Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
23810571
label
Congressional - Antitrust Bill (3)
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
23810571
sourceUrl
contentType
document
title
Congressional - Antitrust Bill (3)
citationUrl
collections
Philip W. Buchen Files
Philip Buchen's General Subject Files
subjects
Antitrust law
Presidential messages
Legislation
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
23810571
coverageEndDate
logicalDate
1976-09-01
month
9
year
1976
coverageStartDate
logicalDate
1975-10-01
month
10
year
1975
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
5cbc08a0b0d1d90a
ocrText
The original documents are located in Box 7, folder "Congressional - Antitrust Bill (3)" of
the Philip Buchen Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 7 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
September 2, 1976
ADMINISTRATIVELY CONFIDENTIAL
MEMORANDUM FOR:
PHILIP BUCHEN
FROM:
JAMES E. CONNOR EC
SUBJECT:
Senate Consideration of Omnibus
Antitrust Legislation
The President reviewed your memorandum of September 1 on the
above subject and made the following notations:
"What is Attorney General's view? "
"What is view of business community? 11
"I think we should have a conference on this soon. 11
"I would veto if no modification but suggest conference
as soon as possible . "
Please follow-up with appropriate action.
cc: Dick Cheney
Max Friedersdorf
FORD VIBRARY
Pfizer
AGRICULTURAL DIVISION
PFIZER INC., 235 EAST 42nd STREET, NEW YORK, N.Y. 10017
R. M. HENDRICKSON
President
212-573-2444
September 3, 1976
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
If Congress has its way, corporations will soon be subject
to blackmail on the part of a bunch of money-hungry lawyers
who handle parens patriae on a contingency fee basis. If
Congress would tell businessmen the specific kinds of
conduct which raise problems under the Sherman Act, maybe
this kind of a lawsuit would be all right, but as things now
stand, in many situations businessmen would not be able
to protect themselves even with the best of legal advice.
No one can tell businessmen what the courts will later
decide under the Sherman Act as to each and every business
practice. You can hire the best law firms on Wall Street or
in Atlanta and they cannot tell you. Yet Congress would
impose this burden of blackmail on American corporations.
That is not justice. It is a corruption of justice.
I hope, Mr. President, that you will veto H.R. 8532 when it
is sent to you.
Sincerely
Foland
Roland M. Hendrickson
President - Agricultural Products
CC: Hon. Philip W. Buchen
Hon. John O. Marsh, Jr.
Hon. Edward Schmults
Hon. John J. Rhodes
Hon. Hugh Scott
Hon. Stewart B. McKinney
GERALD FORD LIBRARY
Pfize
PFIZER INC., 235 EAST 42nd STREET, NEW YORK, N.Y. 10017
HENRY L ROSS, JR.
Vice President
Consumer Products Operations
September 7, 1976
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
It is my understanding that Congress is about to pass and
send to you another terrible piece of legislation on the
theory that if it passes, and you do not veto it, the full
burden will fall on the nation's corporations, and if you do
veto it the Democrats will be able to use it tc their political
advantage. If the legislation were not so bad, I would be
tempted to suggest that you not veto it but unfortunately,
once again, it is only your veto which stands in the way of
catastrophe.
I am speaking of H.R. 8532 and in particular the portion of
that legislation which would give to Attorneys General the
authority to institute law suits as "parens patriae" for
treble damages for Sherman Act violations. The proponents
of this legislation know full well that such suits would be
brought, not for the purpose of deciding the issues in
litigation, but for the purpose of inducing corporations to
settle. It is pure and simple blackmail. Class actions
which have been brought on behalf of far fewer claimants
than those which would be represented in parens patriae
litigation are never tried. They are always settled, and
the reason is that corporations simply cannot bear the risk,
even though small, of losing such a suit.
The original House version had at least limited the more
far-reaching effects of this legislation to "willful" violations.
However, the word "willful" was stricken so that these
blackmail suits could be brought for the most innocent kinds
of violations, which can easily occur in this constantly
expanding area of the law.
FORD
Certainly, blackmail actions should not be allowed in the
ill-defined areas of the Sherman Act. Businessmen do not
know what kind of conduct will or will not later be found to
be a violation of the Sherman Act. We operate in the dark
because Congress has been unwilling to face up to the challenge
of telling businessmen precisely what kind of conduct falls
within the prohibitions of this statute, leaving the
development of antitrust laws to the courts. To impose the
kind of risks created by parens patriae in areas of the law
which are not clear but which are still being developed by
the courts is unfair and unjust.
Businessmen simply cannot live with H.R. 8532 and we must
therefore ask, Mr. President, that, as politically painfull
as it might be, you veto this terrible piece of legislation.
Sincerely yours, Rinji
Henry L. Ross, Jr.
Vice President - Consumer Products
CC: Hon. Philip W. Buchen
Hon. John O. Marsh, Jr.
Hon. Edward Schmults
Hon. John J. Rhodes
Hon. Hugh Scott
Hon. Stewart B. McKinney
FORD is LIBRARY
UIGLEY COMPANY, INC.
235 E. 42ND ST.. NEW YORK. N. Y. 10017
DEAN R. THACKER . PRESIDENT
212 LR 3-3454
September 7, 1976
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
There is every indication that Congress is about to pass
legislation that would give the Attorneys General of all
fifty states the right to bring suit as "parens patriae" and
recover treble damages for violations of the Sherman Act.
The parliamentary rules of Congress, I understand, have
created a rather complicated situation, but the bill presently
before the Congress is H.R. 8532. I most strongly urge
that, if Congress should pass such legislation, you exercise
your veto power to save American business.
We here at Quigley - and I am sure this is true for the vast
majority of American businessmen - make every effort to
comply with the law in every respect. However, the antitrust
laws present a particular problem in that the rules seem to
be in a constant state of flux as the result of court decisions
and changes in agency policies and personnel. A well-
meaning businessman can easily run afoul of those laws
despite conscientious efforts to comply.
Now Congress would add to this problem the hazard of treble
damage claims by any number of Attorneys General on behalf
of vast numbers of people within their states. Even the
largest business organizations could be severely crippled if
a court should find in favor of plaintiffs in such gigantic
actions, so the defendants are compelled - no matter what
the actual merits of the claim - to capitulate and settle.
This is certainly not the type of justice our founding
fathers contemplated, and it's nothing more than legalized
blackmail on a grand scale.
R.
FORD
GERALD
-
A Subsidiary of
PFIZER INC.
I sincerely hope that, if Congress should pass legislation
such as H.R. 8532 containing parens patriae provisions, you
will save American business from its truly terrible effects
by exercising your veto power.
Very truly yours,
Dean R Thacker
Dean R. Thacker
President
CC: Hon. Philip W. Buchen
Hon. John O. Marsh, Jr.
Hon. Edward Schmults
Hon. John J. Rhodes
Hon. Hugh Scott
Hon. Norman F. Lent
FORD is LIBRARY
Pfizer
PFIZER INC., 235 EAST 42nd STREET, NEW YORK, N. Y. 10017
SHELDON G. GILGORE, M.D.
PRESIDENT
PFIZER PHARMACEUTICALS
September 3, 1976
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
Congress is about to enact, and send to your desk, H.R. 8532
containing, among other things, parens patriae provisions.
Although it might seem reasonable on the surface to permit
states to sue as "parens patriae" to redress wrongs to their
citizens arising out of Sherman Act violations, the evils of
this legislation are direct and serious.
Violations of the Sherman Act can be, and in the past have
been, based on the flimsiest kind of evidence. Nevertheless,
courts have permitted inferences of such violations to be
drawn from weak circumstantial evidence. If such charges
are made when only one claim is involved, the charge can be
defended against in court, but when states represent as
parens patriae claims on behalf of all of their citizens and
when such suits by a number of states are consolidated by
the multi-district panel so that in one law suit are involved
claims on behalf of most, if not all citizens of the United
States, the risk of litigation is far too large for a corporation
to accept. The proponents know that this provides them with
an opportunity for blackmail and that is exactly what they
intend. H.R. 8532 would deny the courts to business.
FORD
GERALD
LIBRARY
Another factor in the unfairness of this legislation is the
uncertainty of the antitrust laws. Antitrust law is still
developing through court decisions. No one knows today what
the law will be tomorrow. Before creating the legal monster
of parens patriae Congress should at least provide businessmen
with a clear expression of what is and what is not a violation
of the Sherman Act. Certainly Congress should not be permitted
to avoid its responsibility to enact just laws by enacting
this kind of legislation which would give the states Attorneys
General the power of life and death over corporations which
are earnestly trying to abide by the law.
Sincerely,
Sheldon G. Gilgore, M.D.
President - Pfizer Pharmaceuticals
cc: Hon. Philip W. Buchen
Hon. John O. Marsh, Jr.
Hon. Edward Schmults
Hon. John J. Rhodes
Hon. Hugh Scott
Hon. Stewart B. McKinney
FORDO & DERALO LIBRARY
THE WHITE HOUSE
WASHINGTON
September 18, 1976
MEMORANDUM FOR:
JACK MARSH
JIM LYNN
WILLIAM SEIDMAN
FROM:
PHILIP BUCHEN
Attached is a draft of a proposed Statement of
the President on The Antitrust and Competition
Policy of the Ford Administration. It was
prepared originally at the Department of Justice
and was revised slightly by me:
I suggest that such'a statement accompany the
President's action on the new antitrust bill,
just passed by Congress. It could be a part
of his signing or vetoing statement or could
be issued at the same time as such a statement.
Please let me have your comments.
Attachment
FORD i LIBRARY GERALD
STATEMENT OF THE PRESIDENT
THE ANTITRUST AND COMPETITION POLICY
OF THE FORD ADMINISTRATION
This country has become the economic ideal of the free
world because of its dedication to the free enterprise system.
Full and vigorous .competition has been the watchword of
America's economic progress.
This Administration has long recognized that compe-
tition is the driving force of our economy. Competitive
markets promote efficiency and innovation by rewarding firms
that produce desired products at low costs. In a competitive
industry, `inefficient producers are forced to become efficient
or be driven out of business.
Competition is also a mighty stimulus to the development
of new products and manufacturing processes. The free market
system rewards the successful innovator. In today's inter-
national economy, members of a vigorously competitive economic
system enjoy unlimited worldwide opportunities and contribute
significantly to the stability of their domestic economies.
In the United States, promotion of competition is
consistent with our political and social goals. The undue
concentration of economic and political power has tra-
ditionally been seen as a threat to individual freedom.
GERALD FORD LIBRARY
- 2 -
Under competitive conditions, economic power is fragmented;
no one firm can control prices or supply. Political power
is also decentralized by competition because there is no
need for massive governmental bureaucracies to oversee
business operations.
But perhaps the most compelling justification for a
free market economy is that it best serves the interests
of our citizens. In a freely competitive market, consumers
enjoy freedom of choice from a wide range of products of
all sizes, kinds, and varieties. Consumers, through their
decisions in the marketplace, transmit their preferences
and desires to businessmen who then translate those
preferences into the best products at the lowest prices.
The Federal Government must play an important role
in protecting and advancing the cause of competition.
Through enforcement of the antitrust laws, the
Antitrust Division of the Department of Justice and the
Federal Trade Commission must assure that competitors
do not engage in anticompetitive practices.
BERALD FORD
-3-
A vigorous antitrust enforcement policy is most
important in deterring price-fixing agreements between
competitors that result in higher costs to consumers.
As we come out of an inflationary period and into a period
of economic growth and expansion, we must assure that the
price mechanism is not artificially manipulated for private
gain.
This Administration has been the first one in forty
years to recognize that there is a second respect in which
the Federal Government vitally affects the state of
competition. Not only must the Federal Government seek
to restrain private anticompetitive conduct, but so, too,
must the Federal Government see to it that the govern-
mental process does not impede free and open competition.
Too often in the past, the Federal Government has
itself been a major source of restraints on competition.
Many of our most vital industries have over the years
been subjected to pervasive regulation. Although regulation
has been imposed in the name of the public interest, there
is a growing awareness that the consumer is often the real
loser.
Too many important managerial decisions are made
today not by the marketplace responding to the forces of
GERALD FORD LIBRARY
-4-
supply and demand but by the bureaucrat. The innovative
and creative forces of major industries are suffocated
by governmental regulation. In many instances a businessman
cannot raise or lower prices, enter or leave markets,
provide or terminate services without the prior approval
of a Federal regulatory body.
This is not the economic system that made this country
great. Government regulation is not an effective substitute
for vigorous competition in the marketplace.
To be sure, in some instances governmental regulation
may well protect and advance the public interest. But the
time has come to recognize that many existing regulatory
controls were imposed during uniquely transitory economic
periods that bear no relation to today's economic conditions.
We must repeal or modify those controls that suppress
rather than support competition.
The Administration's competition policy has proceeded
along those very lines. We have set in motion a far-
reaching regulatory reform program. This program has been
accompanied by a policy of vigorous antitrust enforcement
to implement our commitment to competition.
GERALD FORD LIBRARY
- 5 -
L
In the last two years, the antitrust laws have been
vigorously enforced by strengthened antitrust enforcement
agencies. The resources for the Antitrust Division and
the Federal Trade Commission's Bureau of Competition have
been increased by over 50 percent since Fiscal Year 1975.
For the Antitrust Division, this represented the first
real manpower increases since 1950.
The Antitrust Division's crackdown on price fixing
resulted in indictment of 183 individuals during this
period, a figure equalled only once in the 86 years
since enactment of the Sherman Act. The fact that the
Division presently has pending more grand jury investi-
gations than ever in history proves these efforts are
not slackening.
To preserve a competitive market structure by
preventing competitive mergers and acquisitions, the
Antitrust Division is devoting substantial resources
to merger investigations. At the same time, the
Division is litigating large and complex anti-monopoly
cases in two of our most important industries. Cases
have also been filed involving such anticompetitive
restraints as allocation of customers and markets
which interfere with the free interaction of competitive
FORD
forces.
LIBRARY
- 6 -
The cause of vigorous antitrust enforcement was
measurably advanced when I signed the Antitrust
Procedures and Penalties Act of 1974, which made
violation of the Sherman Act a felony punishable by up
to three years' imprisonment of individuals and a
corporate fine of up to $1 million.
I also signed legislation repealing Fair Trade
enabling legislation. This action alone, according to
various estimates, will save consumers $2 billion
annually.
Two regulatory reform proposals I have signed -- the
Securities Act Amendments of 1975 and the Railroad
Revitalization and Regulatory Reform Act inject strong
dosages of competition into industries that had long
rested in the shade of Federal economic regulation.
The Administration has also sponsored important
legislative initiatives to reduce regulation of other
modes of transportation and the regulation of financial
institutions. An important element of the regulatory
reform proposals has been the narrowing of legislative
antitrust immunities which had been granted to industry
is
rate bureaus and which permitted these groups to restrain
FORD
competition under official government sanction. Congress
has not yet acted on these proposals.
- 7 -
The Administration also has underway a broad in-
depth review of many other legislative immunities to
the antitrust laws, to eliminate those immunities that
are not truly justified. All industries and groups,
however regulated and by whom, should be subject to
the interplay of competitive forces to the maximum
extent feasible.
A full measure of the Administration's commitment
to competition is its proposed Agenda for Government
Reform Act that would include a comprehensive,
disciplined look at ways of restoring competition in
the economy. This would require in-depth consideration
of the full range of Federal regulatory activities in
a programmatic manner that would allow for an orderly
transition to a more competitive environment.
This competition policy, which includes regulatory
reform and invigorated antitrust enforcement, will
protect the businessman who desires to be competitive
from both government regulators and anti-competitive
competitors. In turn, the American consumers will
benefit from full and open competition within the
business community.
GERALD FORD
-9-
HART/SCOTT/RODINO ANTITRUST IMPROVEMENTS ACT
The action I am taking today should further strengthen
competition and antitrust enforcement.
This bill contains three titles. The first title
will significantly expand the civil investigatory powers of
the Antitrust Division. This will enable the Department
of Justice not only to bring additional antitrust cases
that would otherwise have escaped prosecution, but it
will also reduce the possibility that unmeritorious suits
will be filed. These amendments to the Antitrust Civil
Process Act were proposed by the Administration two years
ago, and I am pleased to'see that the Congress has finally
passed them.
The second title of this bill will require parties
to large mergers to give the Antitrust Division and the
Federal Trade Commission advance notice of the proposal.
This will allow these agencies to conduct investigations
prior to consummation and thereby bring suit before the
parties have taken irreversible steps toward consolidation
of operations. Again, this proposal was supported by the
Administration, and I am pleased to see it enacted into law.
This legislation also includes a third title about
which I have previously expressed serious reservations.
FORD
LIBRARY
-10-
It would permit state attorneys general to bring antitrust
suits on behalf of the citizens of their states to recover
treble damages.
As I have said before, the states have authority to
amend their own antitrust laws to authorize such suits
in state courts. If a state legislature, representing the
citizens of the state, believes that such a concept is
sound policy, it ought to allow it. Therefore, I questioned
whether the Congress should bypass the state legislatures.
However, Congress has narrowed this title in order
to remove the possibility of significant abuses. Earlier
I had urged that the scope of this legislation be narrowed
to price-fixing activities, where the law is clear and where
the impact is most directly felt by consumers. Given the
broad scope of the bill, I also recommended that damages
be limited to those actually resulting from the violations.
The Congress addressed these concerns by confining the scope
of the controversial provision, of statistically aggregating
damages, to price-fixing violations. Thus, this bill will
be confined to hard-core antitrust violations. The more
complex antitrust questions, where the law is less
will properly be reserved for Federal enforcement efforts
LIBRARY
Also, I have been concerned about the provision that
would allow states to retain attorneys on a contingent fee
basis, thereby encouraging suits against business in which
-11-
the principal motivation would be attorney enrichment.
The present bill has made steps to narrow these arrangements
and has required Federal court approval of attorney fees.
With these and other changes that have been made in
this title since its introduction have narrowed and focused
this legislation. In this form, it should contribute to
deterring price fixing violations. Price fixers must
be denied the fruits of their illegal conduct, and remedies
must be available to those injured by price fixing:
Individual initiative and market competition must
remain the keystones to our American economy. I am today
signing this major antitrust legislation with the expectation
that it will contribute significantly to our free enter-
prise system.
FORD i LIBRARY BERALD
September 21
THE WHITE HOUSE
WASHINGTON
TO:
PHIL BUCHEN
FROM: JOHN O. MARSH June
For Direct Reply
For Draft Response
XX
For Your Information
Please Advise
GERALD FORD LIBRARY
HUGH SCOTT
ENNSYLVANIA
United States Senate
OFFICE OF THE MINORITY LEADER
WASHINGTON, D.C. 20510
September 21, 1976
The President
The White House
Washington, D. C.
Dear Mr. President:
Early in the first session, Senator Hart and I introduced an
ambitious omnibus antitrust reform bill--the Antitrust Improvements
Act of 1975. As you know, the House passed the measure last Thurs-
day by a wide margin.
The bill we send to you bears only the slightest resemblance
to the original Hart-Scott bill. It has suffered through a year
and a half of intense debate. Students of history will ponder its
tortured career 'for generations to gain insight into the mysteries
of the legislative process.
At every stage in its history we have whittled away at its
provisions. For example, of the original seven titles, only three
survive. Wholly eliminated were the provisions dealing with the
automatic TRO in certain merger cases, the provisions relating to
the use of pleas of nolo contendere in civil actions, the provision
authorizing the Department of Justice to issue C.I.D.'s to parties
before the administrative agencies, and the provision allowing
access to grand jury documents in certain civil cases. In fact,
in the C.I.D. portion of the bill we made every change requested
by the Administration.
The most far-reaching change occurred in the parens patriae
title. While the innovative heart of the measure is intact, its scope
has been severely curtailed. We have made its provision prospective
only. We have eliminated the right of consumers suing under the
federal rules to aggregate damages statistically. We have eliminated
the right of the state Attorneys General to sue for damage to the
state's general economy. We have prohibited the award of percentage
contingency fees. And we have effectively limited the scope of the
remedy to that most notorious of antitrust offenses--pricefixing.
The President
Page 2
September 21, 1976
I must state candidly that I had privately urged many of these
changes in an attempt to accommodate what I preceived to be your
views, and not merely to enhance the bill's chances of passage in
either house of Congress. In the spirit of compromise, Senator Hart
accepted the limiting amendments, even though he knew we had the
votes.
With this history in mind, I stated last week on the Senate
floor that "It is a bill that I believe President Ford can sign".
I am enclosing a copy of Bob McClory's letter to me in which he
expresses his pleasure with final passage of the bill. In it he
also observes that we can see how responsibly the state attorneys
general exercise their new authority in the course of the next year
or two. If the feared abuses materialize, then Congress will trim
back the law. Similarly, under the bill's provisions, the various
state legislatures can themselves remove their states from the ambit
of parens patriae at any time if experience shows the measure to
have been ill-advised. On the other hand, if the bill has a salutary
effect on antitrust enforcement and competition, as I believe, that's
all to the good.
I am, of course, convinced that the entire bill has merit.
By enhancing the likelihood of detection of antitrust violations,
and by increasing the potential liability therefor, we will dis-
courage future illegal anticompetitive activity. In that way we
can eliminate stultifying and unnecessary governmental regulation and
unleash the creative forces of our free market economy.
In my view, the measure is a necessary element of your own
regulatory reform program.
I stand at the ready to answer any questions you may have as
to the bill's provisions.
With warmest personal regard,
Sincerely,
Hugh Scott
Republican Leader
FORD
GERALD
LICRARY
ROBERT McCLORY
DISTRICT OFFICES
13TH DISTRICT, ILLINOIS
KANE COUNTY
MUNICIPAL BUILDING
ROOM 2452
150 DEXTER COURT
RAYBURN How OFFICE BUILDING
(201) 225-5221
Congress of the United States
ELGIN, ILLINOIS G0120
(312) 697-5005
JUDICIARY COMMITTEE
House of Representatives 3 28 AM '76
LAKE COUNTY
POST OFFICE BUILDING
SELECT OMMITTEE ON
326 NORTH GENESEE STREET
INT LIGENCE
Washington, D.C. 20515
WAUKEGAN, ILLINOIS 60085
(312) 336-4554
U.S. INTE ARLIAMENTARY
September 17, 1976
UNION ELEGATION
MCHENRY COUNTY
MCHENRY COUNTY COURTHOUSE
2200 SEMINARY ROAD
WOODSTOCK, ILLINOIS 60098
(815) 338-2040
The Honorable Hugh Scott
Minority Leader
United States Senate
Washington, D.C. 20510
Dear Hugh:
I am pleased to report that the House concurred in the Senate
amendments to the antitrust bill in which you were particularly
interested.
It seems unfortunate that the two parts of the bill in which
I took a particular interest prior to House passage should have
been retained in a watered-down and confused form -- leaving
doubt as to the interpretation on the subjects of contingent
fees and treble damages.
I am aware of the complete good faith which you demonstrated
and your apprehension that any further House amendments might
have jeopardized final passage.
I am reconciled to what has occurred notwithstanding my efforts
to restore the House language on these two parts.
I am sure your position and mine are virtually identical. If
the measure is interpreted later in a way which neither you nor
I intended, I will then undertake to introduce corrective
legislation at the next Congress.
I want to reiterate my assurances that I do indeed prize your
friendship and respect your judgment in all things. In obtaining
assurances from Senators Allen, Hruska and Thurmond that they
would not stage another filibuster, I was convinced that if the
House had acted on the amendments which I favored, there would
have been ample opportunity for final passage of the antitrust
bill.
Sincerely yours,
BERAUD FORD LIBRART
Robert McClory
RMcC:mm
Member of Congress
THE ATTORNEY GENERAL
Old SEQUITUR DE DEPARTMENT OF
JUSTITIA
&
7
9/27/76
TO:
Philip W. Buchen
FROM:
Edward H. Levi
Here are two copies of my
memorandum for the President
as to my personal thoughts,
which you indicated he had
requested.
FORD is LIBRARY 8
ASSISTANT ATTORNEY GENERAL
ANTITRUST DIVISION
Department of Justice
Mashington, D.C. 20530
24 SEP 1976
MEMORANDUM TO: Edward C. Schmults
Deputy Counsel to the President
SUBJECT:
Price-fixing Cases Under the
Parens Patriae Bill
This is to give you in writing the substance of our
telephone conversation regarding the elements necessary to
establish a violation of the Sherman Act for price-fixing.
You raised the ordinary situation in which several firms
raised their prices for a basic product (e.g., bread) within
a short period of time.
To begin with, Sherman Act §1 prohibits contracts, com-
binations, or conspiracies in restraint of trade; it does
not reach unilateral business conduct. There must be proof
of some concerted action by at least two parties in order
to establish the contract, combination or conspiracy neces-
sary to sustain the plaintiff's burden in a Section 1 case.
It is, of course, well-established that the combination
or conspiracy need not be "formal" or evidenced by signed
agreements. As in the criminal area generally, the fact of
a combination or conspiracy may be inferred from the conduct
of the parties; and parallel conduct, combined with other
factors, may establish a Sherman Act conspiracy. Interstate
Circuit, Inc. V. United States, 306 U.S. 208 (1939). However,
evidence that parties acted in a consciously similar manner
does not by itself prove a violation of the Sherman Act, since
such similarity of conduct may well be explained by factors
other than a combination or conspiracy to restrain trade.
Theatre Enterprises, Inc. V. Paramount Film Distributing Corp.
346 U.S. 537 (1954).
Where parallel conduct is explained by market factors
such as supply and demand, by costs, or by independent economic
interest, a court may rule for defendants without even proceed-
ing to trial. First National Bank V. Cities Service Co., 391
U.S. 253 (1968). See also Joseph E. Seagram & Sons V.
Hawaiian Oke & Liquors, Ltd., 416 F.2d 71, 84-85 (CA 9 1969),
cert. denied, 396 U.S. 1062 (1970). This authority makes it
REVOLUTION
GERALE FORD LIDRAN,
AMERICAN
NTENN
1776
clear that the mere similarity of a price increase by one
company, followed by others in an industry, is not suffi-
cient to establish a combination or conspiracy in restraint
of trade in violation of the Sherman Act; and the plaintiff
should not be able to get to a jury unless it can prove more.
In particular cases there may be additional factors
that swing the scales the other way. Prices may have been
increased in the face of slackening demand and falling costs;
price increases may have been announced simultaneously or in
such other fashion as to make it unlikely that the decisions
were independently reached; or the particular conduct may be
contrary to the best interests of the individual parties
(e.g., by eliminating favorable differentials enjoyed by
certain industry members).
Absent such special factors, however, state attorneys
general would not be able to recover damages on the basis
of evidence merely showing the members of a particular
industry charge approximately the same prices.
Given the present state of the law, it is unlikely that
parens patriae actions alleging nothing more than pricing
similarity will have serious chance of success. In the un-
usual case where the state attorney general (or his lawyers)
knew when he brought the action that there was nothing more
than a parallel price rise, he might be liable for the
defendants' attorneys' fees under Section 4C (d) (2) on the
grounds that he had "acted in bad faith, vexatiously, won-
tonly, or for oppressive reasons."
Jesl BAKER
Assistant Attorney General
Antitrust Division
Third Draft
9/22/76
Buchen
STATEMENT OF THE PRESIDENT
THE ANTITRUST AND COMPETITION POLICY
OF THE FORD ADMINISTRATION
This country has become the economic ideal of the
free world because of its dedication to the free enterprise
system. Full and vigorous competition has been the
watchword of America's economic progress.
My Administration has always considered competition
to be the driving force of our economy. Our competitive
markets promote efficiency and innovation by rewarding
businesses that produce desirable products at low cost.
In a competitive industry, inefficient companies are
forced to become efficient or be driven out of business.
Competition is also a powerful stimulus to the development
of new products and manufacturing processes. The free
market system rewards the successful innovator.
is BERALD R. FORD
In the United States, promotion of competition
consistent with our political and social goals. Any
excessive concentration of either economic or political
power has traditionally been seen as a threat to individual
freedom. Under competitive conditions, economic power
is fragmented; no one firm can control prices or supply.
Political power is also decentralized by our public policy
which stresses reliance on competition because there is
then no need for massive governmental bureaucracies to
oversee business operations.
-2-
In today's international economy, members of a
vigorously competitive economic system enjoy unlimited
worldwide opportunities and contribute significantly
to the stability of their domestic economies.
But perhaps the most compelling justification for a
free market economy is that it best serves the interests
of our citizens. In a freely competitive market, consumers
enjoy the freedom to choose from a wide range of products
of all sizes, kinds, and varieties. Consumers, through
their decisions in the marketplace, show their preferences
and desires to businessmen who then translate those
preferences into the best products at the lowest prices.
I firmly believe that the Federal Government must
play an important role in protecting and advancing the
of competition.
LIBRARY GERALD
Through enforcement of our antitrust laws, the
Antitrust Division of the Department of Justice and the
Federal Trade Commission must assure that competitors
do not engage in anticompetitive practices.
A vigorous antitrust enforcement policy is most
important in deterring price-fixing agreements between
competitors that result in higher costs to consumers ---
and less production. As we come out of an inflationary
period and into a period of economic growth and expansion,
-3-
my Administration will work to assure that the price
mechanism is not artificially manipulated for private gain.
It is important to realize that this Administration
has been the first one in forty years to recognize a
second way the Federal Government vitally affects the
competitive environment in which businesses operate. Not
only must the Federal Government seek to restrain private
anticompetitive conduct, but the Federal Government must
also see to it that the governmental process does not
impede free and open competition.
All too often in the past, the Federal Government has
itself been a major source of unnecessary restraints on
competition. Many of our most vital industries have over
the years been subjected to pervasive regulation. Although
regulation has been imposed in the name of the public
interest, there is a growing awareness that the consumer is
often the real loser. My Administration has taken the
lead in sharpening this awareness over the past two years
and will vigorously continue this most worthwhile effort.
I believe that far too many important managerial
decisions are made today not by the marketplace responding
to the forces of supply and demand but by the bureaucrat.
-4-
In many instances a businessman cannot raise or lower
prices, enter or leave markets, provide or terminate
services without the prior approval of a Federal regulatory
body. As a consequence, the innovative and creative forces
of major industries are suffocated by governmental regulation.
This is not the economic system that made this country
great. Government regulation is not an effective substitute
for vigorous competition in the American marketplace.
To be sure, in some instances governmental regulation
may well protect and advance the public interest. But the
time has come to recognize that many existing regulatory
controls were imposed during uniquely transitory economic
periods which differed greatly from today's economic
conditions. We must repeal or modify those controls that
suppress rather than support fair and healthy competition.
My Administration's pro-competitive policy has
attempted to make those necessary modifications. We have set
in motion a far-reaching regulatory reform program. And this
program has been accompanied by a policy of vigorous antitrust
enforcement to reinforce our commitment to competition.
In the last two years, the antitrust laws have been
vigorously enforced by strengthened antitrust enforcement
agencies. The resources for the Antitrust Division and
the Federal Trade Commission's Bureau of Competition have
been increased by over 50 percent since Fiscal Year 1975.
-5-
For the Antitrust Division, this represented the first
real manpower increases since 1950. I am committed to
continuing to provide these agencies with the necessary
resources to do their important job. This intensified
effort is producing results. The Antitrust Division's
crackdown on price fixing resulted in indictment of 183
individuals during this period, a figure equalled only once
in the 86 years since enactment of the Sherman Act.
The fact that the Division presently has pending more
grand jury investigations than at any other time in history
shows these efforts are being maintained.
To preserve a competitive market structure by
preventing anti-competitive mergers and acquisitions,
the Antitrust Division is devoting substantial resources
to merger investigations. At the same time, the
Division is litigating large and complex anti-monopoly
cases in two of our most important industries --
computers and telecommunications. Cases have also been
filed involving such anticompetitive business actions
as restrictive allocation of customers and markets.
I advanced the cause of vigorous antitrust enforcement
with the signing of the Antitrust Procedures and Penalties
Act of 1974, which made violation of the Sherman Act a felony
punishable by imprisonment of up to three years for
individuals, and by a corporate fine of up to $1 million.
-6-
Also, in December 1975, I signed legislation repealing
Fair Trade enabling legislation. This action alone,
according to various estimates, will save consumers $2 billion
annually.
Two regulatory reform proposals I have signed ----
the Securities Act Amendments of 1975 and the Railroad
Revitalization and Regulatory Reform Act, inject strong
dosages of competition into industries that long rested
comfortably in the shade of Federal economic regulation.
Contrary to industry predictions, more competition has not
led to chaos in the securities industry, and I am confident
it will prove to be beneficial in our railroad industry
and elsewhere.
FORD
My Administration has also sponsored important
legislative initiatives to reduce regulation of other
LIBRARY
modes of transportation and the regulation of financial
institutions. An important element of my regulatory
reform proposals has been the narrowing antitrust immunities
which Federal legislation currently grants to industry
rate bureaus thereby permitting these groups to restrain
competition under official government sanction. Although
Congress has not yet acted on these proposals, I am hopeful
that the elected representatives of our people will take
action on these proposals soon, since every day which passes
-7-
means millions of dollars of excessive costs and inefficiencies
in our economic system.
The Administration also has underway a comprehensive
review of many other legislative immunities to the antitrust
laws and I intend to eliminate those immunities that are
not truly justified -- if the Congress will concur. All
industries and groups, however regulated and by whom, should
be subject to the interplay of competitive forces to the
maximum extent feasible.
A full measure of my commitment to competition is
the proposed Agenda for Government Reform Act. This would
require a comprehensive, disciplined look at ways of
restoring competition in the economy. This would involve
in-depth consideration of the full range of Federal regulatory
activities in a reasonable -- but rapid -- manner that would
allow for an orderly transition to a more competitive
environment.
This competition policy, which includes regulatory
reform and invigorated antitrust enforcement, will protect
those businessment who desire to be competitive from
anti-competitive actions both by government regulators and
:by other business competitors. In turn, the American
consumers will enjoy the substantial benefits provided by
full and open competition within the business community.
DEWEY. BALLANTINE, BUSHBY. PALMER & WOOD
Mr. Schmults
To
I received the attached
materials by Telecopier from
Paul Nash, and I am sending
them to you per Paul's
FORD : GERALD LIBRAR
instructions.
Felex Langhlen
Felix B. Laughlin
Sept 27 , 1976
September 27, 1976
Notes on Proof of Conspiracy In
Cases Involving Alleged Price Fixing
A conspiracy 1s an agreement. In antitrust cases
there is often an attempt to prove an unlawful agreement by
circumstantial evidence which does not depend on direct
evidence of agreement but rather depends upon the market
behavior of the accused parties. As was said by the Court
of Appeals in American Tobacco Co. V. United States, 147 F.2d
93, 107 (6th Cir. 1944). affirmed, 328 U.S. 781 (1946):
"Often, 1f not generally, direct proof
of a criminal conspiracy 1s not available, and
the common purpose and plan are disclosed only by
a development and collocation of circumstances."
The evaluation of market behavior in an antitrust
case to determine whether substantially parallel business
behavior among competitors constitutes evidence of conspiracy
involves a study of the economics of the industry and a study
of the business motives which a trier of fact, whether a judge
or a Jury, might decide either do or do not justify a find-
ing of unlawful agreement.
In Theatre Enterprises, Inc. V. Paramount Film
Distributing Corp., 346 U.S. 537 (1954), the Supreme Court
held that conscious parallelism of business behavior among
competitors, by itself, was not sufficient evidence of
conspiracy and that something further would have to be
LISEARY GERALD 1
It is unclear, however, what further evidence 1s required and
the result is that the trial of cases inwlving alleged price
fixing conspiracy 1s often a complicated and time consuming
process in which the outcome 1s uncertain until the judge or
jury has finally spoken.
The cases referred to below are examples of the
difficulty of knowing when a price fixing conspiracy 18 made
out and the narrow line which separates guilt from innocence
in a particular case.
In United States V. National Malleable & Steel
Castings Co., et al., 1958 Trade Cases, 1 68,890 (N.D. Ohio
1957) affirmed per curiam, 358 U.S. 38 (1958), there was an
attempt to prove a price fixing conspiracy largely on the
basis of market behavior. After four and one-half years of
pretrial procedures and two months of trial, the trial Judge
concluded that the case was without merit and he expressed the
opinion that if government counsel had known all the facts
they would not have brought the case. Nevertheless the
government appealed the case to the Supreme Court which
affirmed without opinion.
In Peveley Dairy Co. V. United States, 178 F.2d 363
(8th Cir. 1949), cert. denied, 339 U.S. 942 (1950), a number
of dairy companies were indicted for conspiracy to fix prices.
The evidence was wholly circumstantial and it was undisputed
(178 F.2d at 367). The Jury brought in a verdict of guilt
=
GERALD
FORD
2
as against the corporate defendants. The Court of Appeals
reversed the conviction after reviewing all the evidence and
concluded that the facts as to market behavior did not justify
conviction.
Other examples of cases in which the government
sought unsuccessfully to establish price fixing conspiracy on
the basis of circumstantial evidence were United States V.
Eli Lilly & Co., et al., 1959 Trade Cases, 1 69,536 (D. N.J.
1959) and United States V. Ward Baking Co., et al., 243 F. Supp.
713 (E.D. Pa. 1965). In both cases there were elaborate pre-
trial proceedings and a full trial. In both cases It was
found that the circumstances were insufficient to establish a
conspiracy.
The narrow line between guilt and innocence in such
cases 18 illustrated by Beatrice Food Co. V. United States,
312 F.2d 29 (8th Cir. 1963). There a dairy company was
indicted for price fixing. There was a Jury conviction based
largely on evidence as to market behavior. The Court of Appeals
noted that "some might regard the case as not a strong one."
312 F.2d at 43. It also noted that in certain other casés
somewhat similar market behavior had been held to be insuf-
ficient to support a conspiracy charge. It nevertheless held
that the jury verdict would be allowed to stand.
The reason why there are 80 few open and shut cases
of conspiracy to fix prices, and why the line between guilt
R.
and innocence is 80 difficult to draw, 18 that most cases BERAD
FORD
LIBRARY
require a determination of the reasons for business conduct.
As was said in an article in 44 Illinois Law Review, 743,
752 (1950):
"First, conspiracy typically has a definite
subjective quality. Agreement, express or
'tacit,' has been the essence of the offence.
'Meeting of the minds, 'unity of purpose,' 1
'collusion', 'common design' are some of the
phrases constantly recurring in the opinions.
The crime is 'predominantly mental,' and there
must be an intent to be a participant."
Since the alleged crime 1s in most cases "predomin-
antly mental", as 18 stated in the article referred to, the
trial of such a case 1s complicated and difficult and the
outcome 16 hard to anticipate. There are very few litigated
cases which do not involve decisions of fact on which reasonable
people might differ, having to do with the economics of an
industry and the reasons which in fact impelled the businessmen
to act as they did.
LIBRARY GERALD BILFORD
THE WHITE HOUSE
WASHINGTON
September 28, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
EDWARD SCHMULTS
W
SUBJECT:
Recommendation on the Hart/Scott/Rodino
Antitrust Improvements Act of 1976
On the merits, I recommend that you veto the antitrust
bill. My reasons relate primarily to the parens patriae
provisions of Title III. In particular, the mandatory
treble damage and contingency fee provisions are
especially troublesome. The treble damage provision
aggravates the problems presented by the bill's novel
statistical aggregation concept. Once parens patriae
is embedded in our antitrust laws, I believe its scope
will widen over time.
Substantive objections to the bill are more fully set
forth in the memoranda to you from the Attorney General
and the Secretary of the Treasury.
From a political standpoint, I have the following
observations:
1. Opposition from the business community is widespread
and deep. This bill is feared by small business. For
example, real estate brokers are concerned that this
bill will be used by state attorneys general and con-
tingency fee lawyers to overturn an accommodation that
the Real Estate Association has worked out with Justice.
2. Some election commentators have asserted that you
lack a solid base of constituencies. A veto of the
antitrust bill would be helpful with thousands of small
businessmen, as well as with larger companies.
3. Carter has sought to "out Nader Nader" and he and
Mondale will continue to attack you as being insensitive
GERALD FORD LIBRATA
-2-
to the needs of consumers, the poor and small taxpayers.
It seems to me that signing the antitrust bill will
not diminish their attacks one wit and will not win you
any support from consumer groups or the like. Stated
another way, does it really make any difference whether
Carter cites the tax laws, the Consumer Protection Agency
proposal and the antitrust bill, or merely has the first
two to illustrate his charges.
4. Although the initial outcry, which a veto will
provoke, will be sharp, I believe you can mitigate any
loss by prefacing your veto statement with an outline of
your antitrust and competition policy record, which is a
good one. Attached is a suggested outline which is in
the process of being staffed.
5. If you decide to veto the bill, I would recommend that
you call upon the Senate to enact immediately the separate
bills that the House has passed on the civil investigative
demand and pre-merger notification provisions of Titles I
and II, respectively, of the Hart/Scott/Rodino bill. This
strategy would call for a prompt veto of the bill to permit
the Senate to act (of course, it has the dangers of al-
lowing time for an override vote).
Attachment
GERRAL FORD LIBRART
Buchen - FYI
THE WHITE HOUSE
WASHINGTON
September 29, 1976
MEMORANDUM FOR:
JACK MARSH
FROM:
ED SCHMULTS
SUBJECT:
The Antitrust Legislation
I think the President should be made aware of the action
of House and Senate Conferees yesterday to authorize
$10 million of LEAA funds to increase state antitrust
enforcement programs. We now have the prospect of the
antitrust bill giving new powers to state attorneys general
and the federal government funding the enforcement efforts.
See the attached article from today's Washington Post.
If the President decides to sign the antitrust legisla-
tion, I trust we are at least considering a signing
ceremony. We could decide to run with the ball and take
some credit for the new bill. Additionally, as you know,
Senator Hart is quite ill and a ceremony at which he and
Senator Scott would attend would be well received.
Attachment
FORD i LIBRA 07V330
THE WASHINGTON POST
-
September 29, 1976
wask POST. 92976
Antitrust Fund
Gains Support
House and Senate conferees
yesterday agreed to authorize
$10 million a year for three
years in seed money to in-
crease state antitrust en-
forcement programs.
The authorization was part
of the Senate-passed Law En-
forcement Assistance Adminis-
tration authorization bill and
was insisted upon by Sen. Ed-
ward M. Kennedy. (D-Mass:)
in conference although there
was no comparable House pro-
vision.
House conferees polled and
voted 7-2 to okay it after Ju.
diciary Chairman Peter W.
Rodino Jr. and Rep. William J.
Hughes (both D-N.J.) supported
the provision. They said it was
a good way to give the states
money to bring antitrust suits
-without hiring outside law-
yers - should President Ford
sign the antitrust bill giving
states the power to bring anti-
trust damage suits on behalf
of their citizens. The measure
is now on his desk.
FORD
GERALD
LIBRARY
FOR IMMEDIATE RELEASE
September 30, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 (H.R. 8532)
President Ford signed the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 today. He noted that this legislation will contribute
to the Administration's overall competition policy of vigorous anti-
trust enforcement and regulatory reform.
This Act:
Broadens powers of the Department of Justice in conducting
antitrust investigations.
Requires advance notice to the Justice Department and the
Federal Trade Commission of major corporate mergers and
acquisitions.
Authorizes state attorneys general to file suits to recover
damages to citizens of the states resulting from certain
antitrust violations.
MAJOR PROVISIONS
Title I. Antitrust Civil Process Act Amendments
This title adopts Administration-sponsored legislation to amend
the Antitrust Civil Process Act of 1962. It authorizes the
Department of Justice to issue a pre-complaint subpoena--
called a Civil Investigative Demand ("CID") -- not only on targets
of the investigation, as permitted under current law, but also to
third parties (e.g., suppliers and customers) who have information
relevant to an investigation. The bill would also allow the
Department to obtain, not only documentary evidence as under current
law, but also answers to oral and written questions from recipients
of such a CID. These amendments also provide safeguards, including
right to counsel by the recipient of the CID, to assure that these
powers are not abused.
Title II. Premerger Notification
H.R. 8532 requires companies with assets or sales in excess of
$100 million to notify the Department of Justice and the Federal
Trade Commission in advance of the acquisition of, or merger with,
any company with assets or sales in excess of $10 million. This
will allow the antitrust enforcement agencies sufficient time to
investigate the competitive consequences of major mergers and
acquisitions and, if necessary, to obtain injunctive relief before
steps have been taken toward consolidation of the operations.
(more)
GERALO FORD LIBRARY
2
Title III. Parens Patriae
H.R. 8532 would authorize state attorneys general to bring suits
in Federal district court on behalf of state residents for viola-
tions of the antitrust provisions of the Sherman Act.
Mandatory treble damages would be awarded in successful suits and
would either be distributed to individuals in a manner approved
by the court or deposited with the state as general revenues.
In price-fixing cases, damages could be proved in the aggregate
by using statistical sampling or other measures without the
necessity of proving damages to each individual on whose behalf
the suit was brought.
The bill prohibits state attorneys general from hiring outside
lawyers on a contingency fee based on a percentage of the award.
However, it would allow private attorneys to bring suit on
behalf of the state and their fees would be determined by the court.
SUMMARY
In his signing statement, the President noted that the first
two titles of the bill--the Antitrust Civil Process Act amendments
and premerger notification--w desirable. In addition, the
President reiterated his concerns with the potential for abuse
of the parens patriae title and said that its implementation
would be carefully reviewed to assure that it was responsibly
enforced.
# # #
FORD
GERALD
LIBRARY
FOR IMMEDIATE RELEASE
SEPTEMBER 30, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
STATEMENT BY THE PRESIDENT
After careful reflection, I am signing into law today
H.R. 8532 -- the Hart-Scott-Rodino Antitrust Improvements
Act of 1976. This bill contains three titles, two of which
my Administration has supported and one -- the "parens patriae"
title -- which I believe is of dubious merit.
COMPETITION AND ANTITRUST POLICIES
I am proud of my Administration's record of commitment
to antitrust enforcement. Antitrust laws provide an important
means of achieving fair competition. Our nation has become
the economic ideal of the free world because of the vigorous
competition permitted by the free enterprise system. Competition
rewards the efficient and innovative business and penalizes
the inefficient.
Consumers benefit in a freely competitive market by
having the opportunity to choose from a wide range of products.
Through their decisions in the marketplace, consumers indicate
their preferences to businessmen, who translate those preferences /
into the best products at the lowest prices.
The Federal Government must play two important roles in
protecting and advancing the cause of free competition.
First, the policy of my Administration has been to
vigorously enforce our antitrust laws through the Antitrust
Division of the Department of Justice and the Federal Trade
Commission. During an inflationary period, this has been
particularly important in deterring price-fixing agreements
that would result in higher costs to consumers.
Second, my Administration has been the first one in forty
years to recognize an additional way the Federal Government
vitally affects the environment for business competition.
Not only must the Federal Government seek to restrain private
anti-competitive conduct, but our Government must also see to
it that its own actions do not impede free and open competition.
All too often in the past, the Government has itself been a
major source of unnecessary restraints on competition.
I believe that far too many important managerial decisions
are made today not by the marketplace responding to the forces
of supply and demand but by the bureaucrat. Government regulation
is not an effective substitute for vigorous competition in the
American marketplace.
In some instances government regulation may well protect
and advance the public interest. But many existing regulatory
controls were imposed during uniquely transitory economic
conditions. We must repeal or modify those controls that
suppress rather than support fair and healthy competition.
During my Administration, important progress has been
made both in strengthening antitrust enforcement and in reforming
government economic regulation.
more
GERALD FORD LIBRABY
2
In the last two years, we have strengthened the Federal
antitrust enforcement agencies. The resources for the Antitrust
Division and the Federal Trade Commission's Bureau of Competition
have been increased by over 50 percent since Fiscal Year 1975.
For the Antitrust Division, this has been the first real man-
power increase since 1950. I am committed to providing these
agencies with the necessary resources to do their important
job.
This intensified effort is producing results. The Antitrust
Division's crackdown on price-fixing resulted in indictment of
183 individuals during this period, a figure equalled only once
in the 86 years since enactment of the Sherman Act. The fact
that the Division presently has pending more grand jury investi-
gations than at any other time in history shows these efforts
are being maintained.
To preserve competition, the Antitrust Division is
devoting substantial resources to investigating anti-
competitive mergers and acquisitions. At the same time,
the Division is litigating large and complex cases in two
of our most important industries -- data-processing and
telecommunications.
The cause of vigorous antitrust enforcement was aided
substantially when I signed the Antitrust Procedures and
Penalties Act of 1974, making violation of the Sherman Act
a felony punishable by imprisonment of up to three years for
individuals, and by a corporate fine of up to $1 million.
Also, in December 1975, I signed legislation repealing
Fair Trade enabling legislation. This action alone, according
to various estimates, will save consumers $2 billion annually.
On the second front of reducing regulatory actions that
inhibit competition, I have signed the Securities Act Amendments
of 1975 and the Railroad Revitalization and Regulatory Reform
Act, which will inject strong doses of competition into
industries that long rested comfortably in the shade of federal
economic regulation.
My Administration has also sponsored important legislative
initiatives to reduce the regulation of other modes of trans-
portation and of financial institutions. An important element
of my regulatory reform proposals has been to narrow antitrust
immunities which are not truly justified. Although Congress
has not yet acted on these proposals, I am hopeful that it
will act soon. All industries and groups should be subject
to the interplay of competitive forces to the maximum extent
feasible.
A measure of my commitment to competition is the Agenda
for Government Reform Act which I proposed in May of this
year. This proposal would require a comprehensive, disciplined
look at ways of restoring competition in the economy. It would
involve in-depth consideration of the full range of federal
regulatory activities in a reasonable -- but rapid -- manner
that would allow for an orderly transition to a more competitive
environment.
This competition policy of regulatory reform and
vigorous antitrust enforcement will protect both businessmen
and consumers and result in an American economy which is
stronger, more efficient and more innovative.
FORD
more
LIBRARY
3
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
I believe the record of this Administration stands as
a measure of its commitment to competition. While I continue
to have serious reservations about the "parens patriae" title
of this bill, on balance, the action I am taking today should
further strengthen competition and antitrust enforcement.
This bill contains three titles. The first title will
significantly expand the civil investigatory powers of the
Antitrust Division. This will enable the Department of
Justice not only to bring additional antitrust cases that
would otherwise have escaped prosecution, but it will also
better assure that unmeritorious suits will not be filed.
These amendments to the Antitrust Civil Process Act were
proposed by my Administration two years ago, and I am pleased
to see that the Congress has finally passed them.
The second title of this bill will require parties to
large mergers to give the Antitrust Division and the Federal
Trade Commission advance notice of the proposed mergers.
This will allow these agencies to conduct careful investigations
prior to consummation of mergers and, if necessary, bring suit
before often irreversible steps have been taken toward con-
solidation of operations. Again, this proposal was supported
by my Administration, and I am pleased to see it enacted into
law.
I believe these two titles will contribute substantially
to the competitive health of our free enterprise system.
This legislation also includes a third title which would
permit state attorneys general to bring antitrust suits on
behalf of the citizens of their states to recover treble
damages. I have previously expressed serious reservations
regarding this "parens patriae" approach to antitrust
enforcement.
As I have said before, the states have authority to
amend their own antitrust laws to authorize such suits in
state courts. If a state legislature, representing the
citizens of the state, believes that such a concept is sound
policy, it ought to allow it. I questioned whether the
Congress should bypass the state legislatures in this
instance. To meet in part my objection, Congress wisely
incorporated a proviso which permits a state to prevent
the applicability of this title.
In price-fixing cases, this title provides that damages
can be proved in the aggregate by using statistical sampling
or other measures without the necessity of proving the
individual claim of, or the amount of damage to, each person
on whose behalf the case was brought. During the hearings
on this bill, a variety of questions were raised as to the
soundness of this novel and untested concept. Many of the
concerns continue to trouble me.
I have also questioned the provision that would allow
states to retain private attorneys on a contingent-fee basis.
While Congress adopted some limitations which restrict the
scope of this provision, the potential for abuse and
harassment inherent in this provision still exists.
more
FORD
BERALD
4
In partial response to my concerns, Congress has narrowed
this title in order to limit the possibility of significant
abuses. In its present form, this title, if responsibly
enforced, can contribute to deterring price-fixing violations,
thereby protecting consumers. I will carefully review the
implementation of the powers provided by this title to assure
that they are not abused.
Individual initiative and market competition must remain
the keystones to our American economy. I am today signing
this antitrust legislation with the expectation that it will
contribute to our competitive economy.
####