, which 

Congress passed in 1890, are deceptively simple; each is only one sentence long. 

However, those two sentences have come to regulate all manner of business dealings in this country, including who a company can—and must—deal with, how it 

prices its goods, and whether it can merge with a rival company. 

The antitrust laws are unique in American legal culture in that they are enforced 

by two federal agencies, the Department of Justice and the Federal Trade Commission. In addition, each state’s attorney general can bring suit under both federal and 

state antitrust laws. 

The antitrust laws can be enforced both criminally and civilly. Private citizens can 

also bring suit to recover damages and enjoin anticompetitive business practices. 

Antitrust enforcement has also expanded beyond America’s borders. When the 

United States passed the Sherman Act over 100 years ago, it was alone in the 

world. Today over 100 countries have some sort of competition law, and more are 

considering them. 

In fact, China is currently debating its own antitrust laws, despite being a country that does not necessarily share America’s fundamental economic principles. 

Antitrust law affects every industry as evident from the wide variety of hearings 

that the House Judiciary Committee has held under its antitrust jurisdiction. The 

Committee has held hearings on telecommunications, sports, oil and gas, utilities, 

ocean shipping, airlines, agriculture, and financial services. 

Given the impact of antitrust law on the American economy, it is vital that we 

examine how well these laws are working, particularly in light of the innovation 

that today’s high tech economy has brought. 

The Antitrust Modernization Commission, which spent the last three years studying the antitrust laws, found that the Sherman Act is fundamentally sound and requires no major changes by Congress. 

That said, the Commission’s 450 page report has more than 80 recommendations 

on a variety of subjects, including repeal of Illinois Brick, repeal of the RobinsonPatman Act, modifications to the merger review clearance process, and amendments 

to the Federal Trade Commission’s ability to bring injunctions and to pursue administrative litigation in merger cases. 

The Commission’s report also provides a framework for Congress to assess immunities from the antitrust laws, such as the McCarran-Ferguson Act and the Shipping Act, and exemptions related to regulated industries. 

Accordingly, today’s hearing can help inform the Task Force’s work on a number 

of issues that it may consider, including competition in the credit card, pharmaceutical, oil and gas, healthcare, professional sports, and telecommunications industries, just to name a few. 

I would like to congratulate Chairwoman Deb Garza and Vice-Chair Jon 

Yarowsky for their hard work. Together with the other 10 Commissioners and professional staff, they produced an excellent report on time and under budget. The report is well written and helps make difficult concepts easy to understand. It also 

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contains a wealth of supporting data and is an example of how such studies should 

be conducted in the future. 

I yield back the balance of my time.

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PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS, AND MEMBER, ANTITRUST TASK FORCE


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BIOGRAPHIES OF DEBORAH GARZA, CHAIR, ANTITRUST MODERNIZATION COMMISSION; 

AND JOHNATHAN R. YAROWSKY, VICE CHAIR, ANTITRUST MODERNIZATION COMMISSION


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PREPARED STATEMENT OF GLENN ENGLISH, CEO, NATIONAL RURAL ELECTRIC

COOPERATIVE ASSOCIATION AND CHAIRMAN, CONSUMERS UNITED FOR RAIL EQUITY


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ATTACHMENT 1


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ATTACHMENT 2


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ATTACHMENT 3


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ATTACHMENT 4


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Æ


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