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ANTITRUST AGENCIES: DEPARTMENT OF JUSTICE 

ANTITRUST DIVISION AND FEDERAL TRADE 

COMMISSION BUREAU OF COMPETITION 

HEARING 

BEFORE THE

TASK FORCE ON ANTITRUST 

AND COMPETITION POLICY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 25, 2007 

Serial No. 110–158 

Printed for the use of the Committee on the Judiciary 

( 

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

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

TASK FORCE ON ANTITRUST AND COMPETITION POLICY

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

BETTY SUTTON, Ohio 

ANTHONY D. WEINER, New York 

DEBBIE WASSERMAN SCHULTZ, Florida 

RIC KELLER, Florida 

STEVE CHABOT, Ohio 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

LAMAR SMITH, Texas, Ex Officio 

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

(III) 

C O N T E N T S 

SEPTEMBER 25, 2007 

Page 

OPENING STATEMENT 

The Honorable Ric Keller, a Representative in Congress from the State of 

Florida, and Ranking Member, Task Force on Antitrust and Competition 

Policy ..................................................................................................................... 1 

WITNESSES 

The Honorable Deborah Platt Majoras, Chairman, Federal Trade Commission 

(FTC) 

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

Prepared Statement ............................................................................................. 6 

The Honorable Thomas O. Barnett, Assistant Attorney General, Antitrust 

Division, Department of Justice 

Oral Testimony ..................................................................................................... 49 

Prepared Statement ............................................................................................. 51 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Lamar Smith, a Representative in 

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

the Judiciary ......................................................................................................... 2 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Chairman, Task Force on Antitrust and Competition Policy .. 98 

(1) 

ANTITRUST AGENCIES: DEPARTMENT OF JUSTICE ANTITRUST DIVISION AND FEDERAL 

TRADE COMMISSION BUREAU OF COMPETITION 

TUESDAY, SEPTEMBER 25, 2007 

HOUSE OF REPRESENTATIVES,

TASK FORCE ON ANTITRUST

AND COMPETITION POLICY

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 1:15 p.m., in room 

2141, Rayburn House Office Building, the Honorable Zoe Lofgren 

(acting Chair of the Task Force) presiding. 

Present: Representatives Lofgren, Cohen, Sutton, Chabot, Keller, 

Lungren, Cannon, Issa, Smith, and Pence. 

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

Minority Counsel; Ted Kalo, General Counsel-Deputy Staff Director; Sean McLaughlin, Minority General Counsel; Teresa Vest, Majority Chief Clerk. 

Ms. LOFGREN. [Presiding.] Good afternoon. The hearing will come 

to order. And the Chair is authorized to call a recess at any time. 

In the absence of our Chairman, Mr. Conyers, who is temporarily 

detained at a meeting, I will invite our Ranking Member to make 

his opening statements in hopes that Mr. Conyers will be here soon 

to give his. 

Mr. KELLER. Well, thank you, Madam Chairwoman, for initiating 

and convening this important hearing of the Task Force on Antitrust and Competition Policy. And I want to especially thank our 

witnesses, Mr. Barnett and Ms. Majoras for being here today. 

Antitrust law affects nearly every industry. So far this Antitrust 

Task Force has held important hearings on the proposed XM-Sirius 

Satellite Radio merger and the somewhat controversial issue of 

credit card interchange fees. 

Previously the Judiciary Committee has held hearings on telecommunications, sports, oil and gas, utilities, ocean shipping, airlines, agriculture, and financial services related to antitrust issues. 

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

vital that we examine how well these laws are working, particularly in light of the innovation that today’s high-tech economy has 

brought. Today’s hearing gives us the opportunity to see how those 

laws are being enforced and whether there are any areas where 

congressional intervention would be appropriate. 

2 

From their written testimony, it appears that last year the Antitrust Division of the Department of Justice and the Federal Trade 

Commission have both been very active. These two agencies have 

been involved in enforcement actions in the real estate, oil and gas, 

health care, airline and telecommunications fields, just to name a 

few. Both agencies have filed amicus briefs in numerous cases before the U.S. Supreme Court in what has been one of the most active periods of antitrust jurisprudence in years. 

The antitrust agencies are also in the best position to assess recent trends in international antitrust enforcement such as the European Union’s recent decision in the Microsoft case and to provide 

Congress with guidance on how best to promote comity between the 

multiple antitrust enforcement agencies around the world. Because 

of their activities, DOJ and FTC can also serve as a guide for this 

task force as it considers future hearings. 

For instance, I understand that the FTC has particular interest 

in legislation that would make certain types of settlements in pharmaceutical patent litigation illegal. I am very interested to hear 

their views on this topic and perhaps possibly holding hearings on 

this issue in the future if needed. 

Again, I want to thank the witnesses very much for being here 

today. And I look forward to hearing your testimony later. 

And, Madam Chairman, at this point I will yield back the balance of my time. 

Ms. LOFGREN. Thank you. 

Mr. Smith, if you wanted to put your opening statement in the 

record or—— 

Mr. SMITH. Yes, Madam Chair. I ask unanimous consent to have 

my opening statement made a part of the record. Thank you. 

Ms. LOFGREN. So ordered. 

[The prepared statement of Mr. Smith follows:] 

PREPARED STATEMENT OF THE HONORABLE LAMAR SMITH, A REPRESENTATIVE IN

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

JUDICIARY

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

Antitrust and Competition Policy. 

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

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

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

healthy competition. 

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

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

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

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

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

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

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

state antitrust laws. 

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

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

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

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

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

considering them. 

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

3 

Today’s hearing gives us the opportunity to see how the two antitrust agencies 

are faring in enforcing the law. On the one hand, I am heartened by the recent announcement that British Airways and Korean Air Lines have agreed to pay criminal 

fines of $300 million each for their part in a price fixing scandal. 

Similarly, I am pleased to see that the FTC, after studying the broadband industry, has found that there is healthy competition in that sector. DOJ, too, has found 

that competition in that industry is robust and the so-called ‘‘problem’’ that net neutrality advocates are trying to ‘‘fix’’ has not been adequately demonstrated. 

On the other hand, there have been some recent missteps as well. It was troubling to read that the FTC, in the course of its efforts to block the merger between 

Whole Foods and Wild Oats food stores, disclosed—albeit inadvertently—competitively sensitive information about the transaction. The FTC subsequently lost its 

challenge in court, but, according to the written testimony of Chairwoman Majoras, 

continues to pursue administrative remedies against the parties. 

And, the European Union’s recent action in the Microsoft case raises questions 

about whether—and how—comity and a common understanding of antitrust laws 

can be promoted between the United States and the rest of the world. 

I look forward to hearing the testimony of Chairwoman Majoras and Assistant Attorney General Barnett on these and other matters. 

I yield back the balance of my time. 

Ms. LOFGREN. And all Members may put their opening statements in the record. Mr. Conyers may wish to deliver his opening 

statement when he arrives from his meeting. 

I will just note that I think the antitrust portfolio is one of the 

most important of the DOJ. Those of us who are fortunate to live 

in a country that has a vigorous capitalist economy also know that 

competition is protected through vigorous antitrust review. 

And I will note that I do have concerns over the level of review 

of mergers that have occurred in DOJ and other enforcement activities. And I will certainly get into that when it is time for questions. 

At this point, I would like to introduce our witnesses and ask 

them to make their opening statements. 

First we have Deborah Platt Majoras, who is our first witness. 

She is the Chairman of the Federal Trade Commission (FTC). Ms. 

Majoras has spent much of her career working on antitrust issues. 

From April of 2001, through 2003, she served first as the Deputy 

Assistant Attorney General and then as the Principle Deputy for 

the Department of Justice’s Antitrust Division. Prior to her time at 

the Justice Department, she was a partner in the antitrust section 

of the Jones Day Law Firm. 

Welcome to you, Ms. Majoras. 

Next we have Thomas O. Barnett. Mr. Barnett is the Assistant 

Attorney General for the Department of Justice’s Antitrust Division. He was confirmed as Assistant Attorney General in 2006, but 

had been serving as the Acting Assistant Attorney General for the 

division since July of 2005. 

Prior to his tenure as Acting Assistant Attorney General, Mr. 

Barnett had, since 2004, served as the Antitrust Division’s Deputy 

Assistant Attorney General for civil enforcement. Before joining the 

Justice Department, Mr. Barnett was a partner at Covington and 

Burling, where he was vice-chair of the firm’s antitrust and consumer protection practice group. 

Welcome, Mr. Barnett. 

And if you would note the machine on the table, we have 5 minutes to hear your oral testimony. We do ask when the yellow light 

4 

goes on that you have about a minute left and that you sum up. 

And your full written statements will be made part of the record. 

So first, let me call on you, Ms. Majoras, to give us your statement. 

TESTIMONY OF THE HONORABLE DEBORAH PLATT MAJORAS, 

CHAIRMAN, FEDERAL TRADE COMMISSION (FTC) 

Ms. MAJORAS. Madam Chairwoman, Ranking Member Keller, 

Members of the Task Force, thank you for the opportunity to discuss the FTC’s efforts to protect consumers by ensuring competition, which is a critical underpinning of our market economy, remains robust. To this end, at the FTC we focused our enforcement 

effort on the areas that are most likely to impact consumers, namely, health care, energy, real estate, technology and retail sectors. 

During the past 3 fiscal years, the FTC’s competition work has 

produced 51 merger enforcement actions or withdrawals of mergers, which derived from 84 second requests, that is, expanded investigations, and 22 nonmerger actions. During the same time period, we have completed 12 statutorily mandated rule makings and 

reports, eight public conferences and workshops, plus a set of hearings on issues arising under section 2 of the Sherman Act, and nine 

reports on competition issues significant to consumers. 

Through the first 11 months of this fiscal year, 2007, pre-merger 

filings have increased 23 percent in the same period in the last fiscal year. And the number of investigations that we have undertaken reflects this continual uptick. Since January of this year, we 

have litigated three preliminary injunction actions in Federal 

court. 

On the health care front last month, the Commission ruled that 

Evanston Northwestern Health Care Corporation’s consummated 

acquisition of Highland Park Hospital was anticompetitive, that it 

resulted in higher prices, and a substantial lessening of competition for acute care in-patient hospital services in parts of Chicago’s 

northern suburbs. 

The Commission also has challenged several recent health care 

transactions and achieved substantial relief for consumers in the 

areas of generic drugs, over-the-counter medications, injectable analgesics, and other medical devices and diagnostic services. 

The Commission continues to work to detect and investigate anticompetitive agreements between drug companies that delay generic 

entry. Indeed, our Federal court challenge to an alleged anti-competitive agreement involving Ovcon, a branded oral contraceptive 

product, has led to the introduction of lower priced generics. 

So far in 2007, the Commission has challenged three mergers in 

the energy industry. Western Refinery’s acquisition of Giant Industries, unsuccessful in district court. Equitable Resources’ proposed 

acquisition of The Peoples Natural Gas Company, which is still in 

litigation, and the proposed $22 billion deal whereby energy firm, 

Kinder Morgan would be taken private by its management and a 

group of investment firms, including the Carlysle Group and 

Riverstone Holdings. We also charged the American Petroleum 

Company with illegally conspiring with competitors to restrict the 

importation and sale of motor oil lubricants in Puerto Rico. 

5 

The FTC has actively investigated restrictive practices in the residential real estate industry recognizing that the purchase of a 

home is the most significant investment that most consumers will 

ever make. In the past year alone, the agency has brought eight 

enforcement actions against associations of realtors or brokers who 

adopted restrictive rules that allegedly withheld the valuable online benefits of their multiple listing services that they control from 

consumers who chose to enter into nontraditional type contracts 

with real estate brokers. 

In the critical technology arena, in February of 2007, the Commission issued a final opinion and order finding that technology developer, Rambus, Inc., had unlawfully monopolized the markets for 

four computer memory technologies that had incorporated into industry standards for D-ram chips. And we required Rambus to license its SD-ram and DDRSC-ram technologies according to maximum allowable royalty rates. This was the Commission’s first litigated case in the standards setting area and we believe the first 

time in 22 years that the Commission has heard a monopolization 

case in administrative litigation. 

The Commission also guards against anti-competitive conduct in 

the retail sector. And I would be happy to elaborate on that later. 

In addition, complementing our law enforcement work in the 

past year, we have issued reports on competition issues in real estate, gasoline, broadband and intellectual property, and provided 

competition analysis to policy makers regarding such areas as attorney advertising and pharmacy benefit managers. We aided the 

NHS modernization commission in its examination of the U.S. antitrust laws. And to ensure that our knowledge remains fresh, we 

are actively engaged in market research with recent hearings examining the boundaries of permissible and impermissible conduct 

under section 2 of the Sherman Act, a workshop to examine 

broadband connectivity competition policy, and a 3-day conference 

on energy markets in the 21st century. 

Madam Chairman, Members of the Task Force, the FTC is committed to working to preserving competition and to protecting consumers. And we look forward to speaking with you further about 

this. And we appreciate your support. Thank you. 

[The prepared statement of Ms. Majoras follows:] 

6 

PREPARED STATEMENT OF THE HONORABLE DEBORAH PLATT MAJORAS


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Ms. LOFGREN. Thank you very much. 

Mr. Barnett, you are now welcome to deliver your oral testimony. 

TESTIMONY OF THE HONORABLE THOMAS O. BARNETT, ASSISTANT ATTORNEY GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE 

Mr. BARNETT. Madam Chairwoman, Ranking Member Keller, 

and other Members of the Task Force, it is a pleasure to appear 

before you. I thank you for the opportunity to highlight the Division’s accomplishments and answer your questions. I also appreciate the active interest and strong support of our law enforcement 

mission that the Judiciary Committee through the continuing work 

of the Antitrust Task Force has provided to us. 

Competition is the cornerstone of our Nation’s economic foundation. Antitrust enforcement promotes and protects the robust free 

market economy by helping ensure that anti-competitive agreements, conduct, and mergers do not harm consumers. In my short 

time, I will briefly highlight just a few of our outstanding achievements. 

On cartel enforcement, we thank the Committee for its efforts in 

increasing the criminal fines and statutory maximum sentences for 

Sherman Act offenses in 2004 as well as for making antitrust offenses a predicate act for wiretapping authorities. The division’s 

cartel enforcement efforts had an outstanding year for fiscal year 

2007, which ends this week. The division more than doubled its 

record for the most total jail time imposed, obtained the second 

highest amount of fines in division history, and succeeded in obtaining the longest jail sentence for a foreign national ever charged 

with an antitrust offense. 

As one specific example of success, on August 23rd of this year, 

British Airways and Korean Airlines each pleaded guilty and were 

sentenced to pay separate $300 million fines for fixing cargo and 

passenger fares. Each fine ties the record for the division’s second 

largest fine ever. 

On the same day, the United Kingdom’s Office of Fair Trading 

announced a similar resolution with British Airways with a fine of 

approximately $250 million. This was the first time that the Division and the OFT have brought parallel charges. 

One important focus of the Division’s criminal enforcement efforts in the past year has been fraud and corruption in the bidding, 

contracting, and procurement process. These cases take money out 

of the pocket of every American taxpayer and deserves severe condemnation. They deal with U.S. operations in Iraq, construction in 

New Orleans following Hurricane Katrina, U.S. Navy, the Department of Defense, U.S. schools, among others. 

Merger enforcement continues to be one of the Division’s core priorities. The Division is committed to challenging mergers that the 

evidence developed through a thorough investigation evaluated 

pursuant to rigorous economic analysis demonstrates is likely to 

harm U.S. consumers and businesses. 

In fiscal year 2007, six transactions were restructured or abandoned by the parties in response to a Division investigation. And 

the Division filed an additional four merger enforcement actions in 

district court. 

50 

Some of our most significant recent merger actions include the 

following: The Division challenged Monsanto’s $1.5 billion proposed 

merger between Monsanto and Delta and Pine Land and obtained 

a consent decree that required Monsanto and DPL to divest a 

major seed company, multiple cotton seed lines, and other valuable 

assets. 

The Division is currently litigating to challenge to a transaction 

between two daily newspapers in Charleston, WV. In August 2006, 

the Division challenged Mittal’s proposed acquisition of Arcelor as 

likely to adversely affect competition in the $2 billion tin mill products market in the Eastern United States. 

The Division also seeks continually to improve its merger review 

process and its transparency. In December of last year, we announced a revision to the 2001 merger review process initiative. 

This initiative helps us identify and devote increased resources to 

those transactions that should be challenged. Our transparency efforts also have included the release of a joint DOJ-FTC commentary on the Horizontal Merger Guidelines in March of 2006. 

The Division remains active in other areas such as holding hearings in conjunction with the FTC on section 2 standards. In addition, with more and more countries adopting an antitrust enforcement regimes, we make a priority of strengthening international 

cooperation and promoting antitrust policy convergence. 

In the last year, we have worked closely with multi-lateral organizations around the world such as the OECD and the International Competition Network and further developed strong bilateral relationships in other countries. I emphasize that none of what 

I have discussed today could have been accomplished without the 

dedicated career staff of the Antitrust Division. It is an honor and 

a privilege to serve with them. 

I am pleased with what we have accomplished, but I recognize 

that the hallmark of any successful organization is a continuing desire to improve. In that regard, we look forward to working with 

the Members of the Task Force and your respective staff. 

[The prepared statement of Mr. Barnett follows:] 

51 

PREPARED STATEMENT OF THE HONORABLE THOMAS O. BARNETT


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Ms. LOFGREN. Thank you, Mr. Barnett. And thank you both for 

your testimony. 

We will now move to questions from the task force. And we will 

begin with our Ranking Member, the gentleman from Florida, Congressman Ric Keller. 

Mr. KELLER. Thank you, Madam Chairman. 

And, Ms. Majoras, let me begin now with you. I know you only 

had 5 minutes to give us your opening statement. And one of the 

things you weren’t able to expound upon was some of the work you 

do on behalf of consumers in the retail sector to tackle anticompetitive behavior. 

Let me begin by asking you if you had a chance, you or your 

staff, to observe the hearing that this task force did in July on the 

issue of credit card interchange fees and the impact those have on 

the retail sector. 

Ms. MAJORAS. Thank you, Ranking Member Keller. I know that 

we followed the issue with some interest. I will say this, though. 

The Justice Department and the FTC try to divide our work. And 

I hate to do this on the very first question, but the interchange fee 

issues have traditionally resided with the Department of Justice. 

And so, they have brought cases in the area. And so, we are less 

informed on the issue. 

Mr. KELLER. Okay. 

And, Mr. Barnett, let me ask you. Was that a hearing that you 

were able or your staff was able to observe? And is there anything 

that your office is doing to take a look at this interchange fee issue 

and the impact on the retail sector and consumers? 

Mr. BARNETT. Yes, we are very focused on this issue, not only 

through events such as the hearing, but through conducting our 

own monitoring activities and investigations in the area. Without 

commenting on any specific investigation, I would observe that 

these markets are somewhat complicated. They are what our 

economists like to call two-sided markets, which makes the analysis of competitive effects and the impact on consumer welfare 

more challenging than some other areas. 

Notwithstanding that, that is a challenge that we think is a very 

important area of the economy. It is an important sector. And so, 

we are looking at it. We have significant resources devoted to evaluating that issue right now. 

Mr. KELLER. Well, thank you. And it is also a two-sided issue, 

as you know. And certainly, the credit card electronic payment system has revolutionized the world and made it easier. And we are 

all thankful for that. 

And then on the other side, we hear the retailers telling us, 

‘‘Hey, this is 60 percent of the market share, MasterCard, Visa. 

And they can charge us as much as we want, and there is nothing 

we can do about it.’’ So we are actively looking at both sides as 

well, as you are. 

While I have you there, Mr. Barnett, let me ask you. We had a 

hearing back in February on the XM-Sirius satellite merger. Were 

you or your staff able to observe that hearing and the testimony 

of our witnesses such as the CEO, Mel Karmazin? 

Mr. BARNETT. Certainly, Ranking Member Keller, any transaction for which we are conducting a full-fledged investigation. And 

83 

that is certainly a transaction on which we are quite focused and 

conducting an extensive evaluation. We try to obtain information 

from wherever we think we can that will be useful to us. And information through hearings such as the one as this Committee held 

having industry participants providing testimony is very relevant 

information. And—— 

Mr. KELLER. And I don’t want to cut you off, but my time is running out. So let me just do a follow-up and give you a chance to 

answer it. 

I know there is some things you can’t talk about. And I am not 

going to ask you what your decision is going to be or what your 

thoughts are. But can you give us an idea of the timeframe for 

whatever decision is ultimately made and what the status of this 

review is right now? 

Mr. BARNETT. I can’t. I would like to, but I can’t give you an 

exact timeframe. We want to make sure that we get the information that we need so that we can conduct an appropriate analysis 

and evaluation. And we will not decide until we have done that. 

We want to do that as quickly as possible. But we also want to 

get to the right answer. 

Mr. KELLER. Thank you. 

I have several more questions, but my time is expired, Madam 

Chairman. So I will yield back the balance. 

Ms. LOFGREN. Thank you, Mr. Keller. 

I want to follow-up on the credit card interchange fee issue because the hearing that we had was really pretty stark. And it became pretty clear in the course of the hearing that this is a very 

one-sided operation where the retailers in some cases they weren’t 

even permitted to see the contracts. And they are very high fees. 

I actually was so frustrated at the apparent lack of action in DOJ 

that I contacted the attorney general of California to see if States 

have an opportunity. And they actually have an active investigation ongoing on this issue. 

I am wondering, if you can’t tell us obviously what you are going 

to decide, what is your estimate on the timeframe for your investigation of this situation. Can you tell us that, Mr. Barnett? 

Mr. BARNETT. Again, I don’t have a precise estimate. I can tell 

you that we try to be thorough and comprehensive in our evaluation. To give you an example, when the Division brought an action 

in the credit card industry involving Visa and MasterCard, that investigation took a number of years before we had collected the information that we felt was necessary to pursue the challenge. We 

then filed a suit and ultimately prevailed. 

So this is a much more recent investigation. I expect that it will 

take us some time. But again, we like to do these as quickly as we 

responsibly can. And that is what we are committed to do here. 

Ms. LOFGREN. May I ask how many investigators you have assigned to this? 

Mr. BARNETT. I don’t have an exact number here. 

Ms. LOFGREN. If you could get back to us on that, I would appreciate it. You know, obviously we want a thorough investigation. 

But how much effort you put into something also depends on how 

fast it is going to be done. And in the meanwhile, if the testimony 

we received is correct, there is a lot of retailers in the country that 

84 

are being on the short end of the stick and consumers paying higher prices than they really should. 

Mr. BARNETT. Well, Madam Chairwoman, it is a little difficult for 

me to give an exact number in that the number of people involved 

at any given point in time varies depending on what is going on 

in the investigation. If we are taking depositions—— 

Ms. LOFGREN. Well, perhaps you can give me a range how many 

and over what period of time. 

I want to talk about standard setting. I don’t want to get into 

individual cases. But in the tech world, it is a difficult matter. You 

do want standard setting. You know, that really does advance the 

growth of technology. On the other hand, you can have problems 

with standard setting, as we all know. 

And I know that the joint I.P. report that you have issued indicates that the agencies are going to evaluate joint activity to establish licensing terms under the rule of reason. Have you been able 

jointly to do that kind of follow-up and tracking of these standard 

setting operations? And if so, what have you found? 

Mr. BARNETT. Well, we are continually monitoring various developments in different industries. The Division has issued a couple 

of business review letters, one involving VITA, an organization 

called VITA, the other one, I believe, IEEE, where we applied a 

rule of reason type analysis to some disclosure policies that those 

organizations were interested in pursuing to try to address the 

issue of what some people called, sort of, hold-up issues after they 

set a standard, a member who has a patent—— 

Ms. LOFGREN. Right. No, I am familiar with the issue. 

Mr. BARNETT. And in those instances, we found that under a rule 

of reason type approach that the disclosure policies were reasonable and we thought would be potentially procompetitive. 

Ms. LOFGREN. I am wondering—my time is almost up—whether 

you can explain to us maybe in a follow-up letter how you go about 

tracking this, as you said you would in the report, and whether it 

is pursuant to the National Cooperative Research Act and if you 

have a comment on how that has worked in terms of spurring this 

kind of disclosure. It would be very helpful. 

I know, Ms. Majoras, in the remaining seconds. 

Ms. MAJORAS. Very happy to do that. We have been very active 

in the standards setting arena. And we are monitoring complaints 

and so forth as we get them from standard setting organizations, 

so we can absolutely give you a follow-up on that. 

Ms. LOFGREN. I would appreciate that. My time has expired with 

actually 18 seconds to go. 

And so, I will now call on the gentleman from Ohio, Mr. Chabot, 

for his questions. 

Mr. CHABOT. Thank you very much, Madam Chair. 

And I would ask the first question to either or both of the witnesses here. The Antitrust Modernization Commission made a series of recommendations regarding the Hart-Scott-Rodino Act and 

the merger process as it relates to the roles and responsibilities of 

the FTC and the Department of Justice. 

What have you done to facilitate the implementation of these responsibilities, particularly as it relates to prompt clearance to either the FTC or the Department of Justice and parity among the 

85 

FTC and Department of Justice enforcement mechanisms? And you 

can both take a shot at it, if you would like. 

Ms. MAJORAS. All right. Well, before the AMC even issued its 

recommendations, we had already been working on those things. 

The issue of burden in the merger review process is one that has 

been with us for years and one that I have been particularly interested in both in the private sector, at the DOJ, and at the FTC. 

And so, in February of 2006, we put into place some new measures to try to curb the burdens in that process. Some of those 

match pretty completely to the AMC recommendations. Some of 

them don’t. 

A few of the AMC recommendations we don’t necessarily agree 

with because we think it is such an effort to micro-manage the 

process that in the realities of trying to do a merger investigation, 

it would inhibit our abilities. But we are trying very hard to curb 

the burden because, frankly, it puts a lot of burden on us as well. 

The second thing on the clearance issues, we have currently— 

this issue has been with us for years. We have tried to fix this, you 

know, how we allocate the work between us. We are trying again. 

We have people from both agencies sitting down working together and trying to come up with a new system. But some people 

on the bar, of course, in the business community think that we 

should work with Congress to actually make a decision. 

Mr. CHABOT. Okay. Thank you very much. 

Anything you would like to add, Mr. Barnett? 

Mr. BARNETT. Just quickly on the burden of the review process. 

The Division back in 2001, frankly, when chairman Majoras was at 

the Division, launched a review process initiative that was designed to reduce the burden, increase the efficiency. That has 

worked very well. We nonetheless updated and revised it a bit in 

December of last year. 

Overall we think we are more successful in clearing transactions 

without having to issue a second request identifying them early as 

not a threat to competition. And we continue to work in that regard 

because, as the Chairman says, the vast volumes of information 

and documents that we receive are a burden on us as well as the 

parties. 

On clearance, I readily endorse what the Chairman said. We 

have people working on it right now, and we are committed to trying to improve that process as well. 

Mr. CHABOT. Thank you very much. 

My second question is what are the implications of the increasing 

globalization of antitrust law. Does America’s view of antitrust law, 

that it seeks to protect competition, not particular competitors, hold 

true in other jurisdictions? And should America be promoting its 

view of antitrust laws abroad? And if so, how should we do that? 

And again, you can both take a shot at it. 

Mr. BARNETT. Sure. Well, there are two sides to the coin on this 

one. On the cartel enforcement front, the globalization of enforcement has been a benefit to the United States. It has made it easier 

for us to detect, gather evidence about and prosecute cartels and 

those that prey upon American consumers. So that has been a— 

and the example of the OFT going after B.A. at the same time we 

did is a good illustration of the benefits. 

86 

With respect to mergers and other kinds of conduct, there are 

challenges that are there that having different approaches, different processes can create burdens. Having divergent outcomes 

can create very significant concerns. And we at both agencies have 

been very focused on this for years. 

That was part of the purpose of the agencies helping to found the 

International Competition Network in 2001 and why we are so engaged through organizations, through bilateral relationships, why 

we have sent people to China who has recently enacted an anti-monopoly law. It is a concern, and it is one that we are trying to address. 

Mr. CHABOT. Thank you. 

Ms. Majoras? 

Ms. MAJORAS. Thank you. There is no question that we in our 

work internationally—and that includes with developed countries, 

so our major trading partners, but also with developing countries 

who now have antitrust agencies and are trying to develop market 

economies after years of having state-based economies. So we are 

doing work with all of them. 

And, yes, we definitely are trying to influence the process by 

what we have learned that we have done well and that we haven’t 

done so well in enforcement of antitrust over the years in the 

United States. So that is clearly a big part of what we are doing. 

It is a challenge. In 1990, we had about 25 competition agencies 

worldwide. And today we have over 100. So it is a lot to absorb into 

the competition group, if you will, in a short period of time. 

Mr. CHABOT. Thank you very much. 

I think my time is expired, Madam Chair. Thank you. 

Ms. LOFGREN. Thank you. 

The gentlewoman from Ohio, Ms. Sutton? 

Ms. SUTTON. Thank you, Madam Chair. 

Thank you both for your testimony. You made it clear in your remarks that in the United States the Antitrust Divisions of the Department of Justice and, of course, the FTC review various mergers 

and acquisitions to consider whether they have anti-competitive effects. And this sort of follows up on my colleague from Ohio’s question. 

So when a major hospital or hospital firm or a bank seeks to acquire another, we consider here in this country if the merger would 

put any single player in a market in a position to manipulate the 

market. But while antitrust considerations apply to U.S. firms, we 

are now, as you point out in your testimony, living in a global 

world. 

Trade agreements, starting with the 1994 NAFTA and the 1995 

WTO, contain various service sector market access conditions that 

provide the right for foreign firms in covered sectors to establish 

and operate in the United States through mergers and acquisitions 

and startups. And the market access rights for those foreign firms 

established in the WTO’s general agreements on trade and services 

and the NAFTA and CAFTA and other free trade agreements, including the one that will be voted on shortly here with Peru, guarantees such market access rights free of government limits on the 

size of the firm, the number of employees. 

87 

The United States has submitted its own hospitals, insurance, 

banking and other financial service sectors to such commitment. So 

I have a couple of questions. 

I mean, can you tell me what would happen when a foreign firm 

already operating with a sizeable market in the U.S. then sought 

to acquire another large U.S. operation in the same sector? And 

wouldn’t those extreme service sector market access rights for foreign firms in our trade agreements conflict with our own domestic 

antitrust policies? 

Mr. BARNETT. If I understand the question, my understanding at 

least is if a foreign firm has operations in the United States and 

they seek to acquire another United States firm, that transaction 

would be subject to section 7 of the Clayton Act and section 1 of 

the Sherman Act. And we would review it. 

And if we found it constituted a violation of the law, we would 

pursue it. I am not aware of there being a trade barrier or a bar 

to our pursuing such a transaction. 

Ms. MAJORAS. Indeed, I would just add that today, despite what 

trade agreements say, if a foreign firm that operated in the United 

States and sold goods to our consumers wanted to merge with another foreign firm that also had sales in the United States and that 

were to present a competitive problem, we could go after that 

merger as well. So I agree with Mr. Barnett. I don’t see that as 

raising a problem for our enforcement. 

Ms. SUTTON. And has that happened at all? Have you gone after 

any foreign firms? 

Ms. MAJORAS. Sure. I am trying to think of the particular examples. I mean, we required certainly, for example, we had British 

Petroleum take over Amoco some years ago. And the FTC required 

major divestitures in that particular case. 

Mr. BARNETT. I would give the example of Mittal, Arcelor last 

year, two steel companies. Mittal is Indian, but based in Europe. 

And Arcelor, the target, is a French headquartered company. They 

both had operations in the U.S. And we sought and obtained a significant divestiture to remedy competitive harm in the United 

States. 

Ms. SUTTON. Okay, just so I understand correctly, you are saying 

that all of our antitrust policies can be applied to foreign firms operating in the United States? 

Ms. MAJORAS. That is essentially how the jurisdiction works. Obviously, there are legal terms for exactly how it works, but foreign 

firms operating in the United States that sell goods here we have 

not had a jurisdictional problem in attacking practices when necessary. 

Ms. SUTTON. Are you consulted when the United States is negotiating the trade agreements to make sure that there aren’t any conflicts? 

Mr. BARNETT. We not only are consulted, but we, particularly 

with some of the recent trade agreements, there have been competition chapters or sections to it. We have been active participants. We have been at the table to help guide those negotiations 

and generally think they have gone quite well. 

Ms. SUTTON. And both of you? 

88 

Ms. MAJORAS. That is correct, both agencies together with USTR 

and commerce. 

Ms. SUTTON. Okay, great. Thank you. 

I yield back. 

Ms. LOFGREN. The gentlelady yields back. 

I would like to recognize the gentleman from California, Mr. 

Lungren. 

Mr. LUNGREN. Thank you very much, Madam Chairwoman. 

And I thank the witnesses for appearing. This may sound like a 

strange question coming from me, but when we talk about that we 

applaud the globalization of the antitrust concept and that we attempt to influence or exert our influence effectively as we can for 

other countries to adopt the same approach, I wonder how you respond to the question from some other countries about the multiplicity of authorities that can handle antitrust cases in the United 

States. 

Not only the two of you, but, as a former Attorney General of 

California, we jealously guarded our authority. We attempted, I 

thought, to try and work with the Justice Department, particularly 

the U.S. Justice Department to ensure that we were working in 

concert and didn’t sort of double up in inconsistent ways. 

But if we were to look at a foreign country and we were to look 

at them with a regimen for antitrust law or call it what you will, 

that appeared to have a multiplicity of authorities to which American companies would have to respond and in some ways just the 

time it would take to go through the multiplicity of authorities 

would delay our entry into the marketplace or effective way of 

doing it, we might take umbrage at that. 

And so, my question is, can you give us an idea of how you would 

explain the legitimacy of having a multiplicity of authorities, how 

you attempt to ensure that that does not inadvertently add uncertainty to the economic decision-making that really doesn’t go to the 

core of antitrust questions, but to the core of decision making. 

Ms. MAJORAS. Terrific question, one that we do grapple with. We 

have been asked many times. 

I can remember very recently in China being asked very specifically about why we have two antitrust agencies and how that all 

works. And to tell you the truth, my response is that if you were 

starting from scratch, you might not do it this way. 

I think our system is working very well today because we have 

adapted it. But one has to ask the question how many layers of enforcement do you need, because, of course, the problem with overenforcement of the antitrust laws is that the market starts to 

freeze up, as heavy regulation does in other contexts. 

And so, suddenly the very competition that you want to protect 

you are squelching instead. And so, we talk about that. We talked 

about how we work together with each other, how we worked with 

sectoral regulators like the FTC, how we work with the States and 

how private enforcement works and some of the ways in which private enforcement, which Europe is now looking at, might be done 

in a way to avoid some excesses. 

Mr. BARNETT. I completely agree with that and would just add 

briefly that it does present potentially a very significant burden 

and obstacle to marketplace competition and efficient operation of 

89 

the markets. I think it is incumbent upon the various antitrust enforcement authorities—for example, the FTC, the DOJ, and the 

various State attorneys general—to coordinate and to cooperate in 

a way that minimizes those burdens. 

And one example I have given is if we are going to pursue a joint 

enforcement action or a joint investigation, it should appear to the 

parties as if there really is only one investigator and one prosecutor. That is the ideal situation to try and minimize that burden. 

But the potential for harm is very real. 

Mr. LUNGREN. Ms. Majoras, let me just ask you a question on a 

particular case. The FTC recently had the case of the proposed 

merger between Whole Foods and Wild Oats Grocery Stores, which 

was unsuccessful in Federal District Court. In your written testimony you indicate that the Federal Trade Commission is still pursuing an administrative action against Whole Foods. 

Can you explain that? Because from the outside it would appear 

you lost in court, but it is like, okay, we lost there, but we still got 

you. 

Ms. MAJORAS. Of course. The way the Congress set up the FTC 

when we believe that a merger would be anticompetitive, we file 

an administrative action within the FTC. But in order to stop the 

merger long enough to be able to proceed in the administrative action, we go to Federal court for that purpose. That is different from 

the Justice Department. 

Mr. LUNGREN. Right. 

Ms. MAJORAS. Where we are now is if we have lost in District 

Court, which we have, the next step will be to decide whether, in 

fact, we will go forward in an administrative action. I mean, it is 

there now because it was filed months ago. The question now is 

whether we will proceed. 

The Commission has a test that it goes through in deciding that. 

And it has been the very rare case that we have proceeded after 

losing in District Court. 

Mr. LUNGREN. Thank you very much. 

Thank you, Madam Chairwoman. 

Ms. LOFGREN. The gentleman’s time is expired. 

The gentleman from Utah is recognized for 5 minutes. 

Mr. CANNON. Thank you, Madam Chair. 

If I could just followup with both of you briefly on Mr. Chabot’s 

line of questioning and to some degree, Mr. Lungren’s, could you 

describe what we are doing with especially the European community to harmonize our laws. Or do we have a process, and how aggressively are we pursuing that? 

Mr. BARNETT. We have a very extensive process at multiple levels, both at the European Commission level as well as at the member State level now because most of these member States have 

their own regimes and, indeed, enforce not only their member State 

laws, but also European competition laws. 

We have annual bilateral consultations with the European Commission. Our staffs communicate on virtually a daily basis on individual investigative matters. Where there are issues of concern 

that come up, it gets elevated and either both agencies—I think we 

speak directly to their senior management on those issues. 

90 

We also work through multilateral organizations such as the 

OECD or the ICN publishing best practices, as an example, a 

merger review that helps persuade those organizations, including 

the European Commission to improve their processes. And, you 

know, on the cartel enforcement front, as an example, we have 

been very active with the European Commission as well as the 

OFT and some others on working on their enforcement programs. 

Mr. CANNON. Thank you. 

The FTC is currently reviewing the proposed Google-Double 

Click merger. And my understanding is that it took the FTC and 

DOJ more than the 30-day period under the Hart-Scott-Rodino premerger notification process to determine which of the two agencies 

would review the merger. 

Why did this take so long? And would DOJ and FTC and ultimately the parties themselves benefit if Congress were to allow you 

to enter into an agreement similar to the agreement you had in 

2002 that helped spell out which mergers would be reviewed by 

which agency in advance? 

Ms. MAJORAS. Yes, I think we would be benefited. I was at the 

Justice Department at the time we negotiated that agreement with 

the FTC where I now am. And it was an effort to fix this problem. 

And some Members of Congress asked us to stand down. And we 

did so, but I think to the detriment of the system overall. 

Why did this one take longer? Unfortunately, in higher profile 

mergers in interesting markets, first of all, they tend to be converging markets, so it is not clear which of us has the best experience. And then our staff are eager. They are interested in what 

they do. 

And so, we have a big back and forth over who has the most experience and who ought to get the matter. I am not proud of the 

process. It embarrasses me, quite frankly. And I have been talking 

about that for years. 

We have tried to make as many internal reforms as we can. But 

during my confirmation hearing, I was asked to please refrain from 

going back to the 2000 agreement, and I agreed to do it. So I think 

it would take some action from Congress before I could do that 

again. 

Mr. CANNON. Let me try and get one last question in. I had a 

startling experience this last week. I have a 9-year-old who is now 

old enough to have a telephone. And I have a son who just returned to the United States. So in the last month or so, I have purchased two telephones. 

And I noticed that you and the other body talked about the commentary exemption frustrating the FTC’s ability to deal with deceptive and unfair acts. Is that the case? And in particular, this is 

a complex area of law. I used to Chair the Committee on Commercial and Administrative Law. Now I am the Ranking Member 

there. And clearly, there are some commercial aspects here of contracts of adhesion. 

And with my son it was fairly straightforward. I had to ask 

about the $175 termination fee, which I had read about elsewhere 

that was with my daughter. But with the most recent phone, we 

went through this elaborate process where I signed documents that 

I didn’t have time to read, didn’t have an interest in reading, and 

91 

then had to take a phone call from the company where I agreed 

to certain terms. 

But none of the really significant—I didn’t think it was significant terms. And finally, the phone didn’t get qualified until they 

sent me an e-mail or a text message and I responded to the text 

message. I am amazed at the process. I mean, what you have here 

is a convergence of many carriers on several items that cost consumers a great deal of money. Is that what is driving your concern? 

Ms. MAJORAS. What is driving our concern is that with the convergence of technologies and the like and when new technologies 

come up, consumer expectations aren’t necessarily set. So consumers need very good disclosures about what they are paying for. 

Here are markets in which if the company claims that they have 

common carrier status, it is true, the FTC has no jurisdiction, so 

we can’t assert our authority to battle deceptive practices. So, yes, 

that is what we are trying to get at. 

Mr. CANNON. This is an amazing thing where poor people are 

way disproportionately affected by these harsh decisions. I think 

there is now a universal deal that you can’t terminate a contract 

even 1 day before the 2-year period runs without incurring a $175 

fee. I would encourage you to pursue that. And if we need to help 

with some kind of change to the law, I would like to know that. 

Ms. MAJORAS. All right. Thank you. 

Ms. LOFGREN. The gentleman’s time is expired. 

The gentleman from Indiana, Mr. Pence, is recognized. 

Mr. PENCE. Thank you, Chairman. Thanks for calling this hearing and bringing these two distinguished public servants before 

this Task Force. 

I appreciate your service to the country. And I am curious about 

a couple of kind of headline issues and what either one of you 

might be doing with them. 

Number one would be when I am back in Muncie, Indiana, people are not so much worried about some of the issues we fight 

about out here. But they are pretty worried about gasoline prices. 

And to the Chair of the FTC I would ask, you know, this calls 

for regulation of the oil and gas industry here in Congress, price 

gauging statutes have been advanced. I haven’t supported them, 

but, I mean, as Federal solutions. 

I know the FTC has looked at this. And I would like to know 

what has the FTC actually found at this point with regard to collusion in the pricing of gasoline. 

And secondly, also ripped from the headlines, Mr. Barnett, this 

whole issue of real estate, mortgages, and the concern that we all 

have about when all these ARMs come due at the end of this year. 

I know that the Antitrust Division under your leadership has undertaken a civil action regarding real estate broker activities. And 

I just wondered if you might comment as appropriate on that and 

how you think that kind of enforcement will benefit homeowners 

in the future. 

Ms. MAJORAS. We are well aware at the FTC that there is virtually no product in the United States that is sold that affects consumers as much as gasoline and, certainly, the price of gasoline, 

which has gone up in recent years. So we spend an enormous 

amount of time studying gasoline markets, investigating gasoline 

92 

markets and making sure that companies are adhering to the antitrust laws. 

We have done several studies in recent years, including a major 

study after Hurricanes Katrina and Rita. We have not found collusion among the oil companies. Obviously, we have OPEC at the upstream end, which is another story. But we have not found it. 

What we have found, which is hard for people to hear, is a market that behaves pretty competitively according to laws of supply 

and demand. Now, in recent years, demand has been going up. Our 

supply has not kept pace. People ask, ‘‘Well, how could that happen? How could there be competitive markets but our refining capacity is not keeping pace?’’ 

Well, the problem has been—and we sort of have short memories, 

I am afraid. It was just a few years ago that refineries were not 

making so much money. Their profits were not going up. And so, 

that inhibited investment. 

What we are seeing now—and we just saw a major announcement by Royal Dutch Shell that, in fact, they are increasing their 

capacity in Port Arthur, Texas by 325,000 barrels a day, which is 

enormous. That is a third of all of our imports that we get. 

So we are seeing what we thought we would see with these higher prices, increased investment. And we think that that is going to 

be a good thing for consumers. 

Mr. PENCE. And British Petroleum was trying to increase its capacities in Indiana until very recently. 

Ms. MAJORAS. Yes, indeed. 

Mr. PENCE. I want you to be very aware. 

Ms. MAJORAS. So it is a big area, obviously, of discussion. I would 

be happy to talk more, but I don’t want to use up all your time. 

Mr. PENCE. Very good. Thank you. 

Mr. BARNETT. Well, if there is any one market that is as important as the gasoline market, it might well be the real estate market, given that that is by far and away the largest transaction that 

most people engage in in their lives. I don’t think it is appropriate 

for me to comment on pending litigation. 

Mr. PENCE. I understand. 

Mr. BARNETT. But more generally, the Department of Justice and 

very much in cooperation with the Federal Trade Commission, has 

been quite active in the real estate area. It is not only through investigations and enforcement actions such as a couple of years ago 

when we took an action against the Kentucky Real Estate Commission, which banned rebates by brokers, essentially banning price 

discounts to brokers. 

We have been engaged in through advocacy efforts with a variety 

of States who either have regulations or laws that ban such price 

discounting or that are considered to do so as well as something 

they call minimum service requirements. 

Mr. PENCE. Right. 

Mr. BARNETT. It means they force you as a purchaser of brokerage services to buy a package of services even if you don’t want all 

of them. And we have found that by freeing up the market to let 

consumers and suppliers make these choices, there is indications 

that consumers can save thousands of dollars on a transaction, 

which is a very significant benefit to Americans. 

93 

Mr. PENCE. I thank the Chair. 

I thank the general. 

I yield back. 

Ms. LOFGREN. In consulting with the Ranking Member, we are 

going to do a quick second round of questions. Not that everybody 

has a second round, but Mr. Keller, I think, has a quick question. 

I know I do. 

So Mr. Keller is now recognized for 5 minutes. 

Mr. KELLER. Well, thank you, Madam Chairman. 

Mr. Barnett and Ms. Majoras, you know here in Congress we essentially have two types of laws, one, the noncontroversial laws 

that we can all agree on on a bipartisan basis. We pass those in 

the House through the suspension calendar. And the Senate has a 

procedure called the hot line. 

And then the controversial laws, which are the ones that grab all 

the headlines. I want to start with noncontroversial laws and ask 

you, as people who deal with the antitrust issues on a daily basis 

far more than Members of Congress do: Is there any sort of noncontroversial technical changes to the antitrust laws that you feel 

would be helpful and would be needed to help you protect consumers or to otherwise do your jobs? 

Mr. Barnett, I will start with you and give you both a shot at 

that. 

Mr. BARNETT. The short answer is, I think, no. And I don’t know 

if you would call this controversial or not, but I want to underscore 

our gratitude for the 2004 act that you all worked on to increase 

the statutory maximum fines for criminal cartel price fixing activities. 

The effects of that are really only just being felt now. And we are 

optimistic that we are going to see very significant increases in actual penalties imposed. And we appreciate your efforts in helping 

us get there. 

Mr. KELLER. Okay. 

Ms. Majoras, any thoughts along those lines? 

Ms. MAJORAS. Congressman Keller, I can’t think of anything off 

the top of my head. But if I may, may I think about that a little 

bit and submit something to you in writing if we think of it? 

Mr. KELLER. Please. Yes, please get it to me and also Chairman 

Conyers. 

Ms. MAJORAS. Great. 

Mr. KELLER. And then let me just follow-up with the second part 

of that question. Is there any law that might be considered controversial by some sector or another that you all think that nevertheless would be good for consumers or otherwise would be helpful 

for you to do your job? And what comes to mind? 

Ms. Majoras, I know some folks with the FTC, I have heard, important legislation that preserves access to Affordable Generics Act 

or—I am not really up on it, but something to do with settlements 

and pharmaceutical patent litigation that may be illegal. Or I understand that is controversial, but along those lines. 

And let me again start with Mr. Barnett. Any big ticket laws 

that you think that should be proposed or considered that might 

be controversial? 

94 

Mr. BARNETT. Well, I would mainly point to one recommendation 

of the Antitrust Modernization Commission, which in my testimony 

before them we supported, which is a reevaluation of any antitrust 

exemptions that are out there. We do believe that not only should 

they be rarely passed, but they ought to be periodically reevaluated 

to see that the conditions that may have justified them at one point 

in time are still warranted. 

Mr. KELLER. Even baseball? 

Mr. BARNETT. Well, I am not going to take anything off the table. 

So—— 

Mr. KELLER. If you are going to make headlines, let us swing for 

the fence here. 

Mr. BARNETT. Yes, there you go. 

Mr. KELLER. All right. 

All right, Ms. Majoras? 

Ms. MAJORAS. As you mentioned, we have been in discussions 

with some Members of Congress about an issue that has concerned 

us for some time, which is the issue of branded pharmaceutical and 

generic pharmaceutical companies entering in settlements together 

where the branded pays the generic to stay out of the market for 

a particular period of time. It is a complicated issue, I will grant 

you. 

But we and our economists have looked at it. And we actually 

think that consumers are being harmed and that it is not just a 

matter of exercising patent rights in a legal way. So we have been 

very concerned about that. 

The Antitrust Modernization Commission has recommended that 

the Robinson-Patman Act be repealed. I think it is something that 

is worth taking a look at. I think that statute has probably seen 

better days. 

And as we talk about the international realm that we find ourselves in, that act is put in our faces constantly as a measure that 

was put in place years and years ago to protect small businesses. 

We know a lot more now about what it takes to have a vibrant 

marketplace that even includes small businesses. And I don’t think 

the Robinson-Patman Act is something that is protecting consumers as it was intended to. 

Mr. KELLER. On the pharmaceutical end real quick, are you suggesting any changes to Hatch-Waxman? 

Ms. MAJORAS. I would rather see the change in Hatch-Waxman 

than see the change in the antitrust laws. But there is no question. 

Hatch-Waxman created this situation, no doubt about it. 

It was an unintended consequence of Hatch-Waxman, which, of 

course, had a very good purpose in both protecting the branded intellectual properties so they could get return on investment but at 

the same time, making sure that affordable generics come into the 

market as appropriate. So this has been caused by Hatch-Waxman. 

So if we are going to act, I think that is the way to do it. 

Mr. KELLER. Thank you. 

And, Madam Chairman, I yield back the balance of my time. 

Ms. LOFGREN. The gentleman yields back. 

I just have a couple of quick questions. I will note that, as I said 

in my brief opening remarks, the antitrust portfolio is an essential 

one. And I have had the sense over the last several years that the 

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enforcement at DOJ at least has not been as vigorous as it has 

been in past years. And the statistics seem to back that up. 

Using the Department of Justice’s own statistics, there was a 59 

percent decline in merger investigations in the past 4 years of the 

Bush administration compared to the last 4 years of the Clinton 

administration. And with respect to merger challenges, in the last 

4 years, reveal a 75 percent decline compared to the last 4 years 

of the Clinton administration and a 37 percent decline even for 

nonmerger enforcement. 

There are times when I feel that, you know, the most vigorous 

antitrust activity is really occurring with State A.G.’s. But there 

are some things I think that it is very difficult for them to do. And 

that really comes to my question regarding the Internet. 

I believe that the rules that were in place until the FTC decision 

in 2005 really did play a tremendous, important role in fostering 

innovation and an even playing field in that section. And I was 

very surprised, frankly, that the department submitted a filing 

with the FCC just recently in late opposing the concept of net neutrality. And I was wondering why this filing was months late, after 

the comment period was over, and what motivated the department 

to do this. And who did you meet with? 

I note in the filing there was a mention of the opponents of that 

neutrality, Hands Off the Internet and Consumers for Cable 

Choice, which I think are sometimes referred to as astro-turf 

groups, really funded by the phone companies, AT&T and Verizon. 

I am wondering, did you meet with the opponents of the phone 

companies before you filed. Who did you meet with in reaching the 

conclusion? 

Mr. BARNETT. Well, Madam Chairwoman, I respectfully disagree 

with your assessment regarding the DOJ’s enforcement activities. 

With respect to merger enforcement, we applied consistently 

across—I tend to believe—across Administrations the Horizontal 

Merger Guidelines that both agencies—— 

Ms. LOFGREN. Well, my question was about the net neutrality filing. 

Mr. BARNETT. I understand that, Madam Chairwoman. I just 

note that between the last 4 years of the Clinton administration 

and the last 4 years of the Bush administration there was perhaps 

a 70 percent drop in the number of mergers. So you would expect 

the number of reviews and the number of challenges would be likely to go down. 

With respect to net neutrality, I was the one who made the decision to file those comments. We certainly collected information 

from a wide range of sources. 

Ms. LOFGREN. Can you give me a list after this hearing? 

Mr. BARNETT. And the gist of the comments or the bottom line 

is not necessarily to say that some regulation is ever inappropriate. 

It was to say that as we understand it—and this is a core part of 

our competition advocacy mission—as we understand it, in general 

we let markets work with antitrust enforcement as a backdrop. We 

try not to intervene with Government regulation, unless there is a 

specific case to be made for that. 

And we had not seen—until we reviewed the other comments 

that had been filed with the FCC. We reviewed them, and we did 

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not see that a case had been made. That doesn’t necessarily mean 

that a case can’t be made down the road. But we were providing 

our experience, our expertise in this industry for the benefit of the 

FCC. 

Ms. LOFGREN. I would like to know, and you can provide it in 

writing afterwards. I don’t want you to orally list it. But I would 

like to know who you met with or who the department met with 

prior to that filing. 

And I also would note, because my time is about to expire, that 

96 percent of the residential broadband market nationwide is really 

controlled by a duopoly. And I just can’t think of why that wouldn’t 

be a compelling public policy goal to disrupt that kind of market 

control. And how you can possibly think that that is a competitive 

market is just astounding to me. 

So I will not belabor it. I will look for your report on who you 

met with after this hearing. And I will now call on the gentleman 

from—I guess our gentleman has left. 

My time is expired. And Ms. Sutton has left. And I guess we 

have closed down this hearing. And at this point, we will note that 

the hearing record remains open for 5 days. Members have 5 days 

to submit additional questions. And we would ask the witnesses if 

we forward additional questions to answer them as promptly as 

you may. 

And with that, this hearing is adjourned. 

[Whereupon, at 2:17 p.m., the Committee was adjourned.] 

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PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE ON THE JUDICIARY, AND CHAIRMAN, TASK FORCE ON ANTITRUST AND COMPETITION POLICY


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