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FEDERAL TRADE COMMISSION’S BUREAU OF COMPETITION AND THE U.S. DEPARTMENT OF 

JUSTICE’S ANTITRUST DIVISION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS AND 

COMPETITION POLICY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 27, 2010 

Serial No. 111–133 

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 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DANIEL MAFFEI, New York 

JARED POLIS, Colorado 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

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 ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COURTS AND COMPETITION POLICY

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

CHARLES A. GONZALEZ, Texas 

SHEILA JACKSON LEE, Texas 

MELVIN L. WATT, North Carolina 

MIKE QUIGLEY, Illinois 

DANIEL MAFFEI, New York 

JARED POLIS, Colorado 

HOWARD COBLE, North Carolina 

JASON CHAFFETZ, Utah 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

BOB GOODLATTE, Virginia 

DARRELL ISSA, California 

GREGG HARPER, Mississippi 

CHRISTAL SHEPPARD, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III) 

C O N T E N T S 

JULY 27, 2010 

Page 

OPENING STATEMENTS 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Chairman, Subcommittee on Courts and 

Competition Policy ............................................................................................... 1 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts and 

Competition Policy ............................................................................................... 2 

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

State of Michigan, and Chairman, Committee on the Judiciary, and Member, Subcommittee on Courts and Competition Policy ...................................... 3 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Ranking Member, Committee on the Judiciary ......................... 5 

WITNESSES 

The Honorable Christine A. Varney, Assistant Attorney General for Antitrust, 

U.S. Department of Justice, Washington, DC 

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

Prepared Statement ............................................................................................. 9 

The Honorable Jon Leibowitz, Chairman, Federal Trade Commission, Washington, DC 

Oral Testimony ..................................................................................................... 24 

Prepared Statement ............................................................................................. 26 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 65 

(1) 

FEDERAL TRADE COMMISSION’S BUREAU OF 

COMPETITION AND THE U.S. DEPARTMENT 

OF JUSTICE’S ANTITRUST DIVISION 

TUESDAY, JULY 27, 2010 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS AND

COMPETITION POLICY

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:30 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Henry 

C. ‘‘Hank’’ Johnson, Jr. (Chairman of the Subcommittee) presiding. 

Present: Representatives Johnson, Conyers, Gonzalez, Quigley, 

Polis, Coble, Chaffetz, Smith, Goodlatte, and Issa. 

Mr. JOHNSON. All right right. This hearing of the Committee on 

the Judiciary, Subcommittee on Courts and Competition Policy will 

now come to order. Without objection the Chair is authorized to declare a recess. And let me take the opportunity to apologize for 

being dilatory. What can I say? 

Today’s hearing is our first oversight hearing over the antitrust 

enforcement agencies under this Administration. For me, the antitrust laws are fundamentally about fairness. 

We need to ask ourselves: Are we keeping the playing field level? 

The next Bill Gates or Sergey Brin could be in the audience right 

now or in school, yet he or she will never be able to become this 

country’s next great entrepreneur if we allow anticompetitive practices to keep them out of the market. Our economy and our workers will be worse off for it. 

For these reasons our antitrust agencies must remain ever vigilant. Over the past few decades fairness has been compromised by 

ideological shifts in antitrust law. We have seen a gradual adoption 

of certain free market reasoning by the courts and the enforcements agencies alike that has chipped away at the ability of plaintiffs to access the courthouses. 

Namely, 6 years ago Congress created the Federal Trade Commission because it felt that the Supreme Court was limiting the effectiveness of the antitrust laws and too deferential to big business. 

In the past decade we have seen a movement away from strict prohibitions under the antitrust law and decisions like the Trinko and 

Credit Suisse cases, which suggest that there is less of a need for 

antitrust in the business world. 

2 

Personally, I am not convinced. I have been active on several of 

these issues trying to reopen the doors that courthouses have 

closed. I have also been instrumental in getting the DOJ the tools 

they need for criminal prosecution, but balancing that with the 

need for civil suits. I want to thank the DOJ for working with us 

on this during the reauthorization of ACPERA. 

Now, before we move on let me just say a word about the scope 

of this hearing. Certainly one of the areas of greatest interest is 

merger enforcement. This Subcommittee has examined the implications of a number merges, such as NBC-Comcast and TicketmasterLive Nation on their industries, and while it is fair game to ask 

our witnesses for their thoughts on broad issues of merger policy, 

let us respect the fact that they aren’t able to discuss the specifics 

of any ongoing merger review or make any sort of commitment 

about the future outcome of a merger review. 

I now recognize my colleague, Howard Coble, the distinguished 

Ranking Member of the Subcommittee, for his opening remarks. 

Mr. COBLE. Thank you, Mr. Chairman. 

Good morning to all. 

Antitrust law affects every industry, as is evident from the wide 

variety of hearings that the House Judiciary Committee has held 

under its antitrust jurisdiction. In the last few years the Committee has held hearings on the role of antitrust in telecommunications, sports, oil, and gas, airlines, financial services, and railroads, among other industries. 

Given the impact, Mr. Chairman, of antitrust law on the American economy it is vital, in my opinion, to reexamine how well these 

laws are working, particularly in the light of the innovation that 

today’s high-tech economy has brought forward. Today’s hearing 

gives us the opportunity to see how these laws are being enforced 

and whether there are areas where congressional intervention 

would be appropriate. 

For example, the antitrust agencies are in the best position to assess recent trends in international antitrust enforcement and to 

provide Congress with guidance on how best to promote comity between the multiple antitrust enforcement agencies around the 

world. While I respect the professionalism and rigor with which the 

Department of Justice and the Federal Trade Commission pursue 

antitrust enforcement, I have some concerns as well. 

For example, my district judge in the District of Columbia recently ruled against the FTC and a discovery dispute regarding reverse payments in the pharmaceutical industry. In that ruling the 

judge raised concern that the FTC may have disclosed confidential 

information to third parties and may have improperly coerced the 

parties into negotiations under the threat of legal action. 

If in fact true, these allegations are serious. That said, I know 

that the FTC has challenged these assertions and I look forward 

to the Chairman’s comments clarifying what actually did take 

place. 

With respect to Assistant Attorney General Varney, I know that 

the Department of Justice and the Department of Agriculture have 

held a number of joint hearings in recent months on antitrust and 

agricultural issues. My own district back home in Carolina—North 

3 

Carolina—has a number of AG enterprises, and I look forward to 

hearing what the department recommends in this area. 

Over the last 2 decades the Department of Justice and the Federal Trade Commission have issued a series of guidelines to help 

provide clarity to their enforcement approaches. Recently both 

agencies have released draft revisions in their merger guidelines. 

I look forward, as well, to hearing more about those changes and 

what they mean for business that plan to merge. 

One set of guidelines that has not changed much, however, are 

the health care guidelines, which were released in August 1996. 

That was nearly a decade-and-a-half ago, and I know that there 

have been a host of changes in the medical marketplace since then. 

I have heard complaints from medical professionals that these 

guidelines no longer reflect market realities. My question to each 

of our panelists is, why have these guidelines not been revised, and 

do you have any plans to do so? 

I look forward to hearing the testimony from our two distinguished guests, Mr. Chairman. And, Mr. Chairman, for the record 

I would like to make a request that we invite the trade associations 

representing the pharmaceutical industry to respond, if they would, 

to the charge that appears before us, as I am particularly concerned about the projected cost to consumers from 2009 to 2019, if 

that would be in order, Mr. Chairman. 

And with that I yield back. 

Mr. JOHNSON. Point well taken, Mr. Coble. And I thank you for 

your opening remarks. 

I will now turn to the gentleman from Michigan, John Conyers, 

the Chairman of the Committee on Judiciary, and a distinguished 

Member of this Subcommittee, for his comments. 

Mr. CONYERS. Thank you very much, Mr. Chairman. Hank Johnson, I appreciate all that you and this Committee do. 

Me and the Ranking Member are pleased to join you today. We 

think this is a very important discussion that we are having. And 

I join in with Howard Coble in thinking we might well examine the 

issue that he raised in his closing comments. 

First of all, to have the assistant attorney general, Ms. Varney, 

and the chairman of the Federal Trade Commission, Mr. Leibowitz, 

together here is a very strong statement, and we look forward to 

a very important discussion. 

Antitrust enforcement is critical to the capitalist system. Free 

and competitive markets are the foundation of an economy like 

ours so that when markets fail the economy fails. We have seen 

over and over the fact that Federal antitrust enforcement at either 

the Department of Justice or FTC have intervened to keep a balanced market protecting consumers all the way from the telephone 

monopoly, oil trusts, Microsoft—we have got another case hanging 

out there right now. 

They are huge decisions, and it is important in this era because 

of the increasingly interconnected, high-tech system of doing business. It makes the implications of many of this conduct has far 

more influence and effect upon the economy because of the global, 

high-tech interconnectedness of many of the corporations and the 

subject matter. 

4 

The big issues in antitrust arise in highly technical fields and 

intersect with complex intellectual property issues. Consumers demand that diverse products made my different firms work together. 

The Internet must function as seamlessly as possible regardless of 

what products or services are being used, and that digital information be widely and conveniently available. 

In many cases this interconnected economy requires that firms 

that might ordinarily be rivals share technical information or develop common standards to ensure that the products work together. 

And we have seen so often how high-tech firms quickly come to 

control huge markets. Usually the first ones there lay down some 

pretty large footprints that we spend a lot of time undoing. 

In the 1990’s Microsoft, Intel, and the new giants emerging today 

provide critical products and services but they present huge antitrust challenges. That is what we are here to talk about, and how 

these two important parts of our government relate to each other 

as well. 

In high-tech agriculture the issues are the same. In the intersection of patent law and antitrust, where companies like Monsanto 

have patented critical genetic materials, we are faced with new 

challenges. 

Now, the case for strong antitrust leadership has never been 

more important than it is now. As a matter of fact, we are coming 

off the ropes right now in that regard. As the 44th President said, 

we have had the worst period of antitrust enforcement since the 

last half of the last century. 

There were no Title II cases brought during the entire 8 years 

of the previous Administration. There have been none brought now. 

And the global corporate giants keep getting larger and larger. 

And so I think there are plenty of challenges to the Committee 

and to the heads of the branches of government that are with us 

today. 

In the courts it has been even worse. Until the American Needle 

case the Supreme Court of the United States ruled for the defendants in 10 antitrust cases in a row; in the lower courts over 10 

years, the defendants have won 221 out of 222 rule of reason cases. 

At all levels of our Federal judicial system so-called ‘‘Chicago 

School theories’’ have taken root that make it difficult to establish 

antitrust violations in the first place. There is an assumption that 

business can be trusted to do the right thing and that the markets 

know best, which is almost incredible to repeat here in public in 

broad daylight. 

Of course, leading them all is Citizens United. So that is why I 

have heartened—I have been heartened to see the FTC push to expand Section 5 authority to prohibit unfair competition, heartened 

to see the Department of Justice withdraw the ill-considered Section 2 report. 

The question is, what are we doing, though, now that we have 

withdrawn the report? It is one thing to reject the report, but how 

do we—where do we go from there? And so I am looking forward 

to joining the Committee in this examination of these very critical 

issues. 

I welcome and thank the witnesses for being here. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

5 

We will now turn to the respected and distinguished Member of 

the Judiciary Committee—the Ranking Member—and also Member 

of this Subcommittee, Mr. Lamar Smith, from Texas. 

Mr. SMITH. Thank you, Mr. Chairman. 

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. 

Antitrust laws are unusual in our legal regime in that they are 

enforced by two Federal executive branch agencies—the Department of Justice and the Federal Trade Commission. Antitrust enforcement has also expanded beyond America’s borders. In 1890 the 

United States became the first country to codify an antitrust law. 

Today over 100 countries have some sort of competition law, including China. 

This hearing gives us the opportunity to see how the two antitrust agencies are faring in enforcing U.S. antitrust laws in a 

globalized economy. During the campaign President Obama promised to reinvigorate antitrust enforcement, so my question for today’s hearing is this: How have things changed from the previous 

Administration to this one? How, for example, are the two agencies 

responding to international enforcement efforts by countries like 

China? 

At the Antitrust Division Assistant Attorney General Varney 

made a very public revocation of the previous Administration’s Section 2 report. How as this affected your approach to Section 2 

cases? Has this Antitrust Division brought any monopolization 

cases? How do those numbers compare with the previous Administration? 

One area of strong enforcement by the previous Administration 

was criminal prosecution of price-fixing conspiracies. How many 

new criminal prosecutions has this Antitrust Division brought compared to the previous Administration? With respect to merger enforcement, how many more cases has this Administration brought 

than the previous one? 

At the Federal Trade Commission I have similar questions about 

how enforcement has varied from the previous Administration to 

this one. For example, has the FTC brought more cases under Section 5 than during the previous Administration? 

Of course, numbers tell only part of the story. There are also 

questions about the types of cases that are being brought and how 

they are being prosecuted. 

In 2008 Chairman Conyers and I sent a letter to the FTC raising 

concerns about the different enforcement procedures and standards 

that the FTC uses in pursuing merger challenges. It is my understanding that the FTC has continued to argue for a lower preliminary injunction standard than the Department of Justice. This difference in approaches concerns me and it is something that I plan 

to follow up on. 

I also have questions about the recent decision by a Federal magistrate judge in FTC v. Bisaro. The judge in that case has raised 

troubling questions about actions that the FTC allegedly took to 

negotiate a deal between two private companies. 

6 

I know that the FTC has responded to the interrogatories and 

has challenged the assertions made by one of the lawyers in the 

case. However, I would like Chairman Leibowitz to give us a further understanding of the facts in this matter. 

I support robust antitrust enforcement. It is the key to maintaining competitive markets and ensuring that consumers have access 

to the most goods at the lowest prices possible. 

However, antitrust enforcement should be fair and transparent. 

American businesses need to have clear rules of the road in order 

to compete effectively against each other and in world markets. 

I look forward to hearing the testimony today of Chairman 

Leibowitz and Assistant Attorney General Varney on these and 

other matters, and I hope that they will respond to these questions 

either verbally or in writing after this hearing. 

I thank you, Mr. Chairman. I will yield back. 

Mr. JOHNSON. I thank the gentleman for his statement. 

Without objection other Members’ opening statements will be included in the record, and I am now pleased to introduce the witnesses for today’s hearing. 

Our first witness is Christine Varney, assistant attorney general 

for the Department of Justice’s Antitrust Division. Ms. Varney was 

confirmed as assistant attorney general for the Antitrust Division 

in April of 2009. 

Prior to joining the DOJ she was a partner at the law firm 

Hogan Lovells. From 1994 to 1997 she served as a commissioner 

of the Federal Trade Commission. 

Our second witness is Jon Leibowitz, chairman of the Federal 

Trade Commission. Mr. Leibowitz was designated chairman of the 

FTC by President Obama in March of 2009, having served as a 

commissioner since 2004. 

Prior to joining the FTC Chairman Leibowitz served as chief 

counsel to the Senate Antitrust Subcommittee as well as chief 

counsel to Senator Herbert Kohl. He has also previously worked as 

an attorney in private practice. 

Thank you both for your willingness to participate in today’s 

hearing. Without objection your written statement will be placed 

into the record and we would ask that you limit your oral remarks 

to 5 minutes. 

You will note that we have a lighting system that starts with a 

green light. At 4 minutes it turns yellow, then red at 5 minutes. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions subject to 

the 5-minute limit. 

Assistant Attorney General Varney, will you please begin? 

Good morning. 

TESTIMONY OF THE HONORABLE CHRISTINE A. VARNEY, ASSISTANT ATTORNEY GENERAL FOR ANTITRUST, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC 

Ms. VARNEY. Thank you, Mr. Chairman. 

Chairman Conyers, Members of the Subcommittee, it is a pleasure to be here today on behalf of the Justice Department and discuss the Antitrust Division’s work over the last year. Competition, 

as many of the Members have noted, is a cornerstone of our NaVerDate Aug 31 2005 10:28 Nov 19, 2010 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\072710\57671.000 HJUD1 PsN: 57671
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tion’s economic foundation. At the Antitrust Division we use sound 

competition principles and antitrust precedents to evaluate each 

matter carefully, thoroughly, and in light of its particular facts. 

Our enforcement helps keep markets competitive, promotes consumer welfare, and spurs innovation. We appreciate the Subcommittee’s active interest in and strong support of our law enforcement mission—yes? 

Mr. JOHNSON. Would you pull the microphone just a little closer? 

Thank you. 

Ms. VARNEY. Thank you, Chairman. 

Thank you, Chairman. 

I am surrounded by chairmen. 

We are particularly thankful that this Committee, with the support of the Obama administration, led the effort to eliminate antitrust immunity for the health insurance industry. 

Merger enforcement continues to be a core priority for the division. We are committed to blocking mergers that will substantially 

reduce competition. 

For instance, we are litigating a case involving the Nation’s largest dairy processor seeking to restore competition so that schools, 

grocery stores, and consumers in Illinois, Michigan, and Wisconsin, 

will pay lower prices for milk. Our intended challenge to Blue 

Cross Blue Shield of Michigan’s proposed acquisition of Physicians 

Health Plan led the parties to abandon their deal. In both matters 

we coordinated closely and successfully with the states’ attorneys 

general. 

We have also settled cases when our competitive concerns can be 

addressed. In the Ticketmaster settlement the merged company divested more ticketing assets than it gained from the merger and 

subjected itself to tough anti-retaliation and anticompetitive bundling restrictions. 

At the same time I want to underscore that we are also committed to quickly closing investigations of mergers that do not 

threaten consumer harm, such as Oracle’s acquisition of Sun and 

Microsoft’s joint venture with Yahoo. 

In our criminal program we continue to uncover and prosecute 

a number of cartels that inflict significant competitive harm. These 

efforts were recently enhanced by the Congress’ extension of the 

Antitrust Criminal Penalty Enhancement and Reform Act, 

ACPERA. Again, we thank you for leading the effort to extend that 

program through a 10-year reauthorization. 

Our recent prosecutions have resulted in significant fines and jail 

time. In 2009 the division obtained more than $1 billion in criminal 

fines. 

Our civil non-merger program remains active as well. In addition 

to our ongoing investigations, which I cannot discuss, let me just 

mention two matters that have settled. 

The first concerns the largest seller of electric capacity in New 

York City. In that case we alleged that Keyspan engaged in an 

anticompetitive swap transaction that likely increased electricity 

prices. That settlement, now pending, includes a $12 million 

disgorgement payment. The second case, which settlement is also 

pending, enjoins a group of Idaho surgeons who organized a boycott 

8 

of Idaho’s worker compensation system, essentially refusing to 

treat injured workers. 

The Antitrust Division has stepped up its efforts to strengthen 

markets and preserve economic freedom and fairness. Promoting 

competition principles through broad advocacy efforts and regulatory outreach is one of our highest priorities. The division works 

with a broad range of Federal and state agencies to promote competition across a number of vitally important industries, including 

transportation, energy, telecommunications, banking, and agriculture. 

My first year in the department has been remarkable. Working 

at the Justice Department with Attorney General Holder and the 

dedicated men and women of the Antitrust Division, we are doing 

all we can to ensure that our markets are open and fair, giving 

business predictability and stability, consumers more and better 

choices, and spurring innovation. I have enjoyed a very close working relationship with Chairman Leibowitz, and we continue to address the Nation’s anticompetitive problems together. 

That concludes my remarks, and I have provided much longer 

written statement that describes some of our matters in more detail. I am grateful to have the opportunity to be here and look forward to answering your questions. 

[The prepared statement of Ms. Varney follows:] 

9 

PREPARED STATEMENT OF THE HONORABLE CHRISTINE A. VARNEY


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Mr. JOHNSON. Thank you, Ms. Varney. 

Next we will hear from Chairman Leibowitz. 

Please proceed. 


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TESTIMONY OF THE HONORABLE JON LEIBOWITZ, CHAIRMAN, 

FEDERAL TRADE COMMISSION, WASHINGTON, DC 

Mr. LEIBOWITZ. I will move the mic closer, too. 

Chairman Johnson, Chairman Conyers, Mr. Coble, Members of 

the Subcommittee, thank you so much for inviting me to testify 

here today. I am delighted to be here with my friend and colleague, 

Christine Varney. As you already have my written statement let 

me spend my allotted time talking about just a few of the interesting issues that we are focusing on right now at our agency. 

To start, let me mention that after a several-year losing streak 

we recently won a handful of merger cases. These deals include the 

merger of Thoratec and HeartWare, which would have combined 

the only two producers of critical heart devices used by patients 

waiting for a heart transplant or experiencing severe heart problems. By challenging this transaction, which we believe to be a 

merger to a monopoly, we ensure that patients, including former 

Vice President Dick Cheney, would have more choices, prices would 

be reduced, and innovation increased. 

We have also been aggressive when we find mergers that we 

think will decrease competition, but just as important, we are not 

afraid to hold off when we think a major deal is not going to cause 

consumer harm. A recent example of this is Google AdMob, which 

we investigated thoroughly but unanimously decided not to challenge. And most of our antitrust decisions have been unanimous to 

challenge or not to challenge. 

We are not perfect, but I do believe we are striking the right balance to protect consumers yet still allow businesses latitude to combine when appropriate. 

Right now our top competition priority at the commission is to 

stop pay for delay agreements between brand-name and generic 

drug makers. We estimate that these sweetheart deals will cost 

consumers—and do cost consumers—about $3.5 billion a year. 

And, Mr. Coble, I think it was a terrific idea for you to ask the 

pharmaceutical industry to comment on these numbers. They have 

not done it and these numbers have been available for almost a 

year. I would like to see what they say. 

By now you are all familiar with this story: Brand-name drug 

companies sue their generic competitors claiming that the generic 

has violated their patent and then they turn right around and they 

settle the case by paying off the generic not to compete—that is, 

to delay entering the market. It is win-win for the companies who 

get to keep monopoly profits, but it is lose-lose for consumers who 

are left holding the bag or footing the bill for medicines they may 

desperately need. 

Because of our enforcement efforts there was not a single pay for 

delay agreement in 2004, but since 2005, after a few misguided 

court decisions, the number of agreements has steadily increased. 

In preparation for today’s hearing we asked staff to check on the 

number of patent settlements filed so far this fiscal year and the 

numbers paint a bleak picture, as you can see from the chart. 

Within the first 9 months of fiscal year 2010 there have been 21 

suspect agreements—21, which is more than the 19 filed for all of 

last year. Indeed, more than the number filed in any previous fiscal 

year. 

25 

The new settlements protected branded drug sales of over $9 billion, and that is almost an epidemic. Left untreated, these types of 

settlements will continue to insulate more and more drugs from 

competition and continue to raise the health care cost curve. 

Every single FTC commissioner—Republican, Democrat, and 

Independent, going back through the Bush and to the Clinton administration—has called for an end to these unconscionable agreements, and more and more others are coming around to review. 

Under Christine Varney the Department of Justice position has 

evolved considerably, and it now agrees that pay for delay settlements are presumptively anticompetitive. 

The Second Circuit recently encouraged plaintiffs in a pay for 

delay case to request an en banc review of a previous ruling allowing these deals, thanks in part to an excellent brief filed by the Department of Justice. As Members of this Committee know, circuit 

courts ask for an en banc very, very rarely. 

But as we also know, litigation can take a long time and it would 

be much faster and more direct to enact legislation. Such legislation has now passed the House twice as well as the Senate Judiciary Committee. It has the endorsement of President Obama. So we 

are going to continue to work with Congress to finish the job and 

hopefully that will be later this year. 

Let me also discuss the commission’s increasing use of our Section 5 unfair methods of competition authority, which allows us to 

go beyond the ambit of the antitrust laws to protect consumers. 

Congress granted us this authority in 1914 and balanced it by limiting the availability of remedies under Section 5. 

Now, in recent years Section 5 has been used sparingly, but since 

the 1970’s and 1980’s, as you mentioned, Mr. Conyers, the courts 

have restricted the range of antitrust, to some extent as a result 

of the Chicago School and to some extent, I think, in reaction to 

the costs of private treble damage litigation. Let me note, of course, 

that the Chicago School has in some ways improved antitrust enforcement by emphasizing rigorous economic analysis and efficiencies. However, the result of these changes has also been to 

limit the FTC, which has no treble damage authority, in our effort 

to protect competition and consumers. 

Section 5, carefully applied, is practically tailor-made for this situation. It can effectively protect consumers but it is not an antitrust law and does not, on its own terms, create treble damage liability. So we have broad bipartisan support within the commission 

to use Section 5 in appropriate circumstances, and we are going out 

and doing it. 

Mr. Chairman, I ask for an additional 30 seconds. 

Mr. JOHNSON. Without objection. 

Mr. LEIBOWITZ. Thank you. 

In addition to consumer protection and antitrust the commission 

also has a statutory policy function going back to 1914. An upcoming policy project will focus on health care reform and competition 

policy. Another one focuses on the future of news in the Internet 

age, a topic this Committee considered at a hearing last year. 

We are doing a lot of other important work that I would be glad 

to discuss, including, with Assistant Attorney General Varney, an 

26 

update of the Horizontal Merger Guidelines and a new rule prohibiting market manipulation in the petroleum industry. 

But I will stop now; I know I have exceeded my time. And I am 

happy to answer questions. 

[The prepared statement of Mr. Leibowitz follows:] 

PREPARED STATEMENT OF THE HONORABLE JON LEIBOWITZ


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Mr. JOHNSON. Thank you, Chairman Leibowitz. 

And now we will begin with the questioning, and I will take the 

first round. Given the shifts to rule of reason analysis and the decisions Trinko, Twombly, and Credit Suisse, is it harder to bring an 

antitrust case now than it was 10 years ago? And what do you 

think is the effect on the American public? 


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Ms. VARNEY. Congressman, our view at the department is that, 

while Supreme Court precedent is always paramount in our analysis of particular facts, the cases that you mentioned we believe are 

limited to the facts presented in those cases. And we have not necessarily found them, at this point, to be a barrier to bringing cases, 

as we have many investigations, which I cannot comment on. 

As those investigations come to fruition and you see cases I may 

be back to you with a view as to whether or not those Supreme 

Court precedents have inhibited our enforcement of the law. But at 

this time we view those cases as limited to their facts. 

Mr. LEIBOWITZ. Reasonable people can disagree about the effects 

of Trinko and Credit Suisse and some of the other decisions by the 

Supreme Court. We think it is a potential impediment, and so that 

is part of the reason why we have moved to using our Section 5 

unfair methods of competition authority, which is sort of penumbra 

around the antitrust laws because we are in the business of trying 

to stop anticompetitive behavior that harms consumers, and this is 

a tool in our arsenal. 

But as Assistant Attorney General Varney mentions, some of this 

will depend on the cases we bring and the responses we get from 

the courts. And so we are all working together to try to move forward on protecting competition and consumers. 

Mr. JOHNSON. Thank you. 

Mr. Chairman, I find that as I get to the—towards the top of my 

lifespan that my hearing is starting to be a little bit lessened as 

a result, and so I would strongly urge you to speak directly into 

the microphone, kind of like what I am doing, and that way at 

least I will be able to hear you. And I appreciate it. 

Intellectual property rights standards and antitrust are critical 

interrelated issues internationally. Given discussions in Europe, 

China, the OECD, and the WIPO, the amount of emphasis the U.S. 

government has placed on defending I.P. rights around the world 

and the challenges we face in China and elsewhere in ensuring protection for American intellectual property, what is the Administration’s strategy going forward, and how are we actually managing 

the dialogue on these critical issues abroad, and you coordinating 

a message on these issues with commerce, USTR, USPTO, State, 

and others? 

Ms. VARNEY. As you may know, Chairman, the White House has 

established an I.P. working group and task force that is headed 

and run out of the White House. That task force includes members 

from the PTO, from the Department of Commerce, the Department 

of State, USTR, the Department of Justice—we are all there and 

we are committed to protecting intellectual property here and 

abroad. We work very closely on that matter. 

When it comes to the intersection of antitrust and intellectual 

property, I think the chairman does an incredible job of providing 

technical assistance, which I am sure he will speak to, to a lot of 

emerging antitrust regimes, and we try to work very closely with 

their technical assistance programs in a lot of the emerging antitrust regimes. 

We want to be sure that the laws reflect what is antitrust and 

is not used in any way to inhibit American entry into markets 

when intellectual property is present. So we see an intersection beVerDate Aug 31 2005 10:28 Nov 19, 2010 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\072710\57671.000 HJUD1 PsN: 57671
46 

tween intellectual property and antitrust, but we do not want to 

see antitrust laws around the world used in any way to inhibit 

trade and competition. 

Mr. LEIBOWITZ. Yes. And I agree with everything that Assistant 

Attorney General Varney said. 

We do do a lot of technical assistance with countries. We do help 

them write their antitrust law, which we think generally reflect 

best practices of antitrust. Usually they use the American antitrust 

laws and sometimes the European antitrust laws as a guidepost. 

We were very, very involved with helping China write its antitrust laws, which have just been implemented, and we will see how 

well they work. 

And again, you know, we feel very, very strongly that the more 

competition you have in foreign countries the better it is for all consumers, and particularly American consumers and American businesses. 

Mr. JOHNSON. Thank you. 

I will now turn to Mr. Coble for questions. 

Mr. COBLE. Thank you, Mr. Chairman. 

Ms. Varney, good to have you and the chairman on the Hill 

today. 

Mr. Chairman, in the—regarding the reverse payment context, I 

have heard that the FTC has suggested that the courts should not 

have the authority to review these settlements because the courts 

have an incentive to approve settlements that the commission does 

not have—that is, namely, that the courts are too busy. What do 

you say to that assertion, and if so, do you—if you support it do 

you have examples of that having actually occurred? 

Mr. LEIBOWITZ. Well, I would make a couple of points: Whenever 

we bring a case, and we have two cases pending: one in the district 

court in the Third Circuit involving a drug called Provigil, which 

is a wakefulness drug used by people in the armed services on long 

missions, narcoleptics, and children; and another in the 11th Circuit—we go to court, and we have to prove our case. 

I would say this—and this is true well beyond the pay for delay 

settlement issue a lot of times judges, they have busy dockets, they 

have to put criminal matters first, and I think that settlements are 

generally something they look favorably on. 

And when you have two companies that were in litigation, a 

brand and a generic, and they both turn around and say, ‘‘We have 

a settlement,’’ there is an incentive, for courts to agree with that, 

and consumers are the ones who aren’t at the table who aren’t 

making the deal, and they are the ones who lose from these reverse 

payment settlements or pay for delay settlements, which we believe 

cost consumers $3.5 billion a year. 

And then the only other point I want to make is that the 21 

deals that we have seen in the first three quarters of this fiscal 

year is the highest number we have seen so far in any fiscal year. 

These are deals that we believe delay generic competition and cost 

all of us more money, whether it is embedded in our health care 

costs, as a cost of health care insurance, or whether we have to go 

out and buy drugs because we don’t have insurance, and there are 

still 40-plus million uninsured Americans. 

Mr. COBLE. Well, thank you, Mr. Chairman. 

47 

Ms. Varney, I will start with you, and either of you may answer. 

There have been a lot of recent news reports over Google’s behavior 

in collecting personal information from WiFi networks from specially designed automobiles or vehicles roaming through the 

streets. More than 30 state attorneys general, led by Attorney General Blumenthal, of Connecticut, have announced an investigation 

in this matter, and I think they joined probably a dozen or so nations who are also investigating. 

Since Google acknowledges that it roamed in each of the 50 

states it is probably irrelevant to every Member of this Committee 

if, in fact, the rights of our constituents have been violated. To 

date, however, I believe neither the Department of Justice nor the 

Federal Trade Commission has commented on the so-called SpyFi 

issues. Is either of you all involved with cooperating with the various state attorneys general on this matter? 

Mr. LEIBOWITZ. Well, we don’t confirm investigations unless companies do, but we have said that we are taking a close look at this 

matter. 

Mr. COBLE. Ms. Varney? 

Ms. VARNEY. Chairman, that is outside my jurisdiction. That is 

a privacy and tracking matter, and unless it is brought to our attention that there is some anticompetitive conduct involved there, 

that is probably something that would be best looked at by the 

Federal Trade Commission. 

Mr. COBLE. I got you. 

One more question, if I may, Mr. Chairman? 

Mr. LEIBOWITZ. Yes, sir. 

Mr. COBLE. Google recently announced it was entering the travel 

business with the purchase of ITA. ITA, as we know, supplies information to a variety of Web sites that benefit consumers, such as 

Expedia, Travelocity, and Priceline. These travel sites benefit consumers by offering them real choices, and they are obviously concerned about the prospect of the world’s largest Internet company 

entering their respective businesses. 

Which of your agencies plan to review this matter, and do you 

have a timeline on that? 

Ms. VARNEY. Obviously we don’t comment on any pending investigations, either the chairman or myself, so I can assure you that 

should this transaction go forward and is reportable under the 

Hart-Scott-Rodino procedures to report transactions under—and be 

reviewed under the Clayton Act, Section 7, we will carefully evaluate which agency has the best expertise to review the transaction, 

and we will do so. And I am sure, actually, no matter which agency 

is reviewing the transaction, we will call on each other’s expertise. 

Mr. LEIBOWITZ. We will. 

Mr. COBLE. Thank you both. 

I yield back, Mr. Chairman. 

Mr. JOHNSON. Thank you, Mr. Coble. 

I will next turn to the Chairman of the Judiciary Committee for 

his questions. 

Mr. CONYERS. Thank you for your statements. Let’s look historically at where we are now. 

Were the railroad cases the first big antitrust cases followed by 

the telephone cases? 

48 

Mr. LEIBOWITZ. And oil, yes. 

Mr. CONYERS. Oil. 

But the mergers keep coming; the anticompetitive activity is still 

roaring down the runway. Corporate power globally is increasing. 

The lives of everybody now are impacted, and even governments 

are impacted. 

I can remember, Mr. Chairman, when I made my first trip to the 

African continent. Most of the companies there were larger than 

the companies—most of the companies there were larger than the 

countries that they were in, in terms of power and influence. In 

many instances it hasn’t changed that much. 

Do you agree with this trend that I am—this picture that I am 

summarizing, that corporations keep getting bigger and keep affecting more control and power over not only the people on the 

planet, but the countries that govern the people in the various, 

what is it, 132 nations in the world—192? Let’s talk about that, ladies and gentlemen. 

Ms. VARNEY. Certainly, Chairman, in my travels around the 

world, which have been far less extensive than yours, we see the 

increasing importance of corporations in a global and increasingly 

interconnected and dependent world. And I see it everywhere I 

travel. 

And there are corporations, certainly, that have enormous influence in economies everywhere. At the same time I, not too long 

ago, was in sub-Saharan Africa, and I was informed—I don’t know 

that this is accurate, but I was informed at the time that China 

is actually the largest investor right now in sub-Saharan Africa. 

So I think it is an increasingly complex, increasingly interconnected, and increasingly global world where some participants, 

be they governments or be they private sector participants, are 

having influence beyond what you would have seen at the turn of 

the century when you referenced the very first big antitrust cases. 

Mr. LEIBOWITZ. Yes. And I would agree with everything that Assistant Attorney General Varney said. I would just add this: When 

you look at the origins of the Sherman Act in 1890, I think part 

of what Congress was trying to reach was sort of the undue influence of corporations. 

Of course, corporations also provide enormous benefits to American consumers and to consumers around the world. I would say 

this, you have asked us sort of a meta-question that goes well beyond the jurisdiction of our agencies. There was a piece in the, National Law Journal yesterday—I will put it in for the record—that 

really talked about how active the two agencies have been—— 

Mr. CONYERS. Yes. 

Mr. LEIBOWITZ. And so within the narrower confines of the work 

that we do I think we have done a pretty good job. I can say that 

about the Antitrust Division. I can’t necessarily say that about the 

Commission—I don’t have quite as much objectivity with respect to 

the FTC. 

Mr. CONYERS. Well, when are we going to get a Section 2 case? 

We haven’t got any so far. 

Mr. LEIBOWITZ. Actually, and I hate to correct the Chairman of 

the Committee on a factual matter, we have a Section 2 case. Actually, we have several Section 2 cases right now. One is a pharmaVerDate Aug 31 2005 10:28 Nov 19, 2010 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\072710\57671.000 HJUD1 PsN: 57671
49 

ceutical reverse payment case; that is the Third Circuit case involving Cephalon. Another is a case we have brought using both Section 2 monopolization and Section 5 unfair methods of competition, 

as well as unfair and deceptive acts or practices against Intel. 

And then, during the Bush administration we actually had a 

very significant standard-setting case that was a monopolization 

case involving a company called Rambus. We lost that in the D.C. 

Circuit, but we are going to continue to look around for a—— 

Mr. CONYERS. I stand corrected. 

Attorney General, when are you going to get into that? 

Ms. VARNEY. Mr. Chairman, you will have a case from us when 

we have the facts and evidence ready to bring the case. We have 

many investigations, which I can’t comment on, going on right now. 

We have also been very active in stopping anticompetitive mergers, in fixing—allowing parties to cure potential anticompetitive effects of mergers. So I think we are very active, and I—you know, 

Section 2 cases take, as I think the Chairman—— 

Mr. CONYERS. Of course. 

Ms. VARNEY [continuing]. Quite a bit of time to develop the facts 

and the evidence. 

Mr. CONYERS. They are complex. 

But just closing, Mr. Leibowitz, you know, telling me about how 

much good corporations are doing are balanced by how much bad 

some are getting away with. That is two different subjects. 

I mean, I applaud capitalism under regulation, but this picture 

is getting more and more bleak. The mergers are still roaring 

ahead, which, incidentally, after all of our prattling about small 

business, that makes it that much harder for small business to 

ever get started in this kind of atmosphere. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Next I would recognize my good friend from Utah, Mr. Chaffetz. 

Mr. CHAFFETZ. Thank you, Mr. Chairman. 

And thank you both for being here. 

Mr. Leibowitz, if we could start with you just real quickly, let me 

talk just for a moment about the Cephalon situation, where we 

have—my understanding is a D.C. Federal court—district court 

Judge Kay, for the first time, my understanding is, in 33 years actually offering some limited discovery into that case. Can you expand—I mean, is this—I think you know the situation that we are 

talking about, but is this something that the FTC does, and this 

type of activity, in terms of getting in the middle the way that it 

did? 

Mr. LEIBOWITZ. It is a very fair question, and let me respond to 

it. Let me respond to it first by bifurcating it a little bit. 

Again, we take a perspective at the FTC—and we are very, very 

bipartisan—to try to get the greatest good for the greatest number 

of people, and that is how we came up with or decided to make pay 

for delay settlements a major commission issue. 

We believe—or our Bureau of Economics reported—that it costs consumers $3.5 billion a year, and we are going to be resolute in 

trying to stop these deals, whether by getting a case to the Supreme Court or by trying to pass legislation in Congress. 

As for the issue involving Watson and Mr. Bisaro’s deposition, let 

me make a couple of points. We play by the rules at the FTC, when 

50 

the magistrate issued the opinion and he asked for limited discovery of the commission we decided—and this is almost unprecedented—to make our interrogatories public. It was a vote of the 

commission; it was a five to zero vote. And we did that because we 

thought it was important to get all the facts out. 

Again, I believe we play by the rules. I think as the facts do come 

out you will see that we didn’t do anything wrong. 

I will say this: Mr. Bisaro, who is the person who has avoided 

our subpoena, our deposition, for almost a year now—you know, I 

just don’t quite understand this. If this Committee were doing an 

investigation—if your Committee were doing an investigation, as a 

routine investigation, which this is—or a typical investigation—and 

someone refused to come and testify, I think you would be upset 

with it. And I think there—— 

Mr. CHAFFETZ. I may be upset, but, you know, you have a Federal judge who for the first time in 33 years decided that they were 

going to go ahead and allow some additional discovery—— 

Mr. LEIBOWITZ [continuing]. We are happy, Mr. Chaffetz, to have 

some discovery, because we don’t think we did anything wrong. We 

think that Watson has just been slinging mud at us, and some of 

it will stick occasionally. 

Mr. CHAFFETZ. Okay. Fair enough. 

Let’s go back to the Google situation. And I found it very interesting that Ms. Varney gave an answer for we—us—talking about 

two different agencies. And that is part of the question as to which 

agency does it go to? How do you make the determination as to 

who is going to do what? 

You seem very capable of answering the question for the FTC, 

but for those businesses and organizations that are trying to figure 

out how to move forward with their regulators how do you make 

these types of determinations? I mean, is this—— 

Ms. VARNEY. I think, Mr. Chaffetz, that generally I would say— 

in 98 percent of the matters it is very clear to the parties which 

agency, based on history and expertise—— 

Mr. CHAFFETZ. But for that extra 10 percent—— 

Ms. VARNEY. The extra 2 percent—— 

Mr. CHAFFETZ. Two percent. Sorry—98 percent, okay. 

Ms. VARNEY. It is difficult. It is absolutely difficult to know with 

certainty which agency is likely to have the right expertise—— 

Mr. CHAFFETZ. So if somebody calls in and says, hey, you know, 

and they think it is at Justice and maybe it is a—how do you 

deal—do you have procedures in place for both agencies to—— 

Ms. VARNEY. Very efficiently. And the reason that either one of 

us can answer for both is because this—what you are talking about 

is something that is called preclearance, and it is a process that is 

housed at the FTC but is actually run with both of us present. So 

if a party or parties are merging and they want to come in and it 

is not clear which agency will review the merger, both our staffs 

sit down with the merging parties on the front end and hear the 

presentation, and we work very—— 

Mr. CHAFFETZ. The customer part of it—if there is a customer 

complaint does the same process work in place? 

Ms. VARNEY. Generally we try and resolve which agency is going 

to be reviewing a matter relatively quickly so that one of us can 

51 

get our staffs out there and talking to customers and suppliers and 

competitors and the parties. 

Mr. LEIBOWITZ. So, but just to follow up on—— 

Mr. CHAFFETZ. Yes. 

Mr. LEIBOWITZ [continuing]. Assistant Attorney General Varney’s 

point, you know, she was an FTC commissioner in the 1990’s, and 

a terrific one, we try very hard and—our staffs try hard and we 

try very hard to make sure our staffs resolve those handful of cases 

where there is—effectively a jump ball quickly, because companies 

deserve a quick resolution. And I went back and I looked at the 

statistics which we provided to the Committee, and of the handful 

of contested clearance agreements not a single one of them went 

past 15 days. 

And we can still do a better job because I think we want to keep 

it down to a week, and a few went over a week. But believe me, 

if she and I had to deal with a lot of clearance disputes our head 

would be exploding, or our heads would be exploding right here in 

front of you. So we try to do a good job; we are not perfect. But—— 

Mr. CHAFFETZ. If you could understand how that works a little 

bit more clearly I would appreciate it. 

Thank you, Mr. Chairman. 

Mr. CONYERS. Mr. Chairman, I ask unanimous consent to put 

into the record the article that Mr. Leibowitz referenced, ‘‘FTC 

Antitrust Blitz,’’ written only yesterday in the National Journal 

newspaper. 

Mr. JOHNSON. Without objection. 

And we will next turn to the distinguished gentleman from 

Texas, Mr. Gonzalez. 

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

And I take it from the witnesses’ testimony—correct me if I am 

wrong—no determination has been made as to who is going to be 

looking into the proposed Google-ITA business deal. Is that correct? 

Ms. VARNEY. Congressman, our confidentiality rules do not permit us to even comment on whether or not a particular merger has 

been filed. So we can’t comment. The parties can, but we can’t comment on that. 

Mr. GONZALEZ. All right. 

Mr. LEIBOWITZ. And Google, by the way, has generally acknowledged publicly which agency gets an agreement or a merger proposal, and once they do we can confirm it. 

Mr. GONZALEZ. So let’s just go ahead on what has already been 

reported in every major newspaper in the United States. And let’s 

go in New York Times, July the 6th, ‘‘Regulators Prepare to Dig 

Into Google-ITA Deal,’’ quote—and this is by Brad Stone—‘‘It’s no 

secret that United States antitrust enforcers are looking closely at 

Google’s business practices and the way it leverages its dominance 

in Web search into other Internet markets.’’ 

So we are going to assume someone is going to be looking at it. 

And it is not just Google, and we need to preface—or I need to preface my remarks—it is just not Google. It is the whole technology 

that is going on out there. What happened with Microsoft years ago 

and the advancing of a temporary monopoly argument—on and on. 

So you have got to deal with all that, but it is very interesting to 

52 

figure out that particular business model and its activities and its 

potential spillover to other areas. 

So I will go to New York Times, July 1st, ‘‘France Calls Google 

a Monopoly.’’ ‘‘This week the French Competition Authority officially declared Google a monopoly.’’ ‘‘Google holds the dominate position on the advertising market related to online searches,’’ and 

then it went on to expand. 

But this is the most important part of the story: ‘‘Google’s position, rejected by the French, is that the relevant market is all of 

advertising, in which Google has a tiny share, rather than online 

search ads in which it is dominant. It appears that if the French 

authorities do not reverse that conclusion in their final ruling it 

will be the first official precedent rejecting Google’s argument’’—the 

general argument. 

‘‘In the United States the Federal Trade Commission said in 

2007 that it was possible that search ads could be a defined market 

for antitrust purposes, but it did not reach a conclusion on the 

issue as it approved Google’s acquisition of DoubleClick, in advertising distribution network.’’ 

So my question, to the extent that you can answer it: When does 

kind of general market share translate into something that should 

be drawing your concern? When do you have, as Google has advanced—look, you have got to look at all advertising. Just don’t 

look to that which is search-generated. 

But the truth is, as technology moves forward and where advertising is going, is it, in fact, something that should be isolated and 

recognized as standing on its own for consideration? 

Mr. LEIBOWITZ. So, let me take that question first. I saw that article from a few days ago about the activity of the French government. It would be hard for me to understand how Google could 

have a dominant position in all advertising. I think it is pretty 

clear they have a monopoly position in search ads, and as that article noted, we looked at Google AdMob recently; we looked at Google 

DoubleClick several years ago. 

Again, when you are up in the 70 percent market share, as I 

think they are on search, I think everyone would believe that is a 

monopoly position. It doesn’t control the entire market, but it is 

dominant, as the Europeans would say. 

But I would also point this out, and obviously we have had reviews of Google-related activities and the Justice Department is involved in the Google book search. Just by virtue of being a monopoly, that is not illegal under the antitrust laws. You have to engage 

in some sort of bad conduct beyond that. 

And, I think if you acquire a monopoly position by virtue of your 

terrific products or your terrific marketing that is okay generally. 

It is only when you go beyond that and try to stifle competition or 

engage in exclusionary practices that you are engaging in some sort 

of illegal monopolization. 

Again, courts have pared back the ability to win monopolization 

cases in the last several decades. That is no surprise to anyone. 

And it’s part of the reason why we are using our unfair methods 

of competition authority, which is a penumbra around the antitrust 

laws—when you created the FTC you wanted an agency with very 

broad jurisdiction and very weak remedies. 

53 

We don’t put people in jail, right? We can’t fine malefactors. But 

part of the reason why we are using this authority that we have 

had since 1914 more often is because we want to stop anticompetitive behavior that harms consumers. 

Mr. GONZALEZ. But you are saying they would have to have an 

affirmative act by a company on exclusionary practices before it 

would be legitimate to look at it. 

Mr. LEIBOWITZ. I mean, ‘‘look at it is’’ a non-legal term, so, we 

are aware of the dominant position that certain companies have in 

certain markets—Intel has in chips, Google has in search. But you 

would want to see some sort of acts or an act that was designed 

to unfairly, denigrate competitors before you would bring action. 

Mr. GONZALEZ. And whether you had that intention or not, but 

it is the result, would that matter? 

Mr. LEIBOWITZ. Yes. 

Mr. CONYERS. I ask that the gentleman gain an additional 

minute. 

Mr. JOHNSON. Without objection. 

Mr. GONZALEZ. And I appreciate it, and I will give Ms. Varney 

an opportunity to respond. 

Ms. VARNEY. I think your question, Congressman, started with 

basically a merger analysis question, and without commenting on 

any particular potential merger or current merger, it is not unusual for us to examine what is actually a relevant market. It is 

very tough in many circumstances. I think you saw that in the XMSirius merger. There was a question as to whether satellite radio 

was, in and of itself, a distinguishable market. 

We see that often. In my time at the Department of Justice in 

the many of the mergers we have reviewed the parties have argued 

that the markets that the merged parties were competing in were 

separate markets. 

This is not an issue that we are in any way unfamiliar with. We 

have tools that we use to help us assess and understand what are 

the relevant markets. I am sure you won’t be surprised to know 

that in virtually every merger where there is competitive overlap 

the parties routinely argue that they are not in the same market. 

So that is a threshold question. We have lots of tools—our revised merger guidelines give lots of transparency to parties and to 

practitioners as to how we assess what particular tools we will use 

to try and determine what is an actionable antitrust market. 

As the chairman went through the standards he was, I think, essentially talking about single firm conduct. I am talking about the 

tools you use to do a merger analysis. 

Mr. GONZALEZ. Thank you very much. 

Thank you for your indulgence, Mr. Chairman. 

Mr. JOHNSON. Thank you, Mr. Gonzalez. 

Next we will have questions from the distinguished gentleman 

from Virginia, a man who never smiles and his—is both respected 

and feared by witnesses who appear before this Subcommittee, Mr. 

Bob Goodlatte? 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. You always 

bring a smile to my face. [Laughter.] 

I want to welcome the witnesses and, I must say, I am strongly 

in favor of our Nation’s antitrust laws and believe they should be 

54 

enforced to the fullest extent of the law. And I prefer them, generally, over regulations, wherever possible, because I think that if 

you set parameters and tell companies that if they operate within 

these parameters they are okay then it creates, I think, the maximum amount of competition and the maximum amount of creativity, whereas regulations often result in unintended consequences that can stifle creativity in ways that simply were not 

intended by the regulators. 

However, the Administration enforcing these laws has to be fair, 

has to be predictable, has to be uniform so that businesses know 

that the ground rules, regardless of which industry they happen to 

be and thus which agency reviews their activities. I also believe 

that the law should be enforced objectively and not subjectively. 

And I have been looking into ways to ensure that the basic 

framework of the antitrust enforcement process is fair, and I hope 

that the witnesses here today will join me in that effort. 

So first, I direct this primarily to you, Mr. Leibowitz: One area 

that I have been looking into is the different procedural tools that 

the FTC and the Department of Justice posses. The FTC has different procedural tools available to it to challenge mergers. Like 

the Department of Justice you can pursue a preliminary injunction 

in Federal district court; however, unlike the Department of Justice, which combines its preliminary injunction case with a merits 

trial in Federal district court, the FTC can pursue a separate administrative case within the FTC. 

To me, this raises questions of fairness. First of all, why should 

mergers be subject to different procedural standards given that the 

Department of Justice and the Federal Trade Commission sometimes decide who will review a merger based on basically a coin flip 

or a possession arrow? You want to tackle that first and then we 

will ask Ms. Varney? 

Mr. LEIBOWITZ. Yes. Let me start by saying as a general matter 

I agree with you that enforcement is a better approach than regulation. And, we consider ourselves to be an enforcement agency. We 

occasionally do write rules, but that is the exception rather than 

the rule. 

And then let me also let the record note that I have seen you 

smile many times in the past. [Laughter.] 

I understand this argument, and I have certainly heard it a fair 

amount, particularly from the Antitrust Bar. But I actually think 

ultimately the standards are more alike than not, and here is why: 

So, if we go to court and we ask for preliminary injunction, the 

Antitrust Division asks for a permanent injunction. We then have 

to show in different circuits different standards. 

Outside of the D.C. Circuit we have to show likelihood of success 

on the merits in most circuits. In D.C. Circuit we have to show 

questions that are very serious and very substantial. That is the 

language from the Heinz case. 

And then, if a company wants to come back to the FTC, which 

is an expert body that was created by Congress, we have to show 

ultimately that we will win on the merits. So we ask for preliminary injunction. 

Sometimes that is done very quickly. In a case involving an 

Inova acquisition of Prince William Hospital—you are familiar with 

55 

that—the judge just sent it over to the FTC—the district court 

judge in Alexandria—to do the entire review. 

And the other thing I would say for companies is that we recently dramatically accelerated our procedures at the FTC, so if a 

company wanted to immediately come to the FTC and get a full 

trial, which is more than a preliminary injunction or a permanent 

injunction, they can have that in 5 months with a review in several 

more months—in 2 more months—by the commission, and that is 

actually as fast as you would get a review in the district court. 

Mr. GOODLATTE. Do you have the ability to bring a combined preliminary injunction and merits case like the department does? 

Mr. LEIBOWITZ. We probably do have that—— 

Mr. GOODLATTE. Have you ever used it? 

Mr. LEIBOWITZ. No, no, no. I mean, going back through Administrations and commissions we have always gone to court to ask for 

preliminary injunction and then the case has gone to what we call 

part three internally. But if a company wants to come first—— 

Mr. GOODLATTE. But if you wanted to bring it through the courts 

as opposed to your internal process you could do that? 

Mr. LEIBOWITZ. If a company wants us to we would do that. 

Oh, through the courts? We always go to court because we need 

to get a preliminary injunction—— 

Mr. GOODLATTE. I understand. 

Mr. LEIBOWITZ [continuing]. To stop the merger from proceeding. 

Mr. GOODLATTE. But then do you ever ask the court to rule on 

the merits of the case? 

Mr. LEIBOWITZ. Well, what we ask the court to do is to stop the 

proceeding. Now, courts will sometimes use a likelihood of success 

on the merits standard and sometimes they will use, as the D.C. 

Circuit does, questions so serious and so substantial they go to the 

heart of the matter, and then it comes to the commission. 

Mr. GOODLATTE. How many times does the administrative law 

judge rule against the FTC staff in a merger case? 

Mr. LEIBOWITZ. Against the FTC staff? 

Mr. GOODLATTE. Yes. 

Mr. LEIBOWITZ. Quite often, in cases generally. I will get you that 

information. 

Mr. GOODLATTE. I would like to see that—— 

Mr. LEIBOWITZ. And also in conduct cases, as well. I want to say 

this: I know in conduct cases they have ruled against the FTC staff 

on several recent occasions, including our Rambus case several 

years ago. 

On merger cases, I will go back, and I will get you and I will get 

the Committee the answer. That is a good question. 

Mr. GOODLATTE. And finally, on appeal how many times have the 

five commissioners ruled against the FTC? 

Mr. LEIBOWITZ. I will get you that information. I mean, you raise 

a real question, and I don’t disagree with that, but I like to think 

at its bottom line in merger cases that ultimately the result of the 

merger is never—and I don’t think anyone has ever alleged this 

even from the Antitrust Merger Bar—the outcome isn’t determined 

by who you go to, and the standards are ultimately the same. 

Mr. GOODLATTE. Thank you. 

Ms. Varney, do you have any comment on that? 

56 

Ms. VARNEY. Only I can speak to the Department of Justice, Mr. 

Goodlatte. We can seek a preliminary injunction; we can seek to 

have that preliminary injunction combined with a permanent injunction trial on the merits; or we can seek a preliminary injunction and then proceed down the road after discovery to a permanent injunction, which is a full trial on the merits. 

So our system is slightly different and we, of course, as you have 

noted, are held to the common law standard in every circuit that 

requires for a preliminary injunction likelihood of success on the 

merits and irreparable harm if the injunction is not granted. If we 

get the injunction separate from a permanent injunction we then— 

generally the parties will withdraw and everybody will go home. 

You can often get the parties to agree to not proceed with the 

transaction until the court schedules a full trial on the merits. So 

there are occasions where we simply don’t go through the preliminary injunction standard, where we go after discovery to a direct 

trial on the merits and then all of the standards of Section 7 of the 

Clayton Act and the court precedent on merger analysis kick in. So 

it is a slightly different system. 

Mr. LEIBOWITZ. Mr. Goodlatte, if I could just add one more brief 

point, when Congress—when you or your predecessors—created the 

FTC you wanted to create an expert agency, and so I think theoretically—and I will go back and get you some research on this, 

too—I think theoretically you probably wanted all the merger reviews to go through the FTC internally as opposed to into court for, 

a preliminary injunction. But let me get back to you. 

But part of the idea of putting things into our ALJ process and 

internally into the commission is we are supposed to be an expert 

agency; we are supposed to build records; we are supposed to learn 

from the cases we bring and the actions we take. 

Mr. GOODLATTE. Ms. Varney, does the Antitrust Division not 

have the expertise that we think you have to—— 

Ms. VARNEY. I think that the division and the courts and the 

FTC all have terrific expertise in doing anticompetitive analysis. I 

think, as Chairman Leibowitz pointed out, the Federal Trade Commission is a creature of Congress, and I have no basis to go 

through the legislative history of what Congress intends the FTC 

to do and not do, or how to do it. I think that is a question reserved 

for you and the chairman. 

Mr. GOODLATTE. Well, I am just concerned about the lack of consistency here, and from looking at it from the outside you would 

have a considerable question about, you know, why we are going 

two separate directions here on antitrust law and how there is kind 

of predictability and fairness that a business trying to make a decision before they ever get to the point of being before that court for 

that preliminary injunction has to make. It just compounds the 

problem, and I would think it would be stifling on investment and 

creativity and doing business in the United States. Thank you. 

Mr. Chairman, my time is expired. Are you going to do a second 

round, or—I do have another area I wanted to get into, but I don’t 

want to keep Mr. Issa from getting his shot here first. 

Mr. JOHNSON. I certainly have abundant respect for Mr. Issa’s 

brain power, and you both sit next to each other. Perhaps he will 

57 

ask the same exact questions that you had on your mind. And so 

let’s wait and see what Mr. Issa brings to the table. 

The distinguished gentleman from California, please? 

Mr. ISSA. Thank you, Chairman. As you know, my questions usually lead to more questions, so I suspect a second round will be essential as a result. 

Chairman, we are considering—since you are a creation of ours 

and you are our bastion of expertise—we are considering a bill that 

probably won’t happen in this Congress, but these things tend to 

come back—H.R. 5034. And I would like your view on the legislation itself and on the problems that it make create from a stand— 

because it clearly deals with antitrust questions, interstate commerce, and not only the history of litigation that has already gone 

on and court decisions, but the 21st Amendment. 

To the extent that you are familiar with the legislation, could 

you comment on—— 

Mr. LEIBOWITZ. Is it the alcohol—— 

Mr. ISSA. Yes, sir. 

Mr. LEIBOWITZ. I am aware of that legislation—— 

Mr. ISSA. And your Web site makes us think that you are not 

very keen on it, but I would like a delineation a little more. 

Mr. LEIBOWITZ. I don’t believe that we have testified on or taken 

a position on the legislation—— 

Mr. ISSA. This is your chance. 

Mr. LEIBOWITZ [continuing]. And I will—you know, we are a very 

bipartisan, consensus-driven group, and I am going to go back to 

the commissioners and talk to them, and I will get you an answer. 

But I would say this: My recollection of this legislation is that it 

would preempt the ability of Federal antitrust authorities as a 

practical matter under most circumstances from reviewing competition problems within alcohol distribution. 

And so, we generally believe as I know you do—that competition 

is the best approach, and when you have Federal antitrust enforcement under appropriate circumstances that is usually a good thing 

in terms of bringing competition, more choice, and lower prices to 

consumers. But let me get back to you with some more grounding. 

I don’t want to speculate too much until I go back and read the bill. 

Mr. ISSA. Okay. And as you can imagine, this is a bipartisan 

piece of legislation, particularly to those of us who have both beer 

producers and wine producers in our district, both manufacturers 

and, if you will, distributors. So even if you don’t take a final position on it, some of the pitfalls that you believe it might—from your 

oversight standpoint going forward—might represent would be 

very, very helpful. I am looking forward to that answer the—a 

great deal. 

Let me ask another question. Now, I am one of the non-lawyers 

on this Committee, and my antitrust experience really goes to 

being told by the courts years ago that at a Chrysler dealership if 

Chrysler decided not to let anyone else sell radios there except 

Chrysler radios that it wasn’t an antitrust violation even though 

they had 100 percent control over that franchisee because the relevant market were all car companies and there were only 10 percent Chryslers, and less later. 

58 

I thought that was a rotten decision. It should never have stood; 

it ultimately was one of those where we won on a three-judge panel 

and lost en banc, and denied cert. It was the Town Sound case here 

in one of the eastern circuits. Terrible decision. 

So I have always looked at relevant market barrier to entries to 

try to figure out the other part, the other legs of stools—legs of the 

stool. And one of the questions I am starting to have in the Internet—and earlier Mr. Chaffetz talked about, he was getting into 

Google and some of these other issues. If we assume for a moment 

that the Internet has no barrier to entry, that just anyone with 

$1,000 and a college kid to write a piece of software can someday 

be a major player on the Internet, then that leg of the stool just 

doesn’t exist, and that means that the test is there is no antitrust. 

On the other hand, when we look at powerful players who, for 

example, have a dominant position and then give away lots of software—and Gmail is highly recognized and some of the services 

Google do, but I am not trying to pick on just them. When are we 

going to either see the courts make decisions that they may or may 

not be empowered to make or a direction back to those of us on this 

side saying that we have got to rewrite antitrust law to deal with, 

if you will, market power without a barrier to entry, potentially, 

and yet a tie-in that effectively is anticompetitive? 

And this could be a question for both of you because I view it as 

clearly anticompetitive potentially. I view it as locking—free always locks out other innovation, almost always. And yet, right now 

I feel like current law probably doesn’t support your being more activist in those kinds of areas. 

Ms. VARNEY. Well, I have not sure—— 

Mr. ISSA. Ms. Varney, I was glad to see your head shaking, so 

I—— 

Ms. VARNEY. I am not sure that I feel that current law doesn’t 

allow us to prosecute anticompetitive behavior in any industry, including technology. I think I will—— 

Mr. ISSA. So if Google has market power and they are giving 

something away, and therefore their giving away promotes a product in which they have a dominant position while eroding other 

people’s ability to have profit, why wouldn’t that already be the 

subject of your investigations and enforcement? 

Ms. VARNEY. Again, without commenting on any potential current—— 

Mr. ISSA. Let’s just say your historic and as of yet revealed—— 

Ms. VARNEY. Well, actually that is what I am going to do, is I 

am going to take you back a little. But first I am going to promise 

you that I am going to read your case so that I understand the 

facts of your case. 

But I would also like to take you back to U.S. v. Microsoft. 

Mr. ISSA. By the way, I was not a plaintiff in Town Sound. I was 

the nonpaid chairman of a trade association that supported it. I 

was actually in security, not car radios. But you follow these things 

on behalf of your trade association—— 

Ms. VARNEY. Well, I will look forward to discussing that case 

with you after I have read it. 

But in the interim I would direct you to U.S. v. Microsoft, both 

the court of appeals here in D.C. and the trial court opinion, which 

59 

dealt precisely with the issues that you are talking about—barriers 

to entry, is free predatory pricing, when does lockout occur, what 

is a tipping point, what is a leveraged market, what is an adjacent 

market—all of these questions were dealt with, I think, quite successfully and quite appropriately in the U.S. court of appeals for 

the District of Columbia in U.S. v. Microsoft. 

So I believe at the moment we have the tools we need. If that 

turns out not to be true I will be back to you in a heartbeat telling 

you we don’t have the tools we need. 

Mr. LEIBOWITZ. And I guess just to—— 

Mr. ISSA. Although in that case they found barriers to entry 

which I think we could make the case that in the cloud you can 

have a zero barrier to entry, potentially—a threshold of a few thousand dollars to give you—— 

Ms. VARNEY. Yes. At the time one of the arguments that many 

were making is that there were no barriers to write new applications that browsers could then, indeed, locate. 

Mr. ISSA. Right. But the software was sitting on the product at 

the time delivered in a tie-in with Intel, AMD, and so on. So there 

were a much more conventional set of circumstances of hardwaresoftware than we are now seeing in cloud computing. 

Ms. VARNEY. Well, at the time, Congressman, I was in—as you 

were in your case—I was very involved in this case. I was the attorney for Netscape, which was the company that made the browser. 

Mr. ISSA. Oh, yes. 

Ms. VARNEY. And at the time it was not at all clear. It wasn’t 

conventional. This was the operating system and software sitting 

on the operating system I actually came up to the Hill to demonstrate to some Members of the other body what was the relationship between the browser and the software—— 

Mr. ISSA. Such a waste of time. You need to come here first. 

[Laughter.] 

Ms. VARNEY [continuing]. And someone picked up the mouse and 

said, ‘‘Is this the browser?’’ So I think if you go back in time and 

you look at the situation when the government brought the U.S. v. 

Microsoft case it was a very, very new set of circumstances, set of 

industry players, set of industry facts. 

People didn’t understand the relationship between the intellectual property in the operating system, the construction of the operating system, whether or not the browser was integral to the functioning of the operating system, whether or not the browser could 

be a platform that could replace the operating system—these questions were all present in 1997 when we started the U.S. v. Microsoft case, and we managed to work our way through them I think 

to the right conclusion with the tools that we have and continue 

to have to this day. 

Mr. LEIBOWITZ. Yes. I agree with Assistant Attorney General 

Varney, and I think the Microsoft case does encapsulate a lot of the 

elements that you have talked about. 

I do think we have the tools to go ahead and bring cases against 

companies that engage in illegal monopolization. We have a major 

case against Intel now—we are actually in settlement talks, and of 

60 

course if we can settle to the benefit of consumers and competition 

and the public we will do that. 

But we do have those tools. At the FTC we have an additional 

tool, which is our Section 5 unfair methods of competition authority 

that is this penumbra around the antitrust laws. The remedies are 

weak; we are not using it to break up companies; we are not using 

it to do anything but open the door to competition going forward. 

So I think, as Assistant Attorney General Varney said, we will 

come back to you if we need additional tools, and there certainly 

have been some attempts, as you have alluded to, by the courts to 

circumscribe antitrust in recent years. But I think we will, when 

we do our next oversight hearing in a year or 2 hopefully we will 

have some pretty good cases and some pretty good settlements or 

results. 

Mr. ISSA. I appreciate that, Mr. Chairman. I hope that that last 

comment will be stricken from the record—the part about a year 

or 2. I was hoping to see you much sooner. 

Mr. LEIBOWITZ. We will come by and have an offline chat. 

Mr. ISSA. Thank you. 

I yield back. 

Mr. JOHNSON. Thank you, Mr. Issa. 

We now turn back to Mr. Goodlatte. 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. 

The other area I wanted to get into is the one related to the 

chart that Mr. Leibowitz brought with him, and that is related to 

these patent settlement cases that are reviewed by the courts. You, 

or the FTC in general, has expressed concerns about the potential 

anticompetitive nature of some of these settlements, and you have 

indicated an interest in getting enhanced authority to challenge the 

settlements. 

Don’t the courts review the settlements that occur before them 

in other contexts? I mean, what about patent settlements are so 

unique that the Federal courts cannot understand them well 

enough to review them for their competitive impact, particularly if 

you are given, as you are, the authority to express your views as 

a part of the process? 

Mr. LEIBOWITZ. Well, I would say, of course courts can review 

settlements, and they have the opportunity to do that, and I don’t 

dispute that. And in fact, any cases that we have brought—and we 

have brought several; we have two pending now, one in Mr. Johnson’s 11th Circuit in district court, one in the Third Circuit—they 

are reviewed by the courts and they are ones that we are involved 

in. 

So we want to work with the courts. We think the trend is turning around, actually. 

There was a Second Circuit decision in a case involving the drug 

Cipro; Assistant Attorney General Varney filed a terrific brief in it 

and in a very unusual result the three-judge panel questioned the 

previous permissive rule. So I think we are making progress in the 

courts. Just going back to your—— 

Mr. GOODLATTE. Let me just interrupt you there for a second, because, you know, I share some of your enthusiasm for these delay 

settlements and wanting to break into them, but here is the point: 

You indicated, ‘‘Well, in this case we are making some progress,’’ 

61 

but if you were to take a legislative approach that would internalize more of this in the FTC you are taking away the element 

of fairness that I think people expect from the Federal courts. 

Now if the courts are lopsided in their review then maybe the 

Congress needs to review the standards by which they judge these 

cases or something like that, but I am not excited about moving 

away from the idea that the independent judiciary will be the final 

arbiter of these cases. 

Mr. LEIBOWITZ. I think that is a great question. And remember, 

the first bill that the House passed as part of health care was what 

we call a bright-line test, what others call a per se ban on these 

deals. 

The legislation that was passed as part the appropriations defense supplemental to offset, I believe, the teachers’ money, and not 

passed by the Senate I think largely because of the teachers’ 

money, was a presumption. And I think presumption approach 

works for us. 

What it does is this: It says—and I think this is a pretty good 

approach. It is not everything that the commissioners would necessarily want or the commissioner wants, but I think it solves— 

takes care of the worst abuses. 

It says simply, if a brand pharmaceutical company pays its generic competitor and the generic company delays entry then the 

burden of proof is reversed and it is a rebuttable presumption, essentially. And I think that is a pretty good approach, because remember, the pharmaceutical companies who were in litigation then 

settled have all the information, and if they can show—and I think 

in some cases they probably would—that the money that went for 

settlement didn’t go for the delay then they can do their deal. 

If this legislation is enacted this year, and of course we hope it 

will be, we will be bringing cases in the courts and we will have 

to show the money, the delay, and then there will be a rebuttable 

presumption. So you might be a little more comfortable with this 

compromised version, and that is the version I think, may be enacted this year. 

Mr. GOODLATTE. The final financial reform bill did not include 

the provisions that would have expanded the FTC’s authority in 

rulemaking, civil penalties, and aiding and abetting. Do you plan 

to continue to push for such authority? 

Mr. LEIBOWITZ. Well, I would say this: It did not, and reasonable 

people can disagree about our expanded authority. On civil penalty 

authority I would say we bring a lot of fraud cases because the Justice Department has other priorities, and in those cases it would 

be very helpful for us to be able to go to the courts and ask to fine 

malefactors. 

Caspar Weinberger, when he was the chairman of the FTC in the 

early 1970’s, supported this, and again, I would be surprised if this 

is going to be a viable matter—this is going to be a viable issue 

going forward this year. 

I think that there is going to be an FTC reauthorization next 

year; your Committee will be involved, Energy and Commerce will 

be involved. And so it will go through regular order, and we will 

have a bit of discussion and I think it is a good idea to have one— 

about the pros and cons of easier FTC rulemaking. 

62 

Mr. GOODLATTE. My understanding is that most of those changes 

were directed at the commission’s consumer protection bureau. 

Mr. LEIBOWITZ. Yes. 

Mr. GOODLATTE. Would those changes have affected the commission’s competition enforcement procedures and remedies? 

Mr. LEIBOWITZ. The only one that would have had an effect on 

competition would be the provision that would have allowed us to 

immediately go to—and only in rare instances—would be the provision that would allow us to go to court and have independent litigating authority when we ask for civil penalties. 

There are very few instances when we get civil penalties in the 

antitrust context. It is for violations of an order, and right now we 

have to go to the Justice Department, and the Justice Department 

files our case when we need civil penalty authority or when we are 

asking for a fine. 

But it is a much bigger issue on the consumer protection side. 

On the consumer protection side and you were very involved in 

CAN-SPAM legislation and some of the other enhanced authorities 

that we have gotten over the years—we have a sort of Hobson’s 

choice. 

If someone is engaged in spamming or engaged in a do-not-call 

violation we want to go to court immediately to stop the ongoing 

harm, which we can do by ourselves, but then we have to forego 

the civil penalty authority. We just think it is efficient for us to be 

able to do that together, right, so we can both fine the malefactor 

or ask the court to fine the malefactor, and stop the harm. 

Mr. GOODLATTE. And is the commission unanimous in these—in 

pushing for these changes? 

Mr. LEIBOWITZ. It depends which change you are talking about. 

I think two of the four proposals—— 

Mr. GOODLATTE. The ones you didn’t get. 

Mr. LEIBOWITZ. Well, we didn’t get any of the four, and I would 

say of the four the independent litigating authority is unanimous, 

the APA rulemaking authority and the civil fining authority has bipartisan supermajority of four to one, and we have a lot of respect 

for Bill Kovacic, the commissioner who was opposed to that. And 

again, reasonable people can disagree, and that is why we are 

happy to have the discussion in Congress about it. 

Mr. GOODLATTE. Mr. Chairman, thank you. You have been generous with your time, and I thank our witnesses for enlightening 

us today. 

Mr. JOHNSON. You are very welcome, sir. 

I have no further questions, so I would like to thank all of the 

witnesses for their testimony today. And without objection Members will have 5 legislative days to submit any additional written 

questions, which we will forward to the witnesses and ask that you 

answer as promptly as you can to be made part of the record. Without objection the record will remain open for 5 legislative days for 

the submission of any additional materials. 

I am encouraged by the testimony I have heard today, and I am 

impressed by two truly outstanding individuals who are leading the 

way for antitrust enforcement in this country, and it seems that 

you all have a great working relationship, and I think that that is 

the way the government should operate. 

63 

Nevertheless, perhaps we have grown too complacent in the face 

of shifting economic theories and deference to regulation. The antitrust laws should be keeping the playing field level for all players 

big and small, not just reinforcing the position of a handful that 

dominate. 

And with that, this hearing of the Subcommittee on Courts and 

Competition Policy is adjourned. 

[Whereupon, at 12:06 p.m., the Subcommittee was adjourned.] 

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f 


C-57.eps
209 

Æ 


D.eps