[Congressional Record Volume 150, Number 73 (Friday, May 21, 2004)]
[Extensions of Remarks]
[Pages E934-E935]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CLARIFICATION OF ANTITRUST REMEDIES IN TELECOMMUNICATIONS ACT OF 2004

                                 ______
                                 

                    HON. F. JAMES SENSENBRENNER, JR.

                              of wisconsin

                    in the house of representatives

                         Thursday, May 20, 2004

  Mr. SENSENBRENNER. Mr. Speaker, the application of the antitrust laws 
in the telecommunications sector has produced enormous competitive 
benefits. Market competition has fostered innovative technologies, 
greatly enhanced product and service choices, and reduced prices for 
millions of American telecommunications consumers. The threat of treble 
damages for antitrust violations has provided a powerful deterrent 
against anticompetitive misconduct in this marketplace.
  Indeed, the primary catalyst for the structural changes that have 
produced the enormous competitive gains and expanded consumer choice in 
the telecommunications fields was the principled application of the 
antitrust laws. The legal basis for the elimination of Ma Bell's 
national telephone monopoly was rooted in the antitrust laws. While the 
former AT&T had operated in a highly intensive Federal and State 
regulatory regime for decades, the government relied on the antitrust 
laws to provide the robust procompetitive remedy that regulation could 
not, did not, and will not provide alone.
  The Telecommunications Act of 1996 (the ``Telecom Act''), was enacted 
``to promote competition and reduce regulation in order to secure lower 
prices and higher quality services for American telecommunications 
consumers . . . by opening all telecommunications markets to 
competition.'' In passing the Telecom Act, Congress did not create an 
``antitrust free zone'' in which the regulatory provisions of the 
Telecom Act limited the historic application of the antitrust laws in 
deterring and punishing monopolistic misconduct in the 
telecommunications field.
  Rather, to reaffirm the centrality of the antitrust laws in the 
overall regulatory scheme created by the Telecom Act, Congress included 
an explicit antitrust saving clause in the legislation. In clear and 
forceful legislative guidance, Congress said:

       ``. . . Nothing in this Act or the amendments made by this 
     Act shall be construed to

[[Page E935]]

     modify, impair, or supersede the applicability of any of the 
     antitrust laws.''

  The inadequacy of regulation to fully deter anticompetitive 
misconduct is widely recognized. In fact, Federal Communications 
Commission Chairman Michael Powell, whose agency has authority to 
implement the Telecom Act, concluded in a 2001 letter to the Senate 
Appropriations Committee that the FCC's current fining authority for 
anticompetitive violations is ``insufficient to punish and deter 
violations in many instances . . . given the vast resources of many of 
the nation's [incumbents.]''
  Despite Congress's unmistakable resolve to preserve the vital role of 
the antitrust laws in this field, a record of considerable judicial 
confusion has developed in our nation's courts. In 2000, the Seventh 
Circuit issued the Goldwasser decision, ignoring the plain language of 
the antitrust savings clause and holding that the Telecom Act ``must 
take precedence over the general antitrust laws.''
  In Law Offices of Curtis Trinko v. Verizon, the Second Circuit Court 
of Appeals sharply departed from Goldwasser's flawed reasoning and 
upheld the plain language of the Telecom Act, thus preserving an 
antitrust cause of action for anticompetitive misconduct in the 
telecommunications market in addition to the regulatory regime created 
by the Telecom Act.
  In March of 2003, the Supreme Court granted certiorari to review the 
case. In November of 2003, the Committee on the Judiciary conducted an 
oversight hearing titled: ``Saving the Savings Clause: Congressional 
Intent, the Trinko Case, and the Role of the Antitrust Laws in 
Promoting Competition in the Telecom Sector.'' This hearing examined 
the need to preserve an antitrust remedy for anticompetitive misconduct 
that may also violate provisions of the Telecom Act. During the 
committee's hearing, I stated that ``judicial circumvention or erosion 
of the savings clause contained in the 1996 Act will necessitate a 
swift and decisive legislative correction from this Committee and 
Congress.''
  In January, 2004, the Supreme Court handed down its Trinko decision. 
While the Court upheld the antitrust savings clause on its face, the 
decision makes it nearly impossible to state an antitrust claim for 
anticompetitive conduct within the regulatory ambit of the Telecom Act.
  In reaching its conclusion, the majority looked to the perceived 
institutional capacity of regulators to remedy anticompetitive 
misconduct. Specifically, the majority decision stated: ``One factor of 
particular importance is the existence of a regulatory structure 
designed to deter and remedy anticompetitive harm. Where such a 
structure exists, the additional benefit to competition provided by 
antitrust enforcement will tend to be small, and it will be less 
plausible that the antitrust laws contemplate such additional scrutiny. 
. . .'' The Court also stated that the ``regulatory framework that 
exists in this case demonstrates how, in certain circumstances, 
`regulations significantly diminished the likelihood of major antitrust 
harm.' '' The Court then concluded that ``against the slight benefits 
of antitrust intervention here, we must weigh a realistic assessment of 
its costs.''
  This is precisely the judicial analysis that the antitrust savings 
clause in the Telecom Act precluded. This fundamental judicial error 
ignores the plain meaning of the antitrust savings clause contained in 
the Telecom Act and the intent of Congress, and undermines remedial 
antitrust enforcement in a manner that threatens continued competitive 
gains in the telecommunications marketplace.
  Last November, I stated that ``judicial circumvention of the 
antitrust savings clause in the Telecom Act will necessitate a decisive 
legislative correction from this Committee and Congress.'' The 
legislation I introduce today, with the consponsorship of Ranking 
Member Conyers, delivers on this commitment. This bill reiterates 
Congress's intent that the full force of the antitrust laws apply to 
the telecommunications field. The ``Clarification of Antitrust Remedies 
in Telecommunications Act of 2004'' merely provides that unlawful 
monopolistic behavior that may also violate the regulatory obligations 
of the Telecom Act may constitute an antitrust violation. The 
legislation provides an antitrust remedy for these violations 
irrespective of the existence of regulations that apply to this 
industry. In so doing, the legislation merely reiterates the plain 
meaning of the antitrust savings clause and the broad bipartisan intent 
of Congress to preserve the application of the antitrust laws in the 
telecommunications field irrespective of the existence of the Telecom 
Act.
  To be clear, the legislation does not automatically transform 
violations of the 1996 Act into antitrust violations: this is not, nor 
has it even been, the intent of preserving application of the antitrust 
laws in the regulatory scheme created by the Telecom Act. The 
``Clarification of Antitrust Remedies in Telecom Act of 2004'' merely 
reaffirms that violations of the Telecommunications Act may constitute 
an antitrust violation in appropriate circumstances: this legislation 
restores the result Congress intended; it does not transform the 
antitrust laws nor create antitrust obligations that the 
Telecommunications Act did not contemplate.
  Over the last five decades, the Committee on the Judiciary has played 
a central role promoting competition in the telecommunications market. 
It has drafted procompetitive legislation and overseen its 
implementation. The committee has also diligently preserved the 
application of the antitrust laws in the telecommunications 
marketplace. The ``Clarification of Antitrust Remedies in 
Telecommunications Act of 2004'' continues this important tradition by 
ensuring that the antitrust laws continue to provide a catalyst to 
promote competition and consumer choice in this vital marketplace.
  In that vein, I wish to comment briefly on a related matter. The 
committee continues to monitor the status of negotiations between 
incumbent and competitive local exchange carriers requested by the 
Federal Communications Commission in light of the D.C. Circuit Court of 
Appeals March 2, 2004, invalidation of key aspects of the most recent 
FCC Triennial Review Order. While the Committee on the Judiciary does 
not intend to prejudice the outcome of these continuing talks, it 
reserves the right to review these agreements to ensure that they are 
consistent with the antitrust laws and promote competition and consumer 
choice in the telecommunications marketplace.
  I look forward to working with my colleagues to ensure that the 
antitrust laws produce the irreversibly open telecommunications markets 
that we all seek, and urge their support for this critical legislation.

                          ____________________