[Congressional Record Volume 150, Number 45 (Friday, April 2, 2004)]
[Senate]
[Pages S3610-S3619]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STANDARDS DEVELOPMENT ORGANIZATION ADVANCEMENT ACT OF 2003
Mr. McCONNELL. I ask unanimous consent that the Senate now proceed to
the immediate consideration of Calendar No. 376, H.R. 1086.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (H.R. 1086) to encourage the development and
promulgation of volunteer consensus standards by providing
relief under the antitrust laws to standards development
organizations with respect to conduct engaged in for the
purpose of developing voluntary consensus standards, and for
other purposes.
There being no objection, the Senate proceeded to consider the bill,
which had been reported from the Committee on the Judiciary, with an
amendment to strike all after the enacting clause and insert in lieu
thereof the following:
[Strike the part shown in black brackets and insert the part shown in
italic.]
H.R. 1086
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
[SECTION 1. SHORT TITLE.
[This Act may be cited as the ``Standards Development
Organization Advancement Act of 2003''.
[SEC. 2. FINDINGS.
[The Congress finds the following:
[(1) In 1993, the Congress amended and renamed the National
Cooperative Research Act of 1984 (now known as the National
Cooperative Research and Production Act of 1993 (15 U.S.C.
4301 et seq.)) by enacting the National Cooperative
Production Amendments of 1993 (Public Law 103-42) to
encourage the use of collaborative, procompetitive activity
in the form of research and production joint ventures that
provide adequate disclosure to the antitrust enforcement
agencies about the nature and scope of the activity involved.
[(2) Subsequently, in 1995, the Congress in enacting the
National Technology Transfer and Advancement Act of 1995 (15
U.S.C. 272 note) recognized the importance of technical
standards developed by voluntary consensus standards bodies
to our national economy by requiring the use of such
standards to the extent practicable by Federal agencies and
by encouraging Federal agency representatives to participate
in ongoing standards development activities. The Office of
Management and Budget on February 18, 1998, revised Circular
A-119 to reflect these changes made in law.
[(3) Following enactment of the National Technology
Transfer and Advancement Act of 1995, technical standards
developed or adopted by voluntary consensus standards bodies
have replaced thousands of unique Government standards and
specifications allowing the national economy to operate in a
more unified fashion.
[(4) Having the same technical standards used by Federal
agencies and by the private sector permits the Government to
avoid the cost of developing duplicative Government standards
and to more readily use products and components designed for
the commercial marketplace, thereby enhancing quality and
safety and reducing costs.
[(5) Technical standards are written by hundreds of
nonprofit voluntary consensus standards bodies in a
nonexclusionary fashion, using thousands of volunteers from
the private and public sectors, and are developed under the
standards development principles set out in Circular Number
A-119, as revised February 18, 1998, of the Office of
Management and Budget, including principles that require
openness, balance, transparency, consensus, and due process.
Such principles provide for--
[(A) notice to all parties known to be affected by the
particular standards development activity,
[(B) the opportunity to participate in standards
development or modification,
[(C) balancing interests so that standards development
activities are not dominated by any single group of
interested persons,
[(D) readily available access to essential information
regarding proposed and final standards,
[(E) the requirement that substantial agreement be reached
on all material points after the consideration of all views
and objections, and
[(F) the right to express a position, to have it
considered, and to appeal an adverse decision.
[(6) There are tens of thousands of voluntary consensus
standards available for government use. Most of these
standards are kept current through interim amendments and
interpretations, issuance of addenda, and periodic
reaffirmation, revision, or reissuance every 3 to 5 years.
[(7) Standards developed by government entities generally
are not subject to challenge under the antitrust laws.
[(8) Private developers of the technical standards that are
used as Government standards are often not similarly
protected, leaving such developers vulnerable to being named
as codefendants in lawsuits even though the likelihood of
their being held liable is remote in most cases, and they
generally have limited resources to defend themselves in such
lawsuits.
[(9) Standards development organizations do not stand to
benefit from any antitrust violations that might occur in the
voluntary consensus standards development process.
[(10) As was the case with respect to research and
production joint ventures before the passage of the National
Cooperative Research and Production Act of 1993, if relief
from the threat of liability under the antitrust laws is not
granted to voluntary consensus standards bodies, both
regarding the development of new standards and efforts to
keep existing standards current, such bodies could be forced
to cut back on standards development activities at great
financial cost both to the Government and to the national
economy.
[SEC. 3. DEFINITIONS.
[Section 2 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4301) is amended--
[(1) in subsection (a) by adding at the end the following:
[``(7) The term `standards development activity' means any
action taken by a standards development organization for the
purpose of developing, promulgating, revising, amending,
reissuing, interpreting, or otherwise maintaining a voluntary
consensus standard, or using such standard in conformity
assessment activities, including actions relating to the
intellectual property policies of the standards development
organization.
[``(8) The term `standards development organization' means
a domestic or international organization that plans,
develops, establishes, or coordinates voluntary consensus
standards using procedures that incorporate the attributes of
openness, balance of interests, due process, an appeals
process, and consensus in a manner consistent with the Office
of Management and Budget Circular Number A-119, as revised
February 10, 1998.
[``(9) The term `technical standard' has the meaning given
such term in section 12(d)(4)
[[Page S3611]]
of the National Technology Transfer and Advancement Act of
1995.
[``(10) The term `voluntary consensus standard' has the
meaning given such term in Office of Management and Budget
Circular Number A-119, as revised February 10, 1998.''; and
[(2) by adding at the end the following:
[``(c) The term `standards development activity' excludes
the following activities:
[``(1) Exchanging information among competitors relating to
cost, sales, profitability, prices, marketing, or
distribution of any product, process, or service that is not
reasonably required for the purpose of developing or
promulgating a voluntary consensus standard, or using such
standard in conformity assessment activities.
[``(2) Entering into any agreement or engaging in any other
conduct that would allocate a market with a competitor.
[``(3) Entering into any agreement or conspiracy that would
set or restrain prices of any good or service.''.
[SEC. 4. RULE OF REASON STANDARD.
[Section 3 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4302) is amended by
striking ``of any person in making or performing a contract
to carry out a joint venture shall'' and inserting the
following: ``of--
[``(1) any person in making or performing a contract to
carry out a joint venture, or
[``(2) a standards development organization while engaged
in a standards development activity,
[shall''.
[SEC. 5. LIMITATION ON RECOVERY.
[Section 4 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4303) is amended--
[(1) in subsections (a)(1), (b)(1), and (c)(1) by inserting
``, or for a standards development activity engaged in by a
standards development organization against which such claim
is made'' after ``joint venture'', and
[(2) in subsection (e)--
[(A) by inserting ``, or of a standards development
activity engaged in by a standards development organization''
before the period at the end, and
[(B) by redesignating such subsection as subsection (f),
and
[(3) by inserting after subsection (d) the following:
[``(e) Subsections (a), (b), and (c) shall not be construed
to modify the liability under the antitrust laws of any
person (other than a standards development organization)
who--
[``(1) directly (or through an employee or agent)
participates in a standards development activity with respect
to which a violation of any of the antitrust laws is found,
[``(2) is not a fulltime employee of the standards
development organization that engaged in such activity, and
[``(3) is, or is an employee or agent of a person who is,
engaged in a line of commerce that is likely to benefit
directly from the operation of the standards development
activity with respect to which such violation is found.''.
[SEC. 6. ATTORNEY FEES.
[Section 5 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4304) is amended--
[(1) in subsection (a) by inserting ``, or of a standards
development activity engaged in by a standards development
organization'' after ``joint venture'', and
[(2) by adding at the end the following:
[``(c) Subsections (a) and (b) shall not apply with respect
to any person who--
[``(1) directly participates in a standards development
activity with respect to which a violation of any of the
antitrust laws is found,
[``(2) is not a fulltime employee of a standards
development organization that engaged in such activity, and
[``(3) is, or is an employee or agent of a person who is,
engaged in a line of commerce that is likely to benefit
directly from the operation of the standards development
activity with respect to which such violation is found.''.
[SEC. 7. DISCLOSURE OF STANDARDS DEVELOPMENT ACTIVITY.
[Section 6 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4305) is amended--
[(1) in subsection (a)--
[(A) by redesignating paragraphs (1), (2), and (3) as
subparagraphs (A), (B), and (C), respectively,
[(B) by inserting ``(1)'' after ``(a)'', and
[(C) by adding at the end the following:
[``(2) A standards development organization may, not later
than 90 days after commencing a standards development
activity engaged in for the purpose of developing or
promulgating a voluntary consensus standards or not later
than 90 days after the date of the enactment of the Standards
Development Organization Advancement Act of 2003, whichever
is later, file simultaneously with the Attorney General and
the Commission, a written notification disclosing--
[``(A) the name and principal place of business of the
standards development organization, and
[``(B) documents showing the nature and scope of such
activity.
[Any standards development organization may file additional
disclosure notifications pursuant to this section as are
appropriate to extend the protections of section 4 to
standards development activities that are not covered by the
initial filing or that have changed significantly since the
initial filing.'',
[(2) in subsection (b)--
[(A) in the 1st sentence by inserting ``, or a notice with
respect to such standards development activity that
identifies the standards development organization engaged in
such activity and that describes such activity in general
terms'' before the period at the end, and
[(B) in the last sentence by inserting ``or available to
such organization, as the case may be'' before the period,
[(3) in subsection (d)(2) by inserting ``, or the standards
development activity,'' after ``venture'',
[(4) in subsection (e)--
[(A) by striking ``person who'' and inserting ``person or
standards development organization that'', and
[(B) by inserting ``or any standards development
organization'' after ``person'' the last place it appears,
and
[(5) in subsection (g)(1) by inserting ``or standards
development organization'' after ``person''.
[SEC. 8. RULE OF CONSTRUCTION.
[Nothing in this Act shall be construed to alter or modify
the antitrust treatment under existing law of--
[(1) parties participating in standards development
activity of standards development organizations within the
scope of this Act, or
[(2) other organizations and parties engaged in standard-
setting processes not within the scope of this amendment to
the Act.]
TITLE I--STANDARDS DEVELOPMENT ORGANIZATION ADVANCEMENT ACT OF 2003
SEC. 101. SHORT TITLE.
This title may be cited as the ``Standards Development
Organization Advancement Act of 2003''.
SEC. 102. FINDINGS.
The Congress finds the following:
(1) In 1993, the Congress amended and renamed the National
Cooperative Research Act of 1984 (now known as the National
Cooperative Research and Production Act of 1993 (15 U.S.C.
4301 et seq.)) by enacting the National Cooperative
Production Amendments of 1993 (Public Law 103-42) to
encourage the use of collaborative, procompetitive activity
in the form of research and production joint ventures that
provide adequate disclosure to the antitrust enforcement
agencies about the nature and scope of the activity involved.
(2) Subsequently, in 1995, the Congress in enacting the
National Technology Transfer and Advancement Act of 1995 (15
U.S.C. 272 note) recognized the importance of technical
standards developed by voluntary consensus standards bodies
to our national economy by requiring the use of such
standards to the extent practicable by Federal agencies and
by encouraging Federal agency representatives to participate
in ongoing standards development activities. The Office of
Management and Budget on February 18, 1998, revised Circular
A-119 to reflect these changes made in law.
(3) Following enactment of the National Technology Transfer
and Advancement Act of 1995, technical standards developed or
adopted by voluntary consensus standards bodies have replaced
thousands of unique Government standards and specifications
allowing the national economy to operate in a more unified
fashion.
(4) Having the same technical standards used by Federal
agencies and by the private sector permits the Government to
avoid the cost of developing duplicative Government standards
and to more readily use products and components designed for
the commercial marketplace, thereby enhancing quality and
safety and reducing costs.
(5) Technical standards are written by hundreds of
nonprofit voluntary consensus standards bodies in a
nonexclusionary fashion, using thousands of volunteers from
the private and public sectors, and are developed under the
standards development principles set out in Circular Number
A-119, as revised February 18, 1998, of the Office of
Management and Budget, including principles that require
openness, balance, transparency, consensus, and due process.
Such principles provide for--
(A) notice to all parties known to be affected by the
particular standards development activity,
(B) the opportunity to participate in standards development
or modification,
(C) balancing interests so that standards development
activities are not dominated by any single group of
interested persons,
(D) readily available access to essential information
regarding proposed and final standards,
(E) the requirement that substantial agreement be reached
on all material points after the consideration of all views
and objections, and
(F) the right to express a position, to have it considered,
and to appeal an adverse decision.
(6) There are tens of thousands of voluntary consensus
standards available for government use. Most of these
standards are kept current through interim amendments and
interpretations, issuance of addenda, and periodic
reaffirmation, revision, or reissuance every 3 to 5 years.
(7) Standards developed by government entities generally
are not subject to challenge under the antitrust laws.
(8) Private developers of the technical standards that are
used as Government standards are often not similarly
protected, leaving such developers vulnerable to being named
as codefendants in lawsuits even though the likelihood of
their being held liable is remote in most cases, and they
generally have limited resources to defend themselves in such
lawsuits.
(9) Standards development organizations do not stand to
benefit from any antitrust violations that might occur in the
voluntary consensus standards development process.
[[Page S3612]]
(10) As was the case with respect to research and
production joint ventures before the passage of the National
Cooperative Research and Production Act of 1993, if relief
from the threat of liability under the antitrust laws is not
granted to voluntary consensus standards bodies, both
regarding the development of new standards and efforts to
keep existing standards current, such bodies could be forced
to cut back on standards development activities at great
financial cost both to the Government and to the national
economy.
SEC. 103. DEFINITIONS.
Section 2 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4301) is amended--
(1) in subsection (a) by adding at the end the following:
``(7) The term `standards development activity' means any
action taken by a standards development organization for the
purpose of developing, promulgating, revising, amending,
reissuing, interpreting, or otherwise maintaining a voluntary
consensus standard, or using such standard in conformity
assessment activities, including actions relating to the
intellectual property policies of the standards development
organization.
``(8) The term `standards development organization' means a
domestic or international organization that plans, develops,
establishes, or coordinates voluntary consensus standards
using procedures that incorporate the attributes of openness,
balance of interests, due process, an appeals process, and
consensus in a manner consistent with the Office of
Management and Budget Circular Number A-119, as revised
February 10, 1998.
``(9) The term `technical standard' has the meaning given
such term in section 12(d)(4) of the National Technology
Transfer and Advancement Act of 1995.
``(10) The term `voluntary consensus standard' has the
meaning given such term in Office of Management and Budget
Circular Number A-119, as revised February 10, 1998.''; and
(2) by adding at the end the following:
``(c) The term `standards development activity' excludes
the following activities:
``(1) Exchanging information among competitors relating to
cost, sales, profitability, prices, marketing, or
distribution of any product, process, or service that is not
reasonably required for the purpose of developing or
promulgating a voluntary consensus standard, or using such
standard in conformity assessment activities.
``(2) Entering into any agreement or engaging in any other
conduct that would allocate a market with a competitor.
``(3) Entering into any agreement or conspiracy that would
set or restrain prices of any good or service.''.
SEC. 104. RULE OF REASON STANDARD.
Section 3 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4302) is amended by
striking ``of any person in making or performing a contract
to carry out a joint venture shall'' and inserting the
following: ``of--
``(1) any person in making or performing a contract to
carry out a joint venture, or
``(2) a standards development organization while engaged in
a standards development activity,
shall''.
SEC. 105. LIMITATION ON RECOVERY.
Section 4 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4303) is amended--
(1) in subsections (a)(1), (b)(1), and (c)(1) by inserting
``, or for a standards development activity engaged in by a
standards development organization against which such claim
is made'' after ``joint venture'', and
(2) in subsection (e)--
(A) by inserting ``, or of a standards development activity
engaged in by a standards development organization'' before
the period at the end, and
(B) by redesignating such subsection as subsection (f), and
(3) by inserting after subsection (d) the following:
``(e) Subsections (a), (b), and (c) shall not be construed
to modify the liability under the antitrust laws of any
person (other than a standards development organization)
who--
``(1) directly (or through an employee or agent)
participates in a standards development activity with respect
to which a violation of any of the antitrust laws is found,
``(2) is not a fulltime employee of the standards
development organization that engaged in such activity, and
``(3) is, or is an employee or agent of a person who is,
engaged in a line of commerce that is likely to benefit
directly from the operation of the standards development
activity with respect to which such violation is found.''.
SEC. 106. ATTORNEY FEES.
Section 5 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4304) is amended--
(1) in subsection (a) by inserting ``, or of a standards
development activity engaged in by a standards development
organization'' after ``joint venture'', and
(2) by adding at the end the following:
``(c) Subsections (a) and (b) shall not apply with respect
to any person who--
``(1) directly participates in a standards development
activity with respect to which a violation of any of the
antitrust laws is found,
``(2) is not a fulltime employee of a standards development
organization that engaged in such activity, and
``(3) is, or is an employee or agent of a person who is,
engaged in a line of commerce that is likely to benefit
directly from the operation of the standards development
activity with respect to which such violation is found.''.
SEC. 107. DISCLOSURE OF STANDARDS DEVELOPMENT ACTIVITY.
Section 6 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4305) is amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (1), (2), and (3) as
subparagraphs (A), (B), and (C), respectively,
(B) by inserting ``(1)'' after ``(a)'', and
(C) by adding at the end the following:
``(2) A standards development organization may, not later
than 90 days after commencing a standards development
activity engaged in for the purpose of developing or
promulgating a voluntary consensus standards or not later
than 90 days after the date of the enactment of the Standards
Development Organization Advancement Act of 2003, whichever
is later, file simultaneously with the Attorney General and
the Commission, a written notification disclosing--
``(A) the name and principal place of business of the
standards development organization, and
``(B) documents showing the nature and scope of such
activity.
Any standards development organization may file additional
disclosure notifications pursuant to this section as are
appropriate to extend the protections of section 4 to
standards development activities that are not covered by the
initial filing or that have changed significantly since the
initial filing.'',
(2) in subsection (b)--
(A) in the 1st sentence by inserting ``, or a notice with
respect to such standards development activity that
identifies the standards development organization engaged in
such activity and that describes such activity in general
terms'' before the period at the end, and
(B) in the last sentence by inserting ``or available to
such organization, as the case may be'' before the period,
(3) in subsection (d)(2) by inserting ``, or the standards
development activity,'' after ``venture'',
(4) in subsection (e)--
(A) by striking ``person who'' and inserting ``person or
standards development organization that'', and
(B) by inserting ``or any standards development
organization'' after ``person'' the last place it appears,
and
(5) in subsection (g)(1) by inserting ``or standards
development organization'' after ``person''.
SEC. 108. RULE OF CONSTRUCTION.
Nothing in this title shall be construed to alter or modify
the antitrust treatment under existing law of--
(1) parties participating in standards development activity
of standards development organizations within the scope of
this title, or
(2) other organizations and parties engaged in standard-
setting processes not within the scope of this amendment to
the title.
TITLE II--ANTITRUST CRIMINAL PENALTY ENHANCEMENT AND REFORM ACT OF 2003
SEC. 201. SHORT TITLE.
This title may be cited as the ``Antitrust Criminal Penalty
Enhancement and Reform Act of 2003''.
Subtitle A--Antitrust Enforcement Enhancements and Cooperation
Incentives
SEC. 211. SUNSET.
(a) In General.--Except as provided in subsection (b), the
provisions of sections 211 through 214 shall cease to have
effect 5 years after the date of enactment of this Act.
(b) Exception.--With respect to an applicant who has
entered into an antitrust leniency agreement on or before the
date on which the provisions of sections 211 through 214 of
this subtitle shall cease to have effect, the provisions of
sections 211 through 214 of this subtitle shall continue in
effect.
SEC. 212. DEFINITIONS.
In this subtitle:
(1) Antitrust division.--The term ``Antitrust Division''
means the United States Department of Justice Antitrust
Division.
(2) Antitrust leniency agreement.--The term ``antitrust
leniency agreement,'' or ``agreement,'' means a leniency
letter agreement, whether conditional or final, between a
person and the Antitrust Division pursuant to the Corporate
Leniency Policy of the Antitrust Division in effect on the
date of execution of the agreement.
(3) Antitrust leniency applicant.--The term ``antitrust
leniency applicant,'' or ``applicant,'' means, with respect
to an antitrust leniency agreement, the person that has
entered into the agreement.
(4) Claimant.--The term ``claimant'' means a person or
class, that has brought, or on whose behalf has been brought,
a civil action alleging a violation of section 1 or 3 of the
Sherman Act or any similar State law, except that the term
does not include a State or a subdivision of a State with
respect to a civil action brought to recover damages
sustained by the State or subdivision.
(5) Cooperating individual.--The term ``cooperating
individual'' means, with respect to an antitrust leniency
agreement, a current or former director, officer, or employee
of the antitrust leniency applicant who is covered by the
agreement.
(6) Person.--The term ``person'' has the meaning given it
in subsection (a) of the first section of the Clayton Act.
SEC. 213. LIMITATION ON RECOVERY.
(a) In General.--Subject to subsection (d), in any civil
action alleging a violation of section 1 or 3 of the Sherman
Act, or alleging a violation of any similar State law, based
on conduct covered by a currently effective antitrust
leniency agreement, the amount of damages recovered by or on
behalf of a claimant from an antitrust leniency applicant who
satisfies the requirements of subsection (b), together with
the amounts so recovered from cooperating individuals who
satisfy such requirements, shall not exceed that
[[Page S3613]]
portion of the actual damages sustained by such claimant
which is attributable to the commerce done by the applicant
in the goods or services affected by the violation.
(b) Requirements.--Subject to subsection (c), an antitrust
leniency applicant or cooperating individual satisfies the
requirements of this subsection with respect to a civil
action described in subsection (a) if the court in which the
civil action is brought determines, after considering any
appropriate pleadings from the claimant, that the applicant
or cooperating individual, as the case may be, has provided
satisfactory cooperation to the claimant with respect to the
civil action, which cooperation shall include--
(1) providing a full account to the claimant of all facts
known to the applicant or cooperating individual, as the case
may be, that are potentially relevant to the civil action;
(2) furnishing all documents or other items potentially
relevant to the civil action that are in the possession,
custody, or control of the applicant or cooperating
individual, as the case may be, wherever they are located;
and
(3)(A) in the case of a cooperating individual--
(i) making himself or herself available for such
interviews, depositions, or testimony in connection with the
civil action as the claimant may reasonably require; and
(ii) responding completely and truthfully, without making
any attempt either falsely to protect or falsely to implicate
any person or entity, and without intentionally withholding
any potentially relevant information, to all questions asked
by the claimant in interviews, depositions, trials, or any
other court proceedings in connection with the civil action;
or
(B) in the case of an antitrust leniency applicant, using
its best efforts to secure and facilitate from cooperating
individuals covered by the agreement the cooperation
described in clauses (i) and (ii) and subparagraph (A).
(c) Timelines.--If the initial contact by the antitrust
leniency applicant with the Antitrust Division regarding
conduct covered by the antitrust leniency agreement occurs
after a civil action described in subsection (a) has been
filed, then the court shall consider, in making the
determination concerning satisfactory cooperation described
in subsection (b), the timeliness of the applicant's initial
cooperation with the claimant.
(d) Continuation.--Nothing in this section shall be
construed to modify, impair, or supersede the provisions of
sections 4, 4A, and 4C of the Clayton Act relating to the
recovery of costs of suit, including a reasonable attorney's
fee, and interest on damages, to the extent that such
recovery is authorized by such sections.
SEC. 214. RIGHTS AND AUTHORITY OF ANTITRUST DIVISION NOT
AFFECTED.
Nothing in this subtitle shall be construed to--
(1) affect the rights of the Antitrust Division to seek a
stay or protective order in a civil action based on conduct
covered by an antitrust leniency agreement to prevent the
cooperation described in section 213(b) from impairing or
impeding the investigation or prosecution by the Antitrust
Division of conduct covered by the agreement; or
(2) create any right to challenge any decision by the
Antitrust Division with respect to an antitrust leniency
agreement.
SEC. 215. INCREASED PENALTIES FOR ANTITRUST VIOLATIONS.
(a) Restraint of Trade Among the States.--Section 1 of the
Sherman Act (15 U.S.C. 1) is amended by--
(1) striking ``$10,000,000'' and inserting
``$100,000,000'';
(2) striking ``$350,000'' and inserting ``$1,000,000''; and
(3) striking ``three'' and inserting ``10''.
(b) Monopolizing Trade.--Section 2 of the Sherman Act (15
U.S.C. 2) is amended by--
(1) striking ``$10,000,000'' and inserting
``$100,000,000'';
(2) striking ``$350,000'' and inserting ``$1,000,000''; and
(3) striking ``three'' and inserting ``10''.
(c) Other Restraints of Trade.--Section 3 of the Sherman
Act (15 U.S.C. 3) is amended by--
(1) striking ``$10,000,000'' and inserting
``$100,000,000'';
(2) striking ``$350,000'' and inserting ``$1,000,000''; and
(3) striking ``three'' and inserting ``10''.
Subtitle B--Tunney Act Reform
SEC. 221. PUBLIC INTEREST DETERMINATION.
Section 5 of the Clayton Act (15 U.S.C. 16) is amended--
(1) in subsection (d), by inserting at the end the
following: ``Upon application by the United States, the
district court may, for good cause (based on a finding that
the expense of publication in the Federal Register exceeds
the public interest benefits to be gained from such
publication), authorize an alternative method of public
dissemination of the public comments received and the
response to those comments.''; and
(2) in subsection (e)--
(A) in the matter before paragraph (1), by--
(i) inserting ``independently'' after ``shall'';
(ii) striking ``court may'' and inserting ``court shall'';
and
(iii) inserting ``(1)'' before ``Before''; and
(B) striking paragraphs (1) and (2) and inserting the
following:
``(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement
and modification, duration of relief sought, anticipated
effects of alternative remedies actually considered, whether
its terms are ambiguous and any other competitive
considerations bearing upon the adequacy of such judgment
necessary to a determination of whether the consent judgment
is in the public interest; and
``(B) the impact of entry of such judgment upon competition
in the relevant market or markets, upon the public generally
and individuals alleging specific injury from the violations
set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of
the issues at trial.
``(2) The Court shall not enter any consent judgment
proposed by the United States under this section unless it
finds that there is reasonable belief, based on substantial
evidence and reasoned analysis, to support the United States'
conclusion that the consent judgment is in the public
interest. In making its determination as to whether entry of
the consent judgment is in the public interest, the Court
shall not be limited to examining only the factors set forth
in this subsection, but may consider any other factor
relevant to the competitive impact of the judgment.''.
Mr. HATCH. Mr. President, I rise today to support passage of H.R.
1086, the Standards Development Organization Advancement Act of 2003.
This legislation, along with provisions added to it during the
Judiciary Committee markup and by the substitute amendment that I have
offered along with Senators Leahy, DeWine, and Kohl, provides several
important and significant improvements to our antitrust laws.
This legislation incorporates the limited antitrust protection for
Standards Development Organizations that Senator Leahy and I introduced
as S. 1799, and that Chairman Sensenbrenner introduced in the House as
H.R. 1086. Under this provision, the civil liability for Standards
Development Organizations or ``SDOs'' will be limited to single, rather
than treble, damages for standards-setting activities about which they
have informed the Department of Justice and Federal Trade Commission
using a newly-created notification procedure.
The bill also increases the maximum criminal penalties for antitrust
violations so that they are more in line with other comparable white
collar crimes. I will note that this provision of the legislation is
substantially the same as the one included in S. 1080, a Leahy-Hatch
bill.
This legislation also provides increased incentives for participants
in illegal cartels to blow the whistle on their co-conspirators and
cooperate with the Justice Department's Antitrust Division in
prosecuting the other members of these criminal antitrust conspiracies.
This is accomplished by allowing the Justice Department, in appropriate
circumstances, to limit a cooperating company's civil liability to
actual, rather than treble, damages in return for the company's
cooperation in both the resulting criminal case as well as any
subsequent civil suit based on the same conduct.
Finally, this substitute would amend the Tunney Act to end the
problem of courts simply ``rubber-stamping'' antitrust settlements
reached with the Justice Department. In my view, this amendment
essentially codifies existing case law, while reemphasizing the
original congressional intent that lead to passage of the Tunney Act.
When this provision was added to H.R. 1086 in the Senate Judiciary
Committee, I noted that, although I supported it in principal, I
thought that continued modifications of the actual language might be
necessary to respond to concerns that had been raised. I am pleased to
be able to state that, largely through the efforts of Senator Kohl and
his staff, a compromise on this language was reached that is
supported--or at least not strongly objected to--by the parties
involved.
With that introduction, I will briefly discuss the four principal
sections of the legislation.
The section Protection of Standards Development Organizations, which
comes from S. 1799, a bill that Senator Leahy and I introduced as a
Senate companion to H.R. 1086, is designed to extend limited antitrust
protection to Standards Development Organizations, or ``SDOs''.
In the United States, most technical standards are developed and
promulgated by private, not-for-profit organizations called SDOs.
Numerous concerns have been raised that the threat of treble damages
deters SDOs from their pro-competitive standard-setting activities.
This legislation addresses those concerns by providing a notification
process whereby SDOs may inform DOJ and the FTC regarding their
intended standards-development activities. If the authorities do not
object to the proposed activities but the SDO is subsequently sued by a
private plaintiff, the SDO's civil liability is limited
[[Page S3614]]
to single rather than treble damages. Importantly, this legislation
does not in any way immunize industry participants who cooperate in the
development of standards from antitrust liability for using the
standards-setting process for anti-competitive purposes.
I thank Senator Leahy and Chairman Sensenbrenner and their staffs for
their vigilant efforts toward passage of the Standards Development
Organization Advancement Act of 2003.
The legislation also amends the antitrust laws to provide
corporations and their executives with increased incentives to come
forward and cooperate with the Department of Justice in prosecuting
criminal antitrust cartels. It does so by enhancing the effectiveness
of the already-successful Corporate Leniency Policy issued by the
Justice Department's Antitrust Division.
In general, the leniency policy provides that a corporation and its
executives will not be criminally charged if the company is not the
ringleader of the conspiracy and it is the first of the conspirators to
approach the division and fully cooperate with the division's criminal
investigation. The program serves to destabilize cartels, and it causes
the members of the cartel to turn against one another in a race to the
Government. Cooperation obtained through the leniency program has led
to the detection and prosecution of massive international cartels that
cost businesses and consumers billions of dollars and has led to the
largest fines in the Antitrust Division's history.
Though this important program has been successful, a major
disincentive to self reporting still exists, the threat of exposure to
a possible treble damage lawsuit by the victims of the conspiracy.
Under current law, the successful leniency applicant is not criminally
charged, but it still faces treble damage actions with joint and
several liability. In other words, before voluntarily disclosing its
criminal conduct, a potential amnesty applicant must weigh the
potential ruinous consequences of subjecting itself to liability for
three times the damages that the entire conspiracy caused.
This provision addresses this disincentive to self-reporting.
Specifically, it amends the antitrust laws to modify the damage
recovery from a corporation and its executives to actual damages. In
other words, the total liability of a successful leniency applicant
would be limited to single damages without joint and several liability.
Thus, the applicant would only be liable for the actual damages
attributable to its own conduct, rather than being liable for three
times the damages caused by the entire unlawful conspiracy.
Importantly, this limitation on damages is only available to
corporations and their executives if they provide adequate and timely
cooperation to both the Government investigators as well as any
subsequent private plaintiffs bringing a civil suit based on the
covered criminal conduct. I should also note that, because all other
conspirator firms would remain jointly and severably liable for three
times the total damages caused by the conspiracy, the victims'
potential total recovery would not be reduced by the amendments
Congress is considering. And again, the legislation requires the
amnesty applicant to provide full cooperation to the victims as they
prepare and pursue their civil lawsuit.
With this change, more companies will disclose antitrust crimes,
which will have several benefits. First, I expect that the total
compensation to victims of antitrust conspiracies will be increased
because of the requirement that amnesty applicants cooperate. Second,
the increased self-reporting incentive will serve to further de-
stabilize and deter the formation of criminal antitrust conspiracies.
In turn, these changes will lead to more open and competitive markets.
The enhanced criminal penalties provision, which was originally part
of S. 1080, which I introduced with Senator Leahy, improves current law
by increasing the maximum prison sentences and fines for criminal
violations of antitrust law. This change puts the maximum prison
sentences for antitrust violations more in line with other white collar
crimes. By increasing these criminal penalties, we are recognizing the
profoundly harmful impact that antitrust violations have on consumers
and the economy.
This legislation also amends the Tunney Act to end what some have
seen as courts simply ``rubber-stamping'' antitrust settlements reached
with the Justice Department without providing meaningful review. As I
have stated, while I agree with the principle behind this proposal, I
had significant concerns with the specific language that was reported
out of the Judiciary Committee. After several months of discussions, I
am happy to say that the current language appears to have answered
most, if not all, of the principal concerns that were raised regarding
the amendments to the Tunney Act.
In conclusion, I would like to thank Senators Leahy, Kohl, and DeWine
and their staffs for their efforts on this bill. In particular, I would
like to thank Susan Davies of Senator Leahy's staff, Jeff Miller and
Seth Bloom of Senator Kohl's staff, and Pete Levitas and Bill Jones of
Senator DeWine's staff. I also appreciate the expert and energetic
efforts of my own antitrust counsel, Dave Jones. And finally, I thank
Makan Delrahim, my former chief counsel, for all of his ``technical
assistance.''
I urge my colleagues to support this bill.
Mr. LEAHY. Mr. President, I am delighted that Senator Hatch, Senator
Kohl, Senator DeWine, and I have been able to work together to develop
a version of this bill that can pass today as the Standards Development
Organization Advancement Act. Technical standards help to promote
safety, increase efficiency, and allow for interoperability in a
variety of products Americans use every day. Despite the fact that they
go largely unnoticed, we would be markedly less safe without airbags
that deploy properly in serious automobile collisions, more vulnerable
were there not technical standards for fire retardant materials in
homes. And consumers would be less likely to make the purchases that
drive our economy without the technical standards that ensure a light
bulb will fit in its socket or allow DVDs to function properly
regardless of the manufacturer.
In the United States, most technical standards are developed by
private, not-for-profit Standards Development Organizations, which
often possess superior knowledge and adaptability in highly technical
matters. Rather than Government overregulation of technical standards,
SDOs promulgate guidelines that frequently are then adopted by State
and Federal governments. Like many conveniences we take for granted,
technical standards are so deeply infused in our lives that they may
attract little or no individual attention.
While standards serve this vital societal role, there exists a
natural tension between the antitrust laws that prohibit businesses
from colluding and the development of technical standards, which
require competitors to reach agreement on basic design elements. The
Standards Development Organization Advancement Act reduces this
tension, providing relief for SDOs under current law while preserving
the trademark features of antitrust enforcement that benefit consumers.
Without creating an antitrust exemption, the Standards Development
Organization Act allows SDOs to seek review of their standards by the
Department of Justice or Federal Trade Commission prior to
implementation. If these agencies do not object to the standard during
this ``screening'' phase, but the organization is later sued by a
private plaintiff, the SDO would be limited to single damages, rather
than the treble damages levied under existing law.
Additionally, this bill amends the National Cooperative Research and
Production Act of 1993, by directing courts to apply a ``rule of
reason'' standard to SDOs and the guidelines they produce. Under
existing law, standards may be deemed anticompetitive by a court even
if they have the effect of better serving consumers. Courts should be
able to balance the competing interests of safety and efficiency
against any anticompetitive effect, making certain that the law is
doing everything possible to meet the needs of the one constituent we
all share--the American consumer. The Standards Development
Organization Advancement Act gives our courts the authority to do so.
We may fail to notice the technical standards that provide
dependability,
[[Page S3615]]
security, and convenience in our lives, but they serve an increasingly
vital role in a country driven by technological change but devoted to
safety and reliability.
Title II of the Standards Development Organization Advancement Act
also addresses several areas of our antitrust laws that merit updating,
as our experience with the actual practice in the world has shown.
First, the act strives to eliminate the disparity between the treatment
of criminal white collar offenses and antitrust criminal violations.
Without this legislation, offenders who violated the criminal
provisions of the antitrust laws would face much less significant
penalties than would their wire fraud or mail fraud counterparts. The
act increases the maximum penalty for a criminal antitrust violation
from 3 years to 10 years and raises the maximum fines to corporations
from $10 million to $100 million per violation. Senator Hatch and I had
introduced this provision in S. 1080, the Antitrust Improvements Act of
2003, and I am pleased that this useful update to the penalties for
criminal violations of the antitrust laws can be made as part of this
bill.
Title II will also update the Justice Department's amnesty program in
the criminal antitrust context. We have worked with the antitrust
division of the Department of Justice and our States' attorneys general
to give prosecutors the maximum leverage against participants in
criminal antitrust activity. The Department has long had an ``amnesty''
or ``leniency'' policy that is generally available to the first
conspirator involved in a criminal cartel that offers to cooperate with
the authorities. But under the current policy, the Department may only
agree to not bring criminal charges against a corporation, and its
officers and directors, in exchange for cooperation in providing
evidence and testimony against other members in the cartel. Under this
bill, to qualify for amnesty, a party must provide substantial
cooperation not only in any criminal case brought against the other
cartel members, but also in any civil case brought by private parties
that is based on the same unlawful conduct.
This bill would then give our prosecutors the authority to
effectively limit a cooperating party's potential civil liability as
well, and to limit that liability to single damages in any subsequent
civil lawsuit brought by a private plaintiff. And while a party that
receives leniency would only be liable for the portion of the damages
actually caused by its own actions, the rest of its non-cooperating co-
conspirators would remain jointly and severally liable for the entire
amount of damages, which would then be trebled, to ensure that no
injured party will fail to enjoy financial redress.
Finally, the Standards Development Organization Advancement Act makes
some useful adjustments to the Tunney Act. That law provides that
consent decrees in civil antitrust cases brought by the United States
must be reviewed and approved by the District Court in which the case
was brought. Under the Tunney Act, before entering a consent decree,
the court must determine that ``the entry of such judgment is in the
public interest.'' In making this determination, the court may, but is
not required to, consider a variety of enumerated factors. As currently
drafted, the court has discretion in making this public interest
determination, and some have expressed concerns that this lack of
guidance results in courts that are overly deferential to prosecutors'
judgments. Thus, this bill intends to explicitly restate the original
and intended role of District courts in this process by mandating that
the court make an independent judgment based on a series of enumerated
factors. In addition, the legislation makes clear that this amendment
to the Tunney Act will not change the law regarding whether a court may
be required, in a particular instance, to permit intervention or to
hold a hearing in a Tunney Act proceeding.
A final and important technical change would allow a judge to order
publication of the comments received in a Tunney Act proceeding by
electronic or other means. Currently, the Tunney Act requires the
Antitrust Division to publish in the Federal Register the public
comments received on its proposed consent judgments, along with the
Division's response to those comments. This can be very expensive--it
cost almost $3 million in the Microsoft case--with little benefit,
because those materials are, if anything, more accessible on the Web
than in a library. Of course, interested people who lack Internet
access will need to go to a library, but they would have had to do that
for a paper copy as well.
This is an important bill that makes necessary, well-conceived, and
bipartisan reforms.
Mr. KOHL. Mr. President, I rise today in strong support of the
Antitrust Criminal Penalty Enhancement and Reform Act of 2003. It
passed the Judiciary Committee unanimously in November 2003. Today,
along with Senators Hatch, Leahy, and DeWine, we offer a substitute
amendment to H.R. 1086. This legislation will enhance and improve the
enforcement of our nation's antitrust laws in several important
respects.
In light of the importance of this legislation to the administration
of our antitrust laws, as well as the infrequency with which we amend
major provisions of the antitrust laws, it is essential to describe in
detail the reasons we our advancing this bill. Our proposal will
accomplish four important goals. First, our legislation will restore
the ability of Federal courts to review the Justice Department's civil
antitrust settlements to be sure that these settlements are good for
competition and consumers. We will amend the Tunney Act, the law passed
in 1974 in response to concerns that some of these settlements were
motivated by inappropriate political pressure and failed to restore
competition or protect consumers. Congress concluded then, and it is
still true now, that judicial review will ensure that cases are settled
in the public interest. Unfortunately, in recent years, many courts
seem to have ignored this statute and do little more than ``rubber
stamp'' antitrust settlements. This practice is contrary to the intent
of the Tunney Act and effectively strips the courts of the ability to
engage in meaningful review of antitrust settlements. Our bill will
overturn this precedent and make clear that the courts have the
authority to do this vital job.
Second, our legislation enhances criminal penalties for those who
violate our antitrust laws. It will increase the maximum corporate
penalty from $10 million to $100 million; it will increase the maximum
individual fine from $350,000 to $1 million; and it will increase the
maximum jail term for individuals who are convicted of criminal
antitrust violations from 3 to 10 years. These changes will send the
proper message that criminal antitrust violations, crimes such as price
fixing and bid rigging, committed by business executives in a boardroom
are serious offenses that steal from American consumers just as surely
as does a street criminal with a gun.
Our legislation will give the Justice Department significant new
tools under its antitrust leniency program. The leniency program helps
the Government break up criminal cartels by encouraging wrongdoers to
cooperate with the authorities. Our bill will give the Justice
Department the ability to offer those applying for leniency the
additional reward of only facing actual damages in antitrust civil
suits, rather than treble damage liability. This will result in more
antitrust wrongdoers coming forward to reveal antitrust conspiracies,
and thus the detection and ending of more illegal cartels.
Finally, our bill incorporates a provision in the original House
passed version of H.R. 1086. This provision limits the liability that
standards setting organizations face under the antitrust laws to single
damages in most circumstances. It will protect these important
organizations from the threat of liability. However, it will not in any
way limit the damages available to any company that is a member of such
an organization for antitrust violations, nor limit damages should a
standard setting organization engage in conduct that is a per se
violation of antitrust law.
It is important to explain clearly and specifically why it is
necessary to amend the Tunney Act and what we intend to accomplish with
these changes. In recent years, courts have been reluctant to give
meaningful review to antitrust consent decrees, and have been only
willing to take action with respect to most egregious decrees that
[[Page S3616]]
make a ``mockery'' of the judicial function. Our bill will effectuate
the legislative intent of the Tunney Act and restore the ability of
courts to give real scrutiny to antitrust consent decree.
The Tunney Act was enacted in 1974 and provides that consent decrees
in civil antitrust cases brought by the United States must be reviewed
and approved by the district court in which the case was brought to
determine if they are in the public interest. However, the text of the
statute contains no standards governing how a court is to conduct this
review. While the legislative history of the law is clear that it was
meant to prevent ``judicial rubber stamping'' of consent decrees, the
leading precedent of the D.C. Circuit Court of Appeals currently
interprets the law in a manner which makes meaningful review of these
consent decrees virtually impossible. Leading cases stand for the
proposition that only consent decrees that ``make a mockery of the
judicial function'' can be rejected by the district court. The changes
in the Tunney Act incorporated in this legislation, as well as the
statement of Congressional findings, will make clear that such an
interpretation misconstrues the legislative intent of the statute.
The amendments to the Tunney Act found in our bill will restore the
original intent of the Tunney Act, and make clear that courts should
carefully review antitrust consent decrees to ensure that they are in
the public interest. It will accomplish this by, No. 1, a clear
statement of congressional findings and purposes expressly overruling
the improper judicial standard of recent D.C. Circuit decisions; No. 2,
by requiring, rather than permitting, judicial review of a list of
enumerated factors to determine whether a consent decree is in the
public interest; and No. 3, by enhancing the list of factors which the
court now must review.
The Tunney Act was enacted in 1974 to end the practice of courts
``rubber stamping'' antitrust consent decrees, and to remove political
influence from the Justice Department's decision as to whether to
settle antitrust cases. There were several prominent decisions in the
preceding years in which antitrust settlements by the Justice
Department came under strong criticism as inadequate or motivated by
illegitimate purposes, and which were not scrutinized by the courts.
One of the leading early cases applying the Tunney Act noted that
the legislators found that consent decrees often failed to
provide appropriate relief, either because of miscalculations
by the Justice Department [citation omitted] or because of
the ``great influence and economic power'' wielded by
antitrust violators [citing S. Rep. No. 93-298, 93d Cong.,
1st Sess. 5 (1973)]. The [legislative] history, indeed,
contains references to a number of antitrust settlements
deemed ``blatantly inequitable and improper'' on these bases
[citing 119 Cong. Rec. 24598 (1973) (Remarks of Sen.
Tunney)].
U.S. v. American Telephone and Telegraph, 552 F.Supp. 131, 148 (D.D.C.
1982), aff'd sub nom., Maryland v. U.S., 460 U.S. 1001 (1983).
While there were several notable cases which gave rise to the concern
that the government was settling for inadequate remedies for antitrust
violations, see U.S. v. AT&T, 552 F.Supp. at 148 n. 72; 119 Cong. Rec.
24598, Remarks of Sen. Tunney, the most prominent case was the
Government's settlement in 1971 of an antitrust suit brought against
ITT. Critics alleged that the Nixon administration had been influenced
by campaign contributions to the Nixon reelection effort in 1972. The
reasons for the settlement were not publicly disclosed, and the
settlement was strongly criticized by consumer advocates. The
settlement's critics attempted to have the settlement overturned by the
district court, but the court rejected these efforts. ``[T]here was no
meaningful judicial scrutiny of the terms of the consent decree and no
consideration of whether it was in the public interest.'' Anderson,
supra, 65 Antitrust Law Journal at 8.
The legislative history of the original Tunney Act is clear that the
purpose of the statute was to give courts the opportunity to engage in
meaningful scrutiny of antitrust settlements, so as to deter and
prevent settlements motivated either by corruption, undue corporate
influence, or which were plainly inadequate. In introducing the bill,
Senator Tunney highlighted his concern that antitrust settlements could
result from the economic power of the companies under scrutiny. He
noted that ``[i]ncreasing concentration of economic power, such as
occurred in the flood of conglomerate mergers, carries with it a very
tangible threat of concentration of political power. Put simply, the
bigger the company, the greater the leverage it has in Washington.''
119 Cong. Rec. 3451, Feb. 6, 1973.
Senator Tunney also pointed with concern at the lack of scrutiny the
courts were applying to antitrust settlements. He argued that ``too
often in the past district courts have viewed their rules [sic] as
simply ministerial in nature--leaving to the Justice Department the
role of determining the adequacy of the judgment from the public's
view.'' Id. at 3542. Thus, his legislation was intended to
substantially expand the role of the court in considering an antitrust
consent decree. Senator Tunney described the criteria in the bill under
which the courts to review the settlements, and stated that
The thrust of those criteria is to demand that the court
consider both the narrow and the broad impacts of the decree.
Thus, in addition to weighing the merits of the decree from
the viewpoint of the relief obtained thereby and its
adequacy, the court is directed to give consideration to the
relative merits of other alternatives and specifically to the
effect of the entry of the decree upon private parties
aggrieved by the alleged violations and upon the enforcement
of antitrust laws generally.
In a later floor debate on the legislation, Senator Tunney cited the
testimony of Judge J. Skelley Wright of the U.S. Court of Appeals for
the D.C. Circuit, who had testified at an earlier hearing of the Senate
Antitrust and Monopoly Subcommittee expressing concern as to whether
antitrust settlements ``might shortchange the public interest.'' 119
Cong. Rec. 24597, July 18, 1973. Commenting on this testimony, Senator
Tunney stated that ``I think Judge Wright gets to the heart of the
problem--it is the excessive secrecy with which many consent decrees
have been fashioned, and the almost mechanistic manner in which some
courts have been, in effect, willing to rubber stamp consent
judgments.'' Id. at 24598 (emphasis added). The bill passed the Senate
that day on a 92 to 8 vote.
The later House debate in which the bill was passed echoed Senator
Tunney's concern. Congressman Seiberling of Ohio commented that, in
considering antitrust consent decrees, ``too often the courts have, in
fact, simply rubber-stamped such agreements, and the public or
competitors that might be affected have had an effective way to get
their views before the court . . .'' 120 Cong. Rec. 36341, Nov. 19,
1974. Similar sentiments were expressed by Congressman McClory, id.,
Congressman Jordan, id. at 36343, and Congressman Heinz, id. at 36341.
Congressman Holtzman of New York commented that these procedures would
``insure that our antitrust laws are not for sale.'' Id. at 36342.
The House and Senate Committee Reports on the legislation also echo
the floor debate. The Report of the House Judiciary Committee states
that
[o]ne of the abuses sought to be remedied by the bill has
been called ``judicial rubber stamping'' by district courts
of proposals submitted by the Justice Department. The bill
resolves this area of dispute by requiring district court
judges to determine that each proposed consent judgment is in
the public interest.
House Rep. No. 93-1463, 93rd Cong., 1st Sess. (1974), reprinted in 1974
U.S. Code Cong. & Admin. News 6535, 6538.
In one of the first cases to construe the statute, the Government's
case to break up the AT&T phone monopoly, Judge Greene of the U.S.
District Court for the District of Columbia reviewed, and then
summarized, the legislative history of the Tunney Act. He concluded
that:
To remedy these problems [that led to the passage of the
Tunney Act], Congress imposed two major changes in the
consent decree process. First, it reduced secrecy by ordering
disclosure by the Justice Department of the rationale and the
terms of proposed consent decrees and by mandating an
opportunity for public comment. Second, it sought to
eliminate ```judicial rubber stamping' of proposals submitted
to the courts by the Department,'' by requiring an explicit
judicial determination in every case that the proposed decree
was in the public interest. It is clear that Congress wanted
the courts to act as an independent check upon the terms of
decrees negotiated by the Department of Justice. . . .
U.S. v. AT&T, 552 F. Supp. at 148-149 (emphasis added) (citations
omitted).
This conclusion is supported by a recent law journal article co-
authored by
[[Page S3617]]
John J. Flynn, who was special counsel to the Senate Antitrust
Subcommittee during the period when the Tunney Act was drafted and
adopted. Professor Flynn writes that, in enacting the Tunney Act,
Congress rejected the ``notion that courts must give deference to the
DOJ when determining if a consent decree is in the public interest.
Instead, Congress wanted the courts to make an independent, objective,
and active determination without deference to the DOJ.'' Flynn and
Bush, The Misuse and Abuse of the Tunney Act: The Adverse Consequences
of the ``Microsoft Fallacies'', 34 Loyola U. Chicago L. J. 749, 758
(2003).
The early case law that followed the adoption of the Tunney Act in
1974 imposed fairly stringent requirements on courts reviewing
antitrust settlements reached by the Justice Department.
The leading early case is the district court's review of the
Government's proposed settlement with AT&T in the massive antitrust
case that broke up the telephone monopoly, U.S. v. AT&T, supra (D.D.C.
1983). Judge Greene of the U.S. District Court for the District of
Columbia rejected an argument for a highly deferential review of the
proposed consent decree. The court stated that
uIt does not follow . . . that courts must unquestionably
accept a proffered decree as long as it somehow, and however
inadequately, deals with the antitrust and other public
policy problems implicated in the lawsuit. To do so would be
to revert to the ``rubber stamp'' role which was at the crux
of the congressional concerns when the Tunney Act became law.
U.S. v. AT&T, 552 F. Supp. at 151.
Instead the standard the court applied to determine if the public
interest was served by the consent decree was rather exacting. The
court stated it would only enter the proposed consent decree ``if the
decree meets the requirements for an antitrust remedy that is, if it
effectively opens the relevant markets to competition and prevents the
recurrence of anticompetitive activity, all without imposing undue and
unnecessary burdens upon other aspects of the public interest.'' Id. at
153.
The more recent precedent under the Tunney Act have sharply retreated
from Judge Green's opinion in AT&T to a much more deferential standard
of review. It is this misinterpretation of the Tunney Act that our bill
corrects. In describing the recent Tunney Act precedent, one
commentator has called it a ``retreat toward rubber stamping.''
Anderson, supra, 65 Antitrust Law Journal at 19. We agree. It is this
overly deferential standard review which makes reform of the Tunney Act
necessary so that the legislative intent can be effectuated and courts
can provide an independent safeguard to prevent against improper or
inadequate settlements. The changes we make to the Tunney Act today
address these problems and correct the mistaken precedents.
The precedent continues to recognize that the Tunney Act is intended
``to prevent ``judicial rubber stamping' of the Justice Department's
proposed consent decree,'' and for the court to `` `make an independent
determination as to whether or not entry of a proposed consent decree
[was] in the public interest.' '' U.S. v. Microsoft, 56 F.3d 1448, 1458
(D.C. Cir. 1995), quoting S. Rep. No. 298 at 5. Further, in reviewing
the proposed consent decree, the court should inquire into ``the
purpose, meaning, and efficacy of the decree.'' Microsoft, 56 F.3d at
1463.
However, these same decisions improperly and strictly circumscribe
the role of the trial court and give it little leeway to fail to
approve an antitrust consent decree. The D.C. Circuit has stated that:
[T]he district judge is not obligated to accept [an
antitrust consent decree] that, on its face and even after
government explanation, appears to make a mockery of judicial
power. Short of that eventuality, the Tunney Act cannot be
interpreted as an authorization for a district judge to
assume the role of Attorney General.
Id., 56 F.3d at 1462 (emphasis added). In other words, under this
precedent, unless the proposed decree would ``make a mockery of
judicial power,'' the consent decree must be entered by the Court. In
another portion of this opinion, in language much cited by lower
courts, the D.C. Circuit held that the court should not insist that the
consent decree is the one that will ``best serve society,'' but only
confirm that the resulting settlement is ``within the reaches of the
public interest.'' Id. at 1460, citations omitted; emphasis in
original.
In a subsequent decision, the D.C. Circuit summarized a district
court's review under the Tunney Act, as follows:
The district court must examine the decree in light of the
violations charged in the complaint and should withhold
approval only if any of the terms appear ambiguous, if the
enforcement mechanism is inadequate, if third parties will be
positively injured, or if the decree otherwise makes ``a
mockery of judicial power.''
Massachusetts School of Law v. U.S., 118 F.3d 776, 783 (D.C. Cir. 1997)
(emphasis added) (quoting Microsoft, 56 F.3d at 1462). This is plainly
quite a limited standard of review, which contains no admonition to
review the likely effects of the consent decree on competition, and
makes it very unlikely that a court would fail to enter almost any
consent decree.
In the opinion of a leading academic commentator on the Tunney Act,
the court of appeals in Microsoft made a potentially serious
mistake by formulating a rule that, so long as procedural
niceties are followed, all antitrust consent decrees must be
approved unless they are a ``mockery.'' Once the real threat
of meaningful scrutiny is eliminated, the benefits of
deterrence and mediation would be destroyed and the Tunney
Act would be nullified.
Anderson, supra, 65 Antitrust Law Journal at 38. Professor Flynn, who
was involved in drafting the Tunney Act, agrees with this criticism of
the D.C. Circuit's approach. Professor Flynn states that ``from the
language of the Tunney Act and its legislative history, this is
precisely the sort of deferential standard the drafters of the Tunney
Act did not want. . . . [T]he D.C. Circuit chose to ignore the
legislative intent and cast judicial review of consent decrees back to
the days when rubber-stamping was prevalent.'' Flynn and Bush, supra,
34 Loyola U. Chi. L. J. at 780-781.
As originally written, the Tunney Act serves two goals deterrence and
mediation. The prospect of judicial scrutiny deters the Justice
Department from heeding political pressure to enter into a
``sweetheart'' settlement. And real Tunney Act review also provides an
opportunity for a judge to act as a mediator, obtaining modifications
to deficient settlements. As Professor Anderson points out, ``[i]f the
government and antitrust defendants come to perceive that meaningful
[judicial] scrutiny is not a real threat, the door will be wide open
for attempts to swing sweetheart deals and for the public to lose
confidence in antitrust enforcement by the government.'' 65 Antitrust
Law Journal at 38.
In sum, as the Tunney Act is currently interpreted, it is difficult
if not impossible for courts to exercise meaningful scrutiny of
antitrust consent decrees. The ``mockery'' standard is contrary to the
intent of the Tunney Act as found in the legislative history. Our
legislation will correct this misinterpretation of the statute. Our
legislation will insure that the courts can undertake meaningful and
measured scrutiny of antitrust settlements to insure that they are
truly in the public interest, and to remind the courts of Congress'
intention in passing the Tunney Act.
In an effort to explain how the revisions to the Tunney Act in H.R.
1086 correct the mistaken standard used by certain courts in applying
the law, it is important to describe each of the specific provisions of
section 221 of H.R. 1086. Today we have introduced, with Senators
Hatch, Leahy, and DeWine, a Managers' Amendment to H.R. 1086. These
comments address H.R. 1086 as amended.
First, section 221(a) of our bill contains Congressional Findings and
Declarations of Purposes. These provisions clarify that we are
determined to effectuate the original Congressional intent of the
Tunney Act. In other words, after the enactment of this legislation,
courts will once again independently review antitrust consent decrees
to ensure that they are in the public interest. The Congressional
Findings expressly state that for a court to limit its review of
antitrust consent decrees to the lesser standard of determining whether
entry of the consent judgments would make a ``mockery of the judicial
function'' misconstrues the meaning and intent in enacting the Tunney
Act. The language quoted paraphrases the D.C. Circuit decisions in
[[Page S3618]]
Massachusetts School of Law v. U.S., 118 F.3d 776, 783 (D.C. Cir. 1997)
and U.S. v. Microsoft, 56 F.3d 1448, 1462 (D.C. Cir. 1995). To the
extent that these precedents are contrary to section 221(a) of our bill
regarding the standard of review a court should apply in reviewing
consent decrees under the Tunney Act, these decisions are overruled by
this legislation. While this legislation is not intended to require a
trial de novo of the advisability of antitrust consent decrees or a
lengthy and protracted review procedure, it is intended to assure that
courts undertake meaningful review of antitrust consent decrees to
assure that they are in the public interest and analytically sound.
Section 221(b)(2)(A) of our bill amends the existing subsection of
Section 5 of the Clayton Act (codified at 15 U.S.C. Sec. 16(e))
containing the requirement that courts review antitrust consent decrees
to determine that these consent decrees are in the public interest. Our
bill modifies the law by stating that, in making this determination,
the court ``shall'' look at a number of enumerated factors bearing on
the competitive impact of the settlement. The current statute merely
states that the court ``may'' review these factors in making its
determination. Requiring, rather than permitting, the court to examine
these factors will strengthen the review that courts must undertake of
consent decrees and will ensure that the court examines each of the
factors listed therein. Requiring an examination of these factors is
intended to preclude a court from engaging in ``rubber stamping'' of
antitrust consent decrees, but instead to seriously and deliberately
consider these factors in the course of determining whether the
proposed decree is in the public interest.
Our bill, in section 221(b)(2)(B), also revises and enhances the
factors which the court is now required to review in making its public
interest determination. In addition to the factors enumerated under
current law, the court must examine whether the terms of the proposed
decree are ambiguous. While complete precision when dealing with future
conduct may be impossible to achieve, an overly ambiguous decree is
incapable of being enforced and is therefore ineffective. A mandate to
review the impact of entry of the consent judgment upon ``competition
in the relevant market or markets'' is also added by our bill. This
will ensure that the Tunney Act review is properly focused on the
likely competitive impact of the judgment, rather than extraneous
factors irrelevant to the purposes of antitrust enforcement. Finally,
this list is not intended to be exclusive, as the court is directed to
review any other competitive consideration ``that the court deems
necessary to a determination of whether the consent judgment is in the
public interest.''
Under the existing statute, the trial court is granted broad
discretion as to how to conduct Tunney Act proceedings. Our amendments
make no changes to these procedures. In deciding whether to approve the
consent decree, the court may, but is not required to, hold a hearing
on the proposed decree. Id. Sec. 16(f). In such a hearing, the court
may take the testimony of Government officials or expert witnesses. The
court may also take testimony from witnesses or other ``interested
persons or agencies'' and examine documents relevant to the case. The
court may also review the public comments filed during the sixty-day
period pursuant to the Tunney Act. In addition, the court may appoint a
special master or outside consultants as it deems appropriate. Finally,
the court is granted the discretion to ``take such other action in the
public interest as the court may deem appropriate.'' Id. While the
court may do any of the preceding, it is not required to follow any of
these procedures.
Our amendments to section five of the Clayton Act add language
stating that nothing in that section will be ``construed to require the
court to conduct an evidentiary hearing or to require the court to
permit anyone to intervene.'' This language is not intended to make any
changes to existing law, but merely to restate the current
interpretation of the law. Under the statute, the court is not required
to conduct an evidentiary hearing, but is permitted to do so or to take
testimony if it wishes to do so. See 15 U.S.C. Sec. 16(f). This will
remain the procedure, a court will be permitted, but not required, to
conduct evidentiary hearings in making its Tunney Act determination.
Additionally, the statute currently permits in 15 U.S.C. Sec. 16(f)(3)
intervention by interested parties in the Tunney Act review proceeding.
This will remain the procedure a court will be permitted, but not
required, to allow parties to intervene.
Our amendments also make two other minor and technical changes to
Tunney Act procedures. First, section 221(b)(1) of the bill permits the
district court to authorize an alternative means of publication, rather
than publication in the Federal Register, of the public comments
received in response to the announcement of the proposed consent
decree. A court may only authorize such alternative means of
publication if it finds the expense of Federal Register publication
exceeds the public interest benefits to be gained from such
publication. This provision is intended to avoid unnecessary expense in
publishing proposed consent decrees if alternate means are available,
such as, for example, posting the proposed decrees electronically,
which are sufficient to inform interested persons of the proposed
consent decree.
The second technical amendment, found in section 221(b)(3) of our
bill, amends the provision of the Tunney Act codified in 15 U.S.C.
Sec. 16(g) which requires that defendants notify the court of all
communications with the Government relevant to the consent decree,
except for communications between the defendant's counsel of record and
the Justice Department. Our bill adds language which clarifies the
statute's language to make clear that only communications with the
defendant, or any officer, director, employee, or agent of such
defendant, or other person representing the defendant must be
disclosed. The defendant is not required to disclose contacts with the
Government concerning the settlement by persons not affiliated with,
representing, or acting on behalf of the defendant, for example,
competitors of the defendant. The defendant's obligation to disclose
contacts by agents or persons representing the defendant, including
outside lobbyists, is unaffected by this technical change.
In sum, our bill will mandate that courts engage in meaningful review
of the Justice Department's antitrust consent decrees and not merely
``rubber stamp'' the decrees. It will make clear that it is a
misinterpretation of the Tunney Act to limit a court's review to limit
judicial review of these consent decrees to whether they make a mockery
of judicial function, and therefore overrule recent D.C. Circuit
decisions holding to the contrary. The bill is expressly intended to
effectuate the legislative intent of the Tunney Act and ensure the
ability of courts to effectively review consent decrees to ensure that
they are in the public interest. It will require, rather than permit, a
court to review a list of enumerated factors to determine whether a
consent decree is in the public interest. By restoring a robust and
meaningful standard of judicial review, our bill will ensure that the
Justice Department's antitrust consent decrees are in the best
interests of consumers and competition.
Mr. DeWine. Mr. President, I rise today, along with Senator Hatch,
Senator Leahy and Senator Kohl, as a sponsor of H.R. 1086, the
Standards Development Organization Advancement Act of 2003. H.R. 1086
was passed unanimously by the Judiciary Committee in November 2003, and
I am proud to say that H.R. 1086 encompasses many of the provisions of
S. 1797, the Antitrust Criminal Penalty Enhancement and Reform Act of
2003, which Senator Kohl and I introduced in October 2003. H.R. 1086 is
a comprehensive bill that will enhance and improve the enforcement of
U.S. antitrust law in four key areas.
First, and perhaps most important, this bill will raise the penalties
for criminal violations of antitrust law and bring those penalties more
into line with penalties for other, comparable white collar offenses.
Antitrust crimes such as bid rigging or cartel activity cheat consumers
and distort the free market just as surely as any other type of
commercial fraud, and should be strongly punished. Under current
antitrust laws, the maximum criminal penalties for individuals guilty
of
[[Page S3619]]
price-fixing are three years incarceration and $350,000 in fines. For
corporations, the maximum fine is $10 million. This bill will, No. 1,
raise the maximum prison term to 10 years; No. 2, raise the maximum
fine for individuals to $1,000,000; and No. 3, raise the maximum
corporate fine to $100 million. By increasing the prison terms for
individuals, this bill brings criminal antitrust penalties closer in
line with the maximum penalties assessed for mail fraud and wire fraud,
which are both 20 years. Executives and other antitrust offenders need
to know that they face serious consequences when they collude with
their competitors, and this bill will send that message to the
marketplace.
Second, this bill improves on an investigative and prosecutorial tool
already being employed effectively by the Justice Department. Since
1993 the Antitrust Division has successfully used a revised corporate
amnesty program to help infiltrate and break-up criminal antitrust
conspiracies. In short, if a corporate conspirator self-reports its
illegal activity to the Antitrust Division and meets certain
conditions--it must be the first conspirator to confess, it cannot be
the ringleader of the conspiracy, and it must agree to cooperate fully
with the investigation, among other things--it will receive a ``free
pass'' from prosecution. This program has been extremely successful in
cracking conspiracies, because it creates a strong uncertainty dynamic
among co-conspirators; members of the cartel can never be sure that one
of the other conspirators will not confess its illegal activity to the
Antitrust Division in order to avoid criminal liability. This
uncertainty decreases the likelihood of cartels forming to begin with,
and makes cartels less stable when they do form.
H.R. 1086 helps to enhance the Division's corporate amnesty program
by expanding its reach. The current amnesty program does not affect the
civil liability of the conspirators; that is, a corporation cooperating
with the Division through the amnesty program receives protection from
government prosecution, but may still be sued in court by private
parties for treble damages. This bill decreases that liability by
limiting the damages a private plaintiff may recover from a corporation
that has cooperated with the Antitrust Division. Specifically, the
conspirator is not liable for the usual treble-damages; instead, it is
only liable for actual damages. This modification recognizes that a
corporation that has fully cooperated with the Antitrust Division is
less culpable than other conspirators, and provides a far greater
incentive for corporations to cooperate with the Antitrust Division.
Third, H.R. 1086 addresses a concern raised recently by a string of
court opinions that appear to limit the depth of review required by the
Tunney Act. In brief, the Tunney Act requires that prior to
implementing an antitrust consent decree a court must review that
decree to assure that it is in the public interest; historically, that
requirement has been understood to require that the courts engage in
more than merely ``rubber-stamping'' those decrees. A number of recent
opinions have led some to question the depth of review required by the
Tunney Act. This bill makes clear that the Tunney Act requires what it
has always required, and that mere rubber-stamping is not acceptable.
In addition, H.R. 1086 makes a small number of minor modifications and
revisions to ensure both that the Tunney Act accurately reflects its
original intent and that it effectively functions in the modern legal
and economic environment.
Finally, this bill will treat Standard Development Organizations
(SDOs) more favorably under the antitrust laws. SDOs are private,
voluntary non-profit organizations that set standards for industry
products--e.g., one SDO sets the standard for the required depth of a
swimming pool before a diving board may be installed. Under the bill,
qualifying SDOs which pre-notify the Antitrust Division of their
standard-setting activities will not be subject to treble damages in
private suits brought against them. Moreover, SDO activities will be
scrutinized for antitrust violations under the less strict ``rule of
reason'' legal standard, and SDOs may be awarded certain costs and
attorney fees if they substantially prevail in litigation which is
later held to be frivolous.
In all of these ways, H.R. 1086 modernizes and enhances the
enforcement of U.S. antitrust laws, and I am proud to sponsor it.
Mr. McCONNELL. I ask unanimous consent that the Hatch-Leahy amendment
at the desk be agreed to, the committee-reported substitute, as
amended, be agreed to, the bill, as amended, be read a third time and
passed, the motions to reconsider be laid upon the table en bloc, and
any statements relating to the bill be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 3010) was agreed to.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
The committee amendment, in the nature of a substitute, as amended,
was agreed to.
The bill (H.R. 1086), as amended, was read the third time and passed.
____________________