Two Communications to Antitrust Modernization Commission

Mar 17 2005
Testimony and Interventions

Letter from Albert Foer to Andrew Heimert re two issues for the AMC agenda: patent holdup and buyer power.

March 18, 2005

Andrew Heimert, Executive Director

Antitrust Modernization Commission

1120 G Street, NW, Suite 810

Washington, DC 20005

Dear Andrew:

As the Commission prepares for its meeting on March 24, there are two issues that we hope can be reconsidered with respect to the agenda.

First, the Commission’s previous discussion concerning whether to include the patent holdup problem seemed to reflect majority support for taking on the topic, but uncertainty about whether the proposed topic was somehow either too broad or too narrow. We believe that the topic is an important example of where a changed economy raises questions about antitrust, such that it should be addressed by a “modernization” commission. Here is a restatement of the question that we hope can command a majority of the Commissioners:

Is “patent holdup” conduct of various kinds an increasing problem impeding the evolution of open standards and thus open competition in new economy markets; and, if so, is there a need to clarify how antitrust law should apply to tandard- setting processes in order to assure that standard-setting organizations address this problem in more effective ways?

Second, the Commission’s previous discussion concerning whether to include buyer power as an issue for study appeared to reflect a sense that this is not really a major issue. To the contrary, the rise of buyer power is a perfect example of an area in which important changes in the economy have not been matched by evolution of antitrust thinking. The importance of the issue is highlighted by publication of the most recent Antitrust Law Journal‘s Symposium on Buyer Power and Antitrust, which appeared after the Commission’s meeting. For a summary of the papers and some of the issues presented, see http://www.antitrustinstitute.org/files/378.cfm.

While this topic might be discussed in the context of whether to change the Robinson-Patman Act, we urge the Commission to specifically address this question within its Exclusionary Conduct study:

Is “buyer power” an increasing problem impeding the operation of competitive markets, and, if so, is there a need to clarify how antitrust law should or hould not apply to various situations in which buyer power is exercised?

We appreciate your bringing these requests to the attention of the Commissioners prior to the March 24 meeting.

Sincerely,

Albert A. Foer, President

Letter from Albert Foer to Andrew Heimert re composition of AAI's Working Groups covering the AMC agenda.

March 18, 2005

Andrew Heimert, Executive Director

Antitrust Modernization Commission

1120 G Street, NW, Suite 810

Washington, DC 20005

Dear Andrew: To reflect modifications made by the Antitrust Modernization Commission, the American Antitrust Institute has revised its working groups to prepare analysis and positions with respect to the issues that are on the Commission’s agenda. Please communicate to the Commissioners the following information, including membership and e-mails for the leader of each of our working groups.

1. Enforcement Institutions

Issues for Study: Generally:Dual federal enforcement (FTC and DoJ/Harmonization of FTC and DoJ rules/procedures; State attorneys general. Specifically:

1. What changes, if any, should be made to the enforcement role that the states play with respect to federal antitrust laws?

2. Should merger enforcement at the federal level continue to be administered by two separate agencies, the U.S. Department of Justice and the Federal Trade Commission? If so, should merger review responsibility be divided by industry between DOJ and FTC?

3. To the extent that dual enforcement continues, should steps be taken to eliminate differences in treatment arising out of which agency reviews a merger?

4. What role, if any, should private parties and state attorneys general play in merger enforcement? Should merger enforcement be limited to the federal level, or should other steps be taken to ensure that a single merger will not be subject to challenge by multiple private and government enforcers?

AAI Working Group:

Kevin O’CONNOR, koconnor@gklaw.com (CHAIR), Steve Calkins, Patricia Conners, Ellen Cooper, Bob Doyle, Harry First, Kathleen Foote, Veronica Kayne, Bob Litan, John Nannes

2. Merger Enforcement

Issues for Study: Generally: The Hart-Scott-Rodino/Second Request merger review process; Substantive merger analysis/efficiencies. Specifically:

1. Should the Hart-Scott-Rodino merger review process be revised to address issues relating to the number and type of transactions requiring pre-merger notification, the length of investigations, the burden imposed by “Second Requests” and civil investigative demands on the merging companies and third parties, and transparency of the enforcement agencies’ decisional process?

2. Are the federal enforcement agencies and courts appropriately considering efficiencies expected to be realized from transactions?

3. Has current U.S. merger enforcement policy—including as expressed in the Horizontal Merger Guidelines—been effective in ensuring competitively operating markets without unduly hampering the ability of companies to operate efficiently and compete in global markets?

AAI Working Group: James LANGENFELD, James_Langenfeld@LECG.com (CHAIR), Joseph BrodleyY, Robert Doyle, John Kwoka, Kevin O’Connor, F.M. Scherer, Robert Steiner, James Tierney

3. Remedies

Issues for Study: Generally: Rights and remedies in private litigation (Illinois Brick, treble damages, contribution, offset, injunctive relief); remedies available to governmental agencies. Specifically:

1. Should the substantive law and procedures applicable to indirect purchaser litigation be modified to reduce the complexity and inefficiency now present?

2. What should be the remedies and legal liabilities in private antitrust proceedings?

3. Should government civil remedies be expanded, restricted, or clarified?

AAI Working Group: Michael FREED, mfreed@muchshelist.com (CHAIR), Joseph Bauer, Patricia Connors, Eugene Crew, Jonathan Cuneo, Robert Lande, rothland@erols.com, Jim Langenfeld, Daniel Mogin, Kevin O’Connor, Bernard Persky

4. “New Economy” Issues

Issues for Study: Generally: Antitrust analysis applied to industries characterized by significant technological innovation; Balancing the protection of IP rights and promotion of competition. Specifically:

1. Should industries involving significant technological innovation be treated differently under the antitrust laws?

2. How does the current intellectual property regime affect competition?

3. Are there features of the modern (or “new”) economy that warrant different treatment –whether harsher or more lenient—of single-firm or vertical conduct in “new economy” industries?

AAI Working Group: Rudolph PERITZ, rperitz@nyls.edu (CHAIR), Joseph Bauer, James Langenfeld, Roger Noll, Mark Patterson, Douglas Rosenthal, Jonathan Rubin, F.M. Scherer, Robert Skitol, Phil Weiser

5. Robinson-Patman Act

Issues for Study: Specifically:

1. Should Section 3 of the Robinson-Patman Act (providing for criminal penalties) be repealed?

2. Should the Robinson-Patman Act be repealed in whole or in part, or otherwise be modified?

AAI Working Group: Robert SKITOL, skitolra@dbr.com (CHAIR), Roberto Amore, Joseph Bauer, Maxwell Blecher, William Comanor, Lloyd Constantine, Warren Grimes, Norman Hawker, John Kirkwood, Douglas Rosenthal, Stephen Ross, Jonathan Rubin, F.M. Scherer, Robert Steiner.

6. Exclusionary Conduct

Issues for Study: Specifically:

1. Should the substantive standards for determining whether conduct is exclusionary or anticompetitive under either Section 1 or Section 2 of the Sherman Act be revisited?

AAI Working Group: Robert SKITOL, skitolra@dbr.com (CHAIR), Roberto Amore, Joseph Bauer, Maxwell Blecher, William Comanor, Lloyd Constantine, Warren Grimes, Norman Hawker, George Hay, Alfred Kahn, John Kirkwood, Douglas Rosenthal, Stephen Ross, Jonathan Rubin, F.M. Scherer, Robert Steiner.

7. Immunities and Exemptions

Issues for Study: Generally: Immunities and exemptions; Noerr-Pennington; State Action. Specifically:

1. Should industry-specific antitrust immunities and exemptions be eliminated if not justified by the benefits they provide, or should they otherwise be time-limited?

2. Should the state action doctrine be clarified or otherwise changed?

3. Should the Noerr-Pennington doctrine be clarified or otherwise changed?

4. Should the antitrust exemptions for exporters set forth in the Webb-Pomerene Act and Title III of the Export Trading Company Act be eliminated?

AAI Working Group: Warren GRIMES, wgrimes@swlaw.edu (CHAIR), Steve Calkins, Craig Corbitt, Joseph Goldberg, Jonathan Rubin

8. Regulated Industries

Issues for Study: Generally: Antitrust enforcement by federal regulatory agencies; Implied immunity and savings clauses; Industry-specific standards. Specifically:

1. How should responsibility for the enforcement of antitrust laws in regulated industries be divided between the antitrust agencies and other regulatory agencies?

2. How should the presence or absence of antitrust savings clauses in regulatory legislation be interpreted?

3. Should Congress and regulatory agencies set industry-specific standards for particular antitrust violations that may conflict with general standards for the same violations?

AAI Working Group: Diana MOSS, dmoss@antitrustinstitute.org (CHAIR), dmoss@antitrustinstitute.org Alfred Kahn, Susan Kelly, Milton Marquis, Diana Moss, Roger Noll, Stephen Ross; Jonathan Rubin

9. Criminal Issues for Study: General: Sentencing Guidelines Issues (deferred) [ No current assignments]

AAI Working Group: Kenneth ADAMS, adamsk@dsmo.com (CHAIR), Donald Baker, John Connor

10. International Antitrust

Issues for Study: Generally: Clarifications to FTAIA; Coordination with non-U.S. authorities. Specifically:

1. Should the FTAIA be amended to clarify the circumstances in which the Sherman Act applies to extraterritorial anticompetitive conduct?

2. Are there technical or procedural changes that the United States could implement to facilitate further coordination with foreign antitrust enforcement authorities?

AAI Working Group: Phil NELSON, nelson.p@ei.com (CHAIR), John Connor, Beth Farmer, Harry First, Eleanor Fox, Douglas Rosenthal, Spencer Waller

Issues Pending Commission decision: Generally: Imposing time limits on federal civil and criminal investigations; Harmonization of multi-jurisdictional procedures; and Studying the effectiveness of enforcement efforts.

Sincerely,

Albert A. Foer, President