[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



   ANTITRUST AGENCIES: DEPARTMENT OF JUSTICE ANTITRUST DIVISION AND 
             FEDERAL TRADE COMMISSION BUREAU OF COMPETITION

=======================================================================

                                HEARING

                               BEFORE THE

                        TASK FORCE ON ANTITRUST
                         AND COMPETITION POLICY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 25, 2007

                               __________

                           Serial No. 110-158

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov

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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
MAXINE WATERS, California            DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
ROBERT WEXLER, Florida               RIC KELLER, Florida
LINDA T. SANCHEZ, California         DARRELL ISSA, California
STEVE COHEN, Tennessee               MIKE PENCE, Indiana
HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio                   STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
BRAD SHERMAN, California             TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota

            Perry Apelbaum, Staff Director and Chief Counsel
                 Joseph Gibson, Minority Chief Counsel
                                 ------                                

             Task Force on Antitrust and Competition Policy

                 JOHN CONYERS, Jr., Michigan, Chairman

HOWARD L. BERMAN, California         RIC KELLER, Florida
RICK BOUCHER, Virginia               STEVE CHABOT, Ohio
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            CHRIS CANNON, Utah
STEVE COHEN, Tennessee               DARRELL ISSA, California
BETTY SUTTON, Ohio                   MIKE PENCE, Indiana
ANTHONY D. WEINER, New York          J. RANDY FORBES, Virginia
DEBBIE WASSERMAN SCHULTZ, Florida    LAMAR SMITH, Texas, Ex Officio


            Perry Apelbaum, Staff Director and Chief Counsel

                 Joseph Gibson, Minority Chief Counsel








                            C O N T E N T S

                              ----------                              

                           SEPTEMBER 25, 2007

                                                                   Page

                           OPENING STATEMENT

The Honorable Ric Keller, a Representative in Congress from the 
  State of Florida, and Ranking Member, Task Force on Antitrust 
  and Competition Policy.........................................     1

                               WITNESSES

The Honorable Deborah Platt Majoras, Chairman, Federal Trade 
  Commission (FTC)
  Oral Testimony.................................................     4
  Prepared Statement.............................................     6
The Honorable Thomas O. Barnett, Assistant Attorney General, 
  Antitrust Division, Department of Justice
  Oral Testimony.................................................    49
  Prepared Statement.............................................    51

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable Lamar Smith, a Representative 
  in Congress from the State of Texas, and Ranking Member, 
  Committee on the Judiciary.....................................     2

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, 
  Chairman, Committee on the Judiciary, and Chairman, Task Force 
  on Antitrust and Competition Policy............................    98

 
   ANTITRUST AGENCIES: DEPARTMENT OF JUSTICE ANTITRUST DIVISION AND 
             FEDERAL TRADE COMMISSION BUREAU OF COMPETITION

                              ----------                              


                      TUESDAY, SEPTEMBER 25, 2007

              House of Representatives,    
                    Task Force on Antitrust
                             and Competition Policy
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 1:15 p.m., in 
room 2141, Rayburn House Office Building, the Honorable Zoe 
Lofgren (acting Chair of the Task Force) presiding.
    Present: Representatives Lofgren, Cohen, Sutton, Chabot, 
Keller, Lungren, Cannon, Issa, Smith, and Pence.
    Staff present: Stacey Dansky, Majority Counsel; Stewart 
Jeffries, Minority Counsel; Ted Kalo, General Counsel-Deputy 
Staff Director; Sean McLaughlin, Minority General Counsel; 
Teresa Vest, Majority Chief Clerk.
    Ms. Lofgren. [Presiding.] Good afternoon. The hearing will 
come to order. And the Chair is authorized to call a recess at 
any time. In the absence of our Chairman, Mr. Conyers, who is 
temporarily detained at a meeting, I will invite our Ranking 
Member to make his opening statements in hopes that Mr. Conyers 
will be here soon to give his.
    Mr. Keller. Well, thank you, Madam Chairwoman, for 
initiating and convening this important hearing of the Task 
Force on Antitrust and Competition Policy. And I want to 
especially thank our witnesses, Mr. Barnett and Ms. Majoras for 
being here today.
    Antitrust law affects nearly every industry. So far this 
Antitrust Task Force has held important hearings on the 
proposed XM-Sirius Satellite Radio merger and the somewhat 
controversial issue of credit card interchange fees.
    Previously the Judiciary Committee has held hearings on 
telecommunications, sports, oil and gas, utilities, ocean 
shipping, airlines, agriculture, and financial services related 
to antitrust issues. Given the impact of antitrust law on the 
American economy, it is vital that we examine how well these 
laws are working, particularly in light of the innovation that 
today's high-tech economy has brought. Today's hearing gives us 
the opportunity to see how those laws are being enforced and 
whether there are any areas where congressional intervention 
would be appropriate.
    From their written testimony, it appears that last year the 
Antitrust Division of the Department of Justice and the Federal 
Trade Commission have both been very active. These two agencies 
have been involved in enforcement actions in the real estate, 
oil and gas, health care, airline and telecommunications 
fields, just to name a few. Both agencies have filed amicus 
briefs in numerous cases before the U.S. Supreme Court in what 
has been one of the most active periods of antitrust 
jurisprudence in years.
    The antitrust agencies are also in the best position to 
assess recent trends in international antitrust enforcement 
such as the European Union's recent decision in the Microsoft 
case and to provide Congress with guidance on how best to 
promote comity between the multiple antitrust enforcement 
agencies around the world. Because of their activities, DOJ and 
FTC can also serve as a guide for this task force as it 
considers future hearings.
    For instance, I understand that the FTC has particular 
interest in legislation that would make certain types of 
settlements in pharmaceutical patent litigation illegal. I am 
very interested to hear their views on this topic and perhaps 
possibly holding hearings on this issue in the future if 
needed.
    Again, I want to thank the witnesses very much for being 
here today. And I look forward to hearing your testimony later.
    And, Madam Chairman, at this point I will yield back the 
balance of my time.
    Ms. Lofgren. Thank you.
    Mr. Smith, if you wanted to put your opening statement in 
the record or----
    Mr. Smith. Yes, Madam Chair. I ask unanimous consent to 
have my opening statement made a part of the record. Thank you.
    Ms. Lofgren. So ordered.
    [The prepared statement of Mr. Smith follows:]
 Prepared Statement of the Honorable Lamar Smith, a Representative in 
Congress from the State of Texas, and Ranking Member, Committee on the 
                               Judiciary
    Mr. Chairman, thank you for convening this first hearing of the 
Task Force on Antitrust and Competition Policy.
    Vigorous, unimpeded competition sustains our economy and keeps it 
strong. It leads to innovative products that better our lives and keep 
prices low. The Judiciary Committee has a long history of oversight to 
ensure that American markets retain healthy competition.
    At the heart of that competition is the Sherman Act, which the 
Supreme Court has dubbed the ``Magna Carta of free enterprise.'' 
Sections 1 and 2 of the Act, which Congress passed in 1890, are 
deceptively simple; each is only one sentence long.
    However, those two sentences have come to regulate all manner of 
business dealings in this country, including who a company can--and 
must--deal with, how it prices its goods, and whether it can merge with 
a rival company.
    The antitrust laws are unique in American legal culture in that 
they are enforced by two federal agencies, the Department of Justice 
and the Federal Trade Commission. In addition, each state's attorney 
general can bring suit under both federal and state antitrust laws.
    The antitrust laws can be enforced both criminally and civilly. 
Private citizens can also bring suit to recover damages and enjoin 
anticompetitive business practices.
    Antitrust enforcement has also expanded beyond America's borders. 
When the United States passed the Sherman Act over 100 years ago, it 
was alone in the world. Today over 100 countries have some sort of 
competition law, and more are considering them.
    In fact, China is currently debating its own antitrust laws, 
despite being a country that does not necessarily share America's 
fundamental economic principles.
    Today's hearing gives us the opportunity to see how the two 
antitrust agencies are faring in enforcing the law. On the one hand, I 
am heartened by the recent announcement that British Airways and Korean 
Air Lines have agreed to pay criminal fines of $300 million each for 
their part in a price fixing scandal.
    Similarly, I am pleased to see that the FTC, after studying the 
broadband industry, has found that there is healthy competition in that 
sector. DOJ, too, has found that competition in that industry is robust 
and the so-called ``problem'' that net neutrality advocates are trying 
to ``fix'' has not been adequately demonstrated.
    On the other hand, there have been some recent missteps as well. It 
was troubling to read that the FTC, in the course of its efforts to 
block the merger between Whole Foods and Wild Oats food stores, 
disclosed--albeit inadvertently--competitively sensitive information 
about the transaction. The FTC subsequently lost its challenge in 
court, but, according to the written testimony of Chairwoman Majoras, 
continues to pursue administrative remedies against the parties.
    And, the European Union's recent action in the Microsoft case 
raises questions about whether--and how--comity and a common 
understanding of antitrust laws can be promoted between the United 
States and the rest of the world.
    I look forward to hearing the testimony of Chairwoman Majoras and 
Assistant Attorney General Barnett on these and other matters.
    I yield back the balance of my time.

    Ms. Lofgren. And all Members may put their opening 
statements in the record. Mr. Conyers may wish to deliver his 
opening statement when he arrives from his meeting.
    I will just note that I think the antitrust portfolio is 
one of the most important of the DOJ. Those of us who are 
fortunate to live in a country that has a vigorous capitalist 
economy also know that competition is protected through 
vigorous antitrust review.
    And I will note that I do have concerns over the level of 
review of mergers that have occurred in DOJ and other 
enforcement activities. And I will certainly get into that when 
it is time for questions.
    At this point, I would like to introduce our witnesses and 
ask them to make their opening statements.
    First we have Deborah Platt Majoras, who is our first 
witness. She is the Chairman of the Federal Trade Commission 
(FTC). Ms. Majoras has spent much of her career working on 
antitrust issues.
    From April of 2001, through 2003, she served first as the 
Deputy Assistant Attorney General and then as the Principle 
Deputy for the Department of Justice's Antitrust Division. 
Prior to her time at the Justice Department, she was a partner 
in the antitrust section of the Jones Day Law Firm.
    Welcome to you, Ms. Majoras.
    Next we have Thomas O. Barnett. Mr. Barnett is the 
Assistant Attorney General for the Department of Justice's 
Antitrust Division. He was confirmed as Assistant Attorney 
General in 2006, but had been serving as the Acting Assistant 
Attorney General for the division since July of 2005.
    Prior to his tenure as Acting Assistant Attorney General, 
Mr. Barnett had, since 2004, served as the Antitrust Division's 
Deputy Assistant Attorney General for civil enforcement. Before 
joining the Justice Department, Mr. Barnett was a partner at 
Covington and Burling, where he was vice-chair of the firm's 
antitrust and consumer protection practice group.
    Welcome, Mr. Barnett.
    And if you would note the machine on the table, we have 5 
minutes to hear your oral testimony. We do ask when the yellow 
light goes on that you have about a minute left and that you 
sum up. And your full written statements will be made part of 
the record.
    So first, let me call on you, Ms. Majoras, to give us your 
statement.

  TESTIMONY OF THE HONORABLE DEBORAH PLATT MAJORAS, CHAIRMAN, 
                 FEDERAL TRADE COMMISSION (FTC)

    Ms. Majoras. Madam Chairwoman, Ranking Member Keller, 
Members of the Task Force, thank you for the opportunity to 
discuss the FTC's efforts to protect consumers by ensuring 
competition, which is a critical underpinning of our market 
economy, remains robust. To this end, at the FTC we focused our 
enforcement effort on the areas that are most likely to impact 
consumers, namely, health care, energy, real estate, technology 
and retail sectors.
    During the past 3 fiscal years, the FTC's competition work 
has produced 51 merger enforcement actions or withdrawals of 
mergers, which derived from 84 second requests, that is, 
expanded investigations, and 22 nonmerger actions. During the 
same time period, we have completed 12 statutorily mandated 
rule makings and reports, eight public conferences and 
workshops, plus a set of hearings on issues arising under 
section 2 of the Sherman Act, and nine reports on competition 
issues significant to consumers.
    Through the first 11 months of this fiscal year, 2007, pre-
merger filings have increased 23 percent in the same period in 
the last fiscal year. And the number of investigations that we 
have undertaken reflects this continual uptick. Since January 
of this year, we have litigated three preliminary injunction 
actions in Federal court.
    On the health care front last month, the Commission ruled 
that Evanston Northwestern Health Care Corporation's 
consummated acquisition of Highland Park Hospital was 
anticompetitive, that it resulted in higher prices, and a 
substantial lessening of competition for acute care in-patient 
hospital services in parts of Chicago's northern suburbs.
    The Commission also has challenged several recent health 
care transactions and achieved substantial relief for consumers 
in the areas of generic drugs, over-the-counter medications, 
injectable analgesics, and other medical devices and diagnostic 
services.
    The Commission continues to work to detect and investigate 
anti-competitive agreements between drug companies that delay 
generic entry. Indeed, our Federal court challenge to an 
alleged anti-competitive agreement involving Ovcon, a branded 
oral contraceptive product, has led to the introduction of 
lower priced generics.
    So far in 2007, the Commission has challenged three mergers 
in the energy industry. Western Refinery's acquisition of Giant 
Industries, unsuccessful in district court. Equitable 
Resources' proposed acquisition of The Peoples Natural Gas 
Company, which is still in litigation, and the proposed $22 
billion deal whereby energy firm, Kinder Morgan would be taken 
private by its management and a group of investment firms, 
including the Carlysle Group and Riverstone Holdings. We also 
charged the American Petroleum Company with illegally 
conspiring with competitors to restrict the importation and 
sale of motor oil lubricants in Puerto Rico.
    The FTC has actively investigated restrictive practices in 
the residential real estate industry recognizing that the 
purchase of a home is the most significant investment that most 
consumers will ever make. In the past year alone, the agency 
has brought eight enforcement actions against associations of 
realtors or brokers who adopted restrictive rules that 
allegedly withheld the valuable online benefits of their 
multiple listing services that they control from consumers who 
chose to enter into nontraditional type contracts with real 
estate brokers.
    In the critical technology arena, in February of 2007, the 
Commission issued a final opinion and order finding that 
technology developer, Rambus, Inc., had unlawfully monopolized 
the markets for four computer memory technologies that had 
incorporated into industry standards for D-ram chips. And we 
required Rambus to license its SD-ram and DDRSC-ram 
technologies according to maximum allowable royalty rates. This 
was the Commission's first litigated case in the standards 
setting area and we believe the first time in 22 years that the 
Commission has heard a monopolization case in administrative 
litigation.
    The Commission also guards against anti-competitive conduct 
in the retail sector. And I would be happy to elaborate on that 
later.
    In addition, complementing our law enforcement work in the 
past year, we have issued reports on competition issues in real 
estate, gasoline, broadband and intellectual property, and 
provided competition analysis to policy makers regarding such 
areas as attorney advertising and pharmacy benefit managers. We 
aided the NHS modernization commission in its examination of 
the U.S. antitrust laws. And to ensure that our knowledge 
remains fresh, we are actively engaged in market research with 
recent hearings examining the boundaries of permissible and 
impermissible conduct under section 2 of the Sherman Act, a 
workshop to examine broadband connectivity competition policy, 
and a 3-day conference on energy markets in the 21st century.
    Madam Chairman, Members of the Task Force, the FTC is 
committed to working to preserving competition and to 
protecting consumers. And we look forward to speaking with you 
further about this. And we appreciate your support. Thank you.
    [The prepared statement of Ms. Majoras follows:]
       Prepared Statement of the Honorable Deborah Platt Majoras



    Ms. Lofgren. Thank you very much.
    Mr. Barnett, you are now welcome to deliver your oral 
testimony.

    TESTIMONY OF THE HONORABLE THOMAS O. BARNETT, ASSISTANT 
  ATTORNEY GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE

    Mr. Barnett. Madam Chairwoman, Ranking Member Keller, and 
other Members of the Task Force, it is a pleasure to appear 
before you. I thank you for the opportunity to highlight the 
Division's accomplishments and answer your questions. I also 
appreciate the active interest and strong support of our law 
enforcement mission that the Judiciary Committee through the 
continuing work of the Antitrust Task Force has provided to us.
    Competition is the cornerstone of our Nation's economic 
foundation. Antitrust enforcement promotes and protects the 
robust free market economy by helping ensure that anti-
competitive agreements, conduct, and mergers do not harm 
consumers. In my short time, I will briefly highlight just a 
few of our outstanding achievements.
    On cartel enforcement, we thank the Committee for its 
efforts in increasing the criminal fines and statutory maximum 
sentences for Sherman Act offenses in 2004 as well as for 
making antitrust offenses a predicate act for wiretapping 
authorities. The division's cartel enforcement efforts had an 
outstanding year for fiscal year 2007, which ends this week. 
The division more than doubled its record for the most total 
jail time imposed, obtained the second highest amount of fines 
in division history, and succeeded in obtaining the longest 
jail sentence for a foreign national ever charged with an 
antitrust offense.
    As one specific example of success, on August 23rd of this 
year, British Airways and Korean Airlines each pleaded guilty 
and were sentenced to pay separate $300 million fines for 
fixing cargo and passenger fares. Each fine ties the record for 
the division's second largest fine ever.
    On the same day, the United Kingdom's Office of Fair 
Trading announced a similar resolution with British Airways 
with a fine of approximately $250 million. This was the first 
time that the Division and the OFT have brought parallel 
charges.
    One important focus of the Division's criminal enforcement 
efforts in the past year has been fraud and corruption in the 
bidding, contracting, and procurement process. These cases take 
money out of the pocket of every American taxpayer and deserves 
severe condemnation. They deal with U.S. operations in Iraq, 
construction in New Orleans following Hurricane Katrina, U.S. 
Navy, the Department of Defense, U.S. schools, among others.
    Merger enforcement continues to be one of the Division's 
core priorities. The Division is committed to challenging 
mergers that the evidence developed through a thorough 
investigation evaluated pursuant to rigorous economic analysis 
demonstrates is likely to harm U.S. consumers and businesses.
    In fiscal year 2007, six transactions were restructured or 
abandoned by the parties in response to a Division 
investigation. And the Division filed an additional four merger 
enforcement actions in district court.
    Some of our most significant recent merger actions include 
the following: The Division challenged Monsanto's $1.5 billion 
proposed merger between Monsanto and Delta and Pine Land and 
obtained a consent decree that required Monsanto and DPL to 
divest a major seed company, multiple cotton seed lines, and 
other valuable assets.
    The Division is currently litigating to challenge to a 
transaction between two daily newspapers in Charleston, WV. In 
August 2006, the Division challenged Mittal's proposed 
acquisition of Arcelor as likely to adversely affect 
competition in the $2 billion tin mill products market in the 
Eastern United States.
    The Division also seeks continually to improve its merger 
review process and its transparency. In December of last year, 
we announced a revision to the 2001 merger review process 
initiative. This initiative helps us identify and devote 
increased resources to those transactions that should be 
challenged. Our transparency efforts also have included the 
release of a joint DOJ-FTC commentary on the Horizontal Merger 
Guidelines in March of 2006.
    The Division remains active in other areas such as holding 
hearings in conjunction with the FTC on section 2 standards. In 
addition, with more and more countries adopting an antitrust 
enforcement regimes, we make a priority of strengthening 
international cooperation and promoting antitrust policy 
convergence.
    In the last year, we have worked closely with multi-lateral 
organizations around the world such as the OECD and the 
International Competition Network and further developed strong 
bilateral relationships in other countries. I emphasize that 
none of what I have discussed today could have been 
accomplished without the dedicated career staff of the 
Antitrust Division. It is an honor and a privilege to serve 
with them.
    I am pleased with what we have accomplished, but I 
recognize that the hallmark of any successful organization is a 
continuing desire to improve. In that regard, we look forward 
to working with the Members of the Task Force and your 
respective staff.
    [The prepared statement of Mr. Barnett follows:]
         Prepared Statement of the Honorable Thomas O. Barnett



    Ms. Lofgren. Thank you, Mr. Barnett. And thank you both for 
your testimony.
    We will now move to questions from the task force. And we 
will begin with our Ranking Member, the gentleman from Florida, 
Congressman Ric Keller.
    Mr. Keller. Thank you, Madam Chairman.
    And, Ms. Majoras, let me begin now with you. I know you 
only had 5 minutes to give us your opening statement. And one 
of the things you weren't able to expound upon was some of the 
work you do on behalf of consumers in the retail sector to 
tackle anticompetitive behavior.
    Let me begin by asking you if you had a chance, you or your 
staff, to observe the hearing that this task force did in July 
on the issue of credit card interchange fees and the impact 
those have on the retail sector.
    Ms. Majoras. Thank you, Ranking Member Keller. I know that 
we followed the issue with some interest. I will say this, 
though. The Justice Department and the FTC try to divide our 
work. And I hate to do this on the very first question, but the 
interchange fee issues have traditionally resided with the 
Department of Justice. And so, they have brought cases in the 
area. And so, we are less informed on the issue.
    Mr. Keller. Okay.
    And, Mr. Barnett, let me ask you. Was that a hearing that 
you were able or your staff was able to observe? And is there 
anything that your office is doing to take a look at this 
interchange fee issue and the impact on the retail sector and 
consumers?
    Mr. Barnett. Yes, we are very focused on this issue, not 
only through events such as the hearing, but through conducting 
our own monitoring activities and investigations in the area. 
Without commenting on any specific investigation, I would 
observe that these markets are somewhat complicated. They are 
what our economists like to call two-sided markets, which makes 
the analysis of competitive effects and the impact on consumer 
welfare more challenging than some other areas.
    Notwithstanding that, that is a challenge that we think is 
a very important area of the economy. It is an important 
sector. And so, we are looking at it. We have significant 
resources devoted to evaluating that issue right now.
    Mr. Keller. Well, thank you. And it is also a two-sided 
issue, as you know. And certainly, the credit card electronic 
payment system has revolutionized the world and made it easier. 
And we are all thankful for that.
    And then on the other side, we hear the retailers telling 
us, ``Hey, this is 60 percent of the market share, MasterCard, 
Visa. And they can charge us as much as we want, and there is 
nothing we can do about it.'' So we are actively looking at 
both sides as well, as you are.
    While I have you there, Mr. Barnett, let me ask you. We had 
a hearing back in February on the XM-Sirius satellite merger. 
Were you or your staff able to observe that hearing and the 
testimony of our witnesses such as the CEO, Mel Karmazin?
    Mr. Barnett. Certainly, Ranking Member Keller, any 
transaction for which we are conducting a full-fledged 
investigation. And that is certainly a transaction on which we 
are quite focused and conducting an extensive evaluation. We 
try to obtain information from wherever we think we can that 
will be useful to us. And information through hearings such as 
the one as this Committee held having industry participants 
providing testimony is very relevant information. And----
    Mr. Keller. And I don't want to cut you off, but my time is 
running out. So let me just do a follow-up and give you a 
chance to answer it.
    I know there is some things you can't talk about. And I am 
not going to ask you what your decision is going to be or what 
your thoughts are. But can you give us an idea of the timeframe 
for whatever decision is ultimately made and what the status of 
this review is right now?
    Mr. Barnett. I can't. I would like to, but I can't give you 
an exact timeframe. We want to make sure that we get the 
information that we need so that we can conduct an appropriate 
analysis and evaluation. And we will not decide until we have 
done that.
    We want to do that as quickly as possible. But we also want 
to get to the right answer.
    Mr. Keller. Thank you.
    I have several more questions, but my time is expired, 
Madam Chairman. So I will yield back the balance.
    Ms. Lofgren. Thank you, Mr. Keller.
    I want to follow-up on the credit card interchange fee 
issue because the hearing that we had was really pretty stark. 
And it became pretty clear in the course of the hearing that 
this is a very one-sided operation where the retailers in some 
cases they weren't even permitted to see the contracts. And 
they are very high fees.
    I actually was so frustrated at the apparent lack of action 
in DOJ that I contacted the attorney general of California to 
see if States have an opportunity. And they actually have an 
active investigation ongoing on this issue.
    I am wondering, if you can't tell us obviously what you are 
going to decide, what is your estimate on the timeframe for 
your investigation of this situation. Can you tell us that, Mr. 
Barnett?
    Mr. Barnett. Again, I don't have a precise estimate. I can 
tell you that we try to be thorough and comprehensive in our 
evaluation. To give you an example, when the Division brought 
an action in the credit card industry involving Visa and 
MasterCard, that investigation took a number of years before we 
had collected the information that we felt was necessary to 
pursue the challenge. We then filed a suit and ultimately 
prevailed.
    So this is a much more recent investigation. I expect that 
it will take us some time. But again, we like to do these as 
quickly as we responsibly can. And that is what we are 
committed to do here.
    Ms. Lofgren. May I ask how many investigators you have 
assigned to this?
    Mr. Barnett. I don't have an exact number here.
    Ms. Lofgren. If you could get back to us on that, I would 
appreciate it. You know, obviously we want a thorough 
investigation. But how much effort you put into something also 
depends on how fast it is going to be done. And in the 
meanwhile, if the testimony we received is correct, there is a 
lot of retailers in the country that are being on the short end 
of the stick and consumers paying higher prices than they 
really should.
    Mr. Barnett. Well, Madam Chairwoman, it is a little 
difficult for me to give an exact number in that the number of 
people involved at any given point in time varies depending on 
what is going on in the investigation. If we are taking 
depositions----
    Ms. Lofgren. Well, perhaps you can give me a range how many 
and over what period of time.
    I want to talk about standard setting. I don't want to get 
into individual cases. But in the tech world, it is a difficult 
matter. You do want standard setting. You know, that really 
does advance the growth of technology. On the other hand, you 
can have problems with standard setting, as we all know.
    And I know that the joint I.P. report that you have issued 
indicates that the agencies are going to evaluate joint 
activity to establish licensing terms under the rule of reason. 
Have you been able jointly to do that kind of follow-up and 
tracking of these standard setting operations? And if so, what 
have you found?
    Mr. Barnett. Well, we are continually monitoring various 
developments in different industries. The Division has issued a 
couple of business review letters, one involving VITA, an 
organization called VITA, the other one, I believe, IEEE, where 
we applied a rule of reason type analysis to some disclosure 
policies that those organizations were interested in pursuing 
to try to address the issue of what some people called, sort 
of, hold-up issues after they set a standard, a member who has 
a patent----
    Ms. Lofgren. Right. No, I am familiar with the issue.
    Mr. Barnett. And in those instances, we found that under a 
rule of reason type approach that the disclosure policies were 
reasonable and we thought would be potentially procompetitive.
    Ms. Lofgren. I am wondering--my time is almost up--whether 
you can explain to us maybe in a follow-up letter how you go 
about tracking this, as you said you would in the report, and 
whether it is pursuant to the National Cooperative Research Act 
and if you have a comment on how that has worked in terms of 
spurring this kind of disclosure. It would be very helpful.
    I know, Ms. Majoras, in the remaining seconds.
    Ms. Majoras. Very happy to do that. We have been very 
active in the standards setting arena. And we are monitoring 
complaints and so forth as we get them from standard setting 
organizations, so we can absolutely give you a follow-up on 
that.
    Ms. Lofgren. I would appreciate that. My time has expired 
with actually 18 seconds to go.
    And so, I will now call on the gentleman from Ohio, Mr. 
Chabot, for his questions.
    Mr. Chabot. Thank you very much, Madam Chair.
    And I would ask the first question to either or both of the 
witnesses here. The Antitrust Modernization Commission made a 
series of recommendations regarding the Hart-Scott-Rodino Act 
and the merger process as it relates to the roles and 
responsibilities of the FTC and the Department of Justice.
    What have you done to facilitate the implementation of 
these responsibilities, particularly as it relates to prompt 
clearance to either the FTC or the Department of Justice and 
parity among the FTC and Department of Justice enforcement 
mechanisms? And you can both take a shot at it, if you would 
like.
    Ms. Majoras. All right. Well, before the AMC even issued 
its recommendations, we had already been working on those 
things. The issue of burden in the merger review process is one 
that has been with us for years and one that I have been 
particularly interested in both in the private sector, at the 
DOJ, and at the FTC.
    And so, in February of 2006, we put into place some new 
measures to try to curb the burdens in that process. Some of 
those match pretty completely to the AMC recommendations. Some 
of them don't.
    A few of the AMC recommendations we don't necessarily agree 
with because we think it is such an effort to micro-manage the 
process that in the realities of trying to do a merger 
investigation, it would inhibit our abilities. But we are 
trying very hard to curb the burden because, frankly, it puts a 
lot of burden on us as well.
    The second thing on the clearance issues, we have 
currently--this issue has been with us for years. We have tried 
to fix this, you know, how we allocate the work between us. We 
are trying again.
    We have people from both agencies sitting down working 
together and trying to come up with a new system. But some 
people on the bar, of course, in the business community think 
that we should work with Congress to actually make a decision.
    Mr. Chabot. Okay. Thank you very much.
    Anything you would like to add, Mr. Barnett?
    Mr. Barnett. Just quickly on the burden of the review 
process. The Division back in 2001, frankly, when chairman 
Majoras was at the Division, launched a review process 
initiative that was designed to reduce the burden, increase the 
efficiency. That has worked very well. We nonetheless updated 
and revised it a bit in December of last year.
    Overall we think we are more successful in clearing 
transactions without having to issue a second request 
identifying them early as not a threat to competition. And we 
continue to work in that regard because, as the Chairman says, 
the vast volumes of information and documents that we receive 
are a burden on us as well as the parties.
    On clearance, I readily endorse what the Chairman said. We 
have people working on it right now, and we are committed to 
trying to improve that process as well.
    Mr. Chabot. Thank you very much.
    My second question is what are the implications of the 
increasing globalization of antitrust law. Does America's view 
of antitrust law, that it seeks to protect competition, not 
particular competitors, hold true in other jurisdictions? And 
should America be promoting its view of antitrust laws abroad? 
And if so, how should we do that? And again, you can both take 
a shot at it.
    Mr. Barnett. Sure. Well, there are two sides to the coin on 
this one. On the cartel enforcement front, the globalization of 
enforcement has been a benefit to the United States. It has 
made it easier for us to detect, gather evidence about and 
prosecute cartels and those that prey upon American consumers. 
So that has been a--and the example of the OFT going after B.A. 
at the same time we did is a good illustration of the benefits.
    With respect to mergers and other kinds of conduct, there 
are challenges that are there that having different approaches, 
different processes can create burdens. Having divergent 
outcomes can create very significant concerns. And we at both 
agencies have been very focused on this for years.
    That was part of the purpose of the agencies helping to 
found the International Competition Network in 2001 and why we 
are so engaged through organizations, through bilateral 
relationships, why we have sent people to China who has 
recently enacted an anti-monopoly law. It is a concern, and it 
is one that we are trying to address.
    Mr. Chabot. Thank you.
    Ms. Majoras?
    Ms. Majoras. Thank you. There is no question that we in our 
work internationally--and that includes with developed 
countries, so our major trading partners, but also with 
developing countries who now have antitrust agencies and are 
trying to develop market economies after years of having state-
based economies. So we are doing work with all of them.
    And, yes, we definitely are trying to influence the process 
by what we have learned that we have done well and that we 
haven't done so well in enforcement of antitrust over the years 
in the United States. So that is clearly a big part of what we 
are doing.
    It is a challenge. In 1990, we had about 25 competition 
agencies worldwide. And today we have over 100. So it is a lot 
to absorb into the competition group, if you will, in a short 
period of time.
    Mr. Chabot. Thank you very much.
    I think my time is expired, Madam Chair. Thank you.
    Ms. Lofgren. Thank you.
    The gentlewoman from Ohio, Ms. Sutton?
    Ms. Sutton. Thank you, Madam Chair.
    Thank you both for your testimony. You made it clear in 
your remarks that in the United States the Antitrust Divisions 
of the Department of Justice and, of course, the FTC review 
various mergers and acquisitions to consider whether they have 
anti-competitive effects. And this sort of follows up on my 
colleague from Ohio's question.
    So when a major hospital or hospital firm or a bank seeks 
to acquire another, we consider here in this country if the 
merger would put any single player in a market in a position to 
manipulate the market. But while antitrust considerations apply 
to U.S. firms, we are now, as you point out in your testimony, 
living in a global world.
    Trade agreements, starting with the 1994 NAFTA and the 1995 
WTO, contain various service sector market access conditions 
that provide the right for foreign firms in covered sectors to 
establish and operate in the United States through mergers and 
acquisitions and startups. And the market access rights for 
those foreign firms established in the WTO's general agreements 
on trade and services and the NAFTA and CAFTA and other free 
trade agreements, including the one that will be voted on 
shortly here with Peru, guarantees such market access rights 
free of government limits on the size of the firm, the number 
of employees.
    The United States has submitted its own hospitals, 
insurance, banking and other financial service sectors to such 
commitment. So I have a couple of questions.
    I mean, can you tell me what would happen when a foreign 
firm already operating with a sizeable market in the U.S. then 
sought to acquire another large U.S. operation in the same 
sector? And wouldn't those extreme service sector market access 
rights for foreign firms in our trade agreements conflict with 
our own domestic antitrust policies?
    Mr. Barnett. If I understand the question, my understanding 
at least is if a foreign firm has operations in the United 
States and they seek to acquire another United States firm, 
that transaction would be subject to section 7 of the Clayton 
Act and section 1 of the Sherman Act. And we would review it.
    And if we found it constituted a violation of the law, we 
would pursue it. I am not aware of there being a trade barrier 
or a bar to our pursuing such a transaction.
    Ms. Majoras. Indeed, I would just add that today, despite 
what trade agreements say, if a foreign firm that operated in 
the United States and sold goods to our consumers wanted to 
merge with another foreign firm that also had sales in the 
United States and that were to present a competitive problem, 
we could go after that merger as well. So I agree with Mr. 
Barnett. I don't see that as raising a problem for our 
enforcement.
    Ms. Sutton. And has that happened at all? Have you gone 
after any foreign firms?
    Ms. Majoras. Sure. I am trying to think of the particular 
examples. I mean, we required certainly, for example, we had 
British Petroleum take over Amoco some years ago. And the FTC 
required major divestitures in that particular case.
    Mr. Barnett. I would give the example of Mittal, Arcelor 
last year, two steel companies. Mittal is Indian, but based in 
Europe. And Arcelor, the target, is a French headquartered 
company. They both had operations in the U.S. And we sought and 
obtained a significant divestiture to remedy competitive harm 
in the United States.
    Ms. Sutton. Okay, just so I understand correctly, you are 
saying that all of our antitrust policies can be applied to 
foreign firms operating in the United States?
    Ms. Majoras. That is essentially how the jurisdiction 
works. Obviously, there are legal terms for exactly how it 
works, but foreign firms operating in the United States that 
sell goods here we have not had a jurisdictional problem in 
attacking practices when necessary.
    Ms. Sutton. Are you consulted when the United States is 
negotiating the trade agreements to make sure that there aren't 
any conflicts?
    Mr. Barnett. We not only are consulted, but we, 
particularly with some of the recent trade agreements, there 
have been competition chapters or sections to it. We have been 
active participants. We have been at the table to help guide 
those negotiations and generally think they have gone quite 
well.
    Ms. Sutton. And both of you?
    Ms. Majoras. That is correct, both agencies together with 
USTR and commerce.
    Ms. Sutton. Okay, great. Thank you.
    I yield back.
    Ms. Lofgren. The gentlelady yields back.
    I would like to recognize the gentleman from California, 
Mr. Lungren.
    Mr. Lungren. Thank you very much, Madam Chairwoman.
    And I thank the witnesses for appearing. This may sound 
like a strange question coming from me, but when we talk about 
that we applaud the globalization of the antitrust concept and 
that we attempt to influence or exert our influence effectively 
as we can for other countries to adopt the same approach, I 
wonder how you respond to the question from some other 
countries about the multiplicity of authorities that can handle 
antitrust cases in the United States.
    Not only the two of you, but, as a former Attorney General 
of California, we jealously guarded our authority. We 
attempted, I thought, to try and work with the Justice 
Department, particularly the U.S. Justice Department to ensure 
that we were working in concert and didn't sort of double up in 
inconsistent ways.
    But if we were to look at a foreign country and we were to 
look at them with a regimen for antitrust law or call it what 
you will, that appeared to have a multiplicity of authorities 
to which American companies would have to respond and in some 
ways just the time it would take to go through the multiplicity 
of authorities would delay our entry into the marketplace or 
effective way of doing it, we might take umbrage at that.
    And so, my question is, can you give us an idea of how you 
would explain the legitimacy of having a multiplicity of 
authorities, how you attempt to ensure that that does not 
inadvertently add uncertainty to the economic decision-making 
that really doesn't go to the core of antitrust questions, but 
to the core of decision making.
    Ms. Majoras. Terrific question, one that we do grapple 
with. We have been asked many times.
    I can remember very recently in China being asked very 
specifically about why we have two antitrust agencies and how 
that all works. And to tell you the truth, my response is that 
if you were starting from scratch, you might not do it this 
way.
    I think our system is working very well today because we 
have adapted it. But one has to ask the question how many 
layers of enforcement do you need, because, of course, the 
problem with over-enforcement of the antitrust laws is that the 
market starts to freeze up, as heavy regulation does in other 
contexts.
    And so, suddenly the very competition that you want to 
protect you are squelching instead. And so, we talk about that. 
We talked about how we work together with each other, how we 
worked with sectoral regulators like the FTC, how we work with 
the States and how private enforcement works and some of the 
ways in which private enforcement, which Europe is now looking 
at, might be done in a way to avoid some excesses.
    Mr. Barnett. I completely agree with that and would just 
add briefly that it does present potentially a very significant 
burden and obstacle to marketplace competition and efficient 
operation of the markets. I think it is incumbent upon the 
various antitrust enforcement authorities--for example, the 
FTC, the DOJ, and the various State attorneys general--to 
coordinate and to cooperate in a way that minimizes those 
burdens.
    And one example I have given is if we are going to pursue a 
joint enforcement action or a joint investigation, it should 
appear to the parties as if there really is only one 
investigator and one prosecutor. That is the ideal situation to 
try and minimize that burden. But the potential for harm is 
very real.
    Mr. Lungren. Ms. Majoras, let me just ask you a question on 
a particular case. The FTC recently had the case of the 
proposed merger between Whole Foods and Wild Oats Grocery 
Stores, which was unsuccessful in Federal District Court. In 
your written testimony you indicate that the Federal Trade 
Commission is still pursuing an administrative action against 
Whole Foods.
    Can you explain that? Because from the outside it would 
appear you lost in court, but it is like, okay, we lost there, 
but we still got you.
    Ms. Majoras. Of course. The way the Congress set up the FTC 
when we believe that a merger would be anticompetitive, we file 
an administrative action within the FTC. But in order to stop 
the merger long enough to be able to proceed in the 
administrative action, we go to Federal court for that purpose. 
That is different from the Justice Department.
    Mr. Lungren. Right.
    Ms. Majoras. Where we are now is if we have lost in 
District Court, which we have, the next step will be to decide 
whether, in fact, we will go forward in an administrative 
action. I mean, it is there now because it was filed months 
ago. The question now is whether we will proceed.
    The Commission has a test that it goes through in deciding 
that. And it has been the very rare case that we have proceeded 
after losing in District Court.
    Mr. Lungren. Thank you very much.
    Thank you, Madam Chairwoman.
    Ms. Lofgren. The gentleman's time is expired.
    The gentleman from Utah is recognized for 5 minutes.
    Mr. Cannon. Thank you, Madam Chair.
    If I could just followup with both of you briefly on Mr. 
Chabot's line of questioning and to some degree, Mr. Lungren's, 
could you describe what we are doing with especially the 
European community to harmonize our laws. Or do we have a 
process, and how aggressively are we pursuing that?
    Mr. Barnett. We have a very extensive process at multiple 
levels, both at the European Commission level as well as at the 
member State level now because most of these member States have 
their own regimes and, indeed, enforce not only their member 
State laws, but also European competition laws.
    We have annual bilateral consultations with the European 
Commission. Our staffs communicate on virtually a daily basis 
on individual investigative matters. Where there are issues of 
concern that come up, it gets elevated and either both 
agencies--I think we speak directly to their senior management 
on those issues.
    We also work through multilateral organizations such as the 
OECD or the ICN publishing best practices, as an example, a 
merger review that helps persuade those organizations, 
including the European Commission to improve their processes. 
And, you know, on the cartel enforcement front, as an example, 
we have been very active with the European Commission as well 
as the OFT and some others on working on their enforcement 
programs.
    Mr. Cannon. Thank you.
    The FTC is currently reviewing the proposed Google-Double 
Click merger. And my understanding is that it took the FTC and 
DOJ more than the 30-day period under the Hart-Scott-Rodino 
pre-merger notification process to determine which of the two 
agencies would review the merger.
    Why did this take so long? And would DOJ and FTC and 
ultimately the parties themselves benefit if Congress were to 
allow you to enter into an agreement similar to the agreement 
you had in 2002 that helped spell out which mergers would be 
reviewed by which agency in advance?
    Ms. Majoras. Yes, I think we would be benefited. I was at 
the Justice Department at the time we negotiated that agreement 
with the FTC where I now am. And it was an effort to fix this 
problem. And some Members of Congress asked us to stand down. 
And we did so, but I think to the detriment of the system 
overall.
    Why did this one take longer? Unfortunately, in higher 
profile mergers in interesting markets, first of all, they tend 
to be converging markets, so it is not clear which of us has 
the best experience. And then our staff are eager. They are 
interested in what they do.
    And so, we have a big back and forth over who has the most 
experience and who ought to get the matter. I am not proud of 
the process. It embarrasses me, quite frankly. And I have been 
talking about that for years.
    We have tried to make as many internal reforms as we can. 
But during my confirmation hearing, I was asked to please 
refrain from going back to the 2000 agreement, and I agreed to 
do it. So I think it would take some action from Congress 
before I could do that again.
    Mr. Cannon. Let me try and get one last question in. I had 
a startling experience this last week. I have a 9-year-old who 
is now old enough to have a telephone. And I have a son who 
just returned to the United States. So in the last month or so, 
I have purchased two telephones.
    And I noticed that you and the other body talked about the 
commentary exemption frustrating the FTC's ability to deal with 
deceptive and unfair acts. Is that the case? And in particular, 
this is a complex area of law. I used to Chair the Committee on 
Commercial and Administrative Law. Now I am the Ranking Member 
there. And clearly, there are some commercial aspects here of 
contracts of adhesion.
    And with my son it was fairly straightforward. I had to ask 
about the $175 termination fee, which I had read about 
elsewhere that was with my daughter. But with the most recent 
phone, we went through this elaborate process where I signed 
documents that I didn't have time to read, didn't have an 
interest in reading, and then had to take a phone call from the 
company where I agreed to certain terms.
    But none of the really significant--I didn't think it was 
significant terms. And finally, the phone didn't get qualified 
until they sent me an e-mail or a text message and I responded 
to the text message. I am amazed at the process. I mean, what 
you have here is a convergence of many carriers on several 
items that cost consumers a great deal of money. Is that what 
is driving your concern?
    Ms. Majoras. What is driving our concern is that with the 
convergence of technologies and the like and when new 
technologies come up, consumer expectations aren't necessarily 
set. So consumers need very good disclosures about what they 
are paying for.
    Here are markets in which if the company claims that they 
have common carrier status, it is true, the FTC has no 
jurisdiction, so we can't assert our authority to battle 
deceptive practices. So, yes, that is what we are trying to get 
at.
    Mr. Cannon. This is an amazing thing where poor people are 
way disproportionately affected by these harsh decisions. I 
think there is now a universal deal that you can't terminate a 
contract even 1 day before the 2-year period runs without 
incurring a $175 fee. I would encourage you to pursue that. And 
if we need to help with some kind of change to the law, I would 
like to know that.
    Ms. Majoras. All right. Thank you.
    Ms. Lofgren. The gentleman's time is expired.
    The gentleman from Indiana, Mr. Pence, is recognized.
    Mr. Pence. Thank you, Chairman. Thanks for calling this 
hearing and bringing these two distinguished public servants 
before this Task Force.
    I appreciate your service to the country. And I am curious 
about a couple of kind of headline issues and what either one 
of you might be doing with them.
    Number one would be when I am back in Muncie, Indiana, 
people are not so much worried about some of the issues we 
fight about out here. But they are pretty worried about 
gasoline prices.
    And to the Chair of the FTC I would ask, you know, this 
calls for regulation of the oil and gas industry here in 
Congress, price gauging statutes have been advanced. I haven't 
supported them, but, I mean, as Federal solutions.
    I know the FTC has looked at this. And I would like to know 
what has the FTC actually found at this point with regard to 
collusion in the pricing of gasoline.
    And secondly, also ripped from the headlines, Mr. Barnett, 
this whole issue of real estate, mortgages, and the concern 
that we all have about when all these ARMs come due at the end 
of this year. I know that the Antitrust Division under your 
leadership has undertaken a civil action regarding real estate 
broker activities. And I just wondered if you might comment as 
appropriate on that and how you think that kind of enforcement 
will benefit homeowners in the future.
    Ms. Majoras. We are well aware at the FTC that there is 
virtually no product in the United States that is sold that 
affects consumers as much as gasoline and, certainly, the price 
of gasoline, which has gone up in recent years. So we spend an 
enormous amount of time studying gasoline markets, 
investigating gasoline markets and making sure that companies 
are adhering to the antitrust laws.
    We have done several studies in recent years, including a 
major study after Hurricanes Katrina and Rita. We have not 
found collusion among the oil companies. Obviously, we have 
OPEC at the upstream end, which is another story. But we have 
not found it.
    What we have found, which is hard for people to hear, is a 
market that behaves pretty competitively according to laws of 
supply and demand. Now, in recent years, demand has been going 
up. Our supply has not kept pace. People ask, ``Well, how could 
that happen? How could there be competitive markets but our 
refining capacity is not keeping pace?''
    Well, the problem has been--and we sort of have short 
memories, I am afraid. It was just a few years ago that 
refineries were not making so much money. Their profits were 
not going up. And so, that inhibited investment.
    What we are seeing now--and we just saw a major 
announcement by Royal Dutch Shell that, in fact, they are 
increasing their capacity in Port Arthur, Texas by 325,000 
barrels a day, which is enormous. That is a third of all of our 
imports that we get.
    So we are seeing what we thought we would see with these 
higher prices, increased investment. And we think that that is 
going to be a good thing for consumers.
    Mr. Pence. And British Petroleum was trying to increase its 
capacities in Indiana until very recently.
    Ms. Majoras. Yes, indeed.
    Mr. Pence. I want you to be very aware.
    Ms. Majoras. So it is a big area, obviously, of discussion. 
I would be happy to talk more, but I don't want to use up all 
your time.
    Mr. Pence. Very good. Thank you.
    Mr. Barnett. Well, if there is any one market that is as 
important as the gasoline market, it might well be the real 
estate market, given that that is by far and away the largest 
transaction that most people engage in in their lives. I don't 
think it is appropriate for me to comment on pending 
litigation.
    Mr. Pence. I understand.
    Mr. Barnett. But more generally, the Department of Justice 
and very much in cooperation with the Federal Trade Commission, 
has been quite active in the real estate area. It is not only 
through investigations and enforcement actions such as a couple 
of years ago when we took an action against the Kentucky Real 
Estate Commission, which banned rebates by brokers, essentially 
banning price discounts to brokers.
    We have been engaged in through advocacy efforts with a 
variety of States who either have regulations or laws that ban 
such price discounting or that are considered to do so as well 
as something they call minimum service requirements.
    Mr. Pence. Right.
    Mr. Barnett. It means they force you as a purchaser of 
brokerage services to buy a package of services even if you 
don't want all of them. And we have found that by freeing up 
the market to let consumers and suppliers make these choices, 
there is indications that consumers can save thousands of 
dollars on a transaction, which is a very significant benefit 
to Americans.
    Mr. Pence. I thank the Chair.
    I thank the general.
    I yield back.
    Ms. Lofgren. In consulting with the Ranking Member, we are 
going to do a quick second round of questions. Not that 
everybody has a second round, but Mr. Keller, I think, has a 
quick question. I know I do.
    So Mr. Keller is now recognized for 5 minutes.
    Mr. Keller. Well, thank you, Madam Chairman.
    Mr. Barnett and Ms. Majoras, you know here in Congress we 
essentially have two types of laws, one, the noncontroversial 
laws that we can all agree on on a bipartisan basis. We pass 
those in the House through the suspension calendar. And the 
Senate has a procedure called the hot line.
    And then the controversial laws, which are the ones that 
grab all the headlines. I want to start with noncontroversial 
laws and ask you, as people who deal with the antitrust issues 
on a daily basis far more than Members of Congress do: Is there 
any sort of noncontroversial technical changes to the antitrust 
laws that you feel would be helpful and would be needed to help 
you protect consumers or to otherwise do your jobs?
    Mr. Barnett, I will start with you and give you both a shot 
at that.
    Mr. Barnett. The short answer is, I think, no. And I don't 
know if you would call this controversial or not, but I want to 
underscore our gratitude for the 2004 act that you all worked 
on to increase the statutory maximum fines for criminal cartel 
price fixing activities.
    The effects of that are really only just being felt now. 
And we are optimistic that we are going to see very significant 
increases in actual penalties imposed. And we appreciate your 
efforts in helping us get there.
    Mr. Keller. Okay.
    Ms. Majoras, any thoughts along those lines?
    Ms. Majoras. Congressman Keller, I can't think of anything 
off the top of my head. But if I may, may I think about that a 
little bit and submit something to you in writing if we think 
of it?
    Mr. Keller. Please. Yes, please get it to me and also 
Chairman Conyers.
    Ms. Majoras. Great.
    Mr. Keller. And then let me just follow-up with the second 
part of that question. Is there any law that might be 
considered controversial by some sector or another that you all 
think that nevertheless would be good for consumers or 
otherwise would be helpful for you to do your job? And what 
comes to mind?
    Ms. Majoras, I know some folks with the FTC, I have heard, 
important legislation that preserves access to Affordable 
Generics Act or--I am not really up on it, but something to do 
with settlements and pharmaceutical patent litigation that may 
be illegal. Or I understand that is controversial, but along 
those lines.
    And let me again start with Mr. Barnett. Any big ticket 
laws that you think that should be proposed or considered that 
might be controversial?
    Mr. Barnett. Well, I would mainly point to one 
recommendation of the Antitrust Modernization Commission, which 
in my testimony before them we supported, which is a 
reevaluation of any antitrust exemptions that are out there. We 
do believe that not only should they be rarely passed, but they 
ought to be periodically reevaluated to see that the conditions 
that may have justified them at one point in time are still 
warranted.
    Mr. Keller. Even baseball?
    Mr. Barnett. Well, I am not going to take anything off the 
table. So----
    Mr. Keller. If you are going to make headlines, let us 
swing for the fence here.
    Mr. Barnett. Yes, there you go.
    Mr. Keller. All right.
    All right, Ms. Majoras?
    Ms. Majoras. As you mentioned, we have been in discussions 
with some Members of Congress about an issue that has concerned 
us for some time, which is the issue of branded pharmaceutical 
and generic pharmaceutical companies entering in settlements 
together where the branded pays the generic to stay out of the 
market for a particular period of time. It is a complicated 
issue, I will grant you.
    But we and our economists have looked at it. And we 
actually think that consumers are being harmed and that it is 
not just a matter of exercising patent rights in a legal way. 
So we have been very concerned about that.
    The Antitrust Modernization Commission has recommended that 
the Robinson-Patman Act be repealed. I think it is something 
that is worth taking a look at. I think that statute has 
probably seen better days.
    And as we talk about the international realm that we find 
ourselves in, that act is put in our faces constantly as a 
measure that was put in place years and years ago to protect 
small businesses. We know a lot more now about what it takes to 
have a vibrant marketplace that even includes small businesses. 
And I don't think the Robinson-Patman Act is something that is 
protecting consumers as it was intended to.
    Mr. Keller. On the pharmaceutical end real quick, are you 
suggesting any changes to Hatch-Waxman?
    Ms. Majoras. I would rather see the change in Hatch-Waxman 
than see the change in the antitrust laws. But there is no 
question. Hatch-Waxman created this situation, no doubt about 
it.
    It was an unintended consequence of Hatch-Waxman, which, of 
course, had a very good purpose in both protecting the branded 
intellectual properties so they could get return on investment 
but at the same time, making sure that affordable generics come 
into the market as appropriate. So this has been caused by 
Hatch-Waxman. So if we are going to act, I think that is the 
way to do it.
    Mr. Keller. Thank you.
    And, Madam Chairman, I yield back the balance of my time.
    Ms. Lofgren. The gentleman yields back.
    I just have a couple of quick questions. I will note that, 
as I said in my brief opening remarks, the antitrust portfolio 
is an essential one. And I have had the sense over the last 
several years that the enforcement at DOJ at least has not been 
as vigorous as it has been in past years. And the statistics 
seem to back that up.
    Using the Department of Justice's own statistics, there was 
a 59 percent decline in merger investigations in the past 4 
years of the Bush administration compared to the last 4 years 
of the Clinton administration. And with respect to merger 
challenges, in the last 4 years, reveal a 75 percent decline 
compared to the last 4 years of the Clinton administration and 
a 37 percent decline even for nonmerger enforcement.
    There are times when I feel that, you know, the most 
vigorous antitrust activity is really occurring with State 
A.G.'s. But there are some things I think that it is very 
difficult for them to do. And that really comes to my question 
regarding the Internet.
    I believe that the rules that were in place until the FTC 
decision in 2005 really did play a tremendous, important role 
in fostering innovation and an even playing field in that 
section. And I was very surprised, frankly, that the department 
submitted a filing with the FCC just recently in late opposing 
the concept of net neutrality. And I was wondering why this 
filing was months late, after the comment period was over, and 
what motivated the department to do this. And who did you meet 
with?
    I note in the filing there was a mention of the opponents 
of that neutrality, Hands Off the Internet and Consumers for 
Cable Choice, which I think are sometimes referred to as astro-
turf groups, really funded by the phone companies, AT&T and 
Verizon. I am wondering, did you meet with the opponents of the 
phone companies before you filed. Who did you meet with in 
reaching the conclusion?
    Mr. Barnett. Well, Madam Chairwoman, I respectfully 
disagree with your assessment regarding the DOJ's enforcement 
activities. With respect to merger enforcement, we applied 
consistently across--I tend to believe--across Administrations 
the Horizontal Merger Guidelines that both agencies----
    Ms. Lofgren. Well, my question was about the net neutrality 
filing.
    Mr. Barnett. I understand that, Madam Chairwoman. I just 
note that between the last 4 years of the Clinton 
administration and the last 4 years of the Bush administration 
there was perhaps a 70 percent drop in the number of mergers. 
So you would expect the number of reviews and the number of 
challenges would be likely to go down.
    With respect to net neutrality, I was the one who made the 
decision to file those comments. We certainly collected 
information from a wide range of sources.
    Ms. Lofgren. Can you give me a list after this hearing?
    Mr. Barnett. And the gist of the comments or the bottom 
line is not necessarily to say that some regulation is ever 
inappropriate. It was to say that as we understand it--and this 
is a core part of our competition advocacy mission--as we 
understand it, in general we let markets work with antitrust 
enforcement as a backdrop. We try not to intervene with 
Government regulation, unless there is a specific case to be 
made for that.
    And we had not seen--until we reviewed the other comments 
that had been filed with the FCC. We reviewed them, and we did 
not see that a case had been made. That doesn't necessarily 
mean that a case can't be made down the road. But we were 
providing our experience, our expertise in this industry for 
the benefit of the FCC.
    Ms. Lofgren. I would like to know, and you can provide it 
in writing afterwards. I don't want you to orally list it. But 
I would like to know who you met with or who the department met 
with prior to that filing.
    And I also would note, because my time is about to expire, 
that 96 percent of the residential broadband market nationwide 
is really controlled by a duopoly. And I just can't think of 
why that wouldn't be a compelling public policy goal to disrupt 
that kind of market control. And how you can possibly think 
that that is a competitive market is just astounding to me.
    So I will not belabor it. I will look for your report on 
who you met with after this hearing. And I will now call on the 
gentleman from--I guess our gentleman has left.
    My time is expired. And Ms. Sutton has left. And I guess we 
have closed down this hearing. And at this point, we will note 
that the hearing record remains open for 5 days. Members have 5 
days to submit additional questions. And we would ask the 
witnesses if we forward additional questions to answer them as 
promptly as you may.
    And with that, this hearing is adjourned.
    [Whereupon, at 2:17 p.m., the Committee was adjourned.]
                            A P P E N D I X

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               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a Representative 
  in Congress from the State of Michigan, Chairman, Committee on the 
Judiciary, and Chairman, Task Force on Antitrust and Competition Policy



                                 
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