"The Apple iPod iTunes Anti-Trust Litigation"
REDACTION Exhibits 2,3,4,5,7,9 to 345 Declaration of Thomas R. Merrick in Support of Plaintiffs' Memorandum in Opposition to Apple's Motion to Dismiss or, Alternatively, for Summary Judgment by Melanie Tucker. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12)(Merrick, Thomas) (Filed on 3/22/2010) Modified on 3/23/2010 (cv, COURT STAFF).
Filed03/22/10 Page1 of 23
Filed03/22/10 Page2 of 23
DEPARTMENT OF JUSTICE
VIGOROUS ANTITRUST ENFORCEMENT
IN THIS CHALLENGING ERA
CHRISTINE A. VARNEY Assistant Attorney General
U.S. Department of Justice
Remarks as Prepared for the United States Chamber of Commerce
Filed03/22/10 Page3 of 23
Good afternoon and on behalf of
the Antitrust Division, I want to thank you
for the opportunity to speak today about the importance of antitrust enforcement in
a distressed economy. I am especially pleased to give remarks here at the
Chamber of Commerce, which represents businesses of all sizes, sectors, and regions, and has focused the attention of its Antitrust Council and International
Competition Working Group on domestic and international competition policy. I
look forward to working with the business community and the Chamber
throughout my tenure as AAG.
I have had a wonderful first month on the job. As I begin each day with the
Division, I pass the photographs of all of
the former AAGs for Antitrust. Among
those photographs are former AAGs who faced the challenges posed by
tumultuous economic conditions. Thurman Arnold is one. He served as the AAG
for Antitrust just after the Great Depression, and the Antitrust Division played a
very active role in bringing competition back to the market during his tenure. I
keep.such luminaries in mind as I consider the great challenges that lie ahead of
I want to talk with you today about three issues. First, I want to address the role of antitrust enforcement in a distressed economy. Second, I want to discuss
the Antitrust Division's approach to enforcement regarding single-firm conduct
under Section 2 of
the Sherman Act. Finally, I want to share my thoughts on the
challenges we face going forward.
Filed03/22/10 Page4 of 23
II. Lessons Learned From Prior Economic Crises: National Industrial
Recovery Act and Industrial Codes
The question on
every American's mind is: "What can the Government do
to help ease consumers' burden in these troubled economic times?" This question
is particularly pressing for the Antitrust Division, which in the past has come
forward to playa significant role in response to economic crises. It istime for the
Antitrust Division to step forward again. I believe this country's prior experience
in responding to economic crises must be considered in evaluating our response to
current market conditions. As Shakespeare once put it - "what's past is
prologue." In particular, I have considered the Government's response to the
market conditions that followed the Great Depression, and I believe there are
important lessons we can learn from that era.
At the tum of the century, after the passage of the Sherman Act, our
country faced catastrophic events: the Panic of i 907 and World War i. The latter
event brought a close to the Government's previous commitments to trust-busting.
This lack of interest in antitrust enforcement continued through the i 920s.
Significantly, the onset of
the Great Depression did not cause the nation to
reconsider the damaging effects of cartelization on economic performance.
Instead of reinvigorating antitrust enforcement, the Government took the opposite
tack. Legislation was passed in the i 930s that effectively foreclosed competition.
The National Industrial Recovery Act ("NIRA"), which created the National
Recovery Administration ("NRA"), allowed industries to create a set of industrial
Filed03/22/10 Page5 of 23
codes. These "codes of
fair competition" set industries' prices and wages,
established production quotas, and imposed restrictions on entry.
At the core of the NIRA was the idea that low profits in the industrial
sectors contributed to the economic instability of those times. The purpose of the
industrial codes was to create "stability" - i.e., higher profits - by fostering
coordinated action in the markets. The codes developed following the passage of
the NIRA governed many of America's major industrial sectors: lumber, steel, oil, mining, and automobiles. Under this legislation, the Government assisted in
the enforcement of the codes if firms contributed to a coordinated effort by
permitting unionization and engaging in collective bargaining.
What was the result of
these industrial codes? Competition was relegated
to the sidelines, as the welfare of firms took priority over the welfare of
consumers. It is not surprising that the industrial codes resulted in restricted
output, higher prices, and reduced consumer purchasing power.
It was not until 1937, during the second Roosevelt Administration, that the
country saw a revival of antitrust enforcement. From 1937-1939, the number of
antitrust cases initiated by the Antitrust Division jumped to 48 cases, a significant
up-tick from the 15 cases filed in the preceding three years. Under the leadership
Tliurman Arnold, who served as the AAG for Antitrust from 1938 until 1943,
the Department continued its enforcement efforts. As Thurman Arnold later
commented, the Roosevelt Administration "was responsible for the first sustained
program of antitrust enforcement on a nationwide scale" that the country had ever
Filed03/22/10 Page6 of 23
had. The cases brought by the Antitrust Division during this era represented the
beginning of a strengthened competition policy. Thurman Arnold's legacy of
vigorous antitrust enforcement was thus a cornerstone of the New Deal's
economic agenda and a part of
that era's legacy for modern economic policy.
The lessons learned from this historical example are twofold. First, there is
no adequate substitute for a competitive market, particularly during times of
economic distress. Second, vigorous antitrust enforcement must playa significant
role in the Government's response to economic crises to ensure that markets
This country's prior experience raises the question of
economic challenges reflect a "failure of antitrust." In other words, could United
States antitrust authorities have done more? As many observers agree, in past
years, with the exception of cartel enforcement, the pendulum swung too far from
Thurman Arnold's legacy of vigorous enforcement.
Americans have seen firms given room to run with the idea that markets
"self-police," and that enforcement authorities should wait for the markets to "self-
correct." It is clear to anyone who picks up a newspaper or watches the evening
news that the country has been waiting for this "self-correction," spurred
innovation, and enhanced consumer welfare. But these developments have not
occurred. Instead, we now see numerous markets distorted. Weare also seeing
some firms fail and take American consumers with them. It appears that a
combination of factors, including ineffective government regulation, ill-considered
Filed03/22/10 Page7 of 23
deregulatory measures, and inadequate antitrust oversight contributed to the
current conditions. I believe that these extreme conditions require a recalibration
of economic and legal analysis and theories, and a clearer plan for action. As
antitrust enforcers, we cannot sit on the sidelines any longer - both in terms of
enforcing the antitrust laws and contributing to sound competition policy as part of
our nation's economic strategy.
III. Actions Ahead: Enforcement Priorities
Section 2 Enforcement The Antitrust Division must step forward and take a leading role in the
the Government's multi-faceted response to the current market
conditions. Vigorous antitrust enforcement action under Section 2 of the Sherman
Act will be part of
the Division's critical contribution to this response.
Just as I do, my predecessors in the Antitrust Division saw the need for a
clear Department policy regarding enforcement under Section 2 of the Sherman
Act. Starting in June 2006, the Department of Justice, with the aid of
Trade Commission, embarked on a year-long series of joint hearings to study
issues relating to enforcement of Section 2 against single-firm conduct. The goal
of these efforts was to clarify the analytical framework for assessing the legality of
single-firm conduct and to provide guidance to the courts, antitrust counselors, and
the business community. In September 2008, after review and analysis of
extensive hearing record, the Department of Justice issued its report, entitled
"Competition and Monopoly: Single-Firm Conduct Under Section 2 of
Filed03/22/10 Page8 of 23
Sherman Act." 1 The Section 2 Report reflected a significant effort by my
predecessors and the FTC in collecting and evaluating the opinions and expertise of antitrust enforcement officials from the United States and abroad, leading
economists and legal scholars, antitrust practitioners, and representatives of
business community. To its credit, the Report provided a comprehensive
evaluation of the history of single- firm enforcement and careful consideration of
the risks and benefits of
particular enforcement strategies. The Report's ultimate
conclusions, however, missed the mark. In my view, the greatest weakness of the
Section 2 Report is that it raised many hurdles to Government antitrust
At the core of the Section 2 Report were several critiques of 1960s antitrust
enforcement policy, which, taken to their extremes, counseled in favor of a
significant limitation of Section 2 enforcement. The Report sounded a call of
great skepticism regarding the ability of antitrust enforcers - as well as antitrust
courts - to distinguish between anticompetitive acts and lawful conduct, and raised
the related concern that the failure to make proper distinctions may lead to "over-
deterrence" with regard to potentially procompetitive conduct.2 I do not share
these concerns. I strongly believe that antitrust enforcers are able to separate the wheat from the chaff in identifying exclusionary and predatory acts. As Judge
Competition and Monopoly: Single-Firm Conduct Under Section 2 of
the Sherman Act, UNITED
STATES DEPARTMENT OF JUSTICE (2008) ("Section 2 Report" or the "Report").
2 This sentiment was expressed by a majority of
the Section 2 Report in September 2008. Statement of Commissioners Harbour, Leibowitz and Rosch on the
FTC Commissioners upon the publication of
Issuance of the Section 2 Report by the Department of Justice, FEDERAL TRADE COMMISSION, at 3-4 (Sept.
Filed03/22/10 Page9 of 23
Posner explained, "antitrust doctrine is supple enough.. .to take in stride the
competitive issues presented by the new economy.,,3
The Section 2 Report also characterized a dominant firm's ability to act
efficiently as a core concern in evaluating any possible anti
competitive impact of
its conduct. 4 There is no dispute that the evaluation of potential economic
efficiencies is an "important aspect of the analysis of firm conduct. The Report,
however, went too far in evaluating the importance of preserving possible efficiencies and understated the importance of redressing exclusionary and
predatory acts that result in harm to competition, distort markets, and increase
barriers to entry. The ultimate result is that consumers are harmed through higher
prices, reduced product variety, and slower innovation.5 Accordingly, I believe
the Section 2 Report lost sight of an ultimate goal of antitrust laws - the protection
of consumer welfare.
With its twin bases for skepticism, the Report counseled in favor of the
exercise of extreme caution in enforcing Section 2 and called for the adoption of a
number of safe harbors for certain conduct within its reach. While there is no
question that Section 2 cases present unique challenges (for example, in the fashioning of injunctive remedies), the Report advocated extreme hesitancy in the
Richard A. Posner, Antitrust in the New Economy, 69 ANTITRUST L.J. 925, 925 (2001).
For a thoughtful development of the basis for this concern, see William E. Kovacic, The Intellectual DNA of Modern Us. Competition Law for Dominant Firm Conduct: The Chicago/Harvard Double Helix, 2007 COLUM. Bus. L. REv. 1,35-38.
5 Harvey J. Goldschmidt, Comment on Herbert Hovenkamp and the Dominant Firm: The Chicago
School Has Made Us Too Cautious About False Positives and the Use of Section 2 of
the Sherman Act, in
How THE CHICAGO SCHOOL OVERSHOT THE MARK 123 (Robert Pitofsky ed., 2008).
Filed03/22/10 Page10 of 23
face of potential abuses by monopoly firms.6 We must change course and take a
For these reasons, I have withdrawn the Section 2 Report by the
Department of Justice. Effective May 11,2009, the Section 2 Report no longer
represents the policy of the Department of Justice with regard to antitrust
enforcement under Section 2 of the Sherman Act. The Report and its conclusions
should not be used as guidance by courts, antitrust practitioners, and the business
In withdrawing the Section 2 Report, I made specific reference to the
Report's conclusions. In particular, Chapter 3 of
the Section 2 Report concluded
that where conduct-specific tests are not applicable, "the disproportionality test is
likely to be the most appropriate test(.J" 7 With this baseline, conduct is only
considered anticompetitive where it results in harm to competition that is
disproportionate to consumer benefits and to the economic benefits to the
defendant. In other words, the anticompetitive harm must substantially outweigh
procompetitive benefits to be actionable. The Report's adoption of
disproportionality test reflected an excessive concern with the risks of overdeterrence and a resulting preference for an overly lenient approach to
enforcement. The failing of
this approach is that it effectively straightjacketed
antitrust enforcers and courts from redressing monopolistic abuses, thereby
See note 2 supra.
Section 2 Report at 45-46.
Filed03/22/10 Page11 of 23
allowing all but the most bold and predatory conduct to go unpunished and
While the Department is not proposing anyone specific test to govern all
Section 2 matters at this time, I believe the balanced analyses reflected in the
leading cases interpreting the reaches of the Sherman Act provide important
guidance in this regard. In particular, leading Section 2 cases - from Lorain
Journal v. United States8 to Aspen Skiing Co. v. Aspen Highlands Skiing Corp.9 to
United States v. MicrosoftlO - highlight a common concern regarding the harmful
effects of a monopolist's exclusionary or predatory conduct on competition and,
ultimately, consumers. Reinvigorated Section 2 enforcement will thus require the
Division to go "back to the basics" and evaluate single-firm conduct against these
tried and true standards that set forth clear limitations on how monopoly firms are
permitted to behave. There can be no better charter for our return to fundamental
principles of antitrust enforcement.
In 1951, the Supreme Court laid down a marker for Section 2 enforcement
in its decision in Lorain Journal. 11 In that case, the Court made a clear step
forward in identifying single firm conduct that crossed the line separating lawful,
fair competition from exclusionary, anti competitive acts.
342 U.S. 143 (1951). 472 U.S. 585 (1985).
touchstone for Section 2 enforcement. See Robert H. Bork, ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF 344-46 (1978); see also Robert H. Bork, Letter to the Editor, WALL STREET JOURNAL (May
15, 1998). .
253 F.3d 34 (D.C. Cir. 2001) (en banc). 342 U.S. at 155. Indeed, in his seminal work, Antitrust Paradox, Judge Bork points to Lorain Journal as a
Filed03/22/10 Page12 of 23
The Court addressed the conduct of a newspaper publisher, which was the
only business disseminating news and advertising in an Ohio town until a small
13 The publisher,
radio station began broadcasting in a neighboring community.
perceiving a threat posed by the radio station, took action to destroy this
competitor.14 The publisher refused to sell advertising space to any parties that
also used the radio station for local advertising.15 This practice forced numerous advertisers to refrain from using the radio station for advertising.16 The
publisher's actions also threatened to deprive surrounding communities of their
I? The Court found that the publisher's conduct violated
only nearby radio station.
Section 2 because its acts were plainly exclusionary in their ultimate effect, were
not justified by any legitimate reason, and were aimed at the "complete destruction
and elimination" of the radio station.
In light of
the publisher's purpose to create or maintain a monopoly and the
plainly anticompetitive impact of its
conduct, the Lorain Journal decision
expressly rejected the claim that the publisher had a "right as a private business
concern to select its customers and to refuse to accept advertisements from
whomever it pleases."19 As the Court explained its critical point: "We do not
dispute the general right. But the word 'right' is one of the most deceptive of
Lorain Journal, at 146-47.
Id at 148-50. Id at 149-50.
Id at 150.
Id at 153, 155 (internal citations omitted).
Filed03/22/10 Page13 of 23
Most rights are qualified.,,20 Consequently, the Court called for an
injunction restraining the publisher from refusing to accept advertising from
entities that also advertised in other media.21
The decisions that followed
Lorain Journal echoed the Supreme Court's
admonition to dominant firms regarding exclusionary and predatory conduct, and
filled out the roadmap for Section 2 enforcement. In Aspen Skiing CO.,22 the Court
again considered whether a monopolist can refuse to deal with its competitors, and
reaffirmed that any such right is not unqualified.23 In that case, the Court
considered the conduct of
Ski Co., the owner of
the four major downhill
skiing facilities in Aspen, Colorado.24 After several years of cooperating with
Highlands, the owner of
the fourth Aspen skiing facility, to issue interchangeable
ski passes that could be used at all four facilities, Ski Co. discontinued the
practice. Ski Co. offered to reinstate the 4-area pass only if Highlands would
accept a fixed percentage of the revenue, which was considerably below Highlands's historical average revenue.25 After Highlands refused to accept Ski
Co.' s offer to reinstate the 4-area pass, Ski Co. embarked upon a national
advertising campaign that strongly implied to visitors that there were only three
Id. (internal citations omitted). Id. at 156-58.
the Supreme Court's 472 U.S. 585 (1985). While commentators have debated the implications of decisions in Pacific Bell Telephone Co. v. Linkline Communications, Inc., - U.S. -, 129 S. Ct. 1109
(2009), and Verizon Communications Inc. v. Law Offices of the scope of
Curtis v. Trinko, LLP, 540 U.S. 398 (2004), on the Section 2 analysis set forth in Aspen Skiing, particularly as it applies in limited, specific sectors subject to significant and specialized regulatory overlay, there is no question that these decisions
reaffirmed Aspen Skiing's limits on a monopolist's ability to engage in exclusionary or predatory conduct. 23 472 U.S. at
24 Id. at 587-90. 25 Id. at 592-93.
Filed03/22/10 Page14 of 23
ski mountains in the area.26 Ski Co. also made efforts to frustrate Highlands's
ability to market its own multi-area package by refusing to accept Highlands's vouchers, each equal to the price of a daily lift ticket at a Ski Co. mountain, which
were guaranteed by an Aspen bank and could be redeemed for face value.
Echoing its previous decision in Lorain Journal, the Supreme Court noted
that "(t)he high value that we have placed on the right to refuse to deal with other
firms does not mean that the right is unqualified.,,28 The critical question before
the Court was therefore whether Ski Co.' s decision to make "an important change
in the pattern of distribution that had originated in a competitive market" was
unlawfully exclusionary. 29 In finding that Ski Co. had violated Section 2, the
Court considered not only Highlands's steady decline in market share, but
significantly, considered the impact of Ski Co.' s conduct on consumers.30 Expert
testimony and anecdotal evidence indicated that the elimination of the 4-area pass
deprived skiers of a desired choice; many wanted to ski all four mountains, but
would not because their ticket would not permit it.31 Finally, the Court identified
Ski CO.'s anticompetitive motivation to discourage skiers from doing
business with Highlands. In particular, Ski Co. was unwilling to accept
Highlands's vouchers, even though it entailed no cost to itself and would have
satisfied potential customers. In other words, Ski Co. appeared willing to sacrifice
Id at 593.
Id at 593-94.
Id at 601.
Id at 603-05.
Id at 605-10.
Id at 605-06.
Filed03/22/10 Page15 of 23
short-run benefits and consumer goodwill in exchange for a perceived long-run impact on Highlands's business.32 Moreover, Ski Co. acted markedly different in
Aspen than it did in another Colorado ski area, where it owned only one mountain
and continued to cooperate in providing access to a four mountain pass.33 Thus, as
Judge Posner put it, Aspen Skiing stands for the proposition that dominant firms
can be expected to deal with their rivals where "cooperation is indispensable to
Following these Supreme Court cases, the Government and private parties
have successfully challenged unlawful exclusionary conduct that harms consumers
and competitors. United States v. Dentsply International, Inc.,35 United States v.
Microsoft,36 and Conwood Co. v. United States Tobacco CO.37 are strong examples
of successful challenges to exclusionary conduct and the Department will
them in establishing its Section 2 enforcement priorities. In particular, following
the D.C. Circuit's decision in United States v. Microsoft, we will need to look
closely at both the perceived procompetitive and anticompetitive aspects of a
dominant firm's conduct, weigh these factors, and determine whether on balance
the net effect of this conduct harms competition and consumers. Going forward,
Id at 610-11.
34 Olympia Equip. Leasing Co. v. W Union Tel. Co., 797 F.2d 370, 377-78 (7th Cir. 1986). Carl
Id at 603 n.30.
Shapiro, Deputy Assistant Attorney General for Economics, elaborated on this principle as to network
industries, explaining that the strategic denial of access to a network facility controlled by a dominant firm
can deny "consumers the full benefits of technological progress that a dynamically competitive market would offer." Carl Shapiro, Exclusivity in Network Industries, 7 GEO. MASON L. REv. 673, 674 (1999).
35 399 F.3d 181 (3d Cir. 2005). 36 253 F.3d 34 (D.C. Cir. 2001) (en banc). 37 290 F:3d 768 (6th Cir. 2002).
Filed03/22/10 Page16 of 23
the Department is committed to aggressively pursuing enforcement of Section 2 of
the Sherman Act in furtherance of the principles embodied in these cases.
We did not lightly withdraw the Report. In this instance, however, we
concluded that the message sent by the doctrinal implications of this Report was
too problematic to let stand. In short, while preserving the right of firms with
market power to continue to compete, we cannot allow them a free pass to
undertake predatory or unjustified exclusionary acts. Section 1 Enforcement
Continued criminal and civil enforcement under Section 1 of the Sherman
Act will also be an important part ofthe Antitrust Division's response to the
The Antitrust Division's criminal enforcement program in recent years has obtained unprecedented success in cracking large domestic and international
cartels, resulting in increasingly higher criminal fines and longer jail sentences for
offenders. In the first six months of
the current fiscal year, nearly $1 billion in
criminal fines were obtained against corporate defendants, and the longest jail
sentence for a one-count Sherman Act offense was imposed. In the last three
years, over $2 billion in criminal fines and more than 162 years in jail time have
been imposed in cases prosecuted by the Division.
With the higher levels of concentration and economic instability, markets
are increasingly vulnerable to collusion and other fraudulent activity. We are
Filed03/22/10 Page17 of 23
especially concerned that the recent infusion of vast amounts of federal funding to
distressed industries and stimulus money to federal, state, and local governments
may lead to increased collusion and fraudulent activity. Outreach and cooperation
with those involved in the public procurement process are important parts of
preventing and identifying such illegal conduct.
I am pleased to report that the Antitrust Division is pioneering new territory
in its efforts to reach at-risk public sectors. We have launched the Antitrust
Division Recovery Initiative, a program developed in response to the enactment of the American Recovery and Reinvestment Act ("ARRA"), an act that provides for
significant appropriations to stimulate the country's economic recovery.
Recognizing the substantial risk that ARRA funded agencies will be vulnerable to
collusion and other fraudulent activity, the Antitrust Division has dedicated
significant resources to assist agencies receiving ARRA funds in detecting and
deterring criminal antitrust offenses. As part of
this Initiative, the Division is
providing training to the investigative arms of agencies receiving ARRA funds, as
well as the procurement officials from those agencies responsible for the
expenditure of such funds. By the end of this month, Division attorneys will have
provided training to over 8,000 agents, auditors, grant recipients, and other
procurement professionals. Through this Initiative, the Antitrust Division hopes to
make a significant impact on the overall prevention of fraud, waste, and abuse
relating to the use of ARRA funds.
Filed03/22/10 Page18 of 23
We will work hard to enable the Antitrust Division program to establish
direct lines of communication with agency Inspector Generals ("IGs") and state
investigative authorities to assist these officers in preventing - as well as detecting
- fraud and abuse. Consequently, in the event that preventive efforts fail, we will
be there to investigate and swiftly prosecute individuals and entities responsible
for criminal antitrust violations.
Civil Merger and Non-Merger Enforcement
On the civil front, the Antitrust Division will continue its push forward with
merger and non-merger investigations. In particular, it is my hope that the
Antitrust Division, drawing upon the significant expertise of my new leadership
team, will have the opportunity to explore vertical theories and other new areas of
civil enforcement, such as those arising in high-tech and Internet-based markets.
Increasingly, Americans are relying on high-tech solutions in the home and the
workplace and enjoying the fruits of innovation in those markets that have been
spurred on by competition between rival firms. We thus plan to devote attention to understanding the unique competition-related issues posed by these markets. In
the past, the Antitrust Division was a leader in its enforcement efforts in
technology industries, and I believe we will take this mantle again. In so doing, I
am cognizant that we must find the right balance to ensure that when intellectual
property is at issue, competition is not thwarted through its misuse or illegal
Filed03/22/10 Page19 of 23
IV. Thinking Ahead: New Ideas
Antitrust authorities must continue to look forward in order to remain at the
forefront of the dialogue, economic learning, and the development of legal
doctrine. While our most pressing challenges relate to enforcement in the
distressed economy, there are other important issues awaiting our attention.
Not only is the Antitrust Division charged with enforcing the antitrust laws,
but it also supports the development of competition policy more broadly. In my
view, we cannot develop sound antitrust policy merely on a case-by-case basis.
Instead, as I have charged the Division's staff, we must consider the overall state of competition in the industries in which we are reviewing potentially
competitive conduct or mergers, or providing guidance to regulatory agencies
charged with industry oversight. We thus must consider market trends and
dynamics, and not lose sight of the broader impacts of antitrust enforcement.
Rigorous economic analysis has been, and will continue to be, at the
foundation of the Division's antitrust policy. The focus of
analysis needs to be on the power of competition in the market to ensure the
American consumer's access to the best products at the lowest prices. We need to
bring the focus of
the economic discourse back to the basic and practical principle:
when markets are competitive, the consumer "wins." Beyond recalibrating our economic analysis, another important and
pragmatic aspect of sound antitrust policy is an understanding of the regulatory
frameworks governing the industries that are subject to antitrust enforcement. The
Filed03/22/10 Page20 of 23
Antitrust Division cannot operate in a vacuum, nor can it only focus on the case
before it. Antitrust policy and enforcement undoubtedly have a significant impact on affected industries. For this reason, we must bring to our antitrust analysis a
comprehensive knowledge of the economic and regulatory environments in which
industries operate. This broader understanding of the playing field is particularly
critical now, in light of our distressed economy and the new administration's
broad-reaching reforms across numerous industries.
Another challenge we will face is how to pursue effective enforcement in
an era of change and reform. The Obama Administration has pledged broad
reforms across numerous industries, including banking, healthcare, energy,
telecommunications, and transportation. The Antitrust Division will need to
contribute our experience and expertise to these reform efforts. Indeed, part of our
efforts will be to foster inter-agency discussions regarding the competition-related
issues posed by existing and proposed regulations and policies, and to play an
active role in competition advocacy. Our review of
these industries may reveal
that antitrust enforcement is but one of the necessary elements of a broader
approach requiring the expertise of other agencies and potential
that is the case, the Antitrust Division will be at the table with other
key decision-makers to make the case for competition policy, underscore the
importance of antitrust enforcement, and advocate for America's consumers.
Finally, I want to address the issue of collaboration with other antitrust
authorities, which I know is an issue of significant concern with the Chamber and
Filed03/22/10 Page21 of 23
its members in the business community. I am in search of
ways to renew
enforcement collaboration between the Antitrust Division and the FTC.
Unfortunately, our policies and processes have diverged too frequently in recent
years. While we are sister agencies with certain differences in terms of our
operations, we have many shared enforcement goals. We will be even closer to
reaching those goals if we can collaborate in pursuing our shared concerns
regarding threats to competition. We will focus our efforts on working through
our previously divergent policies regarding single-firm conduct and pursuing
vigorous enforcement on the Section 2 front. We will also look at whether there is
common ground between the two agencies in Section 1 enforcement, and in particular, with regard to vertical arrangements and in the review of mergers and
acquisitions. In addition, I am focused on merger clearance with the hope of
smoothing that process over time.
In the same spirit, I would like the Division to continue its fruitful
collaboration with international antitrust enforcement authorities. I want to assure
you that the withdrawal of the Section 2 Report does not mean that we are
abandoning our efforts to work with our international colleagues. To the contrary,
I believe that as targets of antitrust enforcement have expanded their operations
worldwide, there is a greater need for U.S. authorities to reach out to other
We will therefore need to continue the efforts described in Chapter 10 of
the Section 2 Report, and also find new ways to encourage collaboration in the
Filed03/22/10 Page22 of 23
international antitrust community. The Division is an unparalleled resource for
other nations that are developing their own antitrust policies, and we will continue
to playa leading role as an international advocate for competition policy.
Although differing international
legal frameworks pose certain hurdles to the
convergence in substantive laws, we can still explore ways in which antitrust
authorities around the world can pursue shared enforcement goals. We will
therefore remain active participants in the International Competition Network and
the Organization for Economic Cooperation and Development. We will provide
continued support to emerging antitrust regimes around the world through
technical cooperation with young antitrust agencies. We will also be looking for
additional opportunities for bilateral cooperation with our sister antitrust
In short, I believe that greater coordination with the FTC and foreign
antitrust authorities is in the best interests of America's business community and
consumers. Cooperation between antitrust agencies will not only contribute to the
development of clearer legal standards around the world, but also may assist in
improving cartel, merger, and non-merger enforcement in our respective
The current economic challenges raise unique issues for antitrust authorities
and private sectors. Weare faced with market conditions that force us to engage
in a critical analysis of previous enforcement approaches. That analysis makes
Filed03/22/10 Page23 of 23
clear that passive monitoring of market participants is not an option. Antitrust
must be among the frontline issues in the Government's broader response to the
distressed economy. Antitrust authorities - as key members of the Government's
economic recovery team - will therefore need to be prepared to take action. The
Antitrust Division will be ready to take a lead role in this effort.
Thank you for the opportunity to speak to you this morning. I am happy to
answer any questions you may have at this time.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?