[Congressional Record Volume 150, Number 75 (Wednesday, June 2, 2004)]
[House]
[Pages H3654-H3660]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STANDARDS DEVELOPMENT ORGANIZATION ADVANCEMENT ACT OF 2003
Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and
concur in the Senate amendment to the bill (H.R. 1086) to encourage the
development and promulgation of voluntary 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.
The Clerk read as follows:
Senate amendment:
Strike out all after the enacting clause and insert:
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
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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. 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. The term `standards development
organization' shall not, for purposes of this Act, include
the parties participating in the standards development
organization.
``(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'',
(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, including the existing standard under which the
conduct of the parties is reviewed, regardless of the
standard under which the conduct of the standards development
organizations in which they participate are reviewed, 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.
[[Page H3656]]
(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 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) Timeliness.--If the initial contact by the antitrust
leniency applicant with the Antitrust Division regarding
conduct covered by the antitrust leniency agreement occurs
after a State, or subdivision of a State, has issued
compulsory process in connection with an investigation of
allegations of a violation of section 1 or 3 of the Sherman
Act or any similar State law based on conduct covered by the
antitrust leniency agreement or 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, AUTHORITIES, AND LIABILITIES 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;
(2) create any right to challenge any decision by the
Antitrust Division with respect to an antitrust leniency
agreement; or
(3) affect, in any way, the joint and several liability of
any party to a civil action described in section 213(a),
other than that of the antitrust leniency applicant and
cooperating individuals as provided in section 213(a) of this
title.
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.
(a) Congressional Findings and Declaration of Purposes.--
(1) Findings.--Congress finds that--
(A) the purpose of the Tunney Act was to ensure that the
entry of antitrust consent judgments is in the public
interest; and
(B) it would misconstrue the meaning and Congressional
intent in enacting the Tunney Act to limit the discretion of
district courts to review antitrust consent judgments solely
to determining whether entry of those consent judgments would
make a ``mockery of the judicial function''.
(2) Purposes.--The purpose of this section is to effectuate
the original Congressional intent in enacting the Tunney Act
and to ensure that United States settlements of civil
antitrust suits are in the public interest.
(b) 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.'';
(2) in subsection (e)--
(A) in the matter before paragraph (1), by--
(i) striking ``court may'' and inserting ``court shall'';
and
(ii) 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
that the court deems 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) Nothing in this section shall be construed to require
the court to conduct an evidentiary hearing or to require the
court to permit anyone to intervene.''; and
(3) in subsection (g), by inserting ``by any officer,
director, employee, or agent of such defendant'' before ``,
or other person''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Sensenbrenner) and the gentleman from Virginia (Mr.
Scott) each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr.
Sensenbrenner).
General Leave
Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on H.R. 1086.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 1086, the Standards
Development Organization Advancement Act of 2003. This legislation
contains several important revisions to America's antitrust laws.
Title I of the legislation contains limited antitrust protection for
standards development organizations. Technical standards play a
critical role in fostering competition and promoting public health and
safety. Without standards there would be no compatibility among broad
categories of products and less confidence in a range of building,
fire, and safety codes that promote the public welfare.
In the United States, most standards development is conducted by
private nonprofit organizations known as Standards Development
Organizations, or SDOs. This approach reflects the fact that private
organizations are better able to keep up with the rapid pace of
technological change. Congress has recognized the importance of SDOs
and requires Federal agencies to adopt standards issued by these
organizations whenever possible.
Over the last several years, the critical efforts of SDOs have been
undermined by sometimes frivolous antitrust lawsuits. The growing
frequency of these claims against SDOs stifles their ability to obtain
technical information, hampers their effectiveness, and undermines the
public goals that the SDOs advance.
I introduced this bill to remedy this problem. This legislation
codifies the rule of reason for antitrust scrutiny of SDOs which
requires courts to assess
[[Page H3657]]
whether the standards-setting activities of an SDO are procompetitive.
It also limits the SDOs civil liability to actual, rather than treble,
damages, and provides for the recovery of attorneys fees to
substantially prevailing parties in antitrust actions against these
organizations.
To receive these limited safeguards, H.R. 1086 requires the SDO to
inform Federal antitrust authorities of the scope and nature of their
activities and to devise and issue standards in a fair and open process
prescribed by the legislation.
The Senate amendment we consider today also contains important
bipartisan provisions that deter antitrust violations while
strengthening antitrust enforcement efforts. Title II harmonizes the
treatment of criminal antitrust offenders and other white collar
criminals by increasing maximum prison terms for criminal antitrust
violations from 3 to 10 years while increasing maximum individual fines
for antitrust violations from $350,000 to $1 million. These provisions
send an unmistakable message to those who consider violating the
antitrust laws that if they are caught they will spend much more time
considering the consequences of their actions within the confinement of
their prison cells.
Title II also increases maximum corporate fines for antitrust
violations from $10 million to $100 million. This considerable increase
sends a clear signal to corporate officers and board members that a
decision to violate antitrust laws will be severely punished.
Title II of the legislation also contains important modifications to
the antitrust leniency program used by the Department of Justice to
facilitate the detection and prosecution of antitrust violations. Under
existing practice, parties that cooperate with Federal antitrust
authorities to uncover violations may not be subject to government
prosecution, but remain liable in civil actions brought by private
parties. The bill creates an additional incentive for corporations to
disclose antitrust violations by limiting their liability in related
civil claims to actual damages. Furthermore, while a cooperating party
would be liable only for damages attributable to that party's conduct,
noncooperating conspirators will remain jointly and severally liable
for treble damages for the misconduct of all of the conspirators.
As a result, the full scope of antitrust remedies against
nonparticipating parties will remain available to the government and
private antitrust plaintiffs.
Finally, the legislation clarifies the Tunney Act. This act gives
Federal district courts some authority to review the merits of civil
antitrust settlements with the United States before they enter final
consent decrees.
{time} 1515
Specifically, district courts in which an antitrust suit is brought
must assess whether these decrees are ``in the public interest.'' The
bill provides legislative guidance to the district courts by listing
specific factors to be considered during this analysis. In addition,
the legislation facilitates the transmission of comments received
during Tunney Act proceedings by allowing Federal judges to order their
publication by electronic or other means.
Mr. Speaker, H.R. 1086 contains important provisions that enhance the
effectiveness of the antitrust laws and the authority of antitrust
enforcement agencies to implement them.
The legislation is truly bipartisan and bicameral in nature, and
while several people deserve credit for this legislation, I would like
to recognize the late Committee on Science Chief Counsel Barry
Beringer. Barry's hard work and dedication brought this legislation to
the floor last year, and his decades of dedication and service brought
great credit to this House. I urge my colleagues to support the
legislation.
Pursuant to the general leave already granted, I will be placing into
the Record a statement of legislative history that the gentleman from
Michigan (Mr. Conyers) and I have agreed to, and I ask that it appear
in the Record at the end of my statement.
Supplemental Legislative History for H.R. 1086, the ``Standards
Development Organization Advancement Act of 2003'' as Enrolled by the
House and Senate
When the House passed H.R. 1086, the ``Standards
Development Organization Advancement Act of 2003,'' it only
contained provisions directed at including standards-
development activities undertaken by certain standards
development organizations (SDOs) within the treatment
accorded certain joint ventures by the National Cooperative
Research and Production Act ``NCRPA.'' The Senate-passed
version of H.R. 1086, which substantially incorporates the
provisions of the House-passed version in its Title I, also
contains an additional title, the ``Antitrust Criminal
Penalty Enhancement and Reform Act of 2003.'' The following
legislative history is submitted on behalf of the House
Committee on the Judiciary jointly by Chairman Sensenbrenner
and Ranking Member Conyers:
Section-by-Section Analysis of H.R. 1086
title I--``standards development organization advancement act of 2003''
Section 101 contains the short title.
Section 102 sets forth the findings and purposes of the
bill as they relate to standards development activities and
standards development organizations (SDOs). The findings
explain the purpose(s) behind the original enactment and
subsequent amendment of the National Cooperative Research and
Production Act (NCRPA). The findings also discuss how passage
of the National Technology Transfer and Advancement Act of
1995 (NTTAA) unintentionally heightened the vulnerability of
SDOs to antitrust litigation. The findings also explain how
SDOs generally do not stand to benefit from any antitrust
violation that might occur during the voluntary consensus
standards development process. Finally, this section finds
that continuing to subject SDOs to potential treble damages
liability under the antitrust laws could impede pro-
competitive standards development activity.
Section 103 adds to the existing definitions contained in
section 2 of the NCRPA: The term ``standards development
activity'' is defined as ``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.'' The
definition of ``standards development activity'' excludes the
following activities: exchanges of information, including
competitively-sensitive information, among competitors
relating to cost, sales, profitability, prices, marketing, or
distribution of any product, process, or service that is not
reasonably required in order to develop or promulgate a
voluntary consensus standard or in order to use the standard
in conformity assessment activities; agreements or other
conduct that would allocate a market among competitors; and
agreements or conspiracies that would set or restrain prices
of any good or service.
The definition of ``standards development activity'' is
broad enough to encompass any action taken by an SDO in
``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 SDO.'' The ``Standards Development
Organization Advancement Act of 2003'' is not intended to
change or influence existing intellectually property policies
currently utilized by various SDOs (including but not limited
to, patent searches), nor to affect or influence new
intellectual property policies that may be developed in
the future. Such policies are vitally important to
ensuring a level playing field among all users of a
standard that incorporates patented technology. In
addition, the legislation is not intended to change or
alter the application of existing antitrust laws with
respect to intellectual property. The legislation also
seeks to encourage disclosure by intellectual property
rights owners of relevant intellectual property rights and
proposed licensing terms. It further encourages discussion
among intellectual property rights owners and other
interested standards participants regarding the terms
under which relevant intellectual property rights would be
made available for use in conjunction with the standard or
proposed standard.
The term ``standards development organization'' is defined
as ``a domestic or international organization that plans,
develops, establishes or coordinates voluntary consensus
standards . . . in a manner consistent with Office Management
and Budget (OMB) Circular Number A-119, as revised on
February 10, 1998.'' The definition includes only the
voluntary consensus standards body conducting the particular
standards development activity, and does not include firms
participating in the standards development activity.
The term ``technical standard'' is defined by reference to
section 12(d)(4) of the NTTAA. The term ``voluntary consensus
standard'' is defined with reference to revised OMB Circular
A-119.
Section 104 amends section 3 of the NCRPA to apply the rule
of reason standard to SDOs with respect to covered standards
development activities in which they are engaged.
Section 105 amends section 4 of the NCRPA to include
properly structured standard-setting activity undertaken by
SDOs as eligible for the protections set forth in that
section, provided that such activities have been previously
disclosed to the antitrust agencies in
[[Page H3658]]
accordance with the requirements of the NCRPA, as amended.
Section 106 amends section 5 of the NCRPA to include SDOs,
in their involvement in covered standards development
activities, within the scope of the NCRPA scheme for awarding
attorneys' fees to substantially prevailing parties.
Section 107 amends section 6 of the NCRPA to apply the same
disclosure requirements to SDOs as a condition for obtaining
the detrebling of damages. In order to obtain the detrebling,
the required disclosures must occur not later than 90 days
after either the date the SDO commences the standards
development activity or the date H.R. 1086 is enacted,
whichever is later.
Section 108 provides that the legislation shall not be
construed to alter or modify the antitrust treatment of
parties participating in a covered standards development
activity, except for the SDO conducting the activity, nor of
anyone engaged in standard-setting processes that are not
within the scope of the legislation.
title II--``antitrust criminal penalty enhancement and reform act of
2003''
Subtitle A--Antitrust Enforcement Enhancements and Cooperation
Incentives
Section 201 contains the short title.
Sections 211-214 strengthen the Antitrust Division's
corporate criminal leniency program, by providing that an
antitrust leniency applicant who cooperates satisfactorily
with the Division in its criminal investigation and
prosecution can also receive limited damages exposure in a
related private civil action in exchange for satisfactorily
cooperating with the private plaintiffs. As Senator Kohl, the
co-sponsor of S. 1797 (which included the leniency
provisions) stated, these provisions ``will remove a
significant disincentive to those who would be likely to seek
criminal amnesty and should result in a substantial increase
in the number of antitrust conspiracies being detected.''
(Statement of Senator Kohl (co-sponsor of S. 1797) upon
introduction of the measure, 149 Cong. Rec. S13520 (daily ed.
October 29, 2003)).
Section 211 states that sections 211-214 of the title shall
sunset five years after the date of enactment, except with
respect to ``an applicant who has entered into an antitrust
leniency agreement on or before'' the sunset date.
Section 212, defines: ``Antitrust Division'' as ``the
United States Department of Justice Antitrust Division'';
``antitrust leniency agreement'' as ``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; ``antitrust leniency applicant''
as ``the person who has entered into the agreement''
described above; ``claimant'' as 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
(Section 1 of the Sherman Act (15 U.S.C. Sec. 1) prohibits
contracts or combinations in restraint of trade; section 3
(15 U.S.C. Sec. 3) applies Sec. 1 to the District of Columbia
and to territories) or any similar State law,'' but
specifically excludes plaintiffs who are states or
subdivisions of states with respect to civil actions brought
to recover damages sustained by the state or subdivision
(i.e., civil actions not brought as parens patriae);
``cooperating individual'' as ``a current or former director,
officer, or employee of the antitrust leniency applicant who
is covered by the agreement''; and ``person'' as the term is
defined in subsection (a) of the first section of the Clayton
Act (15 U.S.C. Sec. 12).
Section 213 states that conduct covered by a ``currently
effective antitrust leniency agreement'' will subject an
antitrust leniency applicant and its cooperating individuals,
as defendants in a private or state enforcement antitrust
action, to liability only for the actual portion of damages
suffered by the claimant ``attributable to the commerce done
by the applicant in the goods or services affected by the
violation'' so long as the court in which the civil action is
brought determines ``that the applicant or cooperating
individual . . . has provided satisfactory cooperation to the
claimant. . . .'' The section does not alter existing
provisions of the antitrust laws with respect to recovery of
costs, including reasonable attorneys' fees.
Satisfactory cooperation shall include ``providing a full
account to the claimant of all facts known to the applicant
or cooperating individual . . . that are potentially relevant
to the civil action'' and ``furnishing all documents or other
items that are potentially relevant to the civil action . . .
that are in the possession, custody, or control of the
applicant or cooperating individual . . . wherever they are
located.'' The section's use of the term ``potentially
relevant'' is intended to preclude a parsimonious view of the
facts or documents to which a claimant is entitled. Documents
or other items in the applicant's possession, custody, or
control must be produced even if they are otherwise arguably
located outside the jurisdiction of the U.S. courts.
If the leniency applicant has applied for a leniency
agreement ``after a State, or subdivision of a State, has
issued compulsory process in connection with an investigation
of allegations of violations of either sections 1 or 3 of the
Sherman Act or any similar State law based on conduct covered
by the antitrust leniency agreement or after a civil action .
. . has been filed,'' the court must consider the timeliness
of the applicant's initial cooperation with the claimant.
Thus, this section is not intended to allow antitrust
defendants in a private lawsuit or state parens patriae
investigation or enforcement action to apply to the
Department of Justice at the last minute to avoid full
treble-damage liability.
The court in which the civil action is brought is empowered
to determine whether the necessary cooperation has occurred.
The power of the court is the same whether the court is a
state or federal court and whether the antitrust claims have
been brought under state or federal laws. That cooperation
includes providing full factual disclosure of all facts,
documents, or other things that are relevant or potentially
relevant. Because many leniency agreements may be with
organizations rather than individuals, the section provides
that any antitrust leniency applicant must use its ``best
efforts'' to obtain and facilitate cooperation from
individuals. Recognizing that there are discovery tools
that plaintiffs can use in discovery of entities, this
section is intended to require cooperation of entities in
such discovery. For example, under Fed. R. Civ. P.
30(b)(6), a corporation or another entity may be noticed
or subpoenaed to provide a corporate representative to
testify on its behalf. If the leniency applicant is an
organization, individuals employed by the organization may
also qualify for reduced private damages exposure if they
cooperate to the court's satisfaction.
Section 214 clarifies that the subtitle does not affect the
right 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 leniency
applicant's cooperation ``from impairing or impeding'' a
Division investigation or prosecution. It also states that
the subtitle does not create any right to challenge the
decision of the Division concerning whether to grant a
leniency agreement; nor does it affect the joint and several
liability of any of the parties to civil antitrust actions
covered by the subtitle other than the ``antitrust leniency
applicant and cooperating individuals. . . .'' In combination
with section 213, the rule of construction in this section
preserving the application of joint and several liability as
to all defendants other than the leniency applicant provides
an additional incentive to corporations and individuals who
have violated the antitrust laws to be the first to cooperate
with the government and private litigants. While the
antitrust leniency applicant who cooperates with civil
plaintiffs will be liable only for single damages caused by
its own unlawful conduct, the remaining defendants will be
fully, jointly and severally liable for the treble damages
the conspiracy caused, minus only the amount actually paid by
the leniency applicant. This could have the effect of
increasing the amount of damages the remaining defendants are
ultimately required to pay.
Section 215 increases, for violations of sections 1-3 of
the Sherman Act, statutory maximum monetary penalties from
$350,000 to $1 million for individuals and business
organizations other than corporations, and from $10 million
to $100 million for corporations; and increases maximum jail
sentences from three years to 10 years. These increases
reflect Congress' belief that criminal antitrust violations
are serious white collar crimes that should be punished in a
manner commensurate with other felonies. This section will
require the United States Sentencing Commission to revise the
existing antitrust sentencing guidelines to increase terms of
imprisonment for antitrust violations to reflect the new
statutory maximum. No revision in the existing guidelines is
called for with respect to fines, as the increases in the
Sherman Act statutory maximum fines are intended to permit
courts to impose fines for antitrust violations at current
Guideline levels without the need to engage in damages
litigation during the criminal sentencing process.
For example, Congress does not intend for the Commission to
revisit the current presumption that twenty percent of the
volume of commerce is an appropriate proxy for the pecuniary
loss caused by a criminal antitrust conspiracy. This
presumption is sufficiently precise to satisfy the interests
of justice, and promotes efficient and predictable imposition
of penalties for criminal antitrust violations. Comments to
the guidelines provide that if the actual overcharge caused
by cartel behavior can be shown to depart substantially from
the presumed ten percent overcharge that underlies the twenty
percent presumption, this should be considered by the court
in setting the fine within the guideline fine range.
Subtitle B--Tunney Act Reform
Section 221 makes clear that Congress intends for the
district court reviewing an antitrust consent decree to go
beyond merely considering whether entry of the decree would
``make a mockery of the judicial function,'' (this is
currently the standard in the Court of Appeals for the D.C.
Circuit) and that the purpose of this section is ``to
effectuate the original Congressional intent in enacting the
Tunney Act. . . .''
The Public Interest Determination provision first amends
the existing Tunney Act by allowing, for good cause shown,
dissemination of public comments on proposed antitrust
consent decrees and responses to them by an alternative to
publication in the Federal Register; replaces ``may'' with
``shall'' in its directions to district courts reviewing
consent decrees; adds to the factors that a reviewing court
must consider, in determining whether the proposed decree is
in the
[[Page H3659]]
public interest, ``whether its terms are ambiguous'' and
``the impact of entry of such judgment upon competition in
the relevant market or markets''; clarifies that nothing in
the section shall be construed as requiring the court to hold
an evidentiary hearing or to permit anyone to intervene; and
specifies that the written or oral communications made on
behalf of a defendant, which the defendant is required to
describe to the court under section 5(g) of the Clayton Act,
include communications ``by any officer, director, employee,
or agent of such defendant, or other person.''
Mr. Speaker, I reserve the balance of my time.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 1086, the Standards
Development Organization Advancement Act of 2003. This measure has
strong bipartisan support in the Committee on the Judiciary, the House
and the Senate, as is evidenced by its cosponsors. It provides
important and significant improvements to our antitrust laws. We passed
the bill last year, and it passed the Senate more recently with
amendments, and we are here today to approve the identical version of
the bill.
Title I of the bill recognizes that organizations set thousands of
standards that keep us safe and provide uniformity for everything from
fire protections to computer systems to building construction. When all
DVDs are the same size, competitors can manufacture to the standard and
compete. When all plugs are the same size, anybody can sell a lamp
without having to insist on a particular brand name because they know
all lamps have the standard plugs. Without the relief in this bill,
industries may be reluctant to agree on a standard out of fear that
treble antitrust damages may be available.
So this title provides a common sense safe harbor for standards
development organizations. Those who voluntarily disclose their
activities to Federal antitrust authorities will only be subject to
single damages should a successful antitrust suit arise. Those who
refuse to disclose their activities or those who take actions beyond
their disclosures will be subject to the treble damages under the
antitrust statutes.
The bill does not exempt anyone from antitrust laws but applies the
rule of reason to standards development organizations that are acting
in an open and forthright manner. If a violation is found, the
organizations are still liable for damages, but single damages, rather
than treble damages, which would now apply. However, organizations that
commit specific serious antitrust violations, such as conspiring about
standards on price, market share or territory division, will still be
fully liable for their actions.
The rationale for the more favorable treatment of standards
development organizations under these circumstances is that standards
development organizations, as nonprofits that serve a cross-section of
an industry, are unlikely themselves to engage in anticompetitive
activities; and, without the risk of treble damages, they can be more
innovative in their effort to develop standards which enhance product
quality and safety while reducing costs.
Title II of the bill, the Antitrust Criminal Penalty Enhancement and
Reform Act of 2003, increases the maximum criminal penalties for
antitrust violations so that the disparity is eliminated between the
treatment of criminal white collar offenses and antitrust criminal
offenses.
This title also incorporates a leniency provision that encourages
participants in an illegal conspiracy to turn in their co-conspirators.
This provision allows the Department of Justice to limit the damages of
the cooperating company's civil liability to actual, rather than
treble, damages. The Department of Justice will only grant such
leniency if the company provides adequate and timely cooperation to
both the government and any subsequent private plaintiffs in civil
suits. And because the remaining conspirators remain jointly and
severally liable to treble damages, the victims' potential recovery is
not reduced by leniency in this situation.
Finally, Title II of the bill reforms the Tunney Act to strengthen
the Act's requirements that courts review antitrust consent decrees in
a meaningful manner, not simply as a rubber stamp to such decrees.
H.R. 1086 is an important bill that modernizes and enhances
enforcement of U.S. antitrust laws. I would like to commend the
gentleman from Wisconsin (Chairman Sensenbrenner) and the gentleman
from Michigan (Ranking Member Conyers) for their leadership and
cooperative efforts on this bill, and I urge my colleagues to support
it.
Mr. BOEHNER. Mr. Speaker, I submit the following letters for the
Record:
Committee on Education and the Workforce, House of
Representatives,
Washington, DC, May 28, 2004.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means, Longworth House Office
Building, Washington, DC.
Dear Chairman Thomas: Thank you for your May 17, 2004
letter regarding H.R. 3908, the ``To provide for the
conveyance of the real property located at 1081 West Main
Street in Ravenna, Ohio.'' I agree that the Committee on Ways
and Means has jurisdiction over matters concerning the Social
Security Act and the effect this bill would have on
provisions within your Committee's jurisdiction. While these
provisions are within the jurisdiction of the Committee on
Ways and Means, I appreciate your willingness to work with me
in moving H.R. 3908 forward without the need for additional
legislative consideration by your Committee.
I agree that this procedural route should note be construed
to prejudice the jurisdictional interest and prerogatives of
the Committee on Ways and Means on these provisions or any
other similar legislation and will not be considered as
precedent for consideration of matters of jurisdictional
interest to your Committee in the future.
I thank you for working with me regarding this matter and
look forward to continuing our work and cooperation on this
bill and similar legislation. This letter and your response
will be included in the Congressional Record during the floor
consideration of this bill. If you have questions regarding
this matter, please do not hesitate to call me.
Sincerely,
John Boehner,
Chairman.
____
House of Representatives,
Committee on Ways and Means,
Washington, DC, May 17, 2004.
Hon. John A. Boehner,
Chairman, Committee on Education and the Workforce, Rayburn
House Office Building, Washington, DC.
Dear Chairman Boehner: I am writing concerning H.R. 3908,
``To provide for the conveyance of the real property located
at 1081 West Main Street in Ravenna, Ohio,'' which was
introduced on March 4, 2004, and referred to the Committee on
Education and the Workforce.
As you know, the Committee on Ways and Means has
jurisdiction over matters concerning the Social Security Act.
Sec. 1 of H.R. 3908 would convey a property purchased using
federal funds authorized under Titles III and IX of the
Social Security Act, and thus falls within the jurisdiction
of the Committee on Ways and Means. However, in order to
expedite this legislation for floor consideration, the
Committee will forgo action on this bill. This is being done
with the understanding that it does not in any way prejudice
the Committee with respect to the appointment of conferees or
its jurisdictional prerogatives on this or similar
legislation.
I would appreciate your response to this letter, confirming
this understanding with respect to H.R. 3908, and would ask
that a copy of our exchange of letters on this matter be
included in the Congressional Record during floor
consideration.
Best regards,
Bill Thomas,
Chairman.
Mr. CONYERS. Mr. Speaker, I rise in support of H.R. 1086, the
standards Development Organization Advancement Act of 2003. This
measure has enjoyed bipartisan support in the Judiciary Committee, the
House, and the Senate. It provides important and significant
improvements to our antitrust laws.
Title I of the bill recognizes that standards development
organizations set thousands of standards that keep us safe and provide
uniformity for everything from fire protections to computer systems to
building construction. This Title provides a common sense safe harbor
for these organizations. Those that voluntarily disclose their
activities to federal antitrust authorities will only be subject to
single damages should a lawsuit later arise. Those who refuse to
disclose their activities, or those who take actions beyond their
disclosure, will still be subject to treble damages under the antitrust
statutes.
This bill does not exempt anyone from the antitrust laws, but it does
apply the rule of reason to standards development organizations.
Therefore the pro-competitive market effects will be balanced against
the anti-competitive market effects of an action before a violation of
the antitrust laws is found. Organizations that commit per se
violations--making agreements or standards about price, market share or
territory division, for example--will still be fully liable for their
actions.
[[Page H3660]]
The rationale for such favored treatment is that standards
development organizations, as non-profits that serve a cross-section of
an industry, are unlikely themselves to engage in anti-competitive
activities. However, if free from the threat of treble damages, they
can increase efficiency and facilitate the gathering of a wealth of
technical expertise from a wide array of interests to enhance product
quality and safety while reducing costs.
Title II, the Antitrust Criminal Penalty Enhancement and Reform Act
of 2003, increases the maximum criminal penalties for antitrust
violations so that the disparity is eliminated between the treatment of
criminal white collar offenses and antitrust criminal violations. At
this point, I do not see any reason to revise downward the current
Sentencing Guideline presumption that twenty percent of the volume of
commerce is an appropriate proxy for the pecuniary loss caused by a
criminal antitrust conspiracy.
This Title also incorporates a leniency provision that encourages
participants in illegal cartels to turn against their co-conspirators.
This provision allows the Department of Justice to limit the damages of
the cooperating company's civil liability to actual, rather than treble
damages. The Department of Justice will only grant such leniency if the
company provides adequate and timely cooperation to both the government
and any subsequent private plaintiffs in civil suits. And because the
remaining conspirators remain jointly and severally liable for treble
damages, the victims' potential total recovery is not reduced by
leniency applicant's reduced damages. The central purpose of this
provision is to bolster the leniency program already utilized by the
Antitrust Division so that antitrust prosecutors can more effectively
go after antitrust violators. The Department of Justice has assured me
that it will always use these new tools cognizant of the needs of
victims.
Finally, Title II of the bill reforms the Tunney Act to strengthen
the Act's requirement that courts review antitrust consent decrees in a
meaningful manner, rather than simply ``rubber-stamping'' such decrees.
H.R. 1086 is an important bill that modernizes and enhances the
enforcement of U.S. antitrust laws. I'd like to thank the Chairman for
his cooperative efforts on this bill and in writing the supplemental
legislative history. We worked hard together on both and I'm very proud
of the final product. I urge my colleagues to support this bill.
Ms. JACKSON-LEE of Texas. Mr. Speaker, as a co-sponsor of this
legislation, I support H.R. 1086, ``The Standards Development
Organization Advancement Act of 2003.''
This Act amends the National Cooperative Standards Development Act to
provide antitrust protections to specific activities of standard
development organizations (SDOs) relating to the development of
voluntary consensus standards.
Among other provisions, H.R. 1086 amends the NCRA to limit the
recovery of antitrust damages against SDOs if the organizations pre-
disclose the nature and scope of their standards development activity
to the proper antitrust authorities. H.R. 1086 also amends the NCRA to
include SDOs in the framework of NCRA that awards reasonable attorneys'
fees to the substantially prevailing party.
The provisions of H.R. 1086 protect SDOs, and in turn, SDOs help
protect consumers and the public. SDOs are non-profit organizations
that establish voluntary industry standards. These standards ensure
competition within various industries, promote manufacturing
compatibility, and reduce the risk that consumers will be stranded with
a product that is incompatible with products from other manufacturers.
The nature of the standards development process requires competing
companies to bring their competitive ideas to the voluntary standards
development process. When one of the companies believes its market
position has been compromised by the standards development process that
company will likely resort to litigation. It is not uncommon for the
SDO to be named as a Defendant. For non-profit organizations like SDOs,
litigation can be very costly and disruptive to their operations, and
treble antitrust damages can be financially crippling.
Under H.R. 1086, the recovery of damages against SDOs is limited if
the organizations pre-disclose the nature and scope of their standards
development activity to the proper antitrust authorities. Furthermore,
SDOs are only liable for treble damages under antitrust laws if they
fail to disclose the nature and scope of their voluntary standards
setting activity.
H.R. 1086 strikes a good balance. It does not grant SDOs full
antitrust immunity, but it provides SDOs with protection from treble
damages when they provide proper disclosure.
H.R. 1086 also benefits the consumer. It enables the SDOs to develop
industry standards that promote price competition, intensify corporate
rivalry, and encourage the development of new products.
Mr. Speaker, I support H.R. 1086.
Mr. SCOTT of Virginia. Mr. Speaker, I yield back the balance of my
time.
Mr. SENSENBRENNER. Mr. Speaker, I have no further requests for time,
and I yield back the balance of my time as well.
The SPEAKER pro tempore (Mr. Simpson). The question is on the motion
offered by the gentleman from Wisconsin (Mr. Sensenbrenner) that the
House suspend the rules and concur in the Senate amendment to the bill,
H.R. 1086.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate amendment was
concurred in.
A motion to reconsider was laid on the table.
____________________