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\Ji1VJV/ 1.::::. U4 UU 10:40/01. JC:4a/NO. JOb/242221 P 

ltniteb 6tatts 1Departmtnt of jJugtlct 

Antitrust Division 

950 Pennsylvania Avenue, NW 

Room3109 

Wasbir.Jgtoo., DC 20530 

Pax Number: 202-616-2645 

Voice Number: 202-514-2401 

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Uuitcd Stari:s Postal Service to tbe address above. Thank you. · 

FAX COVER SHEET 

DATE: 

TO: 

of: 

Fax Number: 

FROM: 

December 4, 2000 

Ed Levy 

Department of Energy 

586-4116 

Doug Melamed 

Pages Sent (including this sheet): 

Remarks: Please deliver immediately. 

4 
l'lW!Vl (MONJ J 2. 04' 00 J 6: 46/ST. 16: 45/NO. 356124222 l P 2 

DEPARTMENT OF JUSTICE 

Antitrust Division 

A.DOUGLAS MELAMED 

Acting Assistant Attorney Geneml 

Main Justice BuiJdinJ 

950 Pennsylvania Avenue, 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 (World Wide Web) 

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. 

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(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 

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