Monday, June 14, 2010

Federal Antitrust Agency Heads Testify at Senate Subcommittee Oversight Hearing

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Senate Judiciary Committee's antitrust subcomittee on June 9 held its first oversight hearing to examine antitrust enforcement under the Obama Administration. Subcommittee Chairman Herb Kohl (D, Wisconsin) began the hearing by saying that antitrust enforcement was sorely in need of revival at the beginning of the administration.

Christine A. Varney, Assistant Attorney General in charge of the Department of Justice Antitrust Division, and FTC Chairman Jon Leibowitz testified on the enforcement efforts of their respective agencies. The FTC prepared statement appears here on the agency website, and the Antitrust Division statement appears here on the Department of Justice website.

Merger Enforcement

“Merger enforcement continues to be a core priority for the Antitrust Division,” Assistant Attorney General Varney told the subcommittee. She cited the Antitrust Division's pending action against Dean Foods—the nation’s largest dairy processor—to undo the company's 2009 merger with Foremost Dairy.

The antitrust chief also noted the recent settlement permitting Ticketmaster—the World’s largest ticketing company—to proceed with its proposed merger with Live Nation Inc.

In response to questioning from Senator Kohl about the way the Antitrust Division handled the Ticketmaster case, Varney said that settling the case was the right thing to do. The proposed relief has both structural and behavioral remedies, Varney noted.

The antitrust chief discussed other enforcement efforts, including anti-cartel efforts during what she described as a remarkable year.

“Pay-for-delay” Agreements

FTC Chairman Jon Leibowitz told the subcommittee that his agency's top competition priority was “stopping `pay-for-delay’ agreements between brand-name pharmaceutical companies and generic competitors that delay the entry of lower-priced generic drugs into the market.”

Section 5 of FTC Act

Leibowitz also discussed how “the Commission is actively considering how it can best use Section 5 of the FTC Act to enhance enforcement in a responsible and transparent manner.”

The chairman noted as an example of the agency's efforts in the Section 5 area its action—announced that same day—against U-Haul International, Inc. and its parent company for inviting it closest competitor, Avis Budget Group, Inc., to fix prices for truck rentals.

Ranking Member Senator Orrin Hatch (R, Utah) questioned the FTC's efforts in these areas. While acknowledging the importance of targeting “pay-for-delay” patent settlement that are anticompetitive, Senator Hatch said that it was important not to impose undue burdens on parties settling patent disputes.

With respect to the FTC's increasing use of Sec. 5 of the FTC Act to combat, Hatch noted that uncertainty inherent in the use of Sec. 5 might lead companies to compete less aggressively. Hatch said there was a need for clear, specific standards.

In response to Senator Hatch's concerns over Sec. 5 enforcement, Chairman Leibowitz agreed that there need to be standards and said that the agency was moving carefully. “Ultimately the courts will decide the outer limits of Sec. 5,” the Chairman said.

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