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Kohl, Hatch Announce Antitrust Subcommittee Agenda For The 111th Congress

Press Release

Location: Washington, DC

U.S. Senator Herb Kohl (D-WI), Chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, and Senator Orrin Hatch (R-UT), Ranking Member, have announced an active agenda of hearings and legislation for the new session of Congress.

"In these challenging economic times, the need for strong antitrust law to protect competition has never been greater. In the 111th Congress, the Antitrust Subcommittee will continue to work to ensure that the antitrust laws are vigorously enforced throughout the economy. We will also pursue several important reforms to antitrust law to ensure that undue barriers to competition are eliminated. Our goal will be to ensure that our antitrust laws are vigorously applied so that consumers see the benefits of full and free competition with lower prices and improved quality and innovation," Senator Kohl said. "I look forward to working with Senator Hatch and continuing our Subcommittee's proud tradition of strong and bipartisan antitrust oversight."

"Once again, I am looking forward to working with Chairman Kohl to ensure that our antitrust laws are enforced and consumers are protected. Why are such laws important? In a word: competition. Competition is the mechanism that allows our economy to grow in the most productive and efficient manner. Competition also ensures that consumers receive the highest quality goods at the best price. As I have always said, antitrust laws ensure one of the fundamental tenants of the American dream: if you build a better product, you will be successful in the American market place. Therefore, I look forward to continuing the Subcommittee's important work."

In 2009, the Subcommittee plans to address the following issues:

* Discount Pricing of Consumer Goods

The Subcommittee will continue its examination of the elimination of the nearly century-old ban against manufacturers setting a minimum retail price as a result of the 2007 Supreme Court decision in the Leegin case. Allowing retail price maintenance has the potential to seriously harm discount pricing and retail competition. Senator Kohl intends to seek passage of the Discount Pricing Consumer Protection Act (S. 148), his bill to restore the ban on vertical price fixing.

* Railroad Competition

The Subcommittee will examine the competitiveness of the freight railroad industry and whether shippers, communities, and small businesses who depend on rail transportation have been the victims of anti-competitive practices when dealing with dominant railroad shippers. These practices raise the cost of rail shipping, costs which are ultimately passed on to consumers in the form of higher electric rates, higher food prices, and higher prices for manufactured goods. Senator Kohl intends to seek passage of the Railroad Antitrust Enforcement Act (S. 146), legislation to remove obsolete antitrust exemptions protecting the freight railroad industry, exemptions that eliminate the ability of those aggrieved by anti-competitive practices or transactions to obtain antitrust remedies.

* Gasoline, Natural Gas, and Oil Markets/Energy

In this time of extreme volatility in the market for crude oil and gasoline and in the wake of last year's record high prices, the Subcommittee will focus on bringing increased competition to the oil industry as a means of restraining energy price increases. Our efforts will include monitoring and oversight of the Federal Trade Commission's investigations into allegations of anti-competitive behavior as well as its continuing project to observe and track changes in gasoline prices in order to uncover any potentially anticompetitive behavior. The Subcommittee will also continue to engage in oversight to ensure that the FTC and the Justice Department take all necessary action to prosecute those who attempt to engage in anti-competitive conduct, price gouging or market manipulation. Senator Kohl also intends to pursue his legislation to bring the actions of the OPEC oil cartel under the jurisdiction of U.S. antitrust law (the No Oil Producing and Exporting Cartels Act ("NOPEC"), S. 204).

* Pharmaceutical Industry

In this era of ever rising health care and prescription drug costs, the Subcommittee will make competition in the pharmaceutical industry a priority. A particular focus will be eliminating barriers to the entry of generic competition to brand name drugs. Senator Kohl intends to pursue legislation to ban "reverse payment" patent settlements in which brand name drug manufacturers pay off generic drug manufacturers to delay the entry of generic competition (the Preserve Access to Affordable Generics Act, S. 369). Senator Hatch understands the concern surrounding so-called reverse payments but intends to ensure any legislation does not create the untended consequences of barring generic entry into the marketplace or penalizing consumers.

* Cellular Telephone Text Messaging

Senator Kohl intends to continue his inquiry into the cause of sharpprice increases for text messaging. From 2006 to 2008, the four leading cell phone providers doubled the per message cost of text messaging, from 10 to 20 cents per message, to consumers not purchasing text messaging as part of a messaging plan. These price increases occurred in two steps within weeks of each other. The Subcommittee intends to examine the rationale behind these price increases and what these increases mean for competition in this industry.

* Bowl Championship Series

The Bowl Championship Series ("BCS") generates revenue for participating schools at a level that is unmatched in the history of collegiate sports. Even teams that never play in a BCS game are able to reap the financial benefits simply by virtue of their membership in one of the six original BCS conferences. Though the BCS claims to represent all of college football - even going so far as to call the winner of the BCS Championship Game the "National Champion" - the BCS system leaves nearly half of all the teams in college football at a competitive disadvantage when it comes to qualifying for the millions of dollars paid out every year. This system's critics allege that the system is not only unfair to the football fans throughout the country, but also to the colleges and universities nationwide that depend on revenues from their football teams to fund their other athletic programs. They further argue that, at the very least, a fair system would provide equal opportunity, regardless of conference, for all teams to play their way into one of the BCS's bowl games and, if they're good enough, to compete for the national championship. The Subcommittee will hold hearings to investigate these issues, and Senator Hatch will introduce legislation to rectify this situation.

* Internet Industry and On-Line Advertising

The Subcommittee will continue to carefully examine competition in the consolidating internet and related on-line advertising industry. We expect to pay particular attention to the competition resulting from acquisitions in this industry, including Google's acquisition of DoubleClick and the now-abandoned efforts at an advertising partnership between Google and Yahoo!, both transactions that were subject of Subcommittee hearings in the last Congress. As the Internet continues to grow in importance to the national economy and to consumers, the Subcommittee will strive to ensure that this sector remains competitive, that advertisers have sufficient choices, and that consumers' privacy is guarded.

* Broadband Telecommunications

We plan to continue to closely examine competition in the broadband industry in the year ahead. Maintaining competitive choices in this industry is crucial to consumers and the health of the national economy. We will also examine the issue of network neutrality principles and monitor whether consumers continue to have the freedom to access the internet content they wish without interference from their internet service provider.

* Media/Cable/Satellite

In this era of continued consolidation in the media sector, the Subcommittee will continue to focus on competitive conditions in the media, cable and satellite industry. We will continue to examine the effects of media consolidation on the marketplace of ideas, including issuessuch as diversity of ownership in the media and on the ability of independent content producers to distribute their products. As cable television rates continue to rise, we will also continue to emphasize bringing increased competition to the cable and satellite television market. In this connection, we will examine program access issues, ensuring that competitors to incumbent cable companies are not subject to predatory conduct, and evaluate the impact of new technology and new competitive options available to consumers. We will also review the operation of program access law so that all cable and satellite providers will continue to have access to "must have" programming necessary to compete, and program carriage rules so that independent programmers have access to cable and satellite distribution on non-discriminatory terms. In addition, we will be active with respect to the renewal of the Satellite Home Viewer Extension and Reauthorization Act. We will work to see that the increasing video competition achieved by that Act will continue to be in place in the years ahead.

* Airline Competition

Another important issue the Subcommittee expects to scrutinize will be ensuring full and robust competition in the airline industry. Airline consolidation will be a particular focus. We will closely examine the likely effects on competition of these proposed airline mergers and any non-merger conduct of airlines that raises competition concerns. We are also concerned with consolidation in the international market, particularly with several large alliance applications pending at the Department of Transportation. The Subcommittee has always been wary of exceptions to antitrust laws that have been granted to certain industries. For example, the Department of Transportation, rather then the Department of Justice and the Federal Trade Commission, is responsible for devising and implementing regulations regarding antitrust immunities for airlines seeking to enter into code-sharing arrangements. Therefore, the Subcommittee will explore various policy initiatives to ensure that all industries are regulated by a uniform set of laws and regulations, and deference is given to the antitrust experts at the Justice Department. We will also closely monitor competitive conditions in the air freight industry, and work to ensure that competition is protected as previously competitive air freight companies - such as DHL and UPS - consider collaboration agreements.

* Agriculture

The Subcommittee will continue to examine competition in agricultural markets, an issue of vital importance to farmers, ranchers and consumers alike. Issues to be examined will be consolidation in the agricultural sector. Senator Kohl also has commissioned a study by the GAO on the effect of agricultural consolidation on food prices, and expects the results of the study in 2009.

* Consolidation in the Concert and Ticketing Business

The Subcommittee intends to continue its inquiry into consolidation in the concert and ticketing business, an inquiry already underway with its hearing into the Ticketmaster/Live Nation merger in February 2009. This merger would combine the nation's leading ticketing company with the nation's leading concert venue and concert promotion company. The Subcommittee will examine the consequences of this consolidation for ticketing prices and services in the concert business.

* Hospital Purchasing of Medical Products

The Subcommittee will continue its work on hospital group purchasing organizations ("GPOs"). The Subcommittee's hearings, investigations and oversight efforts into this issue over the past several years have resulted in the nation's leading GPOs agreeing to voluntary reforms to their business practices, including the creation of a new self-regulatory organization, the Healthcare Group Purchasing Industry Initiative. The Subcommittee will continue its examination of whether the Initiative is adequate and ifthe industry's voluntary reforms are permanent and enforceable.

* Preserving Antitrust Principles in Consolidating Industries

With the current economic downturn, consolidation is taking place in many industries - for example the banking and financial services sector - often using government "bailout" money to finance mergers and acquisitions. The Subcommittee will work to assure that heed is paid to competition concerns in the course of this economic restructuring, and that antitrust principles are not ignored as vital industries consolidate in response to economic conditions.

* Oversight of the Antitrust Enforcement Agencies

The Subcommittee expects to engage in close scrutiny of the government's antitrust enforcement activities at both the Department of Justice and the Federal Trade Commission in the new administration. The Subcommittee will exercise oversight to ensure that vigorous antitrust enforcement is restored in the new administration, particularly at the Justice Department. In that connection, we will closely examine the credentials of the new Assistant Attorney General for Antitrust nominee. Issues to be examined will be merger enforcement, the government's pursuit of civil non-merger cases, such as monopolization and unilateral anti-competitive practices, and criminal antitrust enforcement.

* Efficiency in Antitrust Regulation

Today, the United States has two separate agencies, the Department of Justice's Antitrust Division and the Federal Trade Commission, that are responsible for enforcing our antitrust laws. Therefore, the Subcommittee will explore various policy options to ensure that corporate matters before these agencies are handled in an even more efficient and effective manner.

* International Enforcement of Antitrust

The Subcommittee will continue to examine closely how U.S. multinational companies have been affected by different antitrust regimes in various countries. Complying with the antitrust laws of different countries, which often have differing substantive and procedural rules, is increasingly becoming a burden on U.S. businesses. Over the past several years, foreign and in particular European regulators have been aggressive in their review of American companies' business practices. Some have argued that these same foreign regulators have unfairly used their power to discriminate and hinder American corporations. On the other hand, many times those bringing complaints regarding the business practices of American companies to foreign antitrust enforcement agencies have been other American companies. Further, advocates of aggressive international enforcement argue that this enforcement is warranted. Exploring the validity of these claims will be an important priority for the Subcommittee.

* Industry Standards

Because voluntary industry standards often involve significant coordination and cooperation among horizontal competitors, they have given rise to frequent allegations of anticompetitive behavior. Given the number of ongoing controversies regarding both the pro-competitive and anticompetitive effects of industry standards and standard-setting processes, and the recent activities of antitrust enforcement entities, the Antitrust Subcommittee intends to examine this issue carefully and will consider whether legislation in this area would be advisable.

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