Senators look at antitrust enforcement

Preserving competition is in the best interest of consumers, senators agree, but they question how antitrust laws are enforced.

“Vigilant antitrust enforcement means more money in the pockets of American consumers,” said Sen. Amy Klobuchar, D-Minn., chair of the Judiciary Committee’s subcommittee on Antitrust, Competition Policy and Consumer Rights.

“It means identifying and preventing competitive problems before they occur, like stopping a merger that would allow a few dominant players to raise prices or, when a merger is allowed to move forward, putting conditions in place to protect competition,” she said.

The subcommittee heard testimony from two government officials Tuesday in a hearing on “Oversight of the Enforcement of the Antitrust Laws.”

“Competition is the cornerstone of our nation’s economic foundation,” said William J. Baer, assistant attorney general for the U.S. Department of Justice Antitrust Division since early January. “The antitrust laws serve to promote and protect a robust free-market economy by prohibiting anticompetitive agreements, conduct and mergers that distort market outcomes. When markets are working, consumers benefit from lower prices and higher quality goods and services.”

He talked about efforts to uncover and prosecute cartel behavior, such as price-fixing and bid-rigging, which he said seriously harm consumers. In 2012, Baer said, the division charged 16 corporations and 63 individuals and obtained more than $1.1 billion in criminal fines with 45 individuals sentenced to jail terms that averaged more than two years each.

On the civil side, he said the division worked with 33 state attorneys general to challenge an alleged conspiracy involving Apple Inc. and five major book publishers to raise prices for electronic books. He said the partners of the attorneys general obtained more than $80 million from the publishers for consumers and that the settlement restored meaningful price competition for e-books.

The division works with the Federal Trade Commission, chaired since March 4 by Edith Ramirez, who said the Supreme Court, in a rare decision in February, unanimously sided with the commission in a challenge to a hospital merger in Albany, Ga. that resulted in an alleged monopoly for inpatient services, see Federal Trade Commission v. Phoebe Putney Health System Inc., et al.

She said a key priority is to pursue active enforcement where it might be harmful to competition and consumers and that cartel enforcement remains a top priority, not just domestically, but overseas price fixing arrangements that impact American consumers.

Klobuchar asked about patent lawsuits filed by nonpracticing entities she called “patent trolls,” who buy patents from the original holder and sue competitors. She said the suits are unfounded, but end up costing companies huge sums to defend or settle.

Ramirez said it is being looked at; the comment period just closed on a joint workshop conducted in December by the FTC and Department of Justice to examine the ramifications of patent assertion on competition. She said comments will be reviewed to determine appropriate recommendations.

Sen. Michael S. Lee, R-Utah, the subcommittee’s ranking member, questioned a recent voluntary antitrust settlement with Google Inc. in lieu of a consent order, suggesting a break in long-term enforcement practices.

He said if there is no violation, the government should not be involved in informal market regulation, but also asked how the FTC was going to assure Google adheres to its commitments.

Ramirez said she expects Google will fulfill its commitments but, if not, the agency will take appropriate action.

Baer said the Antitrust Division and FTC have a clearance process to determine which agency is best to handle a situation and avoid duplication, but that if Google is not in compliance, there would be “a prompt conversation” about who would best handle the matter.

In response to a question from Sen. Richard Blumenthal, D-Conn., Ramirez said she too was concerned about group purchasing organizations and the practices of medical device manufacturers using kickbacks, forcing hospitals to bundle purchases from single vendors to qualify for discounts and distorting demand to artificially inflate prices.

She said a number of those issues, such as the applicability of kickback laws, are not related to antitrust, but that she is fully committed to looking at them.

Sen. Al Franken, D-Minn., brought up “pay for delay,” drug manufacturer’s practices of delaying the entry of generic drugs into the marketplace which he said the Congressional Budget Office estimates consumers could save $11 billion in drug costs in the next years if the practice is stopped.

Ramirez said she could not comment on specific investigations, but that the agency is very concerned about efforts by brand drug makers who use risk evaluation and mitigation strategies or product hopping to delay or impede the introduction of generic drugs.

Franken said he hoped she would bring enforcement action and not just amicus briefs.

Ramirez said immediate action will be taken if there is a violation.

Franken also talked about rising bills consumers are paying for cable television and mobile phone services.

“I’m very concerned the Supreme Court may make it much harder for small businesses to file private antitrust enforcement actions,” Franken said. “And instead, they may be forced to arbitrate their claims.”

Ramirez said antitrust laws should be enforced and that arbitration eliminates individual redress.

“It’s our view that private enforcement of the antitrust laws is a very important component to the enforcement by the agencies,” she said, noting it is a position the commission has taken in recent amicus briefs.

The comment period remains open until Tuesday. A video of the hearing is available on the Judiciary Committee’s website at www.judiciary.senate.gov/about/subcommittees/antitrust.cfm.