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ANTITRUST ENFORCEMENT AGENCIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 15, 2013 

Serial No. 113–67 

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 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

MARK AMODEI, Nevada 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, FLORIDA 

JASON T. SMITH, Missouri 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

SPENCER BACHUS, Alabama, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

JASON T. SMITH, Missouri 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DANIEL FLORES, Chief Counsel 

JAMES PARK, Minority Counsel 
(III) 

C O N T E N T S 

NOVEMBER 15, 2013 

Page 

OPENING STATEMENTS 

The Honorable Spencer Bachus, a Representative in Congress from the State 

of Alabama, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ........................................................................................ 1 

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

of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law .......................................................................... 2 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 4 

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

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 8 

WITNESSES 

The Honorable William J. Baer, Assistant Attorney General, Antitrust Division, United States Department of Justice 

Oral Testimony ..................................................................................................... 10 

Prepared Statement ............................................................................................. 13 

The Honorable Edith Ramirez, Chairwoman, Federal Trade Commission 

Oral Testimony ..................................................................................................... 23 

Prepared Statement ............................................................................................. 25 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Ranking Member, Subcommittee 

on Regulatory Reform, Commercial and Antitrust Law 

Letter from the Professional Flight Attendants ............................................. 6 

New York Times Article ................................................................................... 50 

Material submitted by the Honorable Blake Farenthold, a Representative 

in Congress from the State of Texas, and Vice-Chairman, Subcommittee 

on Regulatory Reform, Commercial and Antitrust Law ................................... 62 

Material submitted by the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 71 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Ranking Member, Subcommittee 

on Regulatory Reform, Commercial and Antitrust Law ................................... 83 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 84 

Response to Questions for the Record from the Honorable William J. Baer, 

Assistant Attorney General, Antitrust Division, United States Department 

of Justice ............................................................................................................... 86 

Response to Questions for the Record from the Honorable Edith Ramirez, 

Chairwoman, Federal Trade Commission .......................................................... 93 

(1) 

ANTITRUST ENFORCEMENT AGENCIES 

FRIDAY, NOVEMBER 15, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 9:10 a.m., in room 

2141, Rayburn House Office Building, the Honorable Spencer Bachus (Chairman of the Subcommittee) presiding. 

Present: Representatives Bachus, Goodlatte, Farenthold, Marino, 

Collins, Smith, Cohen, Conyers, Johnson, DelBene, and Jeffries. 

Staff Present: (Majority) Anthony Grossi, Counsel; Ashley Lewis, 

Clerk; Philip Swartzfager, Legislative Director for Mr. Bachus; Jennifer Lackey, Legislative Director for Mr. Collins; Justin Sok, Legislative Assistant for Mr. Smith; Jonathan Nabavi, Legislative Director for Mr. Holding; and (Minority) James Park, Minority Counsel. 

Mr. BACHUS. Good morning. The Subcommittee on Regulatory 

Reform, Commercial and Antitrust Law hearing is called to order. 

We will first do our opening statements. My revisions have arrived 

just in time. 

Today’s oversight hearing is an example of this Subcommittee 

and the Congress exercising one of its fundamental responsibilities. 

Oversight is essential to promoting accountability and transparency, and it brings to light the checks and balances envisioned 

by our Founding Fathers. George Washington noted in his farewell 

address that, and I quote, ‘‘The necessity of reciprocal checks in the 

exercise of political power has been events by experiments ancient 

and modern. To preserve them must be necessary as to institute 

them.’’ 

Before us today are the two Federal antitrust enforcement agencies and their representatives, the Federal Trade Commission 

through its Bureau of Competition and the Department of Justice 

through its Antitrust Division. I welcome you, and I am glad that 

our agencies are back at work after a brief interruption. 

These agencies are entrusted with protecting consumers and free 

markets from harmful anticompetitive conduct and practices. Their 

mission is best accomplished in a way that is transparent, fair, predictable, and reasonably stable. When enforcement is arbitrary and 

businesses are unclear about what the rules of the road really are, 
2 

competition can actually be impeded, and it is the consumer who 

ultimately suffers. 

One area where there could be an improvement in transparency 

and predictability is the FTC’s unfair methods of competition authority under Section 5 of the FTC Act. The FTC’s failure to establish a clear standard for Section 5 has created uncertainty for businesses and resulted in costly litigation that could be avoided. And 

this is not a recent development. This has been over multiple Administrations. Concerns regarding the FTC’s Section 5 authority 

have been raised by two of the four sitting Commissioners, as well 

as my colleagues in Congress. To this end, I recently joined Chairman Goodlatte, Vice Chairman Farenthold, Senator Grassley and 

Senator Lee and others in a letter urging FTC to issue guidance 

on its Section 5 authority. Today’s hearing will provide an opportunity to explore this issue. 

We will also use this opportunity to explore the rationale used 

by the DOJ when it decides to pursue injunctive relief to prevent 

a proposed transaction. The DOJ’s recent settlement and indeed its 

original decision to file a lawsuit against the proposed American 

Airlines and US Airways merger raises questions about how it 

makes the determination to intervene in a proposed merger. 

This matter raises questions for some of us in light of the fact 

that the Department has approved several similar or even more 

problematic airline mergers in the past. It appears to me to be the 

case of overcompensating for past omissions, and that is just my 

personal view. When an executive agency undertakes an action 

that appears to suddenly turn new ground, you wind up with confusion and uncertainty, and leave businesses wondering whether to 

expend significant time and resources pursuing a strategy that 

might be thwarted by the government for very unclear reasons. 

There have also been concerns raised regarding the FTC’s record 

and its administrative proceedings. In a recent column, the former 

Policy Director of the FTC, David Balto, found it troubling that 

since 1995 the agency has found a violation in every single case in 

which it has voted to issue a complaint. With this kind of record 

and unbeaten streak that Perry Mason would envy, a company 

might wonder whether it is worth putting up a defense at all in 

a system where the FTC brings the complaint, the case is tried before an administrative law judge at the FTC, and the FTC holds 

the authority to overturn a decision adverse to the agency. And I 

will add to that and does. My hope is that Chairman Ramirez will 

address my concerns about a process that appears to be very favorable to the FTC in all cases. 

Today’s hearing will allow for an open discourse on these and 

other issues, with the aim of ensuring that Federal antitrust authority is being properly exercised. 

At this time I recognize the Ranking Member for his opening 

statement. 

Mr. COHEN. Thank you, Mr. Chair. 

The Supreme Court has referred to the Federal antitrust laws as 

the Magna Carta of free enterprise, saying that the comprehensive 

charter of economic liberty aimed at preserving free and unfettered 

competition is exactly what that is. 
3 

Effective antitrust enforcement is key to ensuring a vibrant competitive marketplace that rewards innovation and creativity and offers consumers greater choice and lower prices. In the absent of 

antitrust enforcement, companies have less incentive to compete, 

more incentive to maintain high profit margins at the expense of 

consumer welfare, just like Delta airlines in Memphis. 

At the forefront of the effort to ensure that competition remains 

free and fair are the Nation’s principal antitrust enforcement agencies, the Antitrust Division of the Department of Justice and the 

Federal Trade Commission’s Bureau of Competition. Each agency 

has applied efforts to enforce Federal antitrust laws in recent 

years. The Justice Department won a near total victory in the 

issues with Apple and stopped it from conspiring with publishers 

to raise prices for consumers. Thanks to the Department’s work, 

the consumers will enjoy e-books that are 40 percent cheaper than 

they might have been. 

The Department has also successfully obtained criminal fines of 

more than a billion dollars and obtained prison sentences for 28 

people for criminal antitrust violations, which are the most harmful 

types of anticompetitive behavior like price fixing and bid rigging. 

Similarly, the FTC has had a number of notable successes on behalf of consumers, including the victory before the Supreme Court 

in FTC v. Actavis, which found so-called pay-for-delay agreements 

to be subject to the antitrust laws. 

Meanwhile, both agencies established the principle that holders 

of standard essential patents may not seek to exclude competitors 

who rely on the standard technology covered by such patents and 

must license such technology on reasonable and nondiscriminatory 

terms. 

My constituents, those in Memphis, Tennessee, are all too well 

aware of the consequences of ineffective antitrust enforcement. As 

I noted back in February and I noted 2 minutes ago, the merger 

of Delta Airlines and Northwest Airlines has been nothing short of 

a disaster for Memphis after the merger. Before the merger they 

had 240-some-odd flights in and out of Memphis, or departing 

Memphis, I think. Now they have but about 40, although Mr. Anderson did come before this Committee and say it won’t affect 

Memphis, we love Memphis, but we apparently love something else 

more. 

Those promises in 2008, no hub closures, which just as I heard 

in the assurances for American and US Air, and hopefully they will 

be more fitting and they were tailored to 3 years, and Delta waited 

about 3 years before they finally put the lid on, that this merged 

airline would not make that difference. But Mr. Anderson said we 

would also have a flight, continue our flight to Amsterdam and 

may have a flight to Paris, and, wow, JFK was going to be in Memphis, the airline at least. Of course, none of that was true and the 

Amsterdam flight no longer exists. 

There is a string of broken promises that could have been avoided if we wouldn’t have permitted that merger. They did everything 

they could to hurt Memphis, and have. The results, my constituents are very hurt, very upset, a substantial loss of air service and 

a loss of jobs, an airport constructed and expanded for Delta as an 

economic hub, much of it is vestigal. 
4 

Protecting consumers from antitrust violations is important. In 

addition, though, I also hope that Mr. Baer will tell the Attorney 

General—and I know it is not your subject matter and it is not 

your job to be a messenger, that is not your job—but there are a 

lot of individuals in prison with unjust sentences for mandatory 

minimums and for people who are there for crack cocaine disparities, that when they went in prison they are 100 to 1, they are now 

18 to 1. When we changed law it was called the fair sentencing 

law. The House passed it, the Senate passed it, the President 

signed it. That means it is the public policy of the United States. 

There are people in prison for sentences that are void against the 

public policy of the United States. They should have commutations. 

There should be somebody heading up the Commutations Department whose job should be tomorrow, because there is no time that 

the fierce urgency of now is more urgent than people whose liberties are being deprived and for the taxpayers to spend $30,000- 

plus to keep these people incarcerated when it is void against public policy. 

So I hope you will take my message back to my good friend Mr. 

Holder, who should not be impeached and should remain as a fine 

active Attorney General, that he does need to release some people 

from prison because they don’t need to be there. 

I look forward to hearing from our witnesses as to what efforts 

the antitrust enforcement agencies are currently undertaking to 

help ensure free and fair competition in all industries, and at some 

point today I will get on a Delta airplane and fly through Atlanta 

to go home. 

And I yield back the balance of my time. 

Mr. BACHUS. At this time I would like to recognize the Chairman 

of the full Committee, Chairman Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

The protection of our free markets is vital to the success of the 

American economy. By creating an environment in which companies are allowed to compete freely and consumers can select products without restriction, the allocation of resources is maximized in 

accordance with free market principles. Vigorous, intelligent and 

predictable antitrust enforcement promotes these principles by preventing the misuse of monopoly power. Further, as former Judiciary Committee Chairman Henry Hyde advocated, strong antitrust 

enforcement dissipates political pressure for government regulation. 

This Committee has a long and robust effort of oversight of the 

antitrust laws and their enforcement agencies. I thank Chairman 

Bachus for continuing the tradition by holding today’s hearing. The 

Committee’s history includes legislation that was enacted into law 

in 2002 to form the bipartisan Antitrust Modernization Commission, the AMC. In 2007, after conducting a comprehensive review 

of the antitrust laws and their enforcement, which was done in coordination with leading antitrust experts and practitioners, the 

AMC issued a lengthy report detailing its recommendations for improving antitrust enforcement. 

One of the recommendations contained in the AMC report focuses on removing the disparities contained in the merger review 

processes between the Department of Justice and the Federal 
5 

Trade Commission. As the AMC report states, parties to a proposed 

merger should receive comparable treatment and face similar burdens, regardless of whether the FTC or the DOJ reviews their 

merger. 

A divergence undermines the public’s trust that the antitrust 

agencies will review transactions sufficiently and fairly. More importantly, it creates the impression that the ultimate decision as to 

whether a merger may proceed depends in substantial part on 

which agency reviews the transaction. I believe this recommendation merits additional attention, and I look forward to examining 

this issue with Assistant Attorney General Baer and Chairwoman 

Ramirez. 

Another area that deserves further examination is the FTC’s involvement in looking into abusive patent litigation practices. On 

October 23, 2013, I introduced a bill with a number of my colleagues to address the growing problem of abusive patent litigation. I have been following the efforts by the DOJ and the FTC on 

this front as well, including the recent announcement by the FTC 

that it was seeking certain information from patent assertion entities. I would be interested to learn additional details about the 

FTC’s plans regarding this information collection effort. 

I look forward to hearing the testimony today from our witnesses 

of the agencies’ antitrust enforcement efforts as well as on these 

other important issues. 

And, Mr. Chairman, thank you and I yield back the balance of 

my time. 

Mr. BACHUS. Thank you. 

Mr. COHEN. Mr. Chair, if I can ask for unanimous consent—— 

Mr. BACHUS. Absolutely. Then I am going to recognize the former 

Chairman and Ranking Member of the full Committee. 

Mr. COHEN. Unanimous consent to submit a letter from Ms. 

Laura Glading, who is the head of the professional flight attendants, and she is in love with Mr. Baer and says he did a great job. 

Mr. BACHUS. Oh, she says he did a great job? Okay, yeah, we will 

introduce that for sure and get him a copy of it. Without objection, 

it is introduced into the record. Thank you. 

[The information referred to follows:] 
6 
7 
8 

Mr. BACHUS. And I will say I think that it was a successful conclusion, the merger. Obviously when everybody is not completely 

satisfied, that is probably a good result. 

At this time I would like to introduce our two witnesses—— 

Mr. COHEN. Mr. Chairman? 

Mr. BACHUS. Oh, I am sorry, that is right. I did a Barney Frank. 

Mr. CONYERS. Thank you, Chairman Bachus. 

Mr. BACHUS. Mr. Conyers is recognized. 

Mr. CONYERS. Thank you very much. 

Today’s oversight hearing provides an excellent opportunity for 

us to focus on the critical purpose of antitrust law: to ensure that 

businesses do not behave in ways that injure markets and ultimately consumers. As to mergers, this means that any transaction 

that would result in a company obtaining an unfettered ability to 

raise prices or otherwise harm consumers is contrary to basic antitrust policy. So we should be especially skeptical about the potential detriment presented by a rapid succession of big mergers in a 

given industry, and, unfortunately, antitrust scrutiny of mergers 

has been woefully insufficient, in my view, over the past 30 years, 

until only recently. 

The fact that many industries are now dominated by just a handful of very large firms attests to this failure of aggressive scrutiny. 

There has been a wave of mergers in industry after industry. I 

won’t name all of the examples that come to mind, but in the banking industry alone there have been 47 mergers since 2001. Basic 

economics and common sense should tell us that a few dominant 

firms forces consumers to pay higher prices and to accept suboptimal products or services. This hands-off approach to antitrust 

merger enforcement reflects the misguided view that corporate 

power should trump other interests, including the public interest, 

and as a result the trend in antitrust law has been against the 

American consumer. 

Fortunately, recent antitrust enforcement initiatives of both the 

Justice Department and the Federal Trade Commission appear to 

reflect a positive change from prior practice. I am heartened by the 

renewed vigor in antitrust enforcement that these agencies have 

exhibited in the past year or so. Under the Obama administration, 

the Justice Department has aggressively pursued litigation to block 

large, high profile, and potentially anticompetitive mergers, including lawsuits to block the proposed mergers of AT&T and T-Mobile, 

Anheuser-Busch, InBev and Grupo Modelo, and most recently 

American Airlines and US Airways. Such actions would for the 

most part have been unexpected in previous Administrations going 

back a generation. 

Even more important is the fact that these suits have achieved 

pro-consumer results. AT&T and T-Mobile dropped their plans to 

merge, while Anheuser-Busch agreed to divest itself of all Grupo 

Modelo’s U.S. business in response to the Department of Justice’s 

lawsuit. 

The FTC, meanwhile, was able to achieve an important victory 

for consumers before the United States Supreme Court this year in 

the FTC v. Actavis case, which held that agreements between 

brand name and generic drug manufacturers to delay the introduction of cheaper generic drugs can be subject to antitrust laws. 
9 

Such successes, however, do not necessarily mean further oversight is unnecessary. For instance, the Justice Department’s tentative settlement agreement announced earlier this week with respect to the proposed American Airlines-US Airways presents some 

concerns. While this settlement agreement leaves consumers somewhat better off than they would have been had the merger gone 

through as proposed, I remain concerned that the new merged carrier, which would be the largest in the world, will result in only 

four domestic airlines controlling more than 80 percent of the market. As The New York Times noted in yesterday’s editorial, the 

agreement simply ignores the central concern the Department of 

Justice expressed in its lawsuit. The four big airlines, United, 

Delta, Southwest, and the merged American, will have an even 

greater incentive to raise fares and fees because consumers will 

have fewer choices. 

In closing, I note that strong antitrust enforcement is not possible without adequate resources, and as with other Federal agencies, the DOJ and FTC must have sufficient funding to pay for high 

caliber attorneys, economists, and other staff, and for vigorous and 

thorough investigations, and, when necessary, even litigation. 

The continuing budget battles in Congress, including sequestration and the recent fight over a continuing resolution that led to 

the shutdown of the Federal Government, threaten to sap already 

limited resources for all of our Federal agencies. Some of the recent 

successes in antitrust enforcement would be undermined and future enforcement efforts could be compromised. That could return 

us to the bad old days of lax antitrust enforcement, with higher 

prices and fewer choices for consumers. I urge my colleagues to 

make every effort not to go down the road. 

I thank the Chairman and return any balance of time I may 

have. 

Mr. BACHUS. I thank the gentleman. 

At this time I will introduce our two witnesses. We are very fortunate to have both of them here this morning. We appreciate your 

attendance. Both of them share a common accomplishment. Both of 

them were editors of their law reviews, at Stanford and Harvard. 

That is quite an accomplishment, and I commend both of you for 

being diligent students and obviously intelligent. 

Mr. Baer was sworn in as an Assistant Attorney General for the 

Department of Justice Antitrust Division on January the 3rd, 2013. 

Prior to his appointment, he was a partner at Arnold & Porter, 

where he was head of the firm’s antitrust practice group. Prior to 

his time at Arnold & Porter, he was the head of the FTC’s Competition Bureau from 1995 to 1999. Mr. Baer received his JD from 

Stanford Law School in 1975 and served as editor of Stanford’s 

Law Review. He received his BA from Lawrence University in 

1972, and that is in Wisconsin, where he graduated cum laude and 

Phi Beta Kappa. 

Our next witness is Chairwoman Edith Ramirez. She was sworn 

in as Commissioner of the FTC in April 2010 and designated 

Chairwoman by President Obama on March the 4th of this year. 

Before joining the Commission, Ms. Ramirez was a partner at 

Quinn Emanuel in Los Angeles, representing clients in intellectual 

property, antitrust, and unfair competition suits. Chairwoman Ra-
10 

mirez graduated from Harvard Law School cum laude, where she 

served as an editor of the Harvard Law Review and holds an AB 

in history magna cum laude from Harvard University. 

I welcome both our witnesses. I will go from tradition, left to 

right, by recognizing Mr. Baer for your opening statement. 

THE HONORABLE WILLIAM J. BAER, ASSISTANT ATTORNEY 

GENERAL, ANTITRUST DIVISION, UNITED STATES DEPARTMENT OF JUSTICE 

Mr. BAER. Mr. Chairman, Ranking Member Cohen—— 

Mr. BACHUS. I think we will probably not have a clock, so if you 

need 6 minutes, 7 minutes, take that. I don’t want you to rush 

through your remarks. But if you want 4 minutes, that is fine. 

Mr. BAER. Right. Thank you, sir. It is not the Senate and we will 

try not to observe a filibuster approach to our statements. 

It is a pleasure to be here. We thank you for the opportunity to 

discuss the work of the Antitrust Division. And I am very much 

honored to be here with Chairwoman Ramirez at the FTC. We for 

the last 10 months or so have been privileged to work together on 

behalf of American consumers. 

Competition, as the Chairman and a number of other Members 

said in their opening remarks, is the cornerstone of our Nation’s 

economic system. When markets work properly, consumers benefit 

from lower prices and higher quality goods and services. The antitrust laws serve to promote and protect a robust free market economy by prohibiting anticompetitive agreements, anticompetitive 

conduct, and anticompetitive mergers that have a potential to distort market outcomes and ultimately harm consumers. 

Let me start with our efforts at the Antitrust Division to uncover 

and prosecute cartel behavior. Price fixers and bid riggers do serious and demonstrable harm to consumers and to our economy. It 

is a persistent problem. But we are making progress in getting at 

it. Our efforts have resulted in a dramatic increase in exposing the 

world’s largest price-fixing cartels, involving such products as air 

transportation, liquid crystal displays that are used in flat panel 

TVs, iPads, computer screens, and the like, and, most recently, 

auto parts. 

In the last fiscal year alone, the Division filed 50 criminal cases. 

We charged 21 corporations and 34 individuals for antitrust crimes 

that affected tens of billions of dollars of U.S. commerce. The Division obtained criminal fines totaling over $1 billion in the last fiscal year, and we sentenced, with the help of the courts, 28 individuals to jail terms that average more than 2 years per defendant. 

Now, large monetary criminal penalties against corporations 

make cartel behavior less attractive, but the threat of jail time for 

senior company officials responsible for injuring the consumers is 

also in my experience a very powerful deterrent. Today, the average prison sentence for defendants charged with crimes by the 

Antitrust Division is 25 months, over 2 years in jail. That is three 

times the average jail sentence in the 1990’s. 

Taxpayers are well served by the vigorous prosecution of criminal 

cartels. The Antitrust Division continually produces results that 

more than justify its annual appropriation. In other words, we 

think we give your constituents, your taxpayers, a good return on 
11 

the scarce dollars you entrust to us. In the last 5 fiscal years we 

averaged $850 million in criminal penalties against an average direct appropriation of about $85 million. 

Now, these dollars that come into the Treasury don’t go to the 

Antitrust Division, regrettably. They go to the Crime Victims Fund, 

which actually helps victims of all types of crimes throughout the 

country in each and every State that Members represent on this 

Subcommittee. 

Civil enforcement of the antitrust laws also protects competition 

and consumers by challenging conduct that shackles free competition and by going after anticompetitive mergers. For example, earlier this year a Federal court in New York held that executives at 

the highest levels of Apple orchestrated a conspiracy with five 

major book publishers to raise eBook prices and end eBook retailers’ freedom to compete on price terms. This was a big win for U.S. 

consumers. Once our orders went into place against the book publishers and they were forced to compete with one another, the price 

of the average eBook bestseller, New York Times bestseller, has 

dropped from $11 on average down to just about $6 within a year. 

Once the illegal agreement stopped, consumers benefited from an 

open, free, competitive market. 

In addition, the redress, the civil redress that the book publishers thus far have agreed to pay, will result in hundreds of millions of dollars being automatically credited to the accounts of consumers that went to iTunes to buy a book or bought a book elsewhere online. 

Anticompetitive mergers are also important to consumers, and 

stopping them is another key part of our job. In January of this 

year, as Mr. Conyers mentioned, we filed suit to stop the merger 

of the largest and third-largest firms that sell beer in the United 

States. We ended up reaching a settlement that required InBev 

ABI, the old Anheuser-Busch, to divest the entire U.S. business of 

Grupo Modelo—those are the folks that make Corona and other 

beers—and create an independent, fully integrated and economically viable competitor, saving consumers from the risk of billions 

of dollars in increased prices. 

Also, as has been mentioned, in August the Antitrust Division 

and several State attorneys general filed suit to block the proposed 

merger of US Airways and American Airlines. This deal, our complaint alleged, would have harmed competition for airline travel in 

local markets throughout the country. 

Earlier this week we announced a proposed settlement with the 

carriers that if approved by the court would resolve our lawsuit 

challenging that merger. Under the agreement US and American 

will divest important facilities at seven key airports across the 

country. The settlement will enable low-cost carriers to buy those 

facilities and expand their presence all across the country, injecting 

a new form of competition into places that have never had it before. 

The low-cost carriers have a tremendous price effect where they 

are able to fly today, but there are constraints, slots, gates at various airports, and by giving them access to those airports we have 

the potential to inject much more extensive competition into that 

marketplace. 
12 

At the same time, the settlement allows the new American, the 

combined American Airlines and US Airways, to retain all of the 

commuter slots that they currently have at Reagan National. Commuter slots are reserved for small jets and designed to serve small 

and medium-sized communities. We let the airline keep those slots 

because they weren’t important to our remedy, but obviously the 

service is important to those communities. At the same time, the 

Department of Transportation secured a binding commitment from 

the new American that they will continue to use those airplanes to 

serve small and medium-sized communities. 

Effective enforcement is critical to what we do, but close collaboration with other parts of the government also achieves positive results for American consumers. We work closely with the Patent 

and Trademark Office to address issues involving the International 

Trade Commission and standard essential patents subject to voluntary FRAND commitments. 

Together with the FTC, we are examining whether there are legitimate antitrust concerns associated with the growth of these patent assertion entities. It is the subject of the legislation that the 

full Committee Chairman mentioned in his opening remarks. Together with the FTC, we engage very actively with foreign antitrust enforcers to promote cooperation, transparency, and evenhanded application of the antitrust laws around the world. 

Now, while effective and efficient antitrust enforcement makes 

our markets more competitive and saves consumers money, we appreciate that antitrust enforcement itself has to be efficient and 

sensitive to the costs we may impose on the business community. 

We are working on that. 

For example, at the Antitrust Division we have been a pioneer 

among government agencies in the use of predictive coding methods in large volume document productions. I have only learned 

about this in the last few months. But it is essentially allowing 

search, like Google search terms, to have companies under investigation, whether it is a merger or a cartel, to more efficiently identify the documents that are responsive to us. We have used that 

in mergers this year. One law firm told me that we saved their client $2 million by working together with them on getting efficient 

production of the information we need to do our jobs. 

Finally, the Antitrust Division, sir, has a longstanding, consistent, and nonpartisan commitment to American consumers. We 

are committed to ensuring that companies adhere to the antitrust 

laws so that consumers benefit from lower prices and higher quality goods and services. I am honored to be part of the hard-working 

Antitrust Division team, all of whom are glad to be back at work. 

And these dedicated public servants are fulfilling a law enforcement mission that is delivering every day real benefits to American 

consumers. Thank you, sir. 

Mr. BACHUS. Thank you. 

[The prepared statement of Mr. Baer follows:] 
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Mr. BACHUS. And I was going to actually wait until the end, but 

let me say this. I do want to express just personally as a Member 

of Congress that I was somewhat embarrassed that the government 

did shut down, and I feel like it was a failure of the Article I body 

to do what needed to be done. So there were many of us that were 

quite disappointed that that happened. So I personally believe an 

apology is in order and I do want to say that, and I hope that we 

will avoid that in the future. 

At this time I will recognize Chairman Ramirez. Yeah, another 

Barney Frank thing. 

TESTIMONY OF THE HONORABLE EDITH RAMIREZ, 

CHAIRWOMAN, FEDERAL TRADE COMMISSION 

Ms. RAMIREZ. Thank you. Chairman Bachus, Ranking Member 

Cohen, and Members of the Subcommittee, I appreciate the opportunity to testify today regarding the Federal Trade Commission’s 

current antitrust and competition policy efforts. 

I want to begin by thanking the Members of this Subcommittee 

for the support you have given the FTC. As you know, competition 

promotes economic growth and overall consumer welfare by keeping prices competitive, expanding output and choices, and promoting innovation. The FTC works closely with the Department of 

Justice’s Antitrust Division to ensure that the American economy 

remains competitive through vigorous antitrust enforcement, and I 

am grateful for the excellent working relationship that we have 

with Assistant Attorney General Bill Baer and his colleagues at the 

Antitrust Division. We are going to continue to work closely with 

the Antitrust Division, as well as with our counterparts in the 

States, to enhance antitrust consistency, clarity, and transparency. 

One of the agency’s principal responsibilities is to prevent mergers that may substantially lessen competition. In fiscal year 2013, 

we challenged 23 mergers that were likely to have anticompetitive 

effects. In most of these cases, we negotiated a divestiture or other 

remedy that allowed the transaction to go forward, but in five instances we went to Federal court to stop the merger. 

We also seek to identify and stop anticompetitive business conduct. Last year we brought four enforcement actions to stop harmful conduct such as unlawful exclusive dealing and improper information sharing among competitors. 

In an effort to be most effective with limited resources, we pay 

particular attention to sectors where our action will provide the 

greatest benefit to the largest number of consumers. Chief among 

those are the healthcare and technology sectors. 

Anticompetitive mergers and conduct can threaten to undermine 

efforts to control healthcare costs. It is therefore critical that the 

Commission preserve and promote healthcare competition, including in healthcare provider and pharmaceutical markets. The FTC 

has been at the forefront of these issues, preventing proposed 

mergers that threaten higher costs without related improvements 

in quality of care. We have recently successfully litigated three hospital mergers, and parties abandoned a number of deals after the 

FTC threatened a challenge, resulting in significant benefits to consumers. 
24 

We also continue to target efforts by brand name drug companies 

to stifle generic competition. As has been mentioned, in June we 

achieved a significant victory for consumers when the Supreme 

Court overturned the so-called scope of the patent test, which virtually immunized pay-for-delay settlements from antitrust scrutiny. Now we are in a much stronger position to protect consumers 

from anticompetitive drug patent settlements resulting in higher 

drug costs. 

Given its increasing importance to consumers’ lives, the Commission also seeks to ensure robust competition and innovation in the 

technology sector. Among other things, the Commission has sought 

to preserve the integrity of the standard-setting process. The Commission will continue to engage in an ongoing dialogue with stakeholders in this important area and bring enforcement actions when 

necessary to prevent the distortion of the standard-setting process. 

The Commission applies a fact-based approach to enforcement in 

markets with new technologies or evolving business models. Sometimes a changing competitive landscape will lead the Commission 

to conclude that a proposed merger is likely to harm competition 

now or in the future, as it did recently when challenging Nielsen’s 

proposed acquisition of Arbitron. 

Other times the evidence leads the Commission to close an investigation without taking action. This was the case in the Commission’s recent decision to close the investigation of Office Depot’s acquisition of rival OfficeMax. Back in 1997, the Commission stopped 

the merger of Staples and Office Depot based on evidence that office supply superstores mainly competed with each other. But today 

office supply superstores face competition from other types of retailers, including big box and online merchants. This led the Commission to conclude that the transaction should be allowed to proceed. 

These examples demonstrate the enduring vitality of the antitrust laws. Markets can and do change, but the antitrust laws remain a powerful tool to protect consumers and to promote competition. 

The Commission also remains active in research and policy. We 

recently announced that we will conduct an in-depth study of the 

impact of patent assertion entities on technology markets. Our aim 

is to expand the information that is currently available about PAEs 

and how they operate in order to shed light on the likely costs and 

benefits of PAE activity. We believe this research will help inform 

the ongoing policy debate about PAEs. 

Thank you, and I am happy to respond to any questions that you 

may have. 

Mr. BACHUS. Thank you, Chairwoman Ramirez. 

[The prepared statement of Ms. Ramirez follows:] 
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Mr. BACHUS. At this time, in lieu of me asking questions, I am 

going to recognize the gentleman from Georgia, Mr. Collins, for 5 

minutes. 

Mr. COLLINS. Thank you, Mr. Chairman. I appreciate that. 

Thanks for being here this morning on this early Friday morning. 

I appreciate what has been said on the airline mergers. I would 

just, however, continue to remember, as we look at monitoring that 

for all players in the market, not just a single set called low-cost 

markets, all the players in that, as well as I would encourage you 

to do that. 

Also one of the things, Ms. Ramirez, you just brought up was 

health care, and this is something for me this morning as I was 

thinking about this hearing, it was something that has come 

across. And you spoke of drug costs, and I read about your decision, 

especially in the opening statements in oversight. What concerned 

me however was the attention to the drug and the drug costs and 

the issue that you just brought up. 

But the really disappointment in my opinion on the drug delivery 

side, and that is where I am going to focus a little bit this morning, 

is that I believe there are legitimate concerns about the conduct of 

PBMs in the pharmaceutical arena. I was disappointed by the FTC 

statement on the ESI-Medco merger. In my opinion it didn’t sufficiently protect the customers and pharmacy competition. The concerns of independent pharmacists didn’t appear to hold much 

weight in the statement, which seemed to be focused more on the 

effects on entry into the PBM market and the anticompetitive behavior in regards to plan sponsors. 

There was little mention of the leverage that ESI-Medco could 

and I believe will have over pharmacists and pharmacies. Since the 

FTC did not act to address the negative impact to pharmacies that 

would result from the ESI-Medco merger, there doesn’t seem to be 

any recourse other than Congress stepping in and passing legislation to protect the pharmacies and the consumers. 

Just to give everyone here a snapshot of what type of behavior 

PBM engaged in, between 2004 and 2008 three major PBMs were 

subject to six major Federal or multidistrict cases over allegations 

such as fraud, misrepresentation, and failure to meet ethical and 

safety standards, just to name a few. These cases have resulted in 

over $371 million in damages. I have heard from consumers that 

the merger has led to higher prices and that they have been forced 

into mail order. This is a very significant problem for consumers 

who need specialty drugs. 

My question, and I want to sort of preface it, is will the FTC look 

into this situation and the problems that are developed, and we can 

hold that for just a second, but I am also very concerned about patients who have critical conditions and need specialty drugs. It is 

my understanding through a good bit of discussion that the major 

PBMs forced them into receive these drugs through mail order, 

which endanger their health. And what I would like to have is assurances, a commitment to look into this situation. This is a particular concern for me in rural northeast Georgia where I am from. 

I understand that some PBMs force consumes to use only this 

PBM’s mail order. Many of my constituents view this as negative 
47 

because they rely so heavily on their community pharmacist, who 

is often the most accessible healthcare professional and provides invaluable support to them. 

In looking at this, like I said, I applaud both of you for what your 

work is, this one is a concern to me, and especially when you look 

at some of the things that I have just mentioned that have come 

across in the last few years to give basically a, not necessarily a 

pass, but a lack of scrutiny to this delivery system, is what I will 

call it, that is disparately impacting community pharmacists and 

also rural neighborhoods. 

Basically I am not asking for an in-depth answer. I am just 

wanting that you would take more of a look at the impact not just 

on that, but the whole healthcare delivery system that we have a 

problem with. And, Ms. Ramirez, I would love for you to speak to 

that, and from the processes before on the prosecutions and other 

things in that case, I would love just to hear briefly, and just say 

that I want to know if my concerns are going to be taken seriously. 

Ms. RAMIREZ. Yes, absolutely, Congressman. We certainly understand the concerns that have been expressed by independent pharmacies when it comes to the PBM market. It is an area that the 

agency has looked at very closely in a number of different settings. 

Most recently we did examine the merger between ESI and Medco, 

and I will say that we looked very closely at three main aspects of 

that transaction and what effects they would have. That included 

looking on the seller side whether the transaction would allow the 

merged entity to exploit market power in the delivery of services 

to employers; but we also looked at the impact on the buyer’s side, 

what impact would it have on the ability of the merged entity to 

negotiate with pharmacies. And we also examined—— 

Mr. COLLINS. I apologize for interrupting, but one of the concerns 

I have there, and I appreciate you bringing this up, is there is not 

a lot of negotiating going on. It is we are going to do it this way, 

you will conform to us, or we are just going to send you to our preferred provider care and we are shutting out the independent market altogether, and that has been a concern. 

What I would like to do in the short time we have, and I don’t 

want to take any, is I would love for my office to begin an open 

dialogue on further issues that we can see some resolve here, because I believe that the Congress is going to have to step in here 

because undoubtedly we are not getting that I feel support at this 

time outside of that. So I appreciate your answer. And I apologize, 

I just wanted to make sure that we could have that dialogue, and 

that is what I would like to see. 

Ms. RAMIREZ. Let me just say that I am aware of the concerns 

and I will assure you that the Federal Trade Commission will continue to be vigilant in this area. 

Mr. COLLINS. Thank you. 

Mr. Chairman, I yield back. 

Mr. BACHUS. I thank the gentleman. 

At this I recognize Mr. Cohen for 5 minutes. 

Mr. COHEN. Thank you, Mr. Chair. 

Mr. Baer, the stewardess folk said you were most courteous and 

saw them personally and they were most appreciative. And the 

American Airlines folk I know were very interested and the flight 
48 

attendants were very happy about the merger. I hope it works out 

well, and I hope it works out well for Memphis. American has limited service out of Memphis, US Air has some. 

But we saw disastrous effects with Delta and Northwest. While 

Justice didn’t examine that merger as this one was examined and 

require certain slots to be given maybe to Southwest or AirTran at 

the time or whatever, The New York Times was fairly excoriating 

on the decision to allow the merger to go forth. I am going to give 

you 1 minute to respond to The New York Times. 

Mr. BAER. I think I managed in 24 hours to get negative editorials out of The New York Times and The Wall Street Journal, 

so I don’t know what that says. 

Mr. COHEN. One of them is a good thing and one of them is a 

bad thing. 

Mr. BAER. Okay. And depending on where you sit. 

This settlement we ended up concluding was actually better than 

a full-stop injunction. Why would I say such a thing? It is because 

a full-stop injunction would have kept the legacy carriers in their 

current position, which was already pretty cozy. We did not see lots 

of meaningful competition on price, on service, on ancillary fares 

like baggage fees. And where there was significant competition and 

expansion of seats, of planes being flown from here to there, it was 

where the low-cost carriers over the last 10 or 15 years have begun 

to establish a presence. 

But the problem is the low-cost carriers don’t fly everywhere 

today, and one reason they don’t is that they can’t get access to key 

airports like LaGuardia, like National. You open up those airports 

just a little bit. When the United-Continental merger concluded, 

United had to give up all of its slots at Newark, and within a year 

they had added nonstop service to six different cities and driven 

prices way down. But in addition they could then connect one stop 

to other cities all around the country and there were within a year 

60 more cities benefiting from low-cost service from Southwest. 

That is why we thought this settlement, opening up service and 

getting rid of capacity constraints at seven major airports, not only 

was going to benefit the nonstop travel between those airports, but 

there is then the next stop for Southwest or for AirTran, which still 

is flying under its name a little bit, JetBlue, Virgin America. So we 

think there is real opportunity here to positively change the competitive dynamic. 

Mr. COHEN. Well, I appreciate that you did something. I mean, 

the Justice Department did nothing but allow the Delta-Northwest 

to go forth. Of course, the statements made, we would have 

thought it was going to be fine. You said that the hubs, I think in 

your agreement they had to stay open for 3 years, is that right, or 

a minimum of 3 years? 

Mr. BAER. There was agreement with the States which provided 

that they had to keep their hubs open for an extended period of 

time. It didn’t mean they couldn’t reduce some service, though. 

Mr. COHEN. Yeah, which may happen. 

Let me ask you this. I read a story in The New York Times, and 

it was published elsewhere, I guess, about several big banks, including Goldman Sachs, having consolidated ownership of aluminum warehouses, and they are possibly conspiring to prop up 
49 

aluminum prices and shifting these around. This affects a lot of 

consumer goods, cars and beer and other cans and others that are 

aluminum products, soda cans, so it has an impact on consumers. 

Are you aware of this particular issue and is your Division investigating these concerns? 

Mr. BAER. Well, I can’t comment on any details. I will tell you 

that this is a matter we are looking at. 

Mr. COHEN. I would ask unanimous consent to submit this article entitled ‘‘A Shuffle of Aluminum, but to Banks, Pure Gold.’’ 

Mr. BACHUS. Without objection. 

[The information referred to follows:] 
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Mr. COHEN. Thank you, sir. 

Ms. Ramirez, I sometimes get a little confused on where your jurisdiction lies and General Baer’s. But are there areas that you 

think there is legislation needed to give either you or General Baer, 

to give you all more authority? 

Ms. RAMIREZ. Generally speaking I think our authority is appropriate. There are small areas where we think we should have more 

jurisdiction. One issue that comes up periodically has to do with 

our ability to litigate independently when we are seeking civil penalties. Right now we have to refer those particular matters to the 

Department of Justice. There are also certain other areas, such as 

antitrust exemptions, that both antitrust agencies, and I certainly, 

think should be removed, for example McCarran-Ferguson. But for 

the most part I think the authority that the agency has is appropriate for the work that we are doing. 

Mr. COHEN. My red light has gone off, but if the Chairman would 

indulge me with one last question, and it is somewhat like I guess 

Cato the Elder, but I want to come back to the sentences. You said 

that these folks that you convict, 25 months is the average sentence. These folks are mostly business people, predominantly 

White, white collar? 

Mr. BAER. Yes, sir. 

Mr. COHEN. If they had had a gram or two grams of crack, they 

might have gotten a life sentence. Don’t you just think that is just 

unconscionable, that people who rip off the American consumer and 

price fixing, et cetera, get 25 months, and a couple of grams of 

crack gets you life? 

Mr. BAER. Mr. Congressman, I made a note about the message 

you wanted me to convey to Attorney General Holder, and I am 

going to convey that message. 

Mr. COHEN. I appreciate it very much. Because if you read Nick 

Kristof yesterday, ACLU just had a report and cited some cases 

that are just awful, and there are lots of them. 

Mr. MARINO. Would the gentleman yield for a moment, please? 

Mr. COHEN. Sure. 

Mr. MARINO. First of all, I agree with my colleague that The 

Wall Street Journal was right. And, number two, that—— 

Mr. COHEN. They are always on the right. 

Mr. MARINO. And number two, I couldn’t agree with him more. 

As a prosecutor for 18 years, a DAUS attorney, it is appalling to 

me what white-collar criminals get away with and how much they 

have caused financial drain on our economy, but, more importantly, 

our seniors and middle class working people who invest the little 

money that they have into these businesses that they are hoping 

that at least generate a little return on their investment. 

So I would insist that the Attorney General’s office with a vengeance go after these individuals, take everything that they have, follow the money, and then put their tails in prison for as long as 

they can. 

Mr. BAER. Message received, sir. 

Mr. COHEN. Thank you, Mr. Chairman. 

And thank you, Mr. Baer. 

Mr. BACHUS. They told you that they don’t expect you to be a 

messenger, but then they have sent messages back with you. 
61 

At this time Mr. Farenthold is recognized. He actually, I mentioned before you got here, that you joined several of us on a letter 

expressing some concerns with Section 5 and maybe a lack of guidance. 

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

And, Chairwoman Ramirez, as you are aware, this Committee 

has been following the patent troll issue pretty closely, or actually 

the entire Committee is working through the Innovation Act to 

solve some of the problems that we see with the litigation process. 

Congresswoman Chu and I sent letters to you in June of this year, 

we had 18 Members signing on to this. 

And without objection, Mr. Chairman, I would like to make that 

letter a part of the record. 

Mr. BACHUS. Without objection. 

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Mr. FARENTHOLD. So we were urging you to use your Section 5 

authority to help end-users of technologies who are facing patent 

troll litigation for purchasing products off the shelf. I know you are 

now conducting a Section 6(b) study to investigate the patent troll 

problem. But in response to the letter you said most PAE activity 

is likely to lend itself to antitrust or consumer protection law enforcement. Therefore, I am wondering what you are hoping to accomplish with this study and what does the FTC plan to do with 

the collected information? 

Ms. RAMIREZ. This is an area that the Federal Trade Commission 

has been looking at for some time, and most recently. last year we 

cohosted a workshop with the Department of Justice to examine 

PAE activity. What came out of that workshop mainly were two 

things. One, that there is an increasing concern about PAE activity. It appears that PAEs are engaging in activities that now reach 

a number of different sectors rather than just the IT sector, and 

we are, of course, aware of concerns about—— 

Mr. FARENTHOLD. We have had some State attorneys general actually filing lawsuits against patent control. Do you think maybe 

we could get the FTC to take a little bit more aggressive approach 

to protecting consumers in this area? 

Ms. RAMIREZ. I can’t talk about any details about investigations, 

but what I can tell you is that we are aware of the issue. We are 

looking at it closely. If we find that there is either anticompetitive 

conduct by PAEs or conduct that comes within our consumer protection authority under Section 5, deceptive or unfair practices, we 

will take action. 

Mr. FARENTHOLD. Thank you very much. 

Mr. Baer, I would like to talk a little bit about the American Airlines merger as well. I think I made a comment in another hearing, 

I don’t remember if it was in this Committee or Transportation, 

that approvals between United and Continental and between Delta 

and Northwest had been approved and it seemed only fair that 

American be allowed the opportunity to grow its network as well. 

And I am happy to see that you have gotten to that point and 

reached a settlement. 

I do want to ask about the gate divestitures, particularly at DCA 

and LaGuardia. My question is, it seems like we are giving a preference to low-cost carriers. I have got to be careful here because I 

am a big fan of Southwest Airlines and they have done a real good 

job keeping the fares down in my hometown of Corpus Christi. 

At what point is it appropriate for the government to pick winners and losers there, and do we actually have a three-tier system 

of the legacy carriers that have merged and the Southwest-type 

carriers that are established and becoming more like legacy carriers every day, and then you move into the ultra low-cost carriers 

who basically get all their revenue from ancillary fees, charge you 

for a carry-on bag, and the next thing you know they will be charging you for a seatbelt. 

Mr. BAER. Thanks for the question, sir. 

In crafting this remedy and requiring these divestitures, our job, 

and we do this in any merger settlement where we require 

divestitures, we sit down with the merging parties and make sure 
66 

that the buyers of those assets are the people that are going to 

compete those assets most aggressively for the American consumer. 

Mr. BAER. And we will have a process—— 

Mr. FARENTHOLD. But is it fair to American to require testimony 

to sell to a certain person if they are not, say, the highest bidder? 

Mr. BAER. They have agreed to it, and I think it is fair because 

this is a settlement designed to avoid future competitive problems 

in an industry. The alternative, which American and US Air had 

available to them, was to go to court and ask the judge—— 

Mr. FARENTHOLD. I am almost out of time. I just want to follow 

up. You made a point that you consider it adequate service to have 

a one-connection flight between two cities. That is kind of out of 

joint with some of the ideals we have with DCA, Reagan National 

trying to get nonstop services to as many cities as possible. How 

do you reconcile that desire with perhaps the more cost-effective 

one-stop hub-and-spoke system that even to some degree Southwest is adopting these days? 

Mr. BAER. All we are trying to do is to make sure that consumers 

get the benefit of competition wherever possible. And there are 

many airports where competition is limited because there are slots 

that aren’t sold, can’t be bought, or that there are gates, O’Hare 

is a good example, where carriers can’t get in there because there 

is just not enough room. So by freeing up some opportunity and letting competition flourish more than it is able to flourish today, we 

think we are going to get a good result for the American consumer. 

Mr. FARENTHOLD. I see my time has expired. So thank you very 

much, Mr. Chairman. 

Mr. BACHUS. Thank you, Vice Chair. 

At this time I recognize my friend and colleague Mr. John Conyers. 

Mr. CONYERS. Thank you, Chairman Bachus. 

Mr. Baer, can you give any examples offhand about how sequestration has affected the Department of Justice? I understand it has 

been pretty severe. 

Mr. BAER. We had within the Antitrust Division, because of the 

rules limiting who could come to work, we had at any one time, 

only had about 20 or 25 percent of our employees in able to do 

work. And what effect did that have? It meant on mergers, where 

we were trying to move mergers along as part of our responsibility 

to the business community, we could not do our job. We could not 

get back to the lawyers and tell them what questions we had. 

There was a delay for the business community. 

On matters of litigation, we had to ask the court to stay things. 

That slowed things down for us, very inefficient, it slowed things 

down for the defendant, and it delayed the day we get the outcomes 

and we think that is poor for the consumers. 

But, Mr. Conyers, for me it was the fact that I had to tell people 

that I did not know if they were going to get paid for the time they 

were at home. This was a decision Congress had not made yet. And 

we had one pay period where people only got about 50 percent of 

their pay for that pay period. It got made up. But if you were living 

paycheck to paycheck, that was a very, very serious consequence to 

the individual. 
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So it was a slowdown in our ability to do the job you asked us 

to do. But it hurt innocent people. And that is part of what we all 

felt and felt badly about. 

Mr. CONYERS. Thank you so much. 

Chairwoman Ramirez, critics, including the Chamber of Commerce, contend that the FTC’s use of its authority under Section 

5 of the FTC Act has been inappropriate to the extent that it 

reaches conduct that doesn’t violate the Sherman or the Clayton 

Acts, and they contend that the FTC’s failure to issue guidelines 

on its use of section 5 has created uncertainty and is simply unfair. 

Can you comment on that position that they have asserted? 

Ms. RAMIREZ. Certainly. And you will not be surprised to hear 

that I disagree with that position. Number one, Congress very deliberately granted the FTC authority to go beyond the literal scope 

of the antitrust laws under its Section 5 authority. The agency in 

its recent history has used that authority in a very limited and restrained way. The vast majority of the enforcement actions that we 

bring are, in fact, brought under either the Sherman Act or the 

Clayton Act, and it is only in very limited situations that we have 

used what we refer to as our stand-alone Section 5 authority. 

I also don’t believe that the way we have used it has created uncertainty to the extent that it limits pro-competitive behavior on 

the part of businesses. I think we have acted appropriately in the 

times that we have used it, and I also believe that we have provided appropriate guidance about what motivates our use of Section 5—which ultimately is harm to competition or harm to the 

competitive process—the times that we have used it. 

Mr. CONYERS. Thank you. 

Mr. Baer, is there or are there occasions in which mergers could 

be good for consumers. 

Mr. BAER. The answer I think is yes, sir. In situations where 

markets are not all that concentrated merging parties sometimes 

can become more efficient and offer a broader range of products 

and services. 

We issue joint merger guidelines, guidance to the business community and the American public jointly with the FTC. We recently 

updated those, 2 years ago, and we talked about the standards we 

employ, how we look at mergers, when we think we might have a 

problem, and what level of concentration in the market could be a 

warning sign. So we work very hard to be up front about what we 

are looking at, and we recognize that some mergers, particularly 

mergers where it is not two competitors getting together, are likely 

to have no competition issues and have the potential, actually, to 

produce more efficient companies. 

Mr. CONYERS. Can I ask you, my last question to both of you, 

just a yes or no, do you believe that the McCarran-Ferguson Act 

should be repealed with respect to health insurers? 

Ms. RAMIREZ. I do. 

Mr. CONYERS. Thank you. 

Mr. BAER. The Administration, I think in 2010, communicated 

that view to the Congress as a Statement of Administration Policy. 

Mr. CONYERS. Very good. Thank you both. 

I yield back, Mr. Chairman. 

Mr. BACHUS. Thank you. 
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Mr. Marino is recognized for 5 minutes. 

Mr. MARINO. Thank you, Chairman. 

I thank the two of you for being here. I want to get right to the 

point. I have three questions I want to bring, three issues. The first 

one is search engines, the big companies. The second one is going 

to be addressing the issue of patent troll letters. And the third one 

is going to be the merger of Express Scripts and Medco merger. 

So let’s get into search engines. In the past, the FTC has addressed concerns about the manner in which certain major search 

engines are aggregating information. Do you see or do you feel that 

these major companies are currently adhering to the best practices 

of the way search engines should be operating? 

Ms. RAMIREZ. Well, Congressman, as you know, earlier this year, 

we, the Commission, issued a unanimous decision closing its search 

investigation of Google, and we outlined the reasons for that decision in a closing statement. But what I can tell you is that we are 

going to continue to monitor the marketplace, and if we see that 

a company, whether it is a company that engages in search or any 

other company, engages in anticompetitive activities, we are going 

to take action. 

Mr. MARINO. Is there a time or is there an area where you are 

watching as to whether the percentage of the market that a particular search engine group or entities in combination would control that market? Is that a factor? 

Ms. RAMIREZ. Sure. When we are evaluating whether there is a 

violation of the Sherman Act and specifically Section 2 of the Sherman Act, we would be looking at the issue of dominance, and that 

would be a factor in our analysis. 

Mr. MARINO. General, as an attorney and as a U.S. attorney I 

know you can’t get into the details or give an opinion, but what are 

you looking for in the computer tech age now with companies that 

dominate a major portion of the market? And I am not indicating 

in any way that I think that is always bad. 

Mr. BAER. Thank you, sir. What we look for, similar to the FTC, 

is where somebody has not just been successful, because you don’t 

want to penalize success—companies get big because they are better, they are more efficient, they price lower, and we don’t want to 

deter that behavior at all—but sometimes people get big and they 

start pulling up the ladder or grease the ladder so nobody else can 

get up. 

It really is the behavior on top of being successful, when you are 

using your elbows a little bit to muscle people out of the way, that 

in sort of plain talk is where we start to get interested. 

Mr. MARINO. Please keep an eye there. Okay. 

Chairwoman, let’s switch to patent trolls. What, if anything, is 

FTC doing concerning patent troll letters? Have you been actually 

reading patent troll letters? Do you have any suggestions as to 

what can be done with them? 

As far as I am concerned the information—the demand letters 

are really vague. We don’t know who really is pursuing this. And 

can you tell me any plans you may have concerning patent troll letters? 
69 

Ms. RAMIREZ. So I think there are two main areas where the 

agency can be of assistance when it comes to this issue about the 

activities of patent assertion entities. 

One is that we can be vigilant in monitoring the marketplace to 

ensure that there is no violation of the antitrust laws, and also 

under our consumer protection authority under Section 5. And we 

are doing that. I can’t comment on any details of investigations, 

but I can tell you that we are aware of the issue, and where there 

has been deceptive conduct we would be in a position to take action. 

At the same time, we aren’t an agency that is evaluating the 

strength of particular IP, so there are limitations in what we can 

do in addressing some of the issues that are raised by PAE activity. 

Mr. MARINO. Okay. What do you think of this idea: What do you 

think of making it mandatory that whoever is sending a patent 

patent troll letter out has to state boldly on that letter that you are 

not required by law to respond to this letter? 

Ms. RAMIREZ. Let me say that I would have to think more about 

it. I have heard about this idea and I would need to get more details and be able to study it. But I—— 

Mr. MARINO. I am pushing this. This is an aspect that I am 

pushing on these letters. 

Ms. RAMIREZ. I understand. I am supportive of efforts that are 

being made to reform the patent system to weed out weak IP and 

also efforts to allow companies to defend against frivolous litigation. 

Mr. MARINO. My last question is to Express Scripts and Medco 

mergers. Is the commission planning to take any steps to look into 

the anticompetitive behavior currently that I am seeing and could 

you speak on that about the anticompetitive behavior in this merger that I feel has taken place? 

Ms. RAMIREZ. As you know, we did decide to close the investigation and allow the merger to go forward last year. We issued a very 

detailed closing statement outlining the areas that we examined 

and the reasons why we felt that it was appropriate to close the 

investigation. There hasn’t been much time that has elapsed. I am 

not aware of any evidence—— 

Mr. MARINO. Okay. 

Ms. RAMIREZ [continuing]. Of their being anticompetitive conduct 

that has transpired since the merger. But I am happy—— 

Mr. MARINO. I am sorry. I see my time is running out. But I 

would ask unanimous consent, I would like to submit some other 

questions to our distinguished panel—— 

Mr. BACHUS. Without objection. 

Mr. MARINO [continuing]. And expanding on the questions that 

I did ask. So it will be in detail. And thank you very much. I yield 

back. 

Mr. BACHUS. And all Members will be given an additional 5 days 

to do that. 

At this time, I recognize Mr. Johnson for 5 minutes. 

Mr. JOHNSON. And I will yield to Ranking Member Conyers for 

a second. 
70 

Mr. CONYERS. I would just like permission to put into my statement the New York Times editorial of yesterday commenting on 

the unwise airline merger. 

Thank you very much. 

Mr. BACHUS. Thank you. 

[The information referred to follows:] 
71 
72 
73 

*Material previously submitted, see page 6. 

Mr. BACHUS. Mr. Johnson. 

Mr. JOHNSON. And I also would like to submit for the record with 

unanimous consent a letter from the flight attendants of American 

Airlines—— 

Mr. BACHUS. Without objection. 

Mr. JOHNSON [continuing]. Voicing their strong support for the 

merger.* 

Mr. BACHUS. Their strong support for the merger? 

Mr. JOHNSON. Yes. 

Mr. BACHUS. Okay. 

Mr. JOHNSON. Between American Airlines and US Airways. 

Mr. COHEN. And their love of Mr. Baer. 

Mr. JOHNSON. Well, no comment on that. 

Mr. BACHUS. Something for everything in these submissions. 

Mr. JOHNSON. But I would take us back to the days of Ronald 

Reagan coming in. Ronald Reagan said that government is not the 

solution, government is the problem. He said government is the 

problem, not the solution. 

And that kind of was in keeping with a wave going across the 

American economy, a wave, a Milton Friedman economic wave of 

laissez-faire capitalism. Let the fox guard the henhouse basically is 

what that economic philosophy holds. And we have been following 

that for the last, what, 30 years? And we have been incessantly 

and sometimes drunkenly cutting the Federal budget and trying to 

make government smaller, downsizing, privatizing, you know, making government so small that you could drown it in a bathtub. That 

is what Grover Norquist has advocated. And, in fact, many Members of Congress have signed on that pledge and have adhered to 

it. 

What impact does this historical shredding of government’s capacity to enforce antitrust laws, what impact has it had on your 

ability to guard the henhouse, government’s ability to guard the 

henhouse, as opposed to turning it over to the private sector to 

guard themselves and then let everything trickle down, it is going 

to work out according to the free market principles? Where are we 

as far as that is concerned. 

Mr. BAER. Thank you for the question. 

In our prepared statements, both of us talked about the fact that 

as antitrust enforcers, we are actually policing the free market so 

that the business community can compete aggressively and deliver 

better products, better service at lower prices. So we obviously are 

committed to the view that there is tremendous value added. 

In my prepared remarks, I noted that in criminal penalties alone 

against corporations for price fixing and bid rigging, and we have 

unveiled serious conspiracies involving international companies, we 

are generating an average of $850 million in criminal penalties. 

Mr. JOHNSON. But my question is, I know that the work is effective and that it inures to the benefit of consumers, as well as the 

competition in the business community, small businesses versus 

larger businesses. But what is the impact of the incessant and 

drunken budget cutting that has been taking place over the last 30 

years? 
74 

Mr. BAER. We are privileged, I think, as antitrust enforcers—I 

am not dodging the question—but we have actually had fairly good 

bipartisan support for antitrust enforcement over the years. That 

hasn’t always translated into dollars. 

Mr. JOHNSON. How has this impacted your ability to carry out 

your mission, the budget cuts? 

Mr. BAER. Let me give you good examples, sir. Because of the 

current sequester, I have been unable to hire the criminal prosecutors that I need to return the sorts of criminal penalties I referred 

to earlier in my statement. We are down from about 125 criminal 

prosecutors to 85 right now. 

If the budget situation resolves itself, the Justice Department is 

going to hire those people and get them back on. But when the uncertainty is hanging over us all, there is a hiring freeze that has 

had to be imposed. So there is a real world example of how uncertainty can affect our ability to get the troops we need to go out and 

do a good job for the American consumer. 

Mr. JOHNSON. All right. Thank you. And that affects our overall 

ability to be competitive with other Nations, companies in other 

Nations around the world. 

So I do want to thank also you both for working with my office 

on the APPS Act and also arbitration fairness. But now arbitration 

fairness with this recent U.S. Supreme Court ruling, American Express v. The Italian Colors Restaurant, wherein it was ruled that 

arbitration, a mandatory or forced arbitration agreement can 

trump the antitrust laws. What is your analysis—— 

Mr. BACHUS. You can briefly answer. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. BAER. What I will do is get you an answer for the record, 

sir, because when I was at a private law firm I represented some 

credit card companies. That is one area where other people do the 

thinking and do the communicating for me. 

Mr. JOHNSON. All right. How about you, Ms. Ramirez? 

Mr. BACHUS. Thank you. 

Mr. Smith from Missouri. 

Mr. JOHNSON. Could I have an answer from Ms. Ramirez to that 

question, Mr. Chairman? 

Mr. BACHUS. Yes. I am sorry. 

Mr. JOHNSON. Thank you. 

Ms. RAMIREZ. Let me just say that we, the Federal Trade Commission, I believe this general view is also shared by the Department of Justice, are concerned when private litigants aren’t permitted to enforce the antitrust laws. We believe that that is an important component and complement to the public enforcement that 

we engage in which we believe is quite vital to ensure that there 

is a fair and level marketplace. 

Mr. JOHNSON. Thank you. 

Mr. BACHUS. Mr. Smith. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Mr. SMITH. Thank you Mr. Chairman. 

Madam Chairwoman, my question, over the last two decades the 

Commission ruled in its own favor in every single case it has 

brought in its internal court, even when its administrative law 

judges ruled in favor of the defendant. 
75 

Can you comment on the Commission’s record and inform the 

Committee whether there are any actions at the FTC plans to take 

to address this imbalance? 

Ms. RAMIREZ. Let me say first that I believe that is too narrow 

a lens with which to examine concerns about whether or not the 

procedures under the FTC’s administrative processes are fair and 

efficient. I believe that they are. There have been instances both 

where the administrative law judge has disagreed with the FTC 

staff that is litigating the matter before them, what we refer to as 

complaint counsel. There have also been instances when the Commission has in turn ruled against complaint counsel. 

But I think the question to be asked here really is to look more 

broadly and to look at the process as a whole. And when you take 

into account the fact that there is a very thorough investigation 

that is performed by FTC staff, before even proceeding with an enforcement action, then you have a bipartisan expert commission 

who is examining the matter and making a determination about 

whether to proceed, then at that point in time we are able to proceed either by going to Federal court or administratively, when we 

go administratively, the matter is tried before an administrative 

law judge. It can then be appealed to the Commission and we 

would, at that point in time, look at the whole trial record before 

making a determination. And then that, in turn, can be appealed 

to the court of appeals. 

So I think when you examine the process as a whole, in my view, 

it is quite clear that the process is fair. 

In addition, I will note that there had been concerns expressed 

about delays in that process. We took those to heart, and in 2009 

the Commission streamlined its administrative processes. And I believe that now the time that it takes to litigate under our process 

is comparable to the time that it would take to litigate in Federal 

court. 

So when looking at the process as a whole, I do believe that the 

agency approaches matters and makes decisions on a fair and equitable basis. 

Mr. SMITH. You know, I read here that Commissioner Wright before he joined the Commission published in a report saying the 

Commission has reversed at a rate that is four times that of a general Federal judge. To me that seems like that is an imbalance. Do 

you not agree with that statement? 

Ms. RAMIREZ. A court of appeals is obviously going to be examining issues that the agency looks at and may have a different view 

of what the law is. 

Just by way of example, I will note that in the pay-for-delay 

arena, the FTC lost before the courts a number of different times, 

but ultimately made its way to the U.S. Supreme Court, and the 

Supreme Court ended up agreeing with our view that reverse payment settlements ought to be subjected to antitrust scrutiny. 

So sometimes we need to be persistent in pursuing the development of antitrust doctrine when we believe that there is anticompetitive conduct at issue. I recognize that we have been reversed on occasion, but I think we look at these matters very closely and proceed only when we believe there is harm to competition 

or harm to the competitive process. 
76 

Mr. SMITH. I do think that it is something you need to look into 

being that two decades is a long time. That is 20 years. I am 33 

years old. So in 20 years the Commission has found every case on 

their side. I think that is an imbalance and I think that is something you all need to look at. 

Mr. BACHUS. Thank you. 

Ms. DelBene. 

Ms. DELBENE. Thank you very much, Mr. Chair. You are working on pronouncing my name. 

Mr. BACHUS. That is right. 

Ms. DELBENE. You did a great job. 

I thank both of you for taking the time to be here today. 

Mr. Baer, I am on the Agriculture Committee as well as this 

Committee, and my district has many farmers, dairy and berry 

farmers, specialty crop farmers. And I understand that the Department of Justice and the Department of Agriculture corroborated in 

2010 on a series of hearings on competition issues which affected 

the agricultural sector. And I know that farmers and producers all 

across our country and as well as consumers of our Nation’s food 

supply rely on the benefits of a competitive and fair marketplace. 

So how have the 2010 hearings influenced the DOJ’s enforcement 

strategy in this area? What are your plans to ensure fair, open, and 

equitable markets for our Nation’s farmers? 

Mr. BAER. Thank you for the question. 

Those hearings resulted in a report which we sent to both this 

Committee and the Senate Judiciary Committee laying out our 

findings. We have used that report to work together with the State 

Attorneys General, who sometimes are a little closer to the ground 

in terms of being able to communicate with farmers, producers, including livestock producers, for example, who have issues. 

We have a team of lawyers and economists who specialize in agricultural antitrust, agricultural economics. And we have had some 

investigations. We continue to look at this matter. We realize that 

this is an important part of our ongoing antitrust responsibility. 

Ms. DELBENE. Thank you. 

I also had a question, I know last year The Wall Street Journal 

reported that the DOJ was investigating whether cable companies 

were acting improperly to stifle competition from online video services. And to the extent that you can discuss this, I was interested 

in why you looked into this matter and any feedback you have for 

us. 

Mr. BAER. I can’t get into the details, other than to say in any 

industry if there are agreements being made that injure consumers 

unfairly, inappropriately, part of our mission is to take a look at 

them. And where those issues crop up, whether it be in the cable 

industry on delivery of programming or anywhere else, our job is 

to go in as fast as we can and determine whether or not there is 

a problem that requires attention. 

Ms. DELBENE. Thank you. I know we are short on time so I will 

yield back. 

Mr. BACHUS. I appreciate that. 

Mr. Jeffries, I am going to go ahead and let you go next and then 

I will wrap up. An d they can tell me how much time I have. 

Mr. JEFFRIES. Okay. Thank you very much, Mr. Chairman. 
77 

And thank you to the two witnesses. And I will try to expedite 

my questioning given the calling of votes. 

Let me start with Chairwoman Ramirez. So the FTC I guess announced on September 30 that you are going to move forward with 

a 6(b) study of the PAE problem. Is that correct? 

Ms. RAMIREZ. About PAE activity, yes. 

Mr. JEFFRIES. What is your understanding of the nature of the 

issue and/or problem, if you would characterize it as such, that you 

will be studying? 

Ms. RAMIREZ. So let me clarify what it is that we are doing. And, 

again, what we are doing with this study that we have just recently announced is to build on the prior work that the agency has 

done in connection with patent assertion entities, and that includes 

discussion and inquiry that we had and we addressed in a report 

we issued back in 2011. Then last year we had a joint workshop 

with the Department of Justice. And two things emanated from 

that workshop. One is that this is an area of growing concern. But 

secondly, we also found that there is very limited data about what 

PAEs are actually doing, what the business model is, what type of 

patents they hold. 

So we felt that it was appropriate to use our research function 

and our authority under 6(b) of the FTC Act to gather more information. So I want to make sure that it is clear that what we are 

doing is really information gathering and what we hope to do is 

shed light on what the costs and benefits are of PAE activity. 

There are supporters of what PAEs are doing who argue that 

PAEs allow particularly small inventors to monetize their patents. 

And then there are critics who say that this activity is really creating a burden and imposing undue costs on business. And so we 

are trying to examine and shed light on that broader policy question. 

Mr. JEFFRIES. Thank you. And when do you expect to complete 

that study? 

Ms. RAMIREZ. Studies that are analogous to this one in the past 

have taken approximately a year and a half to 2 years. We are 

going to move as quickly as we can, but that gives you a general 

idea about the possible timing. 

Mr. JEFFRIES. Thank you. 

And, Mr. Baer, the proposed settlement between American Airlines and US Air, in my understanding, requires that the combined 

airlines divest approximately 7 percent of their slots from 

LaGuardia Airport. Is that correct? 

Mr. BAER. I think that is correct, yes, sir. 

Mr. JEFFRIES. And how did the DOJ arrive at that 7 percent 

number? 

Mr. BAER. We asked them to divest certain slots that were already being leased to Southwest and that were actually producing 

significant consumer benefits. If the merger went forward, those 

slots would have reverted back to the new American. So we were 

able to maintain that competitive presence. 

There was a total of 34 slots. I believe that was the number of 

slots that American brought to the table, that we were basically 

saying that there cannot be growth on the part of the combined airline in terms of slots in and out of LaGuardia. That was certainly 
78 

our position at National Airport here. I believe it was the same as 

to La Guardia. 

Mr. JEFFRIES. After the divestiture, will those 34 slots be held by 

Southwest Airlines or will they be open to a process by which other 

airlines will have an opportunity to secure them? 

Mr. BAER. Certain of the slots that are currently leased to Southwest, they will have the right of first refusal to come in and get 

those. The rest we will open up to other air carriers to come in and 

persuade us that they are going to compete those assets aggressively on behalf of the American consumer. 

Mr. JEFFRIES. Thank you. 

Thank you Mr. Chair. I yield back. 

Mr. BACHUS. Thank you. 

I will now ask some questions, and at the end of that that will 

be the end of our hearing. 

I want to start with what I consider maybe the most important 

point, and that Mr. Smith brought up, and I know Ms. Ramirez, 

or Chairwoman, you responded that you think the process is fair. 

So I want to ask you to keep an open mind. 

As he said, every time that the FTC has decided to bring an action and it goes to the administrative law judge, in a certain number of those cases the administrative law judge rules in favor of the 

company that action is being brought against. But in all of those 

cases over the last 20 years when it went back to the Commission, 

there was a vote to proceed. So that was actually against the administrative law judge. And then when you proceeded with the case 

and it was appealed by the defendant and it went to a Federal district court, the Commission was reversed at four times the rate 

that Federal district judges normally reverse cases. 

So it does appear, I mean over the last 20 years, and I know that 

is, you know, you say, well, that is 20 cases, but it appears as if 

the Commission always proceeds, I mean, even if the administrative law judge says I have got serious questions. And I know some 

of those decisions by the administrative law judge have been 20 or 

30 pages of saying, no, this isn’t the case, and then the Commission 

decides to proceed. 

And then in a number of those cases where the company then 

appeals to the Article 3 courts, the Article 3 courts decide that the 

FTC has erred. And it at least in calling balls and strikes, it does 

appear as if it is somewhat stacked against the defendant. So I am 

not going to—I know you have already responded. 

And one thing, we said maybe what would clear this up is if you 

could issue guidance. And I know we got a letter back from you 

that the Senators and I, we wrote, saying that you didn’t feel like 

you—instead of issuing guidance on the FTC’s Section 5 authority, 

you ought to just look at the cases. You have issued guidance on 

consumer unfairness. I am just going to urge you again to reconsider. 

Ms. RAMIREZ. So if I may very briefly say a couple of things. One 

is, in terms of the statistics, I think it is a more nuanced picture 

than has been described. And I am happy to provide more detail—— 

Mr. BACHUS. Sure, and I would love that. Let’s start with that. 
79 

Ms. RAMIREZ. But let me just say that I haven’t examined the 

statistics that Commissioner Wright mentions. 

Mr. Bachus. Sure. And even, you know, not only two of the Commissioners, two of the four Commissioners have said they don’t believe it is fair, but also the editorial. And he testified before this 

Congress, Mr. Balto, who was a policy director at the FTC, even 

he, you know, he says that there needs to be some changes, that 

it hadn’t been fair. And what I am saying, you know, it is very costly when these cases are brought. 

Now, I want to say in that regard, I want to commend the Department of Justice for what you have done on discovery to lighten 

the cost. Because, as you know, and I am a former litigator, companies, you know, I represented the railroad, sometimes you settled 

just because the discovery is so expensive. And I commend that, 

that you have lessened that. I think that in and of itself makes a 

fairer system. 

But I am just saying to you, let’s continue this dialogue. I note, 

you know, you appear to be sort of dug in on this issue. 

Ms. RAMIREZ. No. 

Mr. BACHUS. And I understand you have looked at it. But let’s 

continue to talk. Maybe what you do is you just give some clearer 

guidance if you could. 

Ms. RAMIREZ. If I may just take a minute to respond very briefly. 

I want to separate the two questions that you asked, one that relates to Section 5 guidance and the other about the concerns about 

our administrative process. 

I think they are separate because the issue that you raised and 

the issue that some of my fellow Commissioners have raised about 

Section 5 guidance relates to a very narrow, limited number of 

cases in which the agency has acted beyond the literal scope of the 

antitrust laws. 

Mr. BACHUS. But in most cases, it is unanimous. 

Ms. RAMIREZ. So the broader question about—— 

Mr. BACHUS. It is not? Okay. 

Ms. RAMIREZ [continuing]. Those involve the Sherman Act. I 

want to clarify that the Section 5 issue about guidance really does 

relate to a small number of cases, and I am happy to provide you 

with additional information. 

And let me also say that I take your concerns very seriously and 

I am open to and we are going to continue to have an internal dialogue about that Section 5 issue. 

Mr. BACHUS. That is all I ask for. 

The airline merger. You answered my most serious concern, Assistant Attorney General, when you said that you asked US Air 

and American to preserve those flights to smaller cities and towns, 

the commuter flights, and that is what a lot of our concern was, 

will those flights go away? Because I have even had Members of 

Congress come up to me and say, hey, they are now flying to Bangor. They have never done that. They are now flying to Knoxville, 

a direct flight. So I really appreciate that. 

I do wonder if, and two or three others mentioned the legacy carriers where you have kind of carved out the low-cost carriers, and 

I understand the benefit where that brings down the cost between 

Chicago and Washington and different large cities and Washington. 
80 

But the legacy carriers also have the small commuter planes. For 

instance, Dallas, Love Field, there is a monopoly by Southwest 

there. And I join everybody else, Southwest brought down fares in 

Birmingham, they halved the fares. 

I do want to say I looked at this editorial and the third paragraph, I would never say The New York Times would mislead 

someone, but it says that competition would decline significantly on 

more than a thousand routes where the two companies currently 

compete head to head. They don’t really compete effectively head 

to head. And there is only overlapping routes. 

I don’t consider if you have to fly from here to Dallas and then 

back to Birmingham over an 8-hour period that that is head to 

head with a direct flight from here. So I think that is a little bit 

of a—it doesn’t tell the complete story. 

And then it says that they would control 69 percent of the takeoffs at Reagan. Well, they control more than that now. So it is not 

like you made that decision. 

But do you have any further comment? But I do appreciate what 

you said about commuter airlines. 

Mr. BAER. Thank you, sir. And I think by the divestitures we are 

requiring at National we will ensure that not all of those slots— 

that it will be closer to about 56 percent of the slots—that new 

American will hold, and the rest of those slots we are going to 

make sure go out to folks who are going to provide more opportunity to go more places out of National Airport. 

Mr. BACHUS. All right. Thank you. 

I want to quickly say that there are a lot of concerns among 

Members about the hospital mergers, which were brought up, and 

also the community pharmacist issue. And I appreciate, I know you 

all moved and took some action on a hospital merger, and I think 

that is a concern, so I appreciate your vigilance on that. And you 

have also said to other Members that you are aware of the importance of community and local pharmacists and the role they sometimes play on advising people, that ability to go in and talk to your 

local pharmacist. 

With that, I would just say Rachel at Card Services, you know, 

we get more calls on that than anything else. And that is a criminal enterprise. And I just urge you to make that a priority because 

Card Services, this so-called Card Services harasses millions of 

Americans. You know, their phone rings 18 hours a day. And I 

know we have discussed that and you all are trying to innovative, 

and this is a sophisticated criminal enterprises. But they totally 

flaunt the law. Their arrogance is stunning. 

Let me close by saying what other Members have said, and Attorney General Holder I know is concerned about this issue and is 

addressing it. But we imprison more young Black men between the 

ages of 20 and 34 in this country than South Africa under apartheid, which was considered a very regressive regime against our 

black citizens and actually racist. And it is a national tragedy. It 

really is. And when the Bureau of Prisons says we are manufacturing prisoners, not reforming them, manufacturing criminals. 

Violence has dropped since 1980 by a third. In 1980 if you looked 

at the racial makeup of our Federal prisons there was very little 

demographic variant. Since 1980 suddenly young Black men, if you 
81 

were to look at the statistics, have suddenly turned into hardened 

criminals. And I don’t think that is the case. And a lot of it is the 

crack cocaine differential and we have moved against that. 

But I think we have a lot of work yet to be done. And even in 

certain regulations I think we are overcriminalizing, taking regulations that should be civil penalties. And I know you mentioned 

there are some that shouldn’t and have to be careful. 

I am on a task force, in fact I was at the Supreme Court last 

night with the new members of the Sentencing Commission were 

being sworn in, and the Justices there know there is a real problem, they are looking for the Congress. I talked to two of the Justices. 

There is a bipartisan realization in the House and Senate that 

it is a very broken system. And I think it is a civil rights and a 

human rights issue and that it is not your Department. But it is, 

I think, one of the real human rights issues of our age. 

I actually know one Federal judge, a lady, whose husband, because of the story she tells him, goes to the Federal penitentiary 

in Alabama and visits prisoners every Monday. And I encourage 

the Administration to speak out on this. 

The American people don’t understand it. I think they just say, 

well, you know let’s—but these are not violent criminals or if they 

are, we have turned them into that by ago taking a young 19-yearold who might have been a mule. A lot of these people their mental 

capacity, they are actually retarded, and they have been taken advantage of. And they are not, once they come out of prison, sometimes their chances of advancing have pretty much, in many cases, 

dissipated. 

I think it is, and I have talked to Senator Leahy, the Senate is 

going to move legislation, and it is going to come over to the House. 

And it is going to have Rand Paul, Mike Lee, Barbara Mikulski. 

And how do you get people on opposite ends? And here, Mr. Cohen 

and I and Chairman Goodlatte, we are all committed, Raul Labrador. This is something that we need to address. And I know that 

Governor Perry in Texas has talked about need for change. 

So I don’t think anything else we have discussed today affects as 

many people so dramatically. China has four and a half times more 

population, I think, than we are. We have more people in prison 

than China. We are giving the longest sentences today in the history of our country. 

So that concludes our hearing. Thank you very much. 

This is just for the record. You all can go ahead. This concludes 

today’s hearing. Thanks to all our witnesses for attending. Without 

objection, all Members will have 5 legislative days to submit additional written questions for the witnesses or additional materials 

for the record. 

This hearing is adjourned. 

[Whereupon, at 10:54 a.m., the Subcommittee was adjourned.] 

(83) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the Honorable Steve Cohen, a Representative in 

Congress from the State of Tennessee, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law 

The U.S. Supreme Court has referred to the federal antitrust laws as ‘‘the Magna 

Carta of free enterprise,’’ declaring them ‘‘a comprehensive charter of economic liberty aimed at preserving free and unfettered competition.’’ 

Effective antitrust enforcement is key to ensuring a vibrant, competitive marketplace that rewards innovation and creativity and offers consumers greater choice 

and lower prices. In the absence of antitrust enforcement, companies have less incentive to compete, and more incentive to maintain high profit margins at the expense of consumer welfare. 

At the forefront of the effort to ensure that competition remains free and fair are 

the Nation’s principal antitrust enforcement agencies, the Antitrust Division of the 

Department of Justice and the Federal Trade Commission’s Bureau of Competition. 

I applaud both agencies for their vigorous efforts to enforce federal antitrust laws 

in recent years. For example, the Justice Department won a total victory against 

Apple and stopped it from conspiring with publishers to raise prices for consumers. 

Thanks to the Department’s work, consumers will enjoy e-books that are 40% cheaper than they might have been. 

The Department has also successfully obtained criminal fines of more than $1 billion and obtained prison sentences for 28 people for criminal antitrust violations, 

which are the most harmful types of anti-competitive behavior like price-fixing and 

bid-rigging. 

Similarly, the FTC has had a number of notable successes on behalf of consumers, 

including its victory before the Supreme Court in FTC v. Actavis, which found socalled pay-for-delay agreements to be subject to the antitrust laws. 

Meanwhile, both agencies have established the principle that holders of standard 

essential patents may not seek to exclude competitors who rely on the standard 

technology covered by such patents and must license such technology on reasonable 

and non-discriminatory terms. 

My constituents are all too aware of the consequences of lax antitrust enforcement. As I noted back in February, the merger of Delta Airlines and Northwest Airlines has been nothing short of disastrous for Memphis. 

Richard Anderson, Delta’s CEO, promised me in this very room back in 2008 that 

there would be ‘‘no hub closures’’ and that the merged airline would maintain the 

international flight to Amsterdam. At a meeting in Memphis, he pledged to city 

leadership that the Northwest/Delta merger would be one of addition, not subtraction. 

Since then, there has been a string of broken promises. Delta cut the international flight, repeatedly cut service to Memphis and, this year, closed its Memphis 

hub. Service has been cut from 240 flights a day to 40. 

The result was that my constituents were hurt, with a substantial loss of air service and jobs, which ultimately harms Memphis’s competitiveness as a business destination with other cities. 
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Protecting consumers from antitrust violations is important. In addition, though, 

I also hope that Mr. Baer will tell the Attorney General that we also need to protect 

individuals from unjust sentences, as I outlined in a June 18, 2013 letter to the 

President, for which I am still awaiting a response. 

I look forward to hearing from our witnesses as to what efforts the antitrust enforcement agencies are currently undertaking to help ensure free and fair competition in all industries. 

f 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee on the Judiciary 

Today’s oversight hearing on the Department of Justice’s Antitrust Division and 

the Federal Trade Commission’s Bureau of Competition, provides an excellent opportunity for us to focus on the critical purpose of antitrust law: to ensure that businesses do not behave in ways that injures markets, and, ultimately, consumers. 

As to mergers, this means that any transaction that would result in a company 

obtaining an unfettered ability to raise prices or otherwise harm consumers is contrary to basic antitrust policy. 

Thus, we should be especially skeptical about the potential detriment presented 

by a rapid succession of big mergers in a given industry. 

Unfortunately, antitrust scrutiny of mergers has been woefully insufficient over the past 30 years until only recently. 

The very fact that many industries are now dominated by just a handful of very 

large firms attests to this failure of aggressive scrutiny. 

There has been a wave of mergers in industry after industry. Just a few examples 

include the Whirlpool-Maytag, AT&T-BellSouth, AOL-Time Warner, and 

JPMorganChase-BankOne mergers. In the banking industry alone there have been 

47 mergers since 2001. 

Basic economics and common sense should tell us that a few dominant firms 

forces consumers to pay higher prices and to accept suboptimal products or services. 

This hands-off approach to antitrust merger enforcement reflects the misguided 

view that corporate power should trump other interests, including the public interest. As a result, the trend in antitrust law has been against the American consumer. 

Fortunately, recent antitrust enforcement initiatives of both the Justice 

Department and the Federal Trade Commission appear to reflect a positive 

change from prior practice. 

I am very heartened by the renewed vigor in antitrust enforcement that these 

agencies have exhibited in the past year or so. 

Under the Obama Administration, the Justice Department has aggressively pursued litigation to block large, high-profile, and potentially anticompetitive mergers, 

including lawsuits to block the proposed mergers of AT&T and T-Mobile, AnheuserBusch InBev and Grupo Modelo and, most recently, American Airlines and US Airways. 

Such actions would, for the most part, have been unexpected in previous Administrations going back a generation. 

Even more important is the fact that these suits have achieved pro-consumer results. 

AT&T and T-Mobile dropped their plans to merge, while Anheuser Busch agreed 

to divest itself of all of Grupo Modelo’s U.S. business in response to the DOJ’s lawsuit. 

The FTC, meanwhile, was able to achieve an important victory for consumers before the U.S. Supreme Court this year in the FTC v. Actavis case, which held that 

agreements between brand-name and generic drug manufacturers to delay introduction of cheaper generic drugs can be subject to antitrust laws. 

Such successes, however, do not necessarily mean further oversight is 

unnecessary. For instance, the Justice Department’s tentative settlement agreement announced earlier this week with respect to the proposed American Airlines 

and US Airways presents some concerns. 
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While this settlement agreement leaves consumers somewhat better off than they 

would have been had the merger gone through as proposed, I remain concerned that 

the new merged carrier—which would be the largest in the world—will result in 

only four domestic airlines controlling more than 80% of the market. 

As the New York Times noted in an editorial yesterday, ‘‘the agreement simply 

ignores the central concern the Justice Department expressed in its lawsuit: the 

four big airlines—United, Delta, Southwest and the merged American—will have an 

even greater incentive to raise fares and fees because consumers will have fewer 

choices.’’ 

In closing, I note that strong antitrust enforcement is not possible without adequate resources. 

As with other federal agencies, the DOJ and the FTC must have sufficient funding to pay for high-caliber attorneys, economists, and other staff and for vigorous 

and thorough investigations and, when necessary, litigation. 

The continuing budget battles in Congress, including sequestration and the recent 

fight over a continuing resolution that led to the shutdown of the federal government, threaten to sap already limited resources for all of our federal agencies. 

Some of the recent successes in antitrust enforcement would be undermined, and 

future enforcement efforts could be compromised. That could return us to the bad 

old days of lax antitrust enforcement, with higher prices and fewer choices for consumers. I urge my colleagues to make every effort not to go down that road. 

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Response to Questions for the Record from the Honorable William J. Baer, 

Assistant Attorney General, Antitrust Division, United States Department 

of Justice 
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Response to Questions for the Record from the Honorable Edith Ramirez, 

Chairwoman, Federal Trade Commission 
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