Tuesday, April 03, 2007

Antitrust Modernization Commission Finds Antitrust Law Sound, Flexible

After three years of study, 17 public hearings, and 16 meetings, the Antitrust Modernization Commission has concluded that federal and state antitrust enforcement is fundamentally “sound” and the antitrust laws are sufficiently flexible to account for the changing global economy. However, the Commission did make several recommendations for improvement of antitrust enforcement, including some proposals for legislative change.

The 12-member, bipartisan Commission released its Report and Recommendation to the President and Congress on April 3. A press release, a 16-page letter to the President and Congress, and the 449-page “Report and Recommendations” are available at the Antitrust Modernization Commission website.

Letter to President, Congress

In the letter to the President and Congress, the Commission states that (1) “the Report is fundamentally an endorsement of free-market principles,” (2) the antitrust laws are “sound,” but can be improved, and (3) “new or different rules” are not needed to address “new economy” issues.

The Commission does not recommend legislative change to the Sherman Act or Section 7 of the Clayton Act because “the basic legal standards that govern the conduct of firms under those laws are sound.”

However, the report did put forward some recommendations, including the following:

Repeal 1930s-era pricing legislation. The report advocates the repeal of the Robinson-Patman Act on the grounds that it discourages price discounting and “appears to be ineffective in protecting the small businesses that were intended to be its beneficiaries.”

Enact legislation allowing indirect purchasers to sue. The federal ban on suits by indirect purchasers and the state authorization of such suits “have resulted in a morass of litigation that takes money out of the pockets of injured consumers,” the Commission found.

Improve federal merger review. The Commission recommends legislation that would eliminate unnecessary regulatory delay caused by uncertainty over which agency will review a transaction. Amendments to the Hart Scott Rodino Act should (1) require that clearance occur within a short period of time, (2) mandate that mergers be treated the same regardless of whether the FTC or the Department of Justice reviews them, and (3) reduce the burden of merger review and increase the transparency of merger enforcement policy.

Increase cooperation and comity in international antitrust. The U.S. should enter into cooperation and comity agreements with more of its major trading partners, according to the Commission. These agreements should help reduce conflict in antitrust enforcement and strengthen cooperation in the fight against international price-fixing cartels.

Disfavor statutory immunity from antitrust laws. The Commission believes that statutory immunities should be granted rarely (if ever) and only when compelling evidence shows that (1) competition cannot achieve important societal goals that “trump consumer welfare” or (2) a market failure clearly requires government regulation in place of competition.

The Antitrust Modernization Commission was created pursuant to the Antitrust Modernization Commission Act of 2002 (CCH Trade Regulation Reporter ¶27,640) to examine the need to modernize the federal antitrust law, solicit public comment concerning the operation of the antitrust laws, evaluate current practices and proposals for change, and submit recommendations to the President and Congress.

The Commission—led by Deborah A. Garza (Chair) and Jonathan R. Yarowsky (Vice-Chair)—first met on July 15, 2004. It must cease operations within 60 days of the issuance of the report and recommendations.

Further information about the Commission appears at the Antitrust Modernization Commission’s web site.

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