[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]





     FEDERAL TRADE COMMISSION'S BUREAU OF COMPETITION AND THE U.S. 
               DEPARTMENT OF JUSTICE'S ANTITRUST DIVISION

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON COURTS AND
                           COMPETITION POLICY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 27, 2010

                               __________

                           Serial No. 111-133

                               __________

         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            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
TED DEUTCH, Florida                  TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

             Subcommittee on Courts and Competition Policy

           HENRY C. ``HANK'' JOHNSON, Jr., Georgia, Chairman

JOHN CONYERS, Jr., Michigan          HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia               JASON CHAFFETZ, Utah
CHARLES A. GONZALEZ, Texas           F. JAMES SENSENBRENNER, Jr., 
SHEILA JACKSON LEE, Texas            Wisconsin
MELVIN L. WATT, North Carolina       BOB GOODLATTE, Virginia
MIKE QUIGLEY, Illinois               DARRELL ISSA, California
DANIEL MAFFEI, New York              GREGG HARPER, Mississippi
JARED POLIS, Colorado

                    Christal Sheppard, Chief Counsel

                    Blaine Merritt, Minority Counsel













                            C O N T E N T S

                              ----------                              

                             JULY 27, 2010

                                                                   Page

                           OPENING STATEMENTS

The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Chairman, Subcommittee 
  on Courts and Competition Policy...............................     1
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Ranking Member, Subcommittee on 
  Courts and Competition Policy..................................     2
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary, and Member, Subcommittee on Courts and Competition 
  Policy.........................................................     3
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     5

                               WITNESSES

The Honorable Christine A. Varney, Assistant Attorney General for 
  Antitrust, U.S. Department of Justice, Washington, DC
  Oral Testimony.................................................     6
  Prepared Statement.............................................     9
The Honorable Jon Leibowitz, Chairman, Federal Trade Commission, 
  Washington, DC
  Oral Testimony.................................................    24
  Prepared Statement.............................................    26

                                APPENDIX

Material Submitted for the Hearing Record........................    65

 
     FEDERAL TRADE COMMISSION'S BUREAU OF COMPETITION AND THE U.S. 
               DEPARTMENT OF JUSTICE'S ANTITRUST DIVISION

                              ----------                              


                         TUESDAY, JULY 27, 2010

              House of Representatives,    
                 Subcommittee on Courts and
                                 Competition Policy
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:30 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Henry 
C. ``Hank'' Johnson, Jr. (Chairman of the Subcommittee) 
presiding.
    Present: Representatives Johnson, Conyers, Gonzalez, 
Quigley, Polis, Coble, Chaffetz, Smith, Goodlatte, and Issa.
    Mr. Johnson. All right right. This hearing of the Committee 
on the Judiciary, Subcommittee on Courts and Competition Policy 
will now come to order. Without objection the Chair is 
authorized to declare a recess. And let me take the opportunity 
to apologize for being dilatory. What can I say?
    Today's hearing is our first oversight hearing over the 
antitrust enforcement agencies under this Administration. For 
me, the antitrust laws are fundamentally about fairness.
    We need to ask ourselves: Are we keeping the playing field 
level? The next Bill Gates or Sergey Brin could be in the 
audience right now or in school, yet he or she will never be 
able to become this country's next great entrepreneur if we 
allow anticompetitive practices to keep them out of the market. 
Our economy and our workers will be worse off for it.
    For these reasons our antitrust agencies must remain ever 
vigilant. Over the past few decades fairness has been 
compromised by ideological shifts in antitrust law. We have 
seen a gradual adoption of certain free market reasoning by the 
courts and the enforcements agencies alike that has chipped 
away at the ability of plaintiffs to access the courthouses.
    Namely, 6 years ago Congress created the Federal Trade 
Commission because it felt that the Supreme Court was limiting 
the effectiveness of the antitrust laws and too deferential to 
big business. In the past decade we have seen a movement away 
from strict prohibitions under the antitrust law and decisions 
like the Trinko and Credit Suisse cases, which suggest that 
there is less of a need for antitrust in the business world.
    Personally, I am not convinced. I have been active on 
several of these issues trying to reopen the doors that 
courthouses have closed. I have also been instrumental in 
getting the DOJ the tools they need for criminal prosecution, 
but balancing that with the need for civil suits. I want to 
thank the DOJ for working with us on this during the 
reauthorization of ACPERA.
    Now, before we move on let me just say a word about the 
scope of this hearing. Certainly one of the areas of greatest 
interest is merger enforcement. This Subcommittee has examined 
the implications of a number merges, such as NBC-Comcast and 
Ticketmaster-Live Nation on their industries, and while it is 
fair game to ask our witnesses for their thoughts on broad 
issues of merger policy, let us respect the fact that they 
aren't able to discuss the specifics of any ongoing merger 
review or make any sort of commitment about the future outcome 
of a merger review.
    I now recognize my colleague, Howard Coble, the 
distinguished Ranking Member of the Subcommittee, for his 
opening remarks.
    Mr. Coble. Thank you, Mr. Chairman.
    Good morning to all.
    Antitrust law affects every industry, as is evident from 
the wide variety of hearings that the House Judiciary Committee 
has held under its antitrust jurisdiction. In the last few 
years the Committee has held hearings on the role of antitrust 
in telecommunications, sports, oil, and gas, airlines, 
financial services, and railroads, among other industries.
    Given the impact, Mr. Chairman, of antitrust law on the 
American economy it is vital, in my opinion, to reexamine how 
well these laws are working, particularly in the light of the 
innovation that today's high-tech economy has brought forward. 
Today's hearing gives us the opportunity to see how these laws 
are being enforced and whether there are areas where 
congressional intervention would be appropriate.
    For example, the antitrust agencies are in the best 
position to assess recent trends in international antitrust 
enforcement and to provide Congress with guidance on how best 
to promote comity between the multiple antitrust enforcement 
agencies around the world. While I respect the professionalism 
and rigor with which the Department of Justice and the Federal 
Trade Commission pursue antitrust enforcement, I have some 
concerns as well.
    For example, my district judge in the District of Columbia 
recently ruled against the FTC and a discovery dispute 
regarding reverse payments in the pharmaceutical industry. In 
that ruling the judge raised concern that the FTC may have 
disclosed confidential information to third parties and may 
have improperly coerced the parties into negotiations under the 
threat of legal action.
    If in fact true, these allegations are serious. That said, 
I know that the FTC has challenged these assertions and I look 
forward to the Chairman's comments clarifying what actually did 
take place.
    With respect to Assistant Attorney General Varney, I know 
that the Department of Justice and the Department of 
Agriculture have held a number of joint hearings in recent 
months on antitrust and agricultural issues. My own district 
back home in Carolina--North Carolina--has a number of AG 
enterprises, and I look forward to hearing what the department 
recommends in this area.
    Over the last 2 decades the Department of Justice and the 
Federal Trade Commission have issued a series of guidelines to 
help provide clarity to their enforcement approaches. Recently 
both agencies have released draft revisions in their merger 
guidelines. I look forward, as well, to hearing more about 
those changes and what they mean for business that plan to 
merge.
    One set of guidelines that has not changed much, however, 
are the health care guidelines, which were released in August 
1996. That was nearly a decade-and-a-half ago, and I know that 
there have been a host of changes in the medical marketplace 
since then.
    I have heard complaints from medical professionals that 
these guidelines no longer reflect market realities. My 
question to each of our panelists is, why have these guidelines 
not been revised, and do you have any plans to do so?
    I look forward to hearing the testimony from our two 
distinguished guests, Mr. Chairman. And, Mr. Chairman, for the 
record I would like to make a request that we invite the trade 
associations representing the pharmaceutical industry to 
respond, if they would, to the charge that appears before us, 
as I am particularly concerned about the projected cost to 
consumers from 2009 to 2019, if that would be in order, Mr. 
Chairman.
    And with that I yield back.
    Mr. Johnson. Point well taken, Mr. Coble. And I thank you 
for your opening remarks.
    I will now turn to the gentleman from Michigan, John 
Conyers, the Chairman of the Committee on Judiciary, and a 
distinguished Member of this Subcommittee, for his comments.
    Mr. Conyers. Thank you very much, Mr. Chairman. Hank 
Johnson, I appreciate all that you and this Committee do.
    Me and the Ranking Member are pleased to join you today. We 
think this is a very important discussion that we are having. 
And I join in with Howard Coble in thinking we might well 
examine the issue that he raised in his closing comments.
    First of all, to have the assistant attorney general, Ms. 
Varney, and the chairman of the Federal Trade Commission, Mr. 
Leibowitz, together here is a very strong statement, and we 
look forward to a very important discussion.
    Antitrust enforcement is critical to the capitalist system. 
Free and competitive markets are the foundation of an economy 
like ours so that when markets fail the economy fails. We have 
seen over and over the fact that Federal antitrust enforcement 
at either the Department of Justice or FTC have intervened to 
keep a balanced market protecting consumers all the way from 
the telephone monopoly, oil trusts, Microsoft--we have got 
another case hanging out there right now.
    They are huge decisions, and it is important in this era 
because of the increasingly interconnected, high-tech system of 
doing business. It makes the implications of many of this 
conduct has far more influence and effect upon the economy 
because of the global, high-tech interconnectedness of many of 
the corporations and the subject matter.
    The big issues in antitrust arise in highly technical 
fields and intersect with complex intellectual property issues. 
Consumers demand that diverse products made my different firms 
work together. The Internet must function as seamlessly as 
possible regardless of what products or services are being 
used, and that digital information be widely and conveniently 
available.
    In many cases this interconnected economy requires that 
firms that might ordinarily be rivals share technical 
information or develop common standards to ensure that the 
products work together. And we have seen so often how high-tech 
firms quickly come to control huge markets. Usually the first 
ones there lay down some pretty large footprints that we spend 
a lot of time undoing.
    In the 1990's Microsoft, Intel, and the new giants emerging 
today provide critical products and services but they present 
huge antitrust challenges. That is what we are here to talk 
about, and how these two important parts of our government 
relate to each other as well.
    In high-tech agriculture the issues are the same. In the 
intersection of patent law and antitrust, where companies like 
Monsanto have patented critical genetic materials, we are faced 
with new challenges.
    Now, the case for strong antitrust leadership has never 
been more important than it is now. As a matter of fact, we are 
coming off the ropes right now in that regard. As the 44th 
President said, we have had the worst period of antitrust 
enforcement since the last half of the last century.
    There were no Title II cases brought during the entire 8 
years of the previous Administration. There have been none 
brought now. And the global corporate giants keep getting 
larger and larger.
    And so I think there are plenty of challenges to the 
Committee and to the heads of the branches of government that 
are with us today.
    In the courts it has been even worse. Until the American 
Needle case the Supreme Court of the United States ruled for 
the defendants in 10 antitrust cases in a row; in the lower 
courts over 10 years, the defendants have won 221 out of 222 
rule of reason cases.
    At all levels of our Federal judicial system so-called 
``Chicago School theories'' have taken root that make it 
difficult to establish antitrust violations in the first place. 
There is an assumption that business can be trusted to do the 
right thing and that the markets know best, which is almost 
incredible to repeat here in public in broad daylight.
    Of course, leading them all is Citizens United. So that is 
why I have heartened--I have been heartened to see the FTC push 
to expand Section 5 authority to prohibit unfair competition, 
heartened to see the Department of Justice withdraw the ill-
considered Section 2 report.
    The question is, what are we doing, though, now that we 
have withdrawn the report? It is one thing to reject the 
report, but how do we--where do we go from there? And so I am 
looking forward to joining the Committee in this examination of 
these very critical issues.
    I welcome and thank the witnesses for being here.
    Mr. Johnson. Thank you, Mr. Chairman.
    We will now turn to the respected and distinguished Member 
of the Judiciary Committee--the Ranking Member--and also Member 
of this Subcommittee, Mr. Lamar Smith, from Texas.
    Mr. Smith. Thank you, Mr. Chairman.
    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.
    Antitrust laws are unusual in our legal regime in that they 
are enforced by two Federal executive branch agencies--the 
Department of Justice and the Federal Trade Commission. 
Antitrust enforcement has also expanded beyond America's 
borders. In 1890 the United States became the first country to 
codify an antitrust law. Today over 100 countries have some 
sort of competition law, including China.
    This hearing gives us the opportunity to see how the two 
antitrust agencies are faring in enforcing U.S. antitrust laws 
in a globalized economy. During the campaign President Obama 
promised to reinvigorate antitrust enforcement, so my question 
for today's hearing is this: How have things changed from the 
previous Administration to this one? How, for example, are the 
two agencies responding to international enforcement efforts by 
countries like China?
    At the Antitrust Division Assistant Attorney General Varney 
made a very public revocation of the previous Administration's 
Section 2 report. How as this affected your approach to Section 
2 cases? Has this Antitrust Division brought any monopolization 
cases? How do those numbers compare with the previous 
Administration?
    One area of strong enforcement by the previous 
Administration was criminal prosecution of price-fixing 
conspiracies. How many new criminal prosecutions has this 
Antitrust Division brought compared to the previous 
Administration? With respect to merger enforcement, how many 
more cases has this Administration brought than the previous 
one?
    At the Federal Trade Commission I have similar questions 
about how enforcement has varied from the previous 
Administration to this one. For example, has the FTC brought 
more cases under Section 5 than during the previous 
Administration?
    Of course, numbers tell only part of the story. There are 
also questions about the types of cases that are being brought 
and how they are being prosecuted.
    In 2008 Chairman Conyers and I sent a letter to the FTC 
raising concerns about the different enforcement procedures and 
standards that the FTC uses in pursuing merger challenges. It 
is my understanding that the FTC has continued to argue for a 
lower preliminary injunction standard than the Department of 
Justice. This difference in approaches concerns me and it is 
something that I plan to follow up on.
    I also have questions about the recent decision by a 
Federal magistrate judge in FTC v. Bisaro. The judge in that 
case has raised troubling questions about actions that the FTC 
allegedly took to negotiate a deal between two private 
companies.
    I know that the FTC has responded to the interrogatories 
and has challenged the assertions made by one of the lawyers in 
the case. However, I would like Chairman Leibowitz to give us a 
further understanding of the facts in this matter.
    I support robust antitrust enforcement. It is the key to 
maintaining competitive markets and ensuring that consumers 
have access to the most goods at the lowest prices possible.
    However, antitrust enforcement should be fair and 
transparent. American businesses need to have clear rules of 
the road in order to compete effectively against each other and 
in world markets.
    I look forward to hearing the testimony today of Chairman 
Leibowitz and Assistant Attorney General Varney on these and 
other matters, and I hope that they will respond to these 
questions either verbally or in writing after this hearing.
    I thank you, Mr. Chairman. I will yield back.
    Mr. Johnson. I thank the gentleman for his statement.
    Without objection other Members' opening statements will be 
included in the record, and I am now pleased to introduce the 
witnesses for today's hearing.
    Our first witness is Christine Varney, assistant attorney 
general for the Department of Justice's Antitrust Division. Ms. 
Varney was confirmed as assistant attorney general for the 
Antitrust Division in April of 2009.
    Prior to joining the DOJ she was a partner at the law firm 
Hogan Lovells. From 1994 to 1997 she served as a commissioner 
of the Federal Trade Commission.
    Our second witness is Jon Leibowitz, chairman of the 
Federal Trade Commission. Mr. Leibowitz was designated chairman 
of the FTC by President Obama in March of 2009, having served 
as a commissioner since 2004.
    Prior to joining the FTC Chairman Leibowitz served as chief 
counsel to the Senate Antitrust Subcommittee as well as chief 
counsel to Senator Herbert Kohl. He has also previously worked 
as an attorney in private practice.
    Thank you both for your willingness to participate in 
today's hearing. Without objection your written statement will 
be placed into the record and we would ask that you limit your 
oral remarks to 5 minutes.
    You will note that we have a lighting system that starts 
with a green light. At 4 minutes it turns yellow, then red at 5 
minutes. After each witness has presented his or her testimony, 
Subcommittee Members will be permitted to ask questions subject 
to the 5-minute limit.
    Assistant Attorney General Varney, will you please begin?
    Good morning.

   TESTIMONY OF THE HONORABLE CHRISTINE A. VARNEY, ASSISTANT 
  ATTORNEY GENERAL FOR ANTITRUST, U.S. DEPARTMENT OF JUSTICE, 
                         WASHINGTON, DC

    Ms. Varney. Thank you, Mr. Chairman.
    Chairman Conyers, Members of the Subcommittee, it is a 
pleasure to be here today on behalf of the Justice Department 
and discuss the Antitrust Division's work over the last year. 
Competition, as many of the Members have noted, is a 
cornerstone of our Nation's economic foundation. At the 
Antitrust Division we use sound competition principles and 
antitrust precedents to evaluate each matter carefully, 
thoroughly, and in light of its particular facts.
    Our enforcement helps keep markets competitive, promotes 
consumer welfare, and spurs innovation. We appreciate the 
Subcommittee's active interest in and strong support of our law 
enforcement mission--yes?
    Mr. Johnson. Would you pull the microphone just a little 
closer? Thank you.
    Ms. Varney. Thank you, Chairman.
    Thank you, Chairman.
    I am surrounded by chairmen.
    We are particularly thankful that this Committee, with the 
support of the Obama administration, led the effort to 
eliminate antitrust immunity for the health insurance industry.
    Merger enforcement continues to be a core priority for the 
division. We are committed to blocking mergers that will 
substantially reduce competition.
    For instance, we are litigating a case involving the 
Nation's largest dairy processor seeking to restore competition 
so that schools, grocery stores, and consumers in Illinois, 
Michigan, and Wisconsin, will pay lower prices for milk. Our 
intended challenge to Blue Cross Blue Shield of Michigan's 
proposed acquisition of Physicians Health Plan led the parties 
to abandon their deal. In both matters we coordinated closely 
and successfully with the states' attorneys general.
    We have also settled cases when our competitive concerns 
can be addressed. In the Ticketmaster settlement the merged 
company divested more ticketing assets than it gained from the 
merger and subjected itself to tough anti-retaliation and 
anticompetitive bundling restrictions.
    At the same time I want to underscore that we are also 
committed to quickly closing investigations of mergers that do 
not threaten consumer harm, such as Oracle's acquisition of Sun 
and Microsoft's joint venture with Yahoo.
    In our criminal program we continue to uncover and 
prosecute a number of cartels that inflict significant 
competitive harm. These efforts were recently enhanced by the 
Congress' extension of the Antitrust Criminal Penalty 
Enhancement and Reform Act, ACPERA. Again, we thank you for 
leading the effort to extend that program through a 10-year 
reauthorization.
    Our recent prosecutions have resulted in significant fines 
and jail time. In 2009 the division obtained more than $1 
billion in criminal fines.
    Our civil non-merger program remains active as well. In 
addition to our ongoing investigations, which I cannot discuss, 
let me just mention two matters that have settled.
    The first concerns the largest seller of electric capacity 
in New York City. In that case we alleged that Keyspan engaged 
in an anticompetitive swap transaction that likely increased 
electricity prices. That settlement, now pending, includes a 
$12 million disgorgement payment. The second case, which 
settlement is also pending, enjoins a group of Idaho surgeons 
who organized a boycott of Idaho's worker compensation system, 
essentially refusing to treat injured workers.
    The Antitrust Division has stepped up its efforts to 
strengthen markets and preserve economic freedom and fairness. 
Promoting competition principles through broad advocacy efforts 
and regulatory outreach is one of our highest priorities. The 
division works with a broad range of Federal and state agencies 
to promote competition across a number of vitally important 
industries, including transportation, energy, 
telecommunications, banking, and agriculture.
    My first year in the department has been remarkable. 
Working at the Justice Department with Attorney General Holder 
and the dedicated men and women of the Antitrust Division, we 
are doing all we can to ensure that our markets are open and 
fair, giving business predictability and stability, consumers 
more and better choices, and spurring innovation. I have 
enjoyed a very close working relationship with Chairman 
Leibowitz, and we continue to address the Nation's 
anticompetitive problems together.
    That concludes my remarks, and I have provided much longer 
written statement that describes some of our matters in more 
detail. I am grateful to have the opportunity to be here and 
look forward to answering your questions.
    [The prepared statement of Ms. Varney follows:]
        Prepared Statement of the Honorable Christine A. Varney



                               __________

    Mr. Johnson. Thank you, Ms. Varney.
    Next we will hear from Chairman Leibowitz.
    Please proceed.

  TESTIMONY OF THE HONORABLE JON LEIBOWITZ, CHAIRMAN, FEDERAL 
                TRADE COMMISSION, WASHINGTON, DC

    Mr. Leibowitz. I will move the mic closer, too.
    Chairman Johnson, Chairman Conyers, Mr. Coble, Members of 
the Subcommittee, thank you so much for inviting me to testify 
here today. I am delighted to be here with my friend and 
colleague, Christine Varney. As you already have my written 
statement let me spend my allotted time talking about just a 
few of the interesting issues that we are focusing on right now 
at our agency.
    To start, let me mention that after a several-year losing 
streak we recently won a handful of merger cases. These deals 
include the merger of Thoratec and HeartWare, which would have 
combined the only two producers of critical heart devices used 
by patients waiting for a heart transplant or experiencing 
severe heart problems. By challenging this transaction, which 
we believe to be a merger to a monopoly, we ensure that 
patients, including former Vice President Dick Cheney, would 
have more choices, prices would be reduced, and innovation 
increased.
    We have also been aggressive when we find mergers that we 
think will decrease competition, but just as important, we are 
not afraid to hold off when we think a major deal is not going 
to cause consumer harm. A recent example of this is Google 
AdMob, which we investigated thoroughly but unanimously decided 
not to challenge. And most of our antitrust decisions have been 
unanimous to challenge or not to challenge.
    We are not perfect, but I do believe we are striking the 
right balance to protect consumers yet still allow businesses 
latitude to combine when appropriate.
    Right now our top competition priority at the commission is 
to stop pay for delay agreements between brand-name and generic 
drug makers. We estimate that these sweetheart deals will cost 
consumers--and do cost consumers--about $3.5 billion a year.
    And, Mr. Coble, I think it was a terrific idea for you to 
ask the pharmaceutical industry to comment on these numbers. 
They have not done it and these numbers have been available for 
almost a year. I would like to see what they say.
    By now you are all familiar with this story: Brand-name 
drug companies sue their generic competitors claiming that the 
generic has violated their patent and then they turn right 
around and they settle the case by paying off the generic not 
to compete--that is, to delay entering the market. It is win-
win for the companies who get to keep monopoly profits, but it 
is lose-lose for consumers who are left holding the bag or 
footing the bill for medicines they may desperately need.
    Because of our enforcement efforts there was not a single 
pay for delay agreement in 2004, but since 2005, after a few 
misguided court decisions, the number of agreements has 
steadily increased. In preparation for today's hearing we asked 
staff to check on the number of patent settlements filed so far 
this fiscal year and the numbers paint a bleak picture, as you 
can see from the chart. Within the first 9 months of fiscal 
year 2010 there have been 21 suspect agreements--21, which is 
more than the 19 filed for all of last year. Indeed, more than 
the number filed in any previous fiscal year.
    The new settlements protected branded drug sales of over $9 
billion, and that is almost an epidemic. Left untreated, these 
types of settlements will continue to insulate more and more 
drugs from competition and continue to raise the health care 
cost curve.
    Every single FTC commissioner--Republican, Democrat, and 
Independent, going back through the Bush and to the Clinton 
administration--has called for an end to these unconscionable 
agreements, and more and more others are coming around to 
review. Under Christine Varney the Department of Justice 
position has evolved considerably, and it now agrees that pay 
for delay settlements are presumptively anticompetitive.
    The Second Circuit recently encouraged plaintiffs in a pay 
for delay case to request an en banc review of a previous 
ruling allowing these deals, thanks in part to an excellent 
brief filed by the Department of Justice. As Members of this 
Committee know, circuit courts ask for an en banc very, very 
rarely.
    But as we also know, litigation can take a long time and it 
would be much faster and more direct to enact legislation. Such 
legislation has now passed the House twice as well as the 
Senate Judiciary Committee. It has the endorsement of President 
Obama. So we are going to continue to work with Congress to 
finish the job and hopefully that will be later this year.
    Let me also discuss the commission's increasing use of our 
Section 5 unfair methods of competition authority, which allows 
us to go beyond the ambit of the antitrust laws to protect 
consumers. Congress granted us this authority in 1914 and 
balanced it by limiting the availability of remedies under 
Section 5.
    Now, in recent years Section 5 has been used sparingly, but 
since the 1970's and 1980's, as you mentioned, Mr. Conyers, the 
courts have restricted the range of antitrust, to some extent 
as a result of the Chicago School and to some extent, I think, 
in reaction to the costs of private treble damage litigation. 
Let me note, of course, that the Chicago School has in some 
ways improved antitrust enforcement by emphasizing rigorous 
economic analysis and efficiencies. However, the result of 
these changes has also been to limit the FTC, which has no 
treble damage authority, in our effort to protect competition 
and consumers.
    Section 5, carefully applied, is practically tailor-made 
for this situation. It can effectively protect consumers but it 
is not an antitrust law and does not, on its own terms, create 
treble damage liability. So we have broad bipartisan support 
within the commission to use Section 5 in appropriate 
circumstances, and we are going out and doing it.
    Mr. Chairman, I ask for an additional 30 seconds.
    Mr. Johnson. Without objection.
    Mr. Leibowitz. Thank you.
    In addition to consumer protection and antitrust the 
commission also has a statutory policy function going back to 
1914. An upcoming policy project will focus on health care 
reform and competition policy. Another one focuses on the 
future of news in the Internet age, a topic this Committee 
considered at a hearing last year.
    We are doing a lot of other important work that I would be 
glad to discuss, including, with Assistant Attorney General 
Varney, an update of the Horizontal Merger Guidelines and a new 
rule prohibiting market manipulation in the petroleum industry.
    But I will stop now; I know I have exceeded my time. And I 
am happy to answer questions.
    [The prepared statement of Mr. Leibowitz follows:]
           Prepared Statement of the Honorable Jon Leibowitz



                               __________

    Mr. Johnson. Thank you, Chairman Leibowitz.
    And now we will begin with the questioning, and I will take 
the first round. Given the shifts to rule of reason analysis 
and the decisions Trinko, Twombly, and Credit Suisse, is it 
harder to bring an antitrust case now than it was 10 years ago? 
And what do you think is the effect on the American public?
    Ms. Varney. Congressman, our view at the department is 
that, while Supreme Court precedent is always paramount in our 
analysis of particular facts, the cases that you mentioned we 
believe are limited to the facts presented in those cases. And 
we have not necessarily found them, at this point, to be a 
barrier to bringing cases, as we have many investigations, 
which I cannot comment on.
    As those investigations come to fruition and you see cases 
I may be back to you with a view as to whether or not those 
Supreme Court precedents have inhibited our enforcement of the 
law. But at this time we view those cases as limited to their 
facts.
    Mr. Leibowitz. Reasonable people can disagree about the 
effects of Trinko and Credit Suisse and some of the other 
decisions by the Supreme Court. We think it is a potential 
impediment, and so that is part of the reason why we have moved 
to using our Section 5 unfair methods of competition authority, 
which is sort of penumbra around the antitrust laws because we 
are in the business of trying to stop anticompetitive behavior 
that harms consumers, and this is a tool in our arsenal.
    But as Assistant Attorney General Varney mentions, some of 
this will depend on the cases we bring and the responses we get 
from the courts. And so we are all working together to try to 
move forward on protecting competition and consumers.
    Mr. Johnson. Thank you.
    Mr. Chairman, I find that as I get to the--towards the top 
of my lifespan that my hearing is starting to be a little bit 
lessened as a result, and so I would strongly urge you to speak 
directly into the microphone, kind of like what I am doing, and 
that way at least I will be able to hear you. And I appreciate 
it.
    Intellectual property rights standards and antitrust are 
critical interrelated issues internationally. Given discussions 
in Europe, China, the OECD, and the WIPO, the amount of 
emphasis the U.S. government has placed on defending I.P. 
rights around the world and the challenges we face in China and 
elsewhere in ensuring protection for American intellectual 
property, what is the Administration's strategy going forward, 
and how are we actually managing the dialogue on these critical 
issues abroad, and you coordinating a message on these issues 
with commerce, USTR, USPTO, State, and others?
    Ms. Varney. As you may know, Chairman, the White House has 
established an I.P. working group and task force that is headed 
and run out of the White House. That task force includes 
members from the PTO, from the Department of Commerce, the 
Department of State, USTR, the Department of Justice--we are 
all there and we are committed to protecting intellectual 
property here and abroad. We work very closely on that matter.
    When it comes to the intersection of antitrust and 
intellectual property, I think the chairman does an incredible 
job of providing technical assistance, which I am sure he will 
speak to, to a lot of emerging antitrust regimes, and we try to 
work very closely with their technical assistance programs in a 
lot of the emerging antitrust regimes.
    We want to be sure that the laws reflect what is antitrust 
and is not used in any way to inhibit American entry into 
markets when intellectual property is present. So we see an 
intersection between intellectual property and antitrust, but 
we do not want to see antitrust laws around the world used in 
any way to inhibit trade and competition.
    Mr. Leibowitz. Yes. And I agree with everything that 
Assistant Attorney General Varney said.
    We do do a lot of technical assistance with countries. We 
do help them write their antitrust law, which we think 
generally reflect best practices of antitrust. Usually they use 
the American antitrust laws and sometimes the European 
antitrust laws as a guidepost.
    We were very, very involved with helping China write its 
antitrust laws, which have just been implemented, and we will 
see how well they work.
    And again, you know, we feel very, very strongly that the 
more competition you have in foreign countries the better it is 
for all consumers, and particularly American consumers and 
American businesses.
    Mr. Johnson. Thank you.
    I will now turn to Mr. Coble for questions.
    Mr. Coble. Thank you, Mr. Chairman.
    Ms. Varney, good to have you and the chairman on the Hill 
today.
    Mr. Chairman, in the--regarding the reverse payment 
context, I have heard that the FTC has suggested that the 
courts should not have the authority to review these 
settlements because the courts have an incentive to approve 
settlements that the commission does not have--that is, namely, 
that the courts are too busy. What do you say to that 
assertion, and if so, do you--if you support it do you have 
examples of that having actually occurred?
    Mr. Leibowitz. Well, I would make a couple of points: 
Whenever we bring a case, and we have two cases pending: one in 
the district court in the Third Circuit involving a drug called 
Provigil, which is a wakefulness drug used by people in the 
armed services on long missions, narcoleptics, and children; 
and another in the 11th Circuit--we go to court, and we have to 
prove our case.
    I would say this--and this is true well beyond the pay for 
delay settlement issue a lot of times judges, they have busy 
dockets, they have to put criminal matters first, and I think 
that settlements are generally something they look favorably 
on.
    And when you have two companies that were in litigation, a 
brand and a generic, and they both turn around and say, ``We 
have a settlement,'' there is an incentive, for courts to agree 
with that, and consumers are the ones who aren't at the table 
who aren't making the deal, and they are the ones who lose from 
these reverse payment settlements or pay for delay settlements, 
which we believe cost consumers $3.5 billion a year.
    And then the only other point I want to make is that the 21 
deals that we have seen in the first three quarters of this 
fiscal year is the highest number we have seen so far in any 
fiscal year. These are deals that we believe delay generic 
competition and cost all of us more money, whether it is 
embedded in our health care costs, as a cost of health care 
insurance, or whether we have to go out and buy drugs because 
we don't have insurance, and there are still 40-plus million 
uninsured Americans.
    Mr. Coble. Well, thank you, Mr. Chairman.
    Ms. Varney, I will start with you, and either of you may 
answer. There have been a lot of recent news reports over 
Google's behavior in collecting personal information from WiFi 
networks from specially designed automobiles or vehicles 
roaming through the streets. More than 30 state attorneys 
general, led by Attorney General Blumenthal, of Connecticut, 
have announced an investigation in this matter, and I think 
they joined probably a dozen or so nations who are also 
investigating.
    Since Google acknowledges that it roamed in each of the 50 
states it is probably irrelevant to every Member of this 
Committee if, in fact, the rights of our constituents have been 
violated. To date, however, I believe neither the Department of 
Justice nor the Federal Trade Commission has commented on the 
so-called SpyFi issues. Is either of you all involved with 
cooperating with the various state attorneys general on this 
matter?
    Mr. Leibowitz. Well, we don't confirm investigations unless 
companies do, but we have said that we are taking a close look 
at this matter.
    Mr. Coble. Ms. Varney?
    Ms. Varney. Chairman, that is outside my jurisdiction. That 
is a privacy and tracking matter, and unless it is brought to 
our attention that there is some anticompetitive conduct 
involved there, that is probably something that would be best 
looked at by the Federal Trade Commission.
    Mr. Coble. I got you.
    One more question, if I may, Mr. Chairman?
    Mr. Leibowitz. Yes, sir.
    Mr. Coble. Google recently announced it was entering the 
travel business with the purchase of ITA. ITA, as we know, 
supplies information to a variety of Web sites that benefit 
consumers, such as Expedia, Travelocity, and Priceline. These 
travel sites benefit consumers by offering them real choices, 
and they are obviously concerned about the prospect of the 
world's largest Internet company entering their respective 
businesses.
    Which of your agencies plan to review this matter, and do 
you have a timeline on that?
    Ms. Varney. Obviously we don't comment on any pending 
investigations, either the chairman or myself, so I can assure 
you that should this transaction go forward and is reportable 
under the Hart-Scott-Rodino procedures to report transactions 
under--and be reviewed under the Clayton Act, Section 7, we 
will carefully evaluate which agency has the best expertise to 
review the transaction, and we will do so. And I am sure, 
actually, no matter which agency is reviewing the transaction, 
we will call on each other's expertise.
    Mr. Leibowitz. We will.
    Mr. Coble. Thank you both.
    I yield back, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Coble.
    I will next turn to the Chairman of the Judiciary Committee 
for his questions.
    Mr. Conyers. Thank you for your statements. Let's look 
historically at where we are now.
    Were the railroad cases the first big antitrust cases 
followed by the telephone cases?
    Mr. Leibowitz. And oil, yes.
    Mr. Conyers. Oil.
    But the mergers keep coming; the anticompetitive activity 
is still roaring down the runway. Corporate power globally is 
increasing. The lives of everybody now are impacted, and even 
governments are impacted.
    I can remember, Mr. Chairman, when I made my first trip to 
the African continent. Most of the companies there were larger 
than the companies--most of the companies there were larger 
than the countries that they were in, in terms of power and 
influence. In many instances it hasn't changed that much.
    Do you agree with this trend that I am--this picture that I 
am summarizing, that corporations keep getting bigger and keep 
affecting more control and power over not only the people on 
the planet, but the countries that govern the people in the 
various, what is it, 132 nations in the world--192? Let's talk 
about that, ladies and gentlemen.
    Ms. Varney. Certainly, Chairman, in my travels around the 
world, which have been far less extensive than yours, we see 
the increasing importance of corporations in a global and 
increasingly interconnected and dependent world. And I see it 
everywhere I travel.
    And there are corporations, certainly, that have enormous 
influence in economies everywhere. At the same time I, not too 
long ago, was in sub-Saharan Africa, and I was informed--I 
don't know that this is accurate, but I was informed at the 
time that China is actually the largest investor right now in 
sub-Saharan Africa.
    So I think it is an increasingly complex, increasingly 
interconnected, and increasingly global world where some 
participants, be they governments or be they private sector 
participants, are having influence beyond what you would have 
seen at the turn of the century when you referenced the very 
first big antitrust cases.
    Mr. Leibowitz. Yes. And I would agree with everything that 
Assistant Attorney General Varney said. I would just add this: 
When you look at the origins of the Sherman Act in 1890, I 
think part of what Congress was trying to reach was sort of the 
undue influence of corporations.
    Of course, corporations also provide enormous benefits to 
American consumers and to consumers around the world. I would 
say this, you have asked us sort of a meta-question that goes 
well beyond the jurisdiction of our agencies. There was a piece 
in the, National Law Journal yesterday--I will put it in for 
the record--that really talked about how active the two 
agencies have been----
    Mr. Conyers. Yes.
    Mr. Leibowitz. And so within the narrower confines of the 
work that we do I think we have done a pretty good job. I can 
say that about the Antitrust Division. I can't necessarily say 
that about the Commission--I don't have quite as much 
objectivity with respect to the FTC.
    Mr. Conyers. Well, when are we going to get a Section 2 
case? We haven't got any so far.
    Mr. Leibowitz. Actually, and I hate to correct the Chairman 
of the Committee on a factual matter, we have a Section 2 case. 
Actually, we have several Section 2 cases right now. One is a 
pharmaceutical reverse payment case; that is the Third Circuit 
case involving Cephalon. Another is a case we have brought 
using both Section 2 monopolization and Section 5 unfair 
methods of competition, as well as unfair and deceptive acts or 
practices against Intel.
    And then, during the Bush administration we actually had a 
very significant standard-setting case that was a 
monopolization case involving a company called Rambus. We lost 
that in the D.C. Circuit, but we are going to continue to look 
around for a----
    Mr. Conyers. I stand corrected.
    Attorney General, when are you going to get into that?
    Ms. Varney. Mr. Chairman, you will have a case from us when 
we have the facts and evidence ready to bring the case. We have 
many investigations, which I can't comment on, going on right 
now.
    We have also been very active in stopping anticompetitive 
mergers, in fixing--allowing parties to cure potential 
anticompetitive effects of mergers. So I think we are very 
active, and I--you know, Section 2 cases take, as I think the 
Chairman----
    Mr. Conyers. Of course.
    Ms. Varney [continuing]. Quite a bit of time to develop the 
facts and the evidence.
    Mr. Conyers. They are complex.
    But just closing, Mr. Leibowitz, you know, telling me about 
how much good corporations are doing are balanced by how much 
bad some are getting away with. That is two different subjects.
    I mean, I applaud capitalism under regulation, but this 
picture is getting more and more bleak. The mergers are still 
roaring ahead, which, incidentally, after all of our prattling 
about small business, that makes it that much harder for small 
business to ever get started in this kind of atmosphere.
    Mr. Johnson. Thank you, Mr. Chairman.
    Next I would recognize my good friend from Utah, Mr. 
Chaffetz.
    Mr. Chaffetz. Thank you, Mr. Chairman.
    And thank you both for being here.
    Mr. Leibowitz, if we could start with you just real 
quickly, let me talk just for a moment about the Cephalon 
situation, where we have--my understanding is a D.C. Federal 
court--district court Judge Kay, for the first time, my 
understanding is, in 33 years actually offering some limited 
discovery into that case. Can you expand--I mean, is this--I 
think you know the situation that we are talking about, but is 
this something that the FTC does, and this type of activity, in 
terms of getting in the middle the way that it did?
    Mr. Leibowitz. It is a very fair question, and let me 
respond to it. Let me respond to it first by bifurcating it a 
little bit.
    Again, we take a perspective at the FTC--and we are very, 
very bipartisan--to try to get the greatest good for the 
greatest number of people, and that is how we came up with or 
decided to make pay for delay settlements a major commission 
issue.
    We believe--or our Bureau of Economics reported--that it 
costs consumers $3.5 billion a year, and we are going to be 
resolute in trying to stop these deals, whether by getting a 
case to the Supreme Court or by trying to pass legislation in 
Congress.
    As for the issue involving Watson and Mr. Bisaro's 
deposition, let me make a couple of points. We play by the 
rules at the FTC, when the magistrate issued the opinion and he 
asked for limited discovery of the commission we decided--and 
this is almost unprecedented--to make our interrogatories 
public. It was a vote of the commission; it was a five to zero 
vote. And we did that because we thought it was important to 
get all the facts out.
    Again, I believe we play by the rules. I think as the facts 
do come out you will see that we didn't do anything wrong.
    I will say this: Mr. Bisaro, who is the person who has 
avoided our subpoena, our deposition, for almost a year now--
you know, I just don't quite understand this. If this Committee 
were doing an investigation--if your Committee were doing an 
investigation, as a routine investigation, which this is--or a 
typical investigation--and someone refused to come and testify, 
I think you would be upset with it. And I think there----
    Mr. Chaffetz. I may be upset, but, you know, you have a 
Federal judge who for the first time in 33 years decided that 
they were going to go ahead and allow some additional 
discovery----
    Mr. Leibowitz [continuing]. We are happy, Mr. Chaffetz, to 
have some discovery, because we don't think we did anything 
wrong. We think that Watson has just been slinging mud at us, 
and some of it will stick occasionally.
    Mr. Chaffetz. Okay. Fair enough.
    Let's go back to the Google situation. And I found it very 
interesting that Ms. Varney gave an answer for we--us--talking 
about two different agencies. And that is part of the question 
as to which agency does it go to? How do you make the 
determination as to who is going to do what?
    You seem very capable of answering the question for the 
FTC, but for those businesses and organizations that are trying 
to figure out how to move forward with their regulators how do 
you make these types of determinations? I mean, is this----
    Ms. Varney. I think, Mr. Chaffetz, that generally I would 
say--in 98 percent of the matters it is very clear to the 
parties which agency, based on history and expertise----
    Mr. Chaffetz. But for that extra 10 percent----
    Ms. Varney. The extra 2 percent----
    Mr. Chaffetz. Two percent. Sorry--98 percent, okay.
    Ms. Varney. It is difficult. It is absolutely difficult to 
know with certainty which agency is likely to have the right 
expertise----
    Mr. Chaffetz. So if somebody calls in and says, hey, you 
know, and they think it is at Justice and maybe it is a--how do 
you deal--do you have procedures in place for both agencies 
to----
    Ms. Varney. Very efficiently. And the reason that either 
one of us can answer for both is because this--what you are 
talking about is something that is called preclearance, and it 
is a process that is housed at the FTC but is actually run with 
both of us present. So if a party or parties are merging and 
they want to come in and it is not clear which agency will 
review the merger, both our staffs sit down with the merging 
parties on the front end and hear the presentation, and we work 
very----
    Mr. Chaffetz. The customer part of it--if there is a 
customer complaint does the same process work in place?
    Ms. Varney. Generally we try and resolve which agency is 
going to be reviewing a matter relatively quickly so that one 
of us can get our staffs out there and talking to customers and 
suppliers and competitors and the parties.
    Mr. Leibowitz. So, but just to follow up on----
    Mr. Chaffetz. Yes.
    Mr. Leibowitz [continuing]. Assistant Attorney General 
Varney's point, you know, she was an FTC commissioner in the 
1990's, and a terrific one, we try very hard and--our staffs 
try hard and we try very hard to make sure our staffs resolve 
those handful of cases where there is--effectively a jump ball 
quickly, because companies deserve a quick resolution. And I 
went back and I looked at the statistics which we provided to 
the Committee, and of the handful of contested clearance 
agreements not a single one of them went past 15 days.
    And we can still do a better job because I think we want to 
keep it down to a week, and a few went over a week. But believe 
me, if she and I had to deal with a lot of clearance disputes 
our head would be exploding, or our heads would be exploding 
right here in front of you. So we try to do a good job; we are 
not perfect. But----
    Mr. Chaffetz. If you could understand how that works a 
little bit more clearly I would appreciate it.
    Thank you, Mr. Chairman.
    Mr. Conyers. Mr. Chairman, I ask unanimous consent to put 
into the record the article that Mr. Leibowitz referenced, 
``FTC Antitrust Blitz,'' written only yesterday in the National 
Journal newspaper.
    Mr. Johnson. Without objection.
    And we will next turn to the distinguished gentleman from 
Texas, Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    And I take it from the witnesses' testimony--correct me if 
I am wrong--no determination has been made as to who is going 
to be looking into the proposed Google-ITA business deal. Is 
that correct?
    Ms. Varney. Congressman, our confidentiality rules do not 
permit us to even comment on whether or not a particular merger 
has been filed. So we can't comment. The parties can, but we 
can't comment on that.
    Mr. Gonzalez. All right.
    Mr. Leibowitz. And Google, by the way, has generally 
acknowledged publicly which agency gets an agreement or a 
merger proposal, and once they do we can confirm it.
    Mr. Gonzalez. So let's just go ahead on what has already 
been reported in every major newspaper in the United States. 
And let's go in New York Times, July the 6th, ``Regulators 
Prepare to Dig Into Google-ITA Deal,'' quote--and this is by 
Brad Stone--``It's no secret that United States antitrust 
enforcers are looking closely at Google's business practices 
and the way it leverages its dominance in Web search into other 
Internet markets.''
    So we are going to assume someone is going to be looking at 
it. And it is not just Google, and we need to preface--or I 
need to preface my remarks--it is just not Google. It is the 
whole technology that is going on out there. What happened with 
Microsoft years ago and the advancing of a temporary monopoly 
argument--on and on. So you have got to deal with all that, but 
it is very interesting to figure out that particular business 
model and its activities and its potential spillover to other 
areas.
    So I will go to New York Times, July 1st, ``France Calls 
Google a Monopoly.'' ``This week the French Competition 
Authority officially declared Google a monopoly.'' ``Google 
holds the dominate position on the advertising market related 
to online searches,'' and then it went on to expand.
    But this is the most important part of the story: 
``Google's position, rejected by the French, is that the 
relevant market is all of advertising, in which Google has a 
tiny share, rather than online search ads in which it is 
dominant. It appears that if the French authorities do not 
reverse that conclusion in their final ruling it will be the 
first official precedent rejecting Google's argument''--the 
general argument.
    ``In the United States the Federal Trade Commission said in 
2007 that it was possible that search ads could be a defined 
market for antitrust purposes, but it did not reach a 
conclusion on the issue as it approved Google's acquisition of 
DoubleClick, in advertising distribution network.''
    So my question, to the extent that you can answer it: When 
does kind of general market share translate into something that 
should be drawing your concern? When do you have, as Google has 
advanced--look, you have got to look at all advertising. Just 
don't look to that which is search-generated.
    But the truth is, as technology moves forward and where 
advertising is going, is it, in fact, something that should be 
isolated and recognized as standing on its own for 
consideration?
    Mr. Leibowitz. So, let me take that question first. I saw 
that article from a few days ago about the activity of the 
French government. It would be hard for me to understand how 
Google could have a dominant position in all advertising. I 
think it is pretty clear they have a monopoly position in 
search ads, and as that article noted, we looked at Google 
AdMob recently; we looked at Google DoubleClick several years 
ago.
    Again, when you are up in the 70 percent market share, as I 
think they are on search, I think everyone would believe that 
is a monopoly position. It doesn't control the entire market, 
but it is dominant, as the Europeans would say.
    But I would also point this out, and obviously we have had 
reviews of Google-related activities and the Justice Department 
is involved in the Google book search. Just by virtue of being 
a monopoly, that is not illegal under the antitrust laws. You 
have to engage in some sort of bad conduct beyond that.
    And, I think if you acquire a monopoly position by virtue 
of your terrific products or your terrific marketing that is 
okay generally. It is only when you go beyond that and try to 
stifle competition or engage in exclusionary practices that you 
are engaging in some sort of illegal monopolization.
    Again, courts have pared back the ability to win 
monopolization cases in the last several decades. That is no 
surprise to anyone. And it's part of the reason why we are 
using our unfair methods of competition authority, which is a 
penumbra around the antitrust laws--when you created the FTC 
you wanted an agency with very broad jurisdiction and very weak 
remedies.
    We don't put people in jail, right? We can't fine 
malefactors. But part of the reason why we are using this 
authority that we have had since 1914 more often is because we 
want to stop anticompetitive behavior that harms consumers.
    Mr. Gonzalez. But you are saying they would have to have an 
affirmative act by a company on exclusionary practices before 
it would be legitimate to look at it.
    Mr. Leibowitz. I mean, ``look at it is'' a non-legal term, 
so, we are aware of the dominant position that certain 
companies have in certain markets--Intel has in chips, Google 
has in search. But you would want to see some sort of acts or 
an act that was designed to unfairly, denigrate competitors 
before you would bring action.
    Mr. Gonzalez. And whether you had that intention or not, 
but it is the result, would that matter?
    Mr. Leibowitz. Yes.
    Mr. Conyers. I ask that the gentleman gain an additional 
minute.
    Mr. Johnson. Without objection.
    Mr. Gonzalez. And I appreciate it, and I will give Ms. 
Varney an opportunity to respond.
    Ms. Varney. I think your question, Congressman, started 
with basically a merger analysis question, and without 
commenting on any particular potential merger or current 
merger, it is not unusual for us to examine what is actually a 
relevant market. It is very tough in many circumstances. I 
think you saw that in the XM-Sirius merger. There was a 
question as to whether satellite radio was, in and of itself, a 
distinguishable market.
    We see that often. In my time at the Department of Justice 
in the many of the mergers we have reviewed the parties have 
argued that the markets that the merged parties were competing 
in were separate markets.
    This is not an issue that we are in any way unfamiliar 
with. We have tools that we use to help us assess and 
understand what are the relevant markets. I am sure you won't 
be surprised to know that in virtually every merger where there 
is competitive overlap the parties routinely argue that they 
are not in the same market.
    So that is a threshold question. We have lots of tools--our 
revised merger guidelines give lots of transparency to parties 
and to practitioners as to how we assess what particular tools 
we will use to try and determine what is an actionable 
antitrust market.
    As the chairman went through the standards he was, I think, 
essentially talking about single firm conduct. I am talking 
about the tools you use to do a merger analysis.
    Mr. Gonzalez. Thank you very much.
    Thank you for your indulgence, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Gonzalez.
    Next we will have questions from the distinguished 
gentleman from Virginia, a man who never smiles and his--is 
both respected and feared by witnesses who appear before this 
Subcommittee, Mr. Bob Goodlatte?
    Mr. Goodlatte. Well, thank you, Mr. Chairman. You always 
bring a smile to my face. [Laughter.]
    I want to welcome the witnesses and, I must say, I am 
strongly in favor of our Nation's antitrust laws and believe 
they should be enforced to the fullest extent of the law. And I 
prefer them, generally, over regulations, wherever possible, 
because I think that if you set parameters and tell companies 
that if they operate within these parameters they are okay then 
it creates, I think, the maximum amount of competition and the 
maximum amount of creativity, whereas regulations often result 
in unintended consequences that can stifle creativity in ways 
that simply were not intended by the regulators.
    However, the Administration enforcing these laws has to be 
fair, has to be predictable, has to be uniform so that 
businesses know that the ground rules, regardless of which 
industry they happen to be and thus which agency reviews their 
activities. I also believe that the law should be enforced 
objectively and not subjectively.
    And I have been looking into ways to ensure that the basic 
framework of the antitrust enforcement process is fair, and I 
hope that the witnesses here today will join me in that effort.
    So first, I direct this primarily to you, Mr. Leibowitz: 
One area that I have been looking into is the different 
procedural tools that the FTC and the Department of Justice 
posses. The FTC has different procedural tools available to it 
to challenge mergers. Like the Department of Justice you can 
pursue a preliminary injunction in Federal district court; 
however, unlike the Department of Justice, which combines its 
preliminary injunction case with a merits trial in Federal 
district court, the FTC can pursue a separate administrative 
case within the FTC.
    To me, this raises questions of fairness. First of all, why 
should mergers be subject to different procedural standards 
given that the Department of Justice and the Federal Trade 
Commission sometimes decide who will review a merger based on 
basically a coin flip or a possession arrow? You want to tackle 
that first and then we will ask Ms. Varney?
    Mr. Leibowitz. Yes. Let me start by saying as a general 
matter I agree with you that enforcement is a better approach 
than regulation. And, we consider ourselves to be an 
enforcement agency. We occasionally do write rules, but that is 
the exception rather than the rule.
    And then let me also let the record note that I have seen 
you smile many times in the past. [Laughter.]
    I understand this argument, and I have certainly heard it a 
fair amount, particularly from the Antitrust Bar. But I 
actually think ultimately the standards are more alike than 
not, and here is why: So, if we go to court and we ask for 
preliminary injunction, the Antitrust Division asks for a 
permanent injunction. We then have to show in different 
circuits different standards.
    Outside of the D.C. Circuit we have to show likelihood of 
success on the merits in most circuits. In D.C. Circuit we have 
to show questions that are very serious and very substantial. 
That is the language from the Heinz case.
    And then, if a company wants to come back to the FTC, which 
is an expert body that was created by Congress, we have to show 
ultimately that we will win on the merits. So we ask for 
preliminary injunction.
    Sometimes that is done very quickly. In a case involving an 
Inova acquisition of Prince William Hospital--you are familiar 
with that--the judge just sent it over to the FTC--the district 
court judge in Alexandria--to do the entire review.
    And the other thing I would say for companies is that we 
recently dramatically accelerated our procedures at the FTC, so 
if a company wanted to immediately come to the FTC and get a 
full trial, which is more than a preliminary injunction or a 
permanent injunction, they can have that in 5 months with a 
review in several more months--in 2 more months--by the 
commission, and that is actually as fast as you would get a 
review in the district court.
    Mr. Goodlatte. Do you have the ability to bring a combined 
preliminary injunction and merits case like the department 
does?
    Mr. Leibowitz. We probably do have that----
    Mr. Goodlatte. Have you ever used it?
    Mr. Leibowitz. No, no, no. I mean, going back through 
Administrations and commissions we have always gone to court to 
ask for preliminary injunction and then the case has gone to 
what we call part three internally. But if a company wants to 
come first----
    Mr. Goodlatte. But if you wanted to bring it through the 
courts as opposed to your internal process you could do that?
    Mr. Leibowitz. If a company wants us to we would do that.
    Oh, through the courts? We always go to court because we 
need to get a preliminary injunction----
    Mr. Goodlatte. I understand.
    Mr. Leibowitz [continuing]. To stop the merger from 
proceeding.
    Mr. Goodlatte. But then do you ever ask the court to rule 
on the merits of the case?
    Mr. Leibowitz. Well, what we ask the court to do is to stop 
the proceeding. Now, courts will sometimes use a likelihood of 
success on the merits standard and sometimes they will use, as 
the D.C. Circuit does, questions so serious and so substantial 
they go to the heart of the matter, and then it comes to the 
commission.
    Mr. Goodlatte. How many times does the administrative law 
judge rule against the FTC staff in a merger case?
    Mr. Leibowitz. Against the FTC staff?
    Mr. Goodlatte. Yes.
    Mr. Leibowitz. Quite often, in cases generally. I will get 
you that information.
    Mr. Goodlatte. I would like to see that----
    Mr. Leibowitz. And also in conduct cases, as well. I want 
to say this: I know in conduct cases they have ruled against 
the FTC staff on several recent occasions, including our Rambus 
case several years ago.
    On merger cases, I will go back, and I will get you and I 
will get the Committee the answer. That is a good question.
    Mr. Goodlatte. And finally, on appeal how many times have 
the five commissioners ruled against the FTC?
    Mr. Leibowitz. I will get you that information. I mean, you 
raise a real question, and I don't disagree with that, but I 
like to think at its bottom line in merger cases that 
ultimately the result of the merger is never--and I don't think 
anyone has ever alleged this even from the Antitrust Merger 
Bar--the outcome isn't determined by who you go to, and the 
standards are ultimately the same.
    Mr. Goodlatte. Thank you.
    Ms. Varney, do you have any comment on that?
    Ms. Varney. Only I can speak to the Department of Justice, 
Mr. Goodlatte. We can seek a preliminary injunction; we can 
seek to have that preliminary injunction combined with a 
permanent injunction trial on the merits; or we can seek a 
preliminary injunction and then proceed down the road after 
discovery to a permanent injunction, which is a full trial on 
the merits.
    So our system is slightly different and we, of course, as 
you have noted, are held to the common law standard in every 
circuit that requires for a preliminary injunction likelihood 
of success on the merits and irreparable harm if the injunction 
is not granted. If we get the injunction separate from a 
permanent injunction we then--generally the parties will 
withdraw and everybody will go home.
    You can often get the parties to agree to not proceed with 
the transaction until the court schedules a full trial on the 
merits. So there are occasions where we simply don't go through 
the preliminary injunction standard, where we go after 
discovery to a direct trial on the merits and then all of the 
standards of Section 7 of the Clayton Act and the court 
precedent on merger analysis kick in. So it is a slightly 
different system.
    Mr. Leibowitz. Mr. Goodlatte, if I could just add one more 
brief point, when Congress--when you or your predecessors--
created the FTC you wanted to create an expert agency, and so I 
think theoretically--and I will go back and get you some 
research on this, too--I think theoretically you probably 
wanted all the merger reviews to go through the FTC internally 
as opposed to into court for, a preliminary injunction. But let 
me get back to you.
    But part of the idea of putting things into our ALJ process 
and internally into the commission is we are supposed to be an 
expert agency; we are supposed to build records; we are 
supposed to learn from the cases we bring and the actions we 
take.
    Mr. Goodlatte. Ms. Varney, does the Antitrust Division not 
have the expertise that we think you have to----
    Ms. Varney. I think that the division and the courts and 
the FTC all have terrific expertise in doing anticompetitive 
analysis. I think, as Chairman Leibowitz pointed out, the 
Federal Trade Commission is a creature of Congress, and I have 
no basis to go through the legislative history of what Congress 
intends the FTC to do and not do, or how to do it. I think that 
is a question reserved for you and the chairman.
    Mr. Goodlatte. Well, I am just concerned about the lack of 
consistency here, and from looking at it from the outside you 
would have a considerable question about, you know, why we are 
going two separate directions here on antitrust law and how 
there is kind of predictability and fairness that a business 
trying to make a decision before they ever get to the point of 
being before that court for that preliminary injunction has to 
make. It just compounds the problem, and I would think it would 
be stifling on investment and creativity and doing business in 
the United States. Thank you.
    Mr. Chairman, my time is expired. Are you going to do a 
second round, or--I do have another area I wanted to get into, 
but I don't want to keep Mr. Issa from getting his shot here 
first.
    Mr. Johnson. I certainly have abundant respect for Mr. 
Issa's brain power, and you both sit next to each other. 
Perhaps he will ask the same exact questions that you had on 
your mind. And so let's wait and see what Mr. Issa brings to 
the table.
    The distinguished gentleman from California, please?
    Mr. Issa. Thank you, Chairman. As you know, my questions 
usually lead to more questions, so I suspect a second round 
will be essential as a result.
    Chairman, we are considering--since you are a creation of 
ours and you are our bastion of expertise--we are considering a 
bill that probably won't happen in this Congress, but these 
things tend to come back--H.R. 5034. And I would like your view 
on the legislation itself and on the problems that it make 
create from a stand--because it clearly deals with antitrust 
questions, interstate commerce, and not only the history of 
litigation that has already gone on and court decisions, but 
the 21st Amendment.
    To the extent that you are familiar with the legislation, 
could you comment on----
    Mr. Leibowitz. Is it the alcohol----
    Mr. Issa. Yes, sir.
    Mr. Leibowitz. I am aware of that legislation----
    Mr. Issa. And your Web site makes us think that you are not 
very keen on it, but I would like a delineation a little more.
    Mr. Leibowitz. I don't believe that we have testified on or 
taken a position on the legislation----
    Mr. Issa. This is your chance.
    Mr. Leibowitz [continuing]. And I will--you know, we are a 
very bipartisan, consensus-driven group, and I am going to go 
back to the commissioners and talk to them, and I will get you 
an answer. But I would say this: My recollection of this 
legislation is that it would preempt the ability of Federal 
antitrust authorities as a practical matter under most 
circumstances from reviewing competition problems within 
alcohol distribution.
    And so, we generally believe as I know you do--that 
competition is the best approach, and when you have Federal 
antitrust enforcement under appropriate circumstances that is 
usually a good thing in terms of bringing competition, more 
choice, and lower prices to consumers. But let me get back to 
you with some more grounding. I don't want to speculate too 
much until I go back and read the bill.
    Mr. Issa. Okay. And as you can imagine, this is a 
bipartisan piece of legislation, particularly to those of us 
who have both beer producers and wine producers in our 
district, both manufacturers and, if you will, distributors. So 
even if you don't take a final position on it, some of the 
pitfalls that you believe it might--from your oversight 
standpoint going forward--might represent would be very, very 
helpful. I am looking forward to that answer the--a great deal.
    Let me ask another question. Now, I am one of the non-
lawyers on this Committee, and my antitrust experience really 
goes to being told by the courts years ago that at a Chrysler 
dealership if Chrysler decided not to let anyone else sell 
radios there except Chrysler radios that it wasn't an antitrust 
violation even though they had 100 percent control over that 
franchisee because the relevant market were all car companies 
and there were only 10 percent Chryslers, and less later.
    I thought that was a rotten decision. It should never have 
stood; it ultimately was one of those where we won on a three-
judge panel and lost en banc, and denied cert. It was the Town 
Sound case here in one of the eastern circuits. Terrible 
decision.
    So I have always looked at relevant market barrier to 
entries to try to figure out the other part, the other legs of 
stools--legs of the stool. And one of the questions I am 
starting to have in the Internet--and earlier Mr. Chaffetz 
talked about, he was getting into Google and some of these 
other issues. If we assume for a moment that the Internet has 
no barrier to entry, that just anyone with $1,000 and a college 
kid to write a piece of software can someday be a major player 
on the Internet, then that leg of the stool just doesn't exist, 
and that means that the test is there is no antitrust.
    On the other hand, when we look at powerful players who, 
for example, have a dominant position and then give away lots 
of software--and Gmail is highly recognized and some of the 
services Google do, but I am not trying to pick on just them. 
When are we going to either see the courts make decisions that 
they may or may not be empowered to make or a direction back to 
those of us on this side saying that we have got to rewrite 
antitrust law to deal with, if you will, market power without a 
barrier to entry, potentially, and yet a tie-in that 
effectively is anticompetitive?
    And this could be a question for both of you because I view 
it as clearly anticompetitive potentially. I view it as 
locking--free always locks out other innovation, almost always. 
And yet, right now I feel like current law probably doesn't 
support your being more activist in those kinds of areas.
    Ms. Varney. Well, I have not sure----
    Mr. Issa. Ms. Varney, I was glad to see your head shaking, 
so I----
    Ms. Varney. I am not sure that I feel that current law 
doesn't allow us to prosecute anticompetitive behavior in any 
industry, including technology. I think I will----
    Mr. Issa. So if Google has market power and they are giving 
something away, and therefore their giving away promotes a 
product in which they have a dominant position while eroding 
other people's ability to have profit, why wouldn't that 
already be the subject of your investigations and enforcement?
    Ms. Varney. Again, without commenting on any potential 
current----
    Mr. Issa. Let's just say your historic and as of yet 
revealed----
    Ms. Varney. Well, actually that is what I am going to do, 
is I am going to take you back a little. But first I am going 
to promise you that I am going to read your case so that I 
understand the facts of your case.
    But I would also like to take you back to U.S. v. 
Microsoft.
    Mr. Issa. By the way, I was not a plaintiff in Town Sound. 
I was the nonpaid chairman of a trade association that 
supported it. I was actually in security, not car radios. But 
you follow these things on behalf of your trade association----
    Ms. Varney. Well, I will look forward to discussing that 
case with you after I have read it.
    But in the interim I would direct you to U.S. v. Microsoft, 
both the court of appeals here in D.C. and the trial court 
opinion, which dealt precisely with the issues that you are 
talking about--barriers to entry, is free predatory pricing, 
when does lockout occur, what is a tipping point, what is a 
leveraged market, what is an adjacent market--all of these 
questions were dealt with, I think, quite successfully and 
quite appropriately in the U.S. court of appeals for the 
District of Columbia in U.S. v. Microsoft.
    So I believe at the moment we have the tools we need. If 
that turns out not to be true I will be back to you in a 
heartbeat telling you we don't have the tools we need.
    Mr. Leibowitz. And I guess just to----
    Mr. Issa. Although in that case they found barriers to 
entry which I think we could make the case that in the cloud 
you can have a zero barrier to entry, potentially--a threshold 
of a few thousand dollars to give you----
    Ms. Varney. Yes. At the time one of the arguments that many 
were making is that there were no barriers to write new 
applications that browsers could then, indeed, locate.
    Mr. Issa. Right. But the software was sitting on the 
product at the time delivered in a tie-in with Intel, AMD, and 
so on. So there were a much more conventional set of 
circumstances of hardware-software than we are now seeing in 
cloud computing.
    Ms. Varney. Well, at the time, Congressman, I was in--as 
you were in your case--I was very involved in this case. I was 
the attorney for Netscape, which was the company that made the 
browser.
    Mr. Issa. Oh, yes.
    Ms. Varney. And at the time it was not at all clear. It 
wasn't conventional. This was the operating system and software 
sitting on the operating system I actually came up to the Hill 
to demonstrate to some Members of the other body what was the 
relationship between the browser and the software----
    Mr. Issa. Such a waste of time. You need to come here 
first. [Laughter.]
    Ms. Varney [continuing]. And someone picked up the mouse 
and said, ``Is this the browser?'' So I think if you go back in 
time and you look at the situation when the government brought 
the U.S. v. Microsoft case it was a very, very new set of 
circumstances, set of industry players, set of industry facts.
    People didn't understand the relationship between the 
intellectual property in the operating system, the construction 
of the operating system, whether or not the browser was 
integral to the functioning of the operating system, whether or 
not the browser could be a platform that could replace the 
operating system--these questions were all present in 1997 when 
we started the U.S. v. Microsoft case, and we managed to work 
our way through them I think to the right conclusion with the 
tools that we have and continue to have to this day.
    Mr. Leibowitz. Yes. I agree with Assistant Attorney General 
Varney, and I think the Microsoft case does encapsulate a lot 
of the elements that you have talked about.
    I do think we have the tools to go ahead and bring cases 
against companies that engage in illegal monopolization. We 
have a major case against Intel now--we are actually in 
settlement talks, and of course if we can settle to the benefit 
of consumers and competition and the public we will do that.
    But we do have those tools. At the FTC we have an 
additional tool, which is our Section 5 unfair methods of 
competition authority that is this penumbra around the 
antitrust laws. The remedies are weak; we are not using it to 
break up companies; we are not using it to do anything but open 
the door to competition going forward.
    So I think, as Assistant Attorney General Varney said, we 
will come back to you if we need additional tools, and there 
certainly have been some attempts, as you have alluded to, by 
the courts to circumscribe antitrust in recent years. But I 
think we will, when we do our next oversight hearing in a year 
or 2 hopefully we will have some pretty good cases and some 
pretty good settlements or results.
    Mr. Issa. I appreciate that, Mr. Chairman. I hope that that 
last comment will be stricken from the record--the part about a 
year or 2. I was hoping to see you much sooner.
    Mr. Leibowitz. We will come by and have an offline chat.
    Mr. Issa. Thank you.
    I yield back.
    Mr. Johnson. Thank you, Mr. Issa.
    We now turn back to Mr. Goodlatte.
    Mr. Goodlatte. Well, thank you, Mr. Chairman.
    The other area I wanted to get into is the one related to 
the chart that Mr. Leibowitz brought with him, and that is 
related to these patent settlement cases that are reviewed by 
the courts. You, or the FTC in general, has expressed concerns 
about the potential anticompetitive nature of some of these 
settlements, and you have indicated an interest in getting 
enhanced authority to challenge the settlements.
    Don't the courts review the settlements that occur before 
them in other contexts? I mean, what about patent settlements 
are so unique that the Federal courts cannot understand them 
well enough to review them for their competitive impact, 
particularly if you are given, as you are, the authority to 
express your views as a part of the process?
    Mr. Leibowitz. Well, I would say, of course courts can 
review settlements, and they have the opportunity to do that, 
and I don't dispute that. And in fact, any cases that we have 
brought--and we have brought several; we have two pending now, 
one in Mr. Johnson's 11th Circuit in district court, one in the 
Third Circuit--they are reviewed by the courts and they are 
ones that we are involved in.
    So we want to work with the courts. We think the trend is 
turning around, actually.
    There was a Second Circuit decision in a case involving the 
drug Cipro; Assistant Attorney General Varney filed a terrific 
brief in it and in a very unusual result the three-judge panel 
questioned the previous permissive rule. So I think we are 
making progress in the courts. Just going back to your----
    Mr. Goodlatte. Let me just interrupt you there for a 
second, because, you know, I share some of your enthusiasm for 
these delay settlements and wanting to break into them, but 
here is the point: You indicated, ``Well, in this case we are 
making some progress,'' but if you were to take a legislative 
approach that would internalize more of this in the FTC you are 
taking away the element of fairness that I think people expect 
from the Federal courts.
    Now if the courts are lopsided in their review then maybe 
the Congress needs to review the standards by which they judge 
these cases or something like that, but I am not excited about 
moving away from the idea that the independent judiciary will 
be the final arbiter of these cases.
    Mr. Leibowitz. I think that is a great question. And 
remember, the first bill that the House passed as part of 
health care was what we call a bright-line test, what others 
call a per se ban on these deals.
    The legislation that was passed as part the appropriations 
defense supplemental to offset, I believe, the teachers' money, 
and not passed by the Senate I think largely because of the 
teachers' money, was a presumption. And I think presumption 
approach works for us.
    What it does is this: It says--and I think this is a pretty 
good approach. It is not everything that the commissioners 
would necessarily want or the commissioner wants, but I think 
it solves--takes care of the worst abuses.
    It says simply, if a brand pharmaceutical company pays its 
generic competitor and the generic company delays entry then 
the burden of proof is reversed and it is a rebuttable 
presumption, essentially. And I think that is a pretty good 
approach, because remember, the pharmaceutical companies who 
were in litigation then settled have all the information, and 
if they can show--and I think in some cases they probably 
would--that the money that went for settlement didn't go for 
the delay then they can do their deal.
    If this legislation is enacted this year, and of course we 
hope it will be, we will be bringing cases in the courts and we 
will have to show the money, the delay, and then there will be 
a rebuttable presumption. So you might be a little more 
comfortable with this compromised version, and that is the 
version I think, may be enacted this year.
    Mr. Goodlatte. The final financial reform bill did not 
include the provisions that would have expanded the FTC's 
authority in rulemaking, civil penalties, and aiding and 
abetting. Do you plan to continue to push for such authority?
    Mr. Leibowitz. Well, I would say this: It did not, and 
reasonable people can disagree about our expanded authority. On 
civil penalty authority I would say we bring a lot of fraud 
cases because the Justice Department has other priorities, and 
in those cases it would be very helpful for us to be able to go 
to the courts and ask to fine malefactors.
    Caspar Weinberger, when he was the chairman of the FTC in 
the early 1970's, supported this, and again, I would be 
surprised if this is going to be a viable matter--this is going 
to be a viable issue going forward this year.
    I think that there is going to be an FTC reauthorization 
next year; your Committee will be involved, Energy and Commerce 
will be involved. And so it will go through regular order, and 
we will have a bit of discussion and I think it is a good idea 
to have one--about the pros and cons of easier FTC rulemaking.
    Mr. Goodlatte. My understanding is that most of those 
changes were directed at the commission's consumer protection 
bureau.
    Mr. Leibowitz. Yes.
    Mr. Goodlatte. Would those changes have affected the 
commission's competition enforcement procedures and remedies?
    Mr. Leibowitz. The only one that would have had an effect 
on competition would be the provision that would have allowed 
us to immediately go to--and only in rare instances--would be 
the provision that would allow us to go to court and have 
independent litigating authority when we ask for civil 
penalties.
    There are very few instances when we get civil penalties in 
the antitrust context. It is for violations of an order, and 
right now we have to go to the Justice Department, and the 
Justice Department files our case when we need civil penalty 
authority or when we are asking for a fine.
    But it is a much bigger issue on the consumer protection 
side. On the consumer protection side and you were very 
involved in CAN-SPAM legislation and some of the other enhanced 
authorities that we have gotten over the years--we have a sort 
of Hobson's choice.
    If someone is engaged in spamming or engaged in a do-not-
call violation we want to go to court immediately to stop the 
ongoing harm, which we can do by ourselves, but then we have to 
forego the civil penalty authority. We just think it is 
efficient for us to be able to do that together, right, so we 
can both fine the malefactor or ask the court to fine the 
malefactor, and stop the harm.
    Mr. Goodlatte. And is the commission unanimous in these--in 
pushing for these changes?
    Mr. Leibowitz. It depends which change you are talking 
about. I think two of the four proposals----
    Mr. Goodlatte. The ones you didn't get.
    Mr. Leibowitz. Well, we didn't get any of the four, and I 
would say of the four the independent litigating authority is 
unanimous, the APA rulemaking authority and the civil fining 
authority has bipartisan supermajority of four to one, and we 
have a lot of respect for Bill Kovacic, the commissioner who 
was opposed to that. And again, reasonable people can disagree, 
and that is why we are happy to have the discussion in Congress 
about it.
    Mr. Goodlatte. Mr. Chairman, thank you. You have been 
generous with your time, and I thank our witnesses for 
enlightening us today.
    Mr. Johnson. You are very welcome, sir.
    I have no further questions, so I would like to thank all 
of the witnesses for their testimony today. And without 
objection Members will have 5 legislative days to submit any 
additional written questions, which we will forward to the 
witnesses and ask that you answer as promptly as you can to be 
made part of the record. Without objection the record will 
remain open for 5 legislative days for the submission of any 
additional materials.
    I am encouraged by the testimony I have heard today, and I 
am impressed by two truly outstanding individuals who are 
leading the way for antitrust enforcement in this country, and 
it seems that you all have a great working relationship, and I 
think that that is the way the government should operate.
    Nevertheless, perhaps we have grown too complacent in the 
face of shifting economic theories and deference to regulation. 
The antitrust laws should be keeping the playing field level 
for all players big and small, not just reinforcing the 
position of a handful that dominate.
    And with that, this hearing of the Subcommittee on Courts 
and Competition Policy is adjourned.
    [Whereupon, at 12:06 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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