Mr. HART, from the Committee on the Judiciary, REPORT BACKGROUND The Antitrust and Monopoly Subcommittee was established by the Judiciary Committee to make a continuing examination of our competitive system. Basic to the operation of the Subcommittee is a congressional commitment to competition as the most effective and desirable means of organizing our economy. The Subcommittee believes the free enterprise concept affords a domestic society the maximum economic efficiency and political and social freedom. The rapid growth of the economy, when coupled with the explosion of technology, the expansion of Government regulations, the growth of international trade, and the rise of consumerism have magnified the Subcommittee's responsibility to the Congress, the business community, and the public. In bipartisan cooperation, the Subcommittee has attempted to meet its responsibilities in an objective and thorough manner. The actual function of the Subcommittee staff might best be broken down as follows: legislative hearings, investigative hearings, oversight responsibilities of executive agencies and independent regulatory commissions, and assisting other committees and Senate offices with respect to the antitrust implications of proposed legislation. This report is an attempt to provide a summary of the work of the Subcommittee during fiscal 1974. S.R. 1427 I. LEGISLATIVE HEARINGS S. 782, The Antitrust Procedures and Penalties Act S. 1088, The Antitrust Settlement Act of 1973 The Senate Antitrust and Monopoly Subcommittee held 3 days of hearings on the above bills. S. 782 was introduced by Senators Tunney and Gurney, and S. 1088 by Senators Mansfield and Bayh. Both bills would attempt to improve the consent decree process for settlement of Government antitrust cases in that they would be given more public attention. Additionally, S. 782, as introduced, would increase criminal penalties for violations of the antitrust statutes from $50,000 to $500,000 for corporations and $100,000 for any other person. S. 782 also would revise the Expediting Act in an effort to improve the process of appellate review of antitrust cases. S. 782 was reported from the Committee on the Judiciary on June 30, 1973, and passed the Senate on July 18, 1973. S. 978. In 1972, 5 days of hearings were held on S. 3133, introduced by Senator Eastland for himself and 41 cosponsors. The 92d Congress adjourned without action on the proposal and the bill was reintroduced as S. 978 by Senator Eastland with 40 cosponsors on February 22, 1973. The purpose of the bill was to clarify the circumstances under which exclusive territorial provisions in licenses to manufacture, distribute, and sell trademarked soft drink products are lawful under the antitrust laws. The bill was reported from the Committee on the Judiciary on June 4, 1973 and passed the Senate on June 11, 1973. S. 1167, the Industrial Reorganization Act In March of 1973, the chairman reintroduced the Industrial Reorganization Act, S. 1167, and opened hearings on it. These initial 6 days of hearings inquired into the relation between economic concentration and the adequacy of general economic policy measures in achieving the Nation's economic goals. Testimony was also taken on the adequacy of existing antitrust law and enforcement arrangements in achieving and maintaining that measure of decentralization and competition required for the continuation of a private enterprise system. The bill identifies seven industrial categories for which the proposed Industrial Reorganization Commission would have the duty of developing plans for reorganization and recommendation to Congress in order to achieve workable competition. After the general introductory hearings on the purpose of the bill, hearings were begun on the need for and adequacy of the proposed statute in the specific industry. The communications industry was the first in the series. S. 1167, The Industrial Reorganization Act-Communications Four days of hearings were held on the communications industry in connection with the Industrial Reorganization Act to determine the extent to which a policy of competition as opposed to regulation is both feasible and in the public interest. The Subcommittee also focused on the question of whether or not a restructuring of the industry would S.R. 1427 be necessary in order for competition to work effectively. The major segments of this industry which were covered at this initial hearing included: A. The companies (commonly referred to as interconnect companies) offering the communications user an alternative source for his equipment on a lease or purchase basis and the actual benefits. B. The companies (commonly referred to as specialized common carriers) offering voice and/or data transmission facilities to the public at rates significantly lower than those previously offered by the common carriers. Other segments of this industry on which testimony was received included: 1. A paging company-a company which provides a service to a person who requires constant contact with his office. This is achieved by the person carrying a small instrument which will "beep" when his office desires to contact him, and 2. A modem manufacturer-a company which manufactures an instrument which permits a computer to "talk" to another computer over telephone lines. The testimony received from non-A.T. & T. witnesses was unanimous in the belief that the competition presented by the non-A.T. & T. companies was providing the public directly and indirectly with better equipment and service at a lower cost. The same witnesses generally agreed, however, that A.T. & T. was too big and powerful and was able to hamper its competitors almost at will, either through tariff manipulation and/or artificial barriers and that a restructuring of A.T. & T. was necessary. Several proposals were advanced to restructure the industry. Testimony was received from experts to the effect that such restructuring was economically and financially feasible. The A.T. & T. position was that for this country to continue to have the best communications system, it would have to remain a totally integrated operation. A.T. & T. is concerned with fragmenting responsibility for communications services in that it could retard the introduction of new technology as well as reduce the contribution of the Bell Laboratories. While believing generally that competition serves well for most American business, A.T. & T. is of the opinion that the communications. industry is an exception-where it would hurt rather than help the average consumer by increasing residential telephone rates. II. INVESTIGATIVE HEARINGS COMPETITION IN THE ENERGY INDUSTRY In its continuing investigation of "Competition in the Energy Industry." the Subcommittee held 5 days of hearings in June and July. The hearings were focused on competitive developments in the area of petroleum product marketing during a period of emerging shortages. The initial witnesses included the Attorneys General of four States. (Michigan. Connecticut. Massachusetts and North Carolina) and senior representatives of the Attorneys General of New York and Florida. These witnesses discussed possible antitrust violations within S.R. 1427 their States and, in several instances, antitrust actions which they were in the process of filing as the chief legal officers of their respective State governments. Later witnesses described the impact of major oil company policies on the wholesale and retail distribution of petroleum products. These witnesses included representatives of the National Oil Jobbers Council, the National Congress of Petroleum Retailers, the Independent Gasoline Marketers Council, the Michigan Petroleum Association, the Service Station Dealers Association of Michigan, the New England Fuel Institute, the Independent Oilmen's Association of New England, the National Federation of Independent Business, and individual distributors and retailers. The development of Government policy with respect to petroleum shortages was discussed by the Honorable John A. Love, Director of the Federal Energy Office, accompanied by Messrs. Duke Ligon, William A. Johnson, and Douglas L. McCullough, and the Honorable William E. Simon, Deputy Secretary of the Treasury. THE NATURAL GAS INDUSTRY In June of 1973, the Subcommittee held 3 days of hearings on the structural and operational characteristics of the natural gas industry, followed by 3 additional days in October. The hearings focused on the nature and extent of competition within the industry, the identity of the industry's major companies, the extent of industry concentration, and other anticompetitive practices. Also reviewed were reasons for the present "shortage" of natural gas, the validity of reported natural gas reserves, the extent of future natural gas supplies, the relationship between regulation and the present "shortage" and the probable impact of deregulation on price and supply. Witnesses for these hearings included: Hon. George E. Brown, Jr., U.S. Representative from California; Monte Canfield. Jr., deputy director, Ford Foundation Energy Policy Project, Washington, D.C.; Lewis A. Engman, Chairman, Federal Trade Commission; Charles H. Frazier. NERA: James T. Halverson, Director, Bureau of Competition, Federal Trade Commission; Dr. H. Michael Mann, Director, Bureau of Economics, Federal Trade Commission; John N. Nassikas, Chairman, Federal Power Commission: Howard W. Pifer III, professor, Graduate School of Business Administration, Harvard University: Alan J. Roth, executive assistant to the chairman, New York State Public Service Commission, on behalf of chairman Joseph C. Swidler: Dr. David Schwartz, Assistant Chief, Office of Economics, Federal Power Commission; Dr. Norman B. Ture, on behalf of the Gas Supply Committee; Dr. John W. Wilson, Chief, Division of Economic Studies, Office of Economics. Federal Power Commission; and Lee C. White, chairman, Energy Policy Task Force, Consumer Federation of America. The second segment of hearings in October 1973 examined in greater detail the shortage question and the reliability of reserve data reported to the Government. It also presented an in-depth view of how a major regulatory agency carries out its responsibility for monitoring and regulating an industry of critical importance to the Nation. S.R. 1427 |