### .. -

# - \Ji1VJV/ 1.::::. U4 UU 10:40/01. JC:4a/NO. 

### JOb/242221 P 

# ltniteb 

# 6tatts1Departmtnt

# ofjJugtlct AntitrustDivision 950PennsylvaniaAvenue,NW 

### Room3109 Wasbir.Jgtoo., DC20530 Pax Number: 202-616-2645 VoiceNumber: 202-514-2401

Tl!cinfonnationcozu:aio.ed inthisfacsimile is governmentprivilegedandconfidentjal infonnation intended only for che use ofrhe addiem:e(s) listed OD tlti&CO'llel'1heeL If**~he** readerofchis message isnotthe inrendcdrecipient(SJ, you are hereby notified th.at any di:;semioation, distribution orcopying ofthe telecopy il! .strictly prohibited. Ifyou have received tb.i!I facsimile in error, please immediatelynotifythe senderat the telephone nwnbcr Li.qtcd 011 this coversheet and lhe original .Cacsimile munbe rctumed viarhe UuitcdStari:sPostalServiceto tbeaddressabove. Thankyou. ·



### FAXCOVERSHEET

DATE: TO: 

### of: FaxNumber: FROM: December4, 2000 EdLevy DepartmentofEnergy 586-4116 DougMelamed

Pages Sent(includingthis sheet):

Remarks: Pleasedeliverimmediately. 

### 4l'lW!Vl 

### (MONJ J

### 2. 04' 00 J

### 6:

### 46/ST. 16:45/NO. 356124222l P 2
DEPARTMENTOF

### JUSTICE AntitrustDivision 

## A.DOUGLASMELAMED ActingAssistantAttorneyGeneml
MainJusticeBuiJdinJ 950 PennsylvaniaAvenue, N.W_ Washington, D.C. 20530-0001 (202)514-2401 I(202)616-2645 (i) antitrust@ justice.0$doj-gov tiuBnl:fJ http://www.usdoj.gov(WorldWideWeb)

December 4, 2000

Mary Anne Sullivan, General counsel Department 

### of Energy**~ashington,** D.C. 20585

Dear General Counsel Sullivan:
I 

### am responding to your October 16, 2000 letter seeking the 

### views of 

### the Attorney General about the potential impact 

### on competition of two proposed energy efficiency standards: one for clothes washers and the other for residential central air conditioners and heat pumps. Your 

### request was submitted pursuant to Section 32S(o) (2) (B) (i) of the Energy Policy and consei::vation Act, 42 U.S.C. §6291., 6295 (11EPCA."), which requires the Attorney General to make a determination of the impact of any lessening of competition that is likely to result from the imposition of proposed energy efficiency standards. 'I'he Attorney General's 

### responsibilicy for responding 

### to requests from other departments about the effect of a program on competition has been delegated to the Assistant Attorney General for the Antitrust Division in 

### 28 CFR §_ 

### 0.40(g}.
We have reviewed the proposed standards and the supplementary information published in the F§deral Register notices and submicted to the Attorney General, which include 

### information provided to the Department 

### of Energy by manufacturers. We have additionally conducted interviews with members of the**indust~ies.**1 u.vm.**~** 

## - 

# . (MONJ 

### Jc. 

### 04' 00 16:47/ST. 

### 16:45/NO. 3561242221 P 

### 3

Page 2



### we have concluded that the 

### proposed clothes washer standard would not adversely affect competition. In reaching this conclusion, we note that the proposed standard is based on a joint recommendation submitted to the Department of Energy by manufacturers and energy conservation advocates. That recommendation states that virtually all-manufacturers 

### of clothes 

### washers 

### who sell in the United-States participated 

### in 

### arriving at 

### the reconunendation through their trade association, 

### that the recommendation**~as** developed 

### in consultation with 

### small manufacturers, and that the manufacturers believe the**ne~** standard 

### would not**li~ely** reduce compatition. We 

### note further that, as the industry recommended,**th~** proposed standard will be phased in over six years, which will allow companies that do not 

### already have products 

### chac meec the proposed standard sufficient time to redesigrt their product lines.
With respect to the proposed residential centrai air conditioner and heat pump standard, we have concluded that there 

### could be an adverse impact on competition. The proposed standard, Trial Standard Level 3, is expressed in tenns of two 1ndustry measurements: SEER (Seasonal Energy Efficiency Ratio) and HSPF ·{Heating Seasonal Performance Factor)

. 1 These standards would change from the current central air conditioner and heat pump efficiency standards of 10 SEER/6.8 HSPF for split system air 

### conditioners and heat pumps and 9.7 SEER/6.6 HPSF for single package air 

### conditioners and heat pumps to 12 SEER for air conditioners and 13 SEER/7.7**HPS~** 

### for heat pumps.
We have identified three possible competitive problems presented by the proposed standards. First, the proposed 13 SEER

The Federal Register notice also requested col1\Il\ents on a proposal to adopt a 

### standard for steady-state cooling efficiency (EER)a.nd discussed several options the Department of Energy is 

### considering. The proposed rule 

### set**fo~th** 

### in the notice 

### does not, however, include a provision regarding an EER standard, and the views of-the Department 

### of Justice expressed in 

### this letter 

### are 

### limited to 

### "the impact of any lessening of competition

... that is likely to result from the imposition of the {proposed} standard," as required by EPCA. If tha Department of EneJ:"gy · 

### proposes 

### a rule in the future incorporating an EER standard, the Department will then evaluate that proposed rule and express its views about**th~** competitive impact of that 

### standard.

### F.ROM 

### (MON) 12. 04' 00 16:47/ST. 16:45/NO. 3561242221 P 4

Page 3
heat pump standard would have a disproportioriate impact on smaller manufacturers. 

### currently less than 20% of the total current product lines meet che proposed standards, but for some small manufacturers, 100% of their product lines fail to satisfy the proposed standard. second, the proposed standard for heat pumps, and in some instances for air conditioners,.would have an adverse impact on some manufacturers of these products (including those products :referred to in the Eederal**R~gister** notice as "niche products") used to retrofit existing housing and used in manufactured**hou~ing.** These manufacturers could not make units that comply with the rule and fit into the available space. Third, the proposed heat p\Jlt\p standard of 13 SEER could make heat pumps less competitive with alternative heating and cooling systems. Bacause the standard will result in increases in the size and cost of heat pumps, it is possible that purchasers will shift away from heat pumps to other systems that: include electric resistance heat, reducing the competition that presently exists between heat pumps and those other systems.
The Department of Justice urges the Department of Energy to take 

### into account these possible impacts on competition in determining its final energy efficiency standard for air conditioners and heat pumps. The Department of Energy should 

### consider setting 

### a lower SEER standard for heat pumps, such as the standard included in Trial Standard Level 2, and a lower 

### SEEa standard for air conditioners for retrofit markets where there are space constraints (such as markets served by niche products)and for manufactured housing.

Sincerely,

' ('' 

### l ' 

### .. ..,

A. Douglas Melamed .

# ---

..,...,

### ____...