increased emphasis on consent judgments is not without its disadvantages to the Division, and its dangers to antitrust enforcement.1 106 The minority agrees that due regard should be given to the number of antitrust cases which are litigated in relation to cases settled. However, this is not a matter which can be controlled by arbitrarily suggesting that a greater number of cases should be tried. The majority next suggests that cases which involve novel questions of law or which affect the standards of conduct of an entire industry, should be settled 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 this action, and to dissipate the fruits of monopoly.107 This suggestion has merit as a principle to be followed in the settlement of antitrust cases. However, there is no evidence that the Department of Justice has not given due consideration to these factors. As previously suggested, had the committee investigated a representative number of consent settlements, it might have discovered this procedure is being followed.108 Perhaps the majority stresses the conditions on which cases should be settled, and applies it as a general criticism, because it is really more basic to the majority's quarrel with Attorney General Brownell than the efforts to smear his character. Obviously the majority believed that the Attorney General (in settling without divestiture of Western Electric from A. T. & T.) administratively decided an issue of antitrust law. But having based its investigation on an assumption that there must have been bad faith amounting to an "abdication of duty," the majority could not forthrightly say the Attorney General miscontrued the application of the antitrust laws to the regulated industries. Therefore, the majority's general criticism of the procedures of the Department of Justice have no basis in the record. As practical suggestions, they are only that which every antitrust administrator already knows. The minority is not primarily defending the merits of Attorney General Brownell's decision to settle without divestiture. (There is no evidence in the record, such as testimony from would-be competitors or from persons who have suffered injury from entry of the decree upon which to determine the decree's effectiveness.) The minority's purpose has been to show that valid reasons exist for an exercise of judgment and that no proof exists upon which to assume that bad faith was the controlling factor. As stated, the majority has not seen fit to introduce any legislation to correct this defect, which it now claims exists in the manufacture of telephone equipment. 108 Hearings, p. 4082. 107 Majority report, p. 27. 108 In the introduction the minority suggested for study the consent settlements in United States v. Eastman Kodak Co. (W. D. N. Y., 1954), United States v. International Business Machines Corporation (S. D. N. Y., 1956), United States v. United Fruit Company (E. D. La., 1958), and United States v. Radio Corporation of America (S. D. N. Y., 1958). At the hearing, Judge Hansen cited both the Eastman Kodak and I. B. M. consent decrees. The United Fruit and the RCA consent decrees had not been negotiated at that time. With respect to the first two, the majority report comments: "The committee has not undertaken detailed investigation of either the Eastman Kodak decree or the I. B. M. decreee, which Assistant Attorney General Hansen cited. Accordingly, the committee is not in a position to assess independently the efficacy of these two decrees" (majority report, p. 21). After making suggestions for improvement in consent decree procedure, which are fashioned in the nature of criticisms, the majority recommends: (1) That Department procedure provide "notice to the public of the terms of the consent decree, * * * a waiting period *** [and] an opportunity [for third parties] to intervene in the Government's case in order to present their objections to the court ***" 109 and (2) legislation to amend "section 5 of the Clayton Act to give the court *** discretion [to permit use of consent decrees] by private litigants to establish a prima facie case in treble damage litigation." 110 Although Judge Barnes testified that the Antitrust Division follows a practice of conferring with other members of the affected industry before negotiation and entry of a consent decree, the providing of public notice, before presentation of a negotiated judgment to the court, could measurably enhance antitrust policy. It will be impractical, however, to permit third parties to participate in the settlement proceedings or to actually intervene and become parties to the litigation. The purpose for notice should be solely for the purpose of affording third parties, who will in some way be affected by the entry of the decree, an opportunity to present their objections to the court. Such a procedure will provide third parties a limited measure of protection and may forestall later criticism of the Government officials who negotiated the decree. The proposal for amending section 5 of the Clayton Act (to permit use of consent decrees in private treble damage litigation) is without regard for the consequence. Nowhere in the record is any consideration given to what will be achieved by this action. As stated, this measure could effectively prevent the Government from concluding any consent settlements. No antitrust defendant would agree to make himself liable to future suits for treble damages. In these suits he would be unable to make any defense on the issue of liability or violation of the Sherman Act. As a practical matter, both the Government and the defendants will be compelled to litigate every civil case brought by the Antitrust Division. This will include the numerous cases in which the defendants are ordinarily willing to accede to all the injunctive relief requested by the Government. In many cases the amendment will actually delay the effective date of injunctive relief and prevent the speedy reintroduction of competition into the affected industry. The majority's recommendation with respect to the oil pipeline consent decree is completely unrelated to the investigation. The investigation was concerned mostly with the "rebate issue" growing out of the enforcement of the 1941 consent decree. The majority's recommendation for amending the Elkins Act (so as to prohibit payment of dividends by oil pipelines to shipper-owners, which are derived from transportation charges paid by the shipper-owners, competitors of the shipper-owners) 111 as a practical matter will force divorcement of pipelines from their shipper-owners. The majority assumes, without there being any proof on the subjects, that any payments by pipelines to shipper-owners will constitute rebates, which, 100 Majority report, p. 304. 110 Majority report, p. 305. 111 Majority report, p. 296. if eliminated, will "reduce the competitive advantages now enjoyed by the major integrated oil companies." 112 Such stringent measures may ultimately be necessary in order to insure competition in the oil industry. But the feasibility of such measures, or the real necessity for them, was not considered at the hearing. The principal issue considered at the hearing was whether the Department of Justice (as an enforcement matter) was acquiescing in the defendants receiving discriminatory rebates far in excess of the 7 percent fixed by the judgment. It is true that the majority questioned the right of Attorney General Biddle to authorize a 7 percent dividend. But nowhere is there any proof at what rate of precentage less than 7 percent a dividend becomes a rebate or constitutes a discriminatory advantage. Thus, to conclude that all payments should be prohibited lacks factual justification. Nowhere in the record is there any evidence that as a matter of antitrust policy the oil companies should be forced out of the common carrier business. Under these conditions, the minority is not prepared to join in the recommendations not supported by the record. Instead, we strongly recommend that the hearings be reopened and that an attempt be made to determine whether the powers vested in the Attorney General to administratively decide antitrust issues requires modification and definition by the Congress. We support, with the reservations noted, the recommendation for public notice prior to the court approval of consent decrees. It may be that the decree's subjection to public scrutiny and protest at the time of court approval is all the limitation which need be imposed. But we can think of others, such as the suggestion that the duration of consent decrees be limited to a certain number of years on the theory that any decree which does not restore competition within that period requires modification or additional action on the part of the Government.113 We would welcome an opportunity to explore the factual need for these and for other measures. This would be beneficial in diverting the subcommittee from its present negative approach to the problems encountered in the administration of consent decrees and it could be expected to produce worthwhile recommendations for strengthening our competitive free enterprise economy. 11 Majority report, p. 296. WILLIAM M. MCCULLOCH. 113 See Modifications of Consent Decrees, by Victor H. Kramer, 56 Michigan Law Review 1051. APPENDIX I-A. T. & T. UNITED STATES DEPARTMENT OF JUSTICE, Hon. EMANUEL CELLER, Chairman, Antitrust Subcommittee, Committee on the Judiciary, Washington, D. C. DEAR CONGRESSMAN CELLER: I have your letter to the Attorney General, dated May 29, 1956, requesting that we "make available for examination by the subcommittee all files in the Department of Justice relating to the negotiations for, and signing of, a consent decree in," United States v. American Telephone & Telegraph Co., et al. The staff of the Antitrust Division has examined in detail this Department's files relating to the negotiation and formulation of that decree. The bulk of these documents fall in two categories: First, material submitted by defendants regarding their operations; and, second, memoranda by various members of the Antitrust Division concerning negotiation conferences as well as decree provisions. Documents relating to defendants' operations, I emphasize, were produced, not pursuant to interrogatories or court order, but rather in the course of goodfaith negotiation of a consent settlement. Some touched on confidential aspects of the defendants' operations. Were they made available to your subcommittee, this Department would violate the confidential nature of settlement negotiations and, in the process, discourage defendants, present and future, from entering into such negotiations. In any event, as I wrote you over a year ago, on May 6, 1955, Department policy does not permit disclosure of staff memoranda or recommendations. As I indicated, the decision whether or not to settle, and if so on what terms, may involve difficult judgments. Reaching these judgments, I am sure you appreciate that men equally devoted to vigorous antitrust enforcement may well differ. To enable intelligent final decision, therefore, full and open discussion is required frequently, not only by all members of the staff but also by the staff with the Assistant Attorney General. This process of interchange may endure over some time. And, as a result of discussion, any participant must feel free to alter his views as the merits of argument dictate. This essential process of full and flexible exchange might be seriously endangered were staff members hampered by the knowledge they might at some later date be forced to explain before Congress intermediate positions taken. The responsibility for explaining such decisions thus rests upon the Assistant Attorney General and ultimately upon the Attorney General. As the President of the United States directed in a like instance: "Because it is essential to efficient and effective administration that employees of the executive branch be in a position to be completely candid in advising with each other on official matters, and because it is not in the public interest that any of their conversations or communications, or any documents or reproductions, concerning such advice be disclosed, you will instruct employees of your Department that in all of their appearances before [congressional committees] *** not to testify to any such conversations or communications or to produce any such documents or reproductions. This principle must be maintained regardless of who would be benefited by such disclosures." The danger of abandoning that policy in the case of law-enforcement agency seems clear. Revealing staff disagreement on issues might well cramp effective enforcement. With this in mind, this Department cannot grant your request to examine our files relating to the decree in United States v. American Telephone & Telegraph Co., et al. Sincerely, WILLIAM P. ROGERS, Deputy Attorney General. 329 |