MINORITY VIEWS

INTRODUCTION

The operation of the antitrust laws and the settlement of antitrust lawsuits in the consent decree program of the Department of Justice are extremely important subjects. In our free enterprise economy the preservation of competition under rules fair to everyone is essential. The study of the Antitrust Subcommittee and its report could have made a valuable contribution in this field. The lack of any serious study of the basic problems of antitrust law enforcement and the lack of any constructive suggestions for its improvement (coupled with the obvious bias of the majority and its determination by innuendo, inference, and distortion of the record to smear the Department of Justice) has in our judgment been harmful rather than helpful in promoting national antimonopoly policies.

The minority cannot agree with the findings and recommendations contained in the majority report. The investigation was not productive of its avowed legislative purpose. Instead of analyzing the consent decree procedures followed by the Department of Justice and the actual effectiveness of consent decrees in preventing monopolistic practices, the majority investigated two cases for alleged improper activities by high administration officials. As a result, the majority produced no new worthwhile proposals for legislation. Its recommendation for notice to the public prior to the court approval of consent decrees-a recommendation which, with certain reservations, we agree warrants serious consideration. However, this proposal was not the result of this investigation; it was first recommended during a Republican Congress as the result of an investigation of another committee.2

It should be stated at the very outset that the majority report is not the report of the full Judiciary Committee of the House of Representatives. It is only the report of 4 of the 6 Democratic members of the Antitrust Subcommittee and has not been considered or approved by the full committee. The minority's request to present the report to the full Judiciary Committee for consideration on the merits was

1 Chairman Celler's introductory remarks were that "objectives" of the hearings would necessitate "an analysis of the procedures the Department of Justice uses to dispose of antitrust litigation on consent of the parties, and a consideration of whether specific legislation by the Congress with respect to these procedures would be desirable" (hearings, p. 1). 2 See Monopolistic and Unfair Trade Practices, H. Rept. No. 2465, p. 27, 80th Cong., 2d sess., Select Committee on Small Business, December 1948.

It is doubtful whether the Antitrust Subcommittee of the Committee on the Judiciary has legal authority to publish a report without submitting it to the full committee for approval. The Committee on the Judiciary has no separate rules but is governed by the Rules of the House of Representatives. Sec. 735, Rules of Committee Procedure, Jefferson's Manual and Rules of the House of Representatives, provides: "No measure or recommendation shall be reported from any committee unless a majority of the committee were actually present."

Also, H. Res. 27, 86th Cong., 1st sess., which authorized the investigation, provides that the "committee [not the subcommittee] shall report to the House *** the results of its investigation and study, together with such recommendations as it deems advisable."

refused. Therefore, the report has no official status and is not a document of the House of Representatives.

The minority, before criticizing the majority report, suggests that serious consideration be given to conducting a comprehensive, nonpartisan inquiry into the effectiveness of consent decree procedureparticularly the effectiveness of consent decrees as instruments of antitrust policy in restoring competition and eliminating monopolistic practices. Although the majority report contains an interesting introductory chapter on this subject, its conclusions are largely matters of opinion and lack factual justification. We, therefore, suggest that the broad powers vested in the Attorney General to dispose of national economic issues is a proper subject for legislative inquiry.

This matter was not thoroughly investigated because the subcommittee's inquiry was too narrow to form any valid basis for the farreaching changes recommended. As stated, only two consent decrees, the oil pipeline and the A. T. & T. consent decrees, were analyzed. Both of these decrees dealt with unusual economic issues and both in retrospect have become very controversial.

The objectives of the investigation, and the type of investigation which we recommend, if sincerely approached, will require the analysis of a large number of consent decrees. No two consent decrees, no matter how selected, can possibly furnish the basis for suggesting amendments to the antitrust laws, which have such extensive application to the orderly functioning of our entire economic system. Certainly, careful consideration of the probable effects of any amendments (a procedure which was not followed in this investigation) will be necessary before the minority can join in the recommendations for congressional action.

Each industry has its peculiar problems relating to the enforcement of the antitrust laws and each consent decree must be judged in light of the abuses it was intended to correct. Also, as graphically illustrated in this hearing, national defense considerations may at times be a necessary and valid reason for temporarily relaxing antitrust enforcement in the areas of our economy geared to the national defense effort.

Unfortunately the technique of the majority was to examine two consent decrees in detail (which it obviously picked as bad examples) and to infer that the procedures followed are representative of the entire consent decree program of the Department of Justice. For example in its textual discussion, the majority specifies that the Antitrust Division should enter into consent settlements (in cases in which novel questions of law are presented or when the Government's complaint attacks the structure and operations of dominant corporations that determine the standard of conduct for an entire industry) only

when the defendants agree to all of the relief which the Department of Justice believes is essential to reestablish competition, eliminate the conditions which caused the Government to institute its action, and to dissipate the fruits of monopoly.*

5

This sort of academic suggestion, together with the conclusion that consent decree procedure has usurped the judicial function, may be useful; but it is really no more than every antitrust administrator

Majority report, p. 27.

See majority report, p. 15.

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already knows. It is typical of the majority's broad recommendations, which have the effect of criticizing and accusing by suggesting that a different procedure is being employed and that the Antitrust Division is actually approving decrees which perpetuate monopolies. This the majority cannot factually know because there is no evidence in the record to support the assertions. Indeed, we submit that had the investigation of the subcommittee included a representative sampling of other consent decrees (to suggest a few recent cases, the I. B. M., the Eastman Kodak, the United Fruit Company, and the RCA cases), the majority may have found that its "ground rules" are already being followed. But it is now a matter of pure speculation. Thus, we recommend a further investigation into this very important area of antitrust policy and enforcement.

In addition to the Department of Justice, the majority critizes the Defense Department, the Interstate Commerce Commission, and the Federal Communications Communications Commission. These criticisms relate principally to the purported influence these agencies exerted in the negotiation and enforcement of the two consent decrees

In United States v. International Business Machines Corporation (S. D. N. Y., Jan. 25, 1956), the decree opened up an entire industry to competition. IBM's monopoly power was dispelled by requiring the sale of tabulating machines at reasonable prices. IBM was enjoined from including compulsory maintenance and repair in leases of its machines and was required to make available all of its present patents, plus patents acquired within 5 years, to firms desiring to compete. Should these and other provisions of the decree prove ineffective, IBM after 7 years must divest itself of its capacity to manufacture in excess of 50 percent of the total tabulating cards manufactured in the United States.

In United States v. Eastman Kodak Company (W. D. N. Y., Dec. 21, 1954), the decree opened up to competition the entire color film processing industry which had been monopolized by one company. Eastman's fair trade contracts, which included the processing fee in the retail price for color film, were canceled. In addition Eastman was required to make available its processing patents to all who desired to enter the business of processing and developing color film.

In United States v. United Fruit Company (E. D. La., Feb. 4, 1958), the defendant will be required to divest itself of sufficient assets to establish a competing company capable of importing one-third of the volume of bananas presently imported by the United Fruit Co. In addition it is enjoined from engaging in a number of practices which it previously employed in furtherance of its monopoly position. In United States v. Radio Corporation of America (S. D. N. Y., Oct. 28, 1958), the decree effectively provides for the breaking up of the monopoly position RCA had in its patent licensing, manufacture, sale, and distribution of "radio purpose" products. Practically speaking, by requiring RCA to license royalty free all of its existing patents (approximately 12,000) plus requiring RCA to establish a "patent pool" licensing arrangements on 100 of its patents relating to color television, the decree dispels the monopoly power of RCA and opens up the radio and television industry to more effective competition.

(Also, since entry of the decree in United States v. Pitney-Bowes (D. Conn., Jan. 9, 1959), 16 companies have expressed an interest in getting into the manufacture of postage meter equipment and 1 company has been qualified by the Post Office Department to manufacture this equipment (Wall Street Journal, Apr. 17, 1959).) ;

7 The Defense Department is principally criticized for attempting to inject "itself into the very merits of the [A. T. & T.] litigation * * *" (majority report, p. 57). While the Defense Department was interested in the probable effect that divestiture of A. T. & T. and Western Electric would have on the ability of the Bell System to perform its defense commitments and frankly informed the Justice Department of its views, there is no evidence that it sought to fashion the outcome of the antitrust issues involved. The concern of the Defense Department as related to the settlement of the antitrust case by the Department of Justice is briefly discussed hereinafter in the chapter devoted to the A. T. & T. consent decree.

8 The Interstate Commerce Commission is principally criticized for having permitted oil pipeline personnel to assist the ICC in the preparation of valuation data and for its cooperation with or reliance upon the engineers-accountants valuation committee of the American Petroleum Institute. Since the hearing, the ICC is no longer permitting oil pipeline personnel to assist in the preparation of valuation data and has proposed to create its own industry advisory committee (majority report, p. 300). The minority joins in commending the ICC on these changes.

9 The Federal Communications Commission is principally criticized for its failure "ever to conduct a general telephone rate inquiry [which] left it in a peculiarly unfortunate position to advise the Department of Justice with respect to the antitrust settlement." In addition the majority contends that "in advising the Department *** the Commission suppressed the caveat of its staff that effective regulation depended upon the adequacy of the resources at the command of the agencies **" (majority report, pp. 292. 293). This is more a matter of opinion than conclusions drawn from the facts in the record. Therefore, the extent to which the ICC influenced the decision of the Attorney General in the settlement of the A. T. & T. case is discussed hereinafter in the chapter devoted to the A. T. & T. consent decree.