Task Force Reviews Recommendations of Antitrust Modernization Commission

This posting was written by John Scorza, CCH Washington Correspondent.

Members of the House Judiciary Committee’s Antitrust Task Force lauded the work of the Antitrust Modernization Commission (AMC), but took issue with a few of its conclusions at a May 8 hearing.

For three years, the commission reviewed the antitrust laws to determine whether they need to be updated. The commission in early April issued a final report containing more than 300 pages of analysis and recommendations (CCH Trade Regulation Reporter ¶50,222).

Repeal of Robinson-Patman Act

While welcoming the commission’s work, Judiciary Committee Chairman John Conyers (D-Michigan) took issue with some of its conclusions. He was especially skeptical of the recommendation to repeal the Robinson-Patman Act, which prohibits sellers from offering different prices to different purchasers when there is no pro-competitive justification.

“Admittedly, the Act has its flaws; it is structurally complex and hard to administer, and it is not often used as an enforcement tool,” Conyers remarked. “But these problems don’t mean we should repeal the law altogether. Instead of repealing the Act, I believe we should be finding ways to make it work.”

Deborah A. Garza, the chair of the AMC, cited one factor that influenced the recommendation—the difficulty U.S. officials have explaining the Act to foreign competition officials.

John Yarowsky, Vice-Chair of the AMC, parted company with the commission on the issue. He acknowledged that the Act has led to considerable confusion. But, like Conyers, he urged Congress to fix the Act by redesigning it.

Indirect Purchaser Rule

In addition to the objection to the Robinson-Patman Act recommendation, Conyers took exception to the commission’s recommendation to repeal Illinois Brick v. Illinois (1977-1 Trade Cases ¶61,460) and Hanover Shoe. Inc. v. United Shoe Manufacturing Corp. (1968 Trade Cases ¶72,490)

He noted that the U.S. Supreme Court in those two cases ruled that only direct purchasers, not indirect purchasers, may sue for damages from price fixing, and that antitrust defendants in these cases cannot use the defense that the direct purchaser passed on the overcharge to the indirect purchaser or consumer.

“If each direct purchaser must determine how much of the overcharge was passed on downstream, it may be very difficult to pursue these actions,” Conyers said. “The result could be an overall decrease in holding price fixers and monopolists accountable. This is an issue we should study carefully.”

Merger Enforcement

The representative also voiced concerns about “a wave of consolidation in key industries” that have not been challenged by the Justice Department’s Antitrust Division.

Despite his concerns, the Judiciary Committee chairman found some of the AMC’s recommendations to be particularly useful.

“For example,” Conyers said, “its recommendation that immunities from the antitrust laws should be disfavored—and only created when the heavy burden is met of clearly demonstrating that the exemption is necessary to satisfy a specific societal goal that trumps the benefits of a free market—is a good starting point for Congress as it moves forward with various proposals.”