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.

Senate Judiciary Committee’s DOJ Oversight Hearing Touches on Antitrust Issues

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

The “Antitrust Division’s revitalized enforcement” was among the “many good things” accomplished by the Justice Department over the last year, Senator Herb Kohl (D-Wis.) said, commencing a Department of Justice oversight hearing held yesterday by the Senate Judiciary committee.

“Revitalized Enforcement”

Kohl applauded Attorney General Eric H. Holder Jr. for his efforts. Kohl said that, “as our economy rebounds, the Antitrust Division’s revitalized enforcement has fostered a competitive marketplace that encourages innovation and economic development while ensuring consumers have access to high quality goods at the best prices.”

In prepared testimony, the attorney general touted merger enforcement efforts as well as cartel enforcement at the Justice Department Antitrust Division.

“The Department has acted against six merger transactions already in Fiscal Year 2010, reaching settlements to protect competition in the vast majority, including the combination of Ticketmaster and Live Nation, and is currently litigating against Dean Foods, the nation’s largest dairy processor,” Attorney General Holder said. He also noted that the nearly a quarter of a billion in criminal fines were obtained against Antitrust Division defendants so far in the current fiscal year.

While the Justice Department’s role in fighting terrorism was the focus of much of the hearing, antitrust issues were discussed. Before turning to non-antitrust issues, Senator Chuck Grassley (R, Iowa) thanked Attorney General Holder for the Justice Department’s efforts to put on joint antitrust hearings with the Department of Agriculture on the topic of competition in the agriculture marketplace.

The first hearing in the series was held in Iowa on March 12. Attorney General Holder and Agriculture Secretary Tom Vilsack were in attendance.

Comcast/NBC Universal Merger

Senator Al Franken (D, Minn.) expressed his concerns with the proposed merger of Comcast and NBC Universal, now under review by the Department of Justice.

In light of his experience in the entertainment industry, Franken offered his assistance to the Justice Department as it reviews the transaction. The attorney general said that the Justice Department would be glad to work with him and listen to his concerns.

Senator Franken has expressed concern with the enforceability of potential commitments offered by the parties to resolve federal antitrust concerns. He said that he wanted to make sure that merger conditions have “enough teeth” and “long enough life.”

Attorney General Holder said that he was not at liberty to talk about Comcast/NBC deal specifically because of the ongoing investigation. He did say, however, that the Justice Department has enforcement mechanisms to ensure compliance with conditions imposed on merging parties.

Links to a webcast of the Judiciary Committee’s April 14 hearing, as well as Attorney General Holder’s prepared testimony and Senator Kohl’s remarks, are available here.