Antitrust enforcement seen as stronger under Clinton
- Published: January 01, 1995, By MacArthur, Malcolm D.
During the past year and a half, it's become apparent that antitrust enforcement under the Clinton Administration is more vigorous than it was in previous ones.
It's anticipated this trend will continue while President Clinton is in office. The federal antitrust laws consist mainly of Sections 1 and 2 of the Sherman Act, Section 5 of the Federal Trade Commission Act and Section 7 of the Clayton Act.
These laws prohibit conspiracies in restraint of trade, such as: price fixing; attempts and conspiracies to monopolize commerce; monopolization; and mergers and acquisitions that substantially lessen competition. The laws are enforced by the US Department of Justice and by the Federal Trade Commission (FTC). Private treble damage suits can also be brought against alleged violators of these laws.
Since Clinton became president, more money has been allocated to antitrust enforcement, more lawyers have been hired and more cases have been brought. For example, on Aug. 26, Clinton signed a bill increasing the appropriations for the Justice Department's Antitrust Division and the FTC. Justice received $16 million more per year, allowing it to hire 100 new employees. The FTC's appropriations increased and as a result it will hire 25 new enforcement personnel.
The antitrust enforcement activity has been more intense at the Justice Department, It's headed by Anne Bingaman, a tough and active prosecutor. Bingaman says in the first six months of fiscal 1994, the Antitrust Division challenged 14 mergers, whereas in recent years the average number that were prosecuted for the entire year was only eight to 12.
The antimerger activity will have a direct impact on firms in the flexible-packaging industry that might wish to merge. The likelihood is increased that more such mergers will be carefully reviewed and challenged by the agencies.
Bingaman announced the Antitrust Division will initiate greater enforcement of civil antitrust cases generally, particularly cases directed at firms believed to be monopolizing an industry. Some 18 attorneys have been designated to look for possible cases.
The Agency has been active in the issuance of industry-wide guidelines. It withdrew a confusing set of guidelines dealing with so-called vertical restraints, i.e., restrictive arrangements between a supplier and its customer. Revised guidelines will be issued later.
Other guidelines have to do with the application of the antitrust laws to intellectual property, such as patents and copyrights. They cover the extent to which the owner of such property can continue to restrict the property's use. Intellectual property laws give such owners legal monopolies, but there are limitations and the guidelines that deal with them. Guidelines have also been issued on the impact of the antitrust laws on health-care issues. These were published in anticipation that Congress would enact a comprehensive health-care-reform measure, which of course didn't happen. The guidelines are useful in assessing the legality of conduct in industries other than health care.
Finally, the Antitrust Division will increase enforcement of the antitrust laws against foreign companies doing business in the US. In this respect, it may seek to subpoena companies believed to be in violation of US antitrust laws, even though the companies are not headquartered in the US.
Clinton recently appointed Bob Pitofsky as the new chairman of the FTC. He was a member of the Commission and a law professor at Georgetown University Law School.
President Clinton also nominated Christine Anne Varney, Cabinet secretary, to serve as an FTC commissioner. In the confirmation hearing, Varney advocated a greater role by FTC in international antitrust enforcement.
The FTC and the Justice Department have concurrent jurisdiction over antitrust violations. The agencies were at loggerheads over which would have the right to challenge the Lockheed-Martin Marietta $10-billion merger. They resorted to a version of the college basketball possession arrow, the Agency that last took a disputed case yielded to the other. The fact both wanted to investigate the merger should mean it will be given greater scrutiny, and there is a greater likelihood it will be challenged.
The Justice Department's suit against Microsoft, the software giant, was recently settled with the signing of a consent decree. Under the decree Microsoft agreed to eliminate certain restrictive licensing practices. The suit illustrates the globalization of antitrust in as much the same practices were also challenged by the European Union Commission as violation of Sections 85 and 86 of the Treaty of Rome, the European version of our Sherman Act.
Another event illustrates antitrust is worldwide in scope. The European Union recently brought suit against 16 European steel manufacturers resulting in $100 million in fines. The case alleged price fixing in the sale of steel beams, and a British company was fined $35 million. This is a jolting reminder that it's as important to obey antitrust rules in Europe as it is in the US.
