AAI's letter to Senate Appropriations leaders on behalf of organizations endorsing increased antitrust spending.

Mar 23 1999
Testimony and Interventions

The Honorable Judd GreggChairmanSubcommittee on Commerce, Justice,State, and the JudiciaryCommittee on AppropriationsUnited States SenateWashington, D.C. 20510

The Honorable Ernest F. HollingsRanking MemberSubcommittee on Commerce, Justice,State, and the JudiciaryCommittee on AppropriationsUnited States SenateWashington, D.C. 20510

Dear Chairman Gregg and Senator Hollings:

We are pleased to transmit to you a joint statement of organizations endorsing a substantial increase in the funding for the enforcement of the antitrust laws. In addition, a "white paper" prepared by the American Antitrust Institute is enclosed for your reference.

The "white paper" reviews the history of antitrust since 1970, concluding that it has become a matter of urgency to expand the resources available to the federal antitrust mission. The President's Budget for F.Y. 2000 would increase the Antitrust Division from $98 million to $114 million (16.3%) and increase the FTC from $119 million to $134 million (12.6%). Among the reasons to support this increase are the following:

+In 1998 there were 4,728 reportable U.S. merger transactions-compared to 3,087 in 1996 and 1,529 in 1991. The total value of U.S. mergers completed in 1998 exceeded $1.2 trillion - in an economy with a gross domestic product of $8.4 trillion!

+Mergers, which must be dealt with under a statutory time frame, have taken over the workload of the antitrust agencies. Merger investigations increased from 36% of the Antitrust Division's caseload in 1970 to 76% in 1998, driving out much of the non-merger law enforcement.

+Resources have not kept pace with the growing economy. Between 1977 and 1997, the total budgets of the FTC and the Antitrust Division decreased by 7% in constant dollars while the GNP grew by 112%. Mergers have increased by 550% since 1992.

+Even with the White House budget, authorized workyears will trail the 1980 levels. The Antitrust Division would get an increase in authorized FTE's from 819 to 943, still below the 1980 level of 982. FTC workyears would increase from 900 to 1,042 (compared to 1,719 in 1980!).

+Many antitrust challenges remain. Health care is not sufficiently competitive. Airlines monopolize hub terminals and other deregulated and deregulating industries are becoming more concentrated rather than more competitive. International cartels cost consumers dearly. Price fixing and bid rigging are a continual abuse of the system. New technologies are creating persistent monopolies that can control the global flow of information. Agricultural and meatpacking industries are unduly concentrated. And mergers are restructuring the economy without sufficient oversight.

+A single antitrust case can save consumers millions of dollars. E.g., when the FTC stopped the Staples/Office Depot merger, economists calculated the savings at $200 million per year (approximately the combined federal antitrust budget last year).

+Antitrust is a great public bargain. Because funding of the agencies will be 100% paid for by premerger filing fees paid by merging companies, money for antitrust does not displace expenditures for other public programs. The agencies also generate millions of dollars for the treasury in the form of criminal and civil penalties. The Justice Department recently announced that it had collected roughly $470 million in criminal fines in 1997 and 1998, over 90 percent in connection with international cartel activity.

Antitrust has served the American public well for over a hundred years. The need for antitrust has not declined. We still need to work at maintaining competitive markets, perhaps more than ever as the economy continues to change. Yet today's federal antitrust mission is substantially underfunded and understaffed. The President has proposed a budgetary increase, which should be taken as the starting point for a longer-term commitment to rebuilding the FTC's and the Antitrust Division's capability for dealing with today's challenges, and tomorrow's.

Sincerely,

Albert A. FoerPresidentAmerican Antitrust Institute

Enclosure: Statement of Organizations Endorsing Increased Antitrust Funding AAI, The Federal Antitrust Commitment: Providing the Resources to Meet the Challenge

STATEMENT

The undersigned strongly support the federal antitrust mission. We recognize the tremendous challenges that face the Department of Justice Antitrust Division and the Federal Trade Commission as they strive to maintain competition as the fundamental engine of our market economy. We call upon Congress to appropriate and authorize a substantial increase in the funding available to the antitrust agencies. We endorse the President's proposed increases as a reasonable and necessary step in the right direction and we pledge to work to assure that the American people understand that a robust antitrust policy is a bargain that repays the public many times over.

Air Carrier Association of AmericaAmerican Antitrust InstituteAmerican Booksellers AssociationAmerican Public Power AssociationAmerican Society of Travel AgentsAssociation for Local Telecommunications ServicesBurlington Coat Factory Warehouse Corp.Business Travel CoalitionComputer and Communications Industry of AmericaConsumer Federation of AmericaEssential ActionFriends of the EarthNational Consumers LeagueNational Farmers UnionNational Rural Electric Cooperatives AssociationOrganization for Competitive MarketsPublic CitizenUtility Consumers Action Network