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Ronald Reagan Presidential Library Digital Library Collections This is a PDF of a folder from our textual collections. Collection: Roberts, John G.: Files Folder Title: JGR/Antitrust (3 of 3) Box: 2 To see more digitized collections visit: https://reaganlibrary.gov/archives/digital-library To see all Ronald Reagan Presidential Library inventories visit: https://reaganlibrary.gov/document-collection Contact a reference archivist at: [email protected] Citation Guidelines: https://reaganlibrary.gov/citing National Archives Catalogue: https://catalog.archives.gov/ - 10/15 THE WHITE HOUSE WASHINGTON antitional file TO: for FROM: Richard A. Hauser RAY Deputy Counsel to the President FYI: COMMENT: ACTION: the did early warning system is almost york in action in pls. Burbanaic for to receive these identify a contact U.S. Department of Justice alerts. Thanks Office of The Deputy Attorney General Washington, D.C. 20530 October 11, 1985 To: Richard A. Hauser From: Jay B Stephens Attached is a memo- randum advising your Office of action taken by the Antitrust Division regarding AT&T. Attachment U.S. Department of Justice Antitrust Division Office of the Assistant Attorney General Washington, D.C. 20530 October 11, 1985 MEMORANDUM FOR THE COUNSEL TO THE PRESIDENT Subject: Report to the District Court on AT&T Decree Compliance Information Memorandum On Tuesday, October 15, 1985, the Antitrust Division plans to file with the U.S. District Court for the District of Columbia a report on our investigation of AT&T's compliance with certain provisions of the consent decree in United States V. AT&T. The investigation involved AT&T's processing of business customer orders for long distance service. The investigation disclosed that AT&T failed to exercise reasonable care in processing these orders and as a result submitted to local telephone companies hundreds of thousands of erroneous "primary interexchange carrier" (PIC) designations. We could have brought suit alleging that AT&T's conduct constituted a violation of the consent decree, but the outcome of such a suit would not be certain, because it is not entirely clear that we could convince the court that AT&T's conduct violates the specific language of the decree. Ultimately, we decided not to file suit because AT&T has: (a) already taken corrective action; (b) has agreed to pay a fine of up to $1 million per day for each day it does not meet certain specific commitments for corrective action contained in a letter to the Department; and (c) acknowledged that the decree should be interpreted to impose a standard of reasonable care for the PIC designation process. It is possible that the other long distance carriers may complain that we should have taken punitive action against AT&T. However, criminal action was not an option because we concluded that AT&T's conduct was not willful. The arrangement that we ultimately made with AT&T is quicker and almost certainly more effective than any relief we would be likely to obtain in a civil action. We also are in a far better position to go to court if there are any future problems. Douglas H. Ginsburg Assistant Attorney General THE WHITE HOUSE WASHINGTON December 20, 1985 MEMORANDUM FOR DAVID L. CHEW STAFF SECRETARY FROM: ASSOCIATE COUNSEL JJR TO THE PRESIDENT JOHN G. ROBERTS SUBJECT: Joint EPC/DPC Decision Memoranda: Antitrust Law Revisions and Aids Counsel's Office has reviewed the above-referenced decision memoranda, and finds no objection to them from a legal perspective. ID # CU WHITE HOUSE CORRESPONDENCE TRACKING WORKSHEET o . OUTGOING H INTERNAL I - INCOMING Date Correspondence Received (YY/MM/DD) / / Name of Correspondent: Dave Chew MI Mail Report User Codes: (A) (B) (C) Subject: gaint EPC/DPC Decision memorandar; antitrust Law Revisions & aids ROUTE TO: ACTION DISPOSITION Tracking Type Completion Action Date of Date Office/Agency (Staff Name) Code YY/MM/DD Response Code YY/MM/DD CUHOLL ORIGINATOR 85,12,20 / / Referral Note: cuat 18 R 85,13,20 5 85,12,24 Referral Note: / / / / Referral Note: / / / / Referral Note: / / / / Referral Note: ACTION CODES: DISPOSITION CODES: A Appropriate Action I Info Copy Only/No Action Necessary A Answered C Completed C Comment/Recommendation R Direct Reply w/Copy B - Non-Special Referral S Suspended D Draft Response S For Signature F Furnish Fact Sheet X Interim Reply to be used as Enclosure FOR OUTGOING CORRESPONDENCE: Type of Response = Initials of Signer Code = "A" Completion Date = Date of Outgoing Comments: Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference, ext. 2590. 5/81 Document No. WHITE HOUSE STAFFING MEMORANDUM DATE: 12/20/85 ACTION/CONCURRENCE/COMMENT DUE BY: 12/24/85 SUBJECT: JOINT EPC/DPC DECISION MEMORANDA: ANTITRUST LAW REVISIONS & AIDS ACTION FYI ACTIO FYI VICE PRESIDENT McFARLANE REGAN OGLESBY MILLER RYAN BUCHANAN SPEAKES CHAVEZ SPRINKEL CHEW SS SVAHN DANIELS THOMAS FIELDING TUTTLE HENKEL HICKS KINGON LACY REMARKS: Please provide any comments/recommendations by Tuesday, December 24th. Thank you. RESPONSE: David L. Chew Staff Secretary Ext. 2702 THE WHITE HOUSE WASHINGTON December 19, 1985 MEMORANDUM FOR THE PRESIDENT A FROM: ALFRED H. KINGON SUBJECT: Antitrust Law Revisions and AIDS Program Attached are the two decision memoranda reflecting the Joint EPC/DPC meeting. There were unanimous recommendations on both issues and you can sign the last page of each memorandum after reading. Attachments THE WHITE HOUSE WASHINGTON MEMORANDUM FOR THE PRESIDENT FROM: THE DOMESTIC POLICY COUNCIL SUBJECT: Acquired Immune Deficiency Syndrome (AIDS) Issue - What should the federal government do to deal with the problem of AIDS? Background - Acquired immune deficiency syndrome (AIDS) is a very serious, apparently always fatal disease caused by a virus. The incidence of AIDS cases is increasing steadily in the United States. More than 15,000 persons have been diagnosed with the disease since 1981, and more than half of them have died. A much larger number of persons is known to be infected with the virus. The incubation period, during which a person is infected but does not have obvious disease, may last for several years. Infected persons may be capable of transmitting infection to others for many years, even though they may be free of symptoms. Virus infection is known to be transmitted through sexual contact, through equipment used to administer intravenous drugs of abuse, through contaminated blood or blood products and from infected mothers to infants. No effective vaccine or therapy exists. AIDS and the Federal Government - In the past four years, the Department of Health and Human Services has been the major focus of AIDS activities in the federal government. The AIDS research effort has been progressively accelerated and has yielded extensive information on AIDS and the virus that causes it. This research has yielded extensive information on AIDS and the virus that causes it. A test for AIDS virus antibody has been developed and licensed. Blood banks are using it to screen potential blood donors, to reduce the possibility of transmission of the virus. The Department of Health and Human Services is developing a series of recommendations for reducing the risk of contracting AIDS. While awaiting the development of AIDS drugs and vaccines, major effort is focused on public information and education to reduce the risk of the spread of the AIDS virus. The Department of Defense has begun testing all potential recruits for AIDS virus antibody, and counseling and excluding from the military those testing positive. Also, the Department of Defense will test all active duty personnel, in a priority order, over the next year. Those who test positive will be evaluated to determine whether they are ill. If so, they may be processed for discharge. If not, they will be retained, but their deployment may be restricted. - 2 - Other departments and agencies have the following AIDS activities under consideration: Department of Education - Serving as an information resource for state and local education officials. Department of Justice, Bureau of Prisons - Isolating inmates with AIDS and AIDS related complex; testing some or all inmates for AIDS virus antibody. O Department of State - Testing personnel, on a voluntary basis, for AIDS virus antibody, with counseling and assignment restrictions for those who test positive. O Veterans Administration - Augmenting health resources to care for veterans with AIDS. The cost of AIDS to the federal government has risen from $5.5 million in FY 1982 for research in HHS, to about $400 million in FY 1986 for all federal AIDS activities. Conclusions AIDS is a major epidemic public health threat. The number of AIDS cases will continue to increase. O There are long-term hopes for drugs and vaccines against AIDS, but none is immediately at hand. Major effort should focus on prevention, to inform and to lower risks of further transmission of the AIDS virus. Recommendation - The Council unanimously recommends the following steps: O Urging federal agencies and state and local governments to take all necessary steps to lessen the risks of the spread of AIDS, including timely dissemination of accurate information on AIDS. O Emphasizing that, for the general welfare of society, AIDS must be dealt with as a major public health problem. This could be done through the publication of a special report on AIDS, and enhanced public information efforts. - 3 - Decision The Council recommends that you approve these steps. Approve Council Recommendation Disapprove Council Recommendation Further Discussion Required Edwin Meese III Edwin Meese III Chairman Pro-Tempore THE WHITE HOUSE WASHINGTON December 16, 1985 MEMORANDUM FOR THE PRESIDENT FROM: THE DOMESTIC POLICY COUNCIL THE ECONOMIC POLICY COUNCIL SUBJECT: Antitrust Review Since the enactment of our major antitrust laws, the Sherman Act of 1890 and the Clayton Act of 1914, the world has changed considerably. Early in this century the "global economy" was unheard of. Today, the global economy is a reality, a reality to which U.S. business and the U.S. Government must adjust. That adjustment should include refining our antitrust laws to reflect the dynamics of world trade. The Domestic and Economic Policy Councils have reviewed our antitrust laws, seeking to refine and adjust those laws not only to the integrated world economy, but also to reflect the increasing economic and legal sophistication regarding mergers and antitrust restrictions. This memorandum outlines for you several recommendations that the Councils believe will enhance the vigor and competitiveness of American businesses, while continuing to protect American consumers and businesses from unfair practices, including monopolies, cartels, and price fixing. ECONOMICS AND ANTITRUST The economic thinking that dominated antitrust legislation and enforcement through much of this century was that "big is bad." Any action toward greater concentration within an industry was attacked as a threat to competition and free trade. Over the past decade, thinking has changed. Europe and Japan, with our help, have gained a formidable share of the world market and foreign competitors have made substantial inroads into the U.S. domestic market. In part because of increased diversity and heightened competition in global markets, economic thinking about the potential effects of mergers and other efforts by American firms to achieve greater efficiency has become more sophisticated: big is no longer viewed as necessarily bad and most mergers are supported as pro-competitive, helping businesses to achieve greater efficiency and consumers to enjoy lower prices. Two of your appointments to Federal appellate Courts, Judges Robert H. Bork and Richard A. Posner, have pioneered a trend toward taking economic factors into greater account in antitrust - 2 - cases. This thinking improves upon the early 20th century antitrust philosophy by encouraging pro-competitive mergers and cooperative business arrangements, while continuing to guard against anti-competitive abuses that harm consumers and business alike. Your Administration has captured the increasingly sophisticated economic thinking in the Justice Department's Merger Guidelines, which serve as a guide to Federal antitrust enforcement for the courts and the private sector. The Justice Department also has sought to promote an economically rational approach to antitrust by reforming government case selection criteria, filing briefs in private lawsuits, and issuing public pronouncements. PROBLEMS IN ANTITRUST Even with these significant advances in antitrust policy, more remains to be done. Our antitrust statutes, as opposed to enforcement policies, have not been reformed to reflect changes over the years in antitrust thinking. Current policies and judicial trends could be reversed by the discretionary action of future administrations. Current remedies for injuries in antitrust cases provide automatic damages that are three times the amount of the injury. These treble damage provisions were written into the law to deter anticompetitive behavior and encourage private vigilance against harmful cartel agreements, which are typically reached by competitors acting in secret. However, automatic treble damages also encourage frivolous law suits and unjustified settlements. The antitrust statutes occasionally pose a disincentive to firms contemplating mergers to improve their competitive- ness. The test applied to mergers, while made much clearer under the Merger Guidelines, still remains uncertain and poses a barrier to some firms. Moreover, the Guidelines do not prevent private parties from suing to prevent mergers. RECOMMENDATIONS The Domestic and Economic Policy Councils have developed a series of recommendations for refining the antitrust laws bv: Detrebling antitrust damages, except in cases of overcharges or underpayments and otherwise "fine-tuning" the antitrust remedies; Amending the Clayton Act to strengthen and clarify the wording of the statutory standard for mergers and codify the principles embodied in the Justice Department's Merger Guidelines; - 3 - Establishing a limited antitrust merger exemption as an alternative remedy under Sections 201-203 of the Trade Act of 1974 for domestic industries injured by imports; Lifting unnecessary restrictions on interlocking corporate directorates; and Clarifying the factors courts should use in deciding whether to exercise jurisdiction in antitrust cases involving foreign commerce. Detrebling and other Remedies Improvements As mentioned earlier, treble damages cam have positive effects in deterring and apprehending violators of our antitrust laws. However, trebling can also have serious anticompetitive side effects. Firms may shy away from practices such as aggressively lowering prices or innovative distributional practices because of the fear of treble damages. In addition, businesses may use the threat of treble damages to inhibit their more successful rivals. The practice of awarding treble damages poses additional problems. Because each defendant is jointly and severally responsible for all defendants' damages, there is a strong incentive for defendants to settle rather than defend their actions, for fear that their co-defendants will settle first, leaving them with a dispropor- tionate share of the damages should they be found liable. In addition, successful plantiffs in antitrust cases are awarded attorneys' fees, which encourages antitrust suits. Successful defendants, however, do not receive attorneys' fees. This imbalance creates incentives for antitrust litigation and an incentive to settle, sometimes without regard to the merits of the case. The Domestic and Economic Policy Councils offer three proposals for refining the application of treble damages: 1. Treble damages should only be awarded in cases involving overcharges or underpayments; 2. The plantiff's claim for damages in an antitrust suit should be reduced by the share of damages fairly allocable to any person released from liability; and 3. Attorneys' fees should be awarded to successful defendants in cases that are judged to be "frivolous, unreasonable, without foundation, or in bad faith." Mergers and Acquisitions The Councils also propose to clarify and improve the antitrust statutes by amending the Clayton Act to: - 4 - 1. Strengthen the language of the statutory standard governing mergers to require a "significant probability" of harm rather than continue to test mergers under the current "may tend to" (or incipiency) formulation; 2. Clarify that the harm to be avoided is increases in prices to consumers; and 3. Codify the principles of the Justice Department's Merger Guidelines. Import Relief Sections 201-203 of the Trade Act of 1974 authorize the President to provide a domestic industry relief from foreign imports if the International Trade Commission (ITC) finds that an increase in imports is the substantial cause of actual or threatened injury to the domestic industry. Current relief measures include: tariffs, duties, quotas, and orderly marketing arrangements. The Councils propose that the list of relief measures be expanded to include a partial antitrust exemption for mergers and acquisition in domestic industries injured by imports. The exemption would be for a limited period of time, up to five years. The Councils believe there are two reasons for including the antitrust exemption in the range of relief options: (1) in the face of foreign competition significant enough to cause an injury finding under Section 201, the threat of collusion among domestic firms resulting from a merger is sufficiently small to justify a more liberal standard; and (2) the antitrust exemption would be a non protectionist alternative to the other possible relief measures. Interlocking Directorates Section 8 of the Clayton Act prohibits a person from serving on the board of one or more corporations competing with another, however remotely. This absolute restriction causes much frus- tration as potential directors of diversified companies are repeatedly disqualified as directors after discovery of insignificant competitive overlaps. The Councils propose to amend Section 8 of the Clayton Act to exempt interlocks where competitive overlaps are de minimus as measured by sales of the same product or sales in the same market. The Councils also propose to raise the threshold for Federal law prohibition of interlock from situations where either company has $1 million in equity to situations where both companies have at least $10 million in equity. These proposals would remove an unwarranted and bothersome restriction and provide greater certainty with regard to permissible corporate directors. - 5 - Jurisdiction in Foreign Commerce Cases Our trading partners and allies have expressed some consternation at the application of the Sherman Act to the international arena. They believe that this application of our antitrust law interferes with their domestic policies and objectives and represents an unwarranted intrusion upon their sovereignty. The United States has reserved the option to exercise jurisdiction over some international conduct because of its effect on our commerce. The Councils propose that our antitrust laws be amended to require courts to dismiss private suits when, in light of specified factors, the exercise of jurisdiction would be unreasonable. Some of the factors to be considered would include: the nationality of the parties involved; the significance of the alleged violation to U.S. consumers and competitors; the presence of an intention to harm U.S. consumers and competitors; and the degree of conflict between U.S. and foreign law. LEGISLATION OUTLOOK The Councils unanimously agreed upon each of these proposals. We believe they are reasonable and important advances in antitrust law and enforcement. We must caution that some of these proposals may arouse significant opposition and, in fact, spawn counter-proposals inconsistent with your Administration's policies. Nevertheless, we can also expect substantial support for some if not all of these proposals. RECOMMENDATION The Domestic and Economic Policy Councils unanimously recommend that the Administration forward legislation incorporating all of the proposed changes in antitrust law. Approve Disapprove Edwintheese III Edwin Meese III James James A. Baker Bahe III Chairman Pro Tempore Chairman Pro Tempore Domestic Policy Council Economic Policy Council THE WHITE HOUSE WASHINGTON January 16, 1986 MEMORANDUM FOR BRANDEN BLUM LEGISLATIVE ATTORNEY OFFICE OF MANAGEMENT AND BUDGET FROM: ASSOCIATE COUNSEL DM TO THE PRESIDENT JOHN G. ROBERTS SUBJECT: Draft Department of State Report on Proposed Amendment to S. 397, the "Foreign Trade Antitrust Improvements Act of 1985" Counsel's Office has reviewed the above-referenced draft report, and finds no objection to it from a legal perspective. 378609 ID #. CU WHITE HOUSE CORRESPONDENCE TRACKING WORKSHEET o - OUTGOING H - INTERNAL I * INCOMING Date Correspondence Received (YY/MM/DD) 11 Name of Correspondent: James C. MI Mail Report User Codes: (A) (B) (C) Subject: Draft Department of State Report on Proposed Amendment to S. 397 the If Foreign Trade Antitrust Improvements Act of 1985. II ROUTE TO: ACTION DISPOSITION Tracking Type Completion Action Date of Date Office/Agency (Staff Name) Code YY/MM/DD Response Code YY/MM/DD pare CUHOLL ORIGINATOR 86/0/114 IN / / Referral Note: CUAT18 R 86,01,14 IB S 86/0/123 TR Referral Note: / / / / - Referral Note: / / / / I assistant Referral Note: / / / / Referral Note: ACTION CODES: DISPOSITION CODES: A - Appropriate Action I Info Copy Only/No Action Necessary A Answered C Completed C - Comment/Recommendation R Direct Reply w/Copy B . Non-Special Referral S Suspended D Draft Response S For Signature F . Furnish Fact Sheet X - Interim Reply to be used as Enclosure CORDS VYYOENEMI FOR OUTGOING CORRESPONDENCE: Type of Response = Initials of Signer Code = "A" Completion Date = Date of Outgoing Comments: Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference, ext. 2590. 5/81 EXECUTIVE OFFICE OF THE PRESIDENT BC REPRESENTATIVE OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 80503 January 13, 1986 LEGISLATIVE REFERRAL MEMORANDUM 378609CW TO: Department of Justice Department of Commerce Council of Economic Advisers U.S. Trade Representative Department of Transportation Federal Trade Commission SUBJECT: Draft Department of State report on proposed amendment to S. 397, the "Foreign Trade Antitrust Improvements Act of 1985." The Office of Management and Budget requests the views of your agency on the above subject before advising on its relationship to the program of the President, in accordance with OMB Circular A-19. Please provide us with your views no later than January 24, 1986. (NOTE -- Justice and State testimony on S. 397 was cleared for a Senate Judiciary Committee hearing on June 21, 1985.) Direct your questions to Branden Blum (395-3454), the legislative attorney in this office. James Assistant Director for Legislative Reference Enclosure CC: Fred Fielding Karen Wilson Chuck Goldfarb Sue Thau John Cooney Jim Barie Penny Jacobs THE LEGAL ADVISER DEPARTMENT OF STATE WASHINGTON to S. 397, the "Foreign Trade Antitrust Improvements Dear Senator DeConcini: Act of 1985." Thank you for the opportunity to comment on your amendment) I am pleased to be able to state that the Administration affirmatively supports the adoption of legislation providing an appropriate standard for U.S. courts to apply in deciding whether to exercise jurisdiction in foreign commerce cases. We also believe that reform is required in the field of private antitrust remedies, including treble damages, but that this should be addressed, at least initially, across the board, not just in the foreign commerce context. Thus, while we support the goals of your legislation and believe it alleviates some of the concerns we expressed earlier, we continue to have some reservations about its specific language. Against this background, let me offer our views on each of your proposed revisions. First, you have proposed that Sections 2(b) and 3(b), providing for early judicial determination of motions on jurisdiction, permit discovery on the merits for good cause shown while such motions are under consideration. We agree. Early decisions on jurisdiction would help to minimize conflicts caused by those cases in which the United States has the fewest interests. However, as the Justice Department pointed out in its June testimony, facts relating to jurisdiction may be intertwined with those relating to the merits, so discovery may be necessary. Second, your revisions of Section 3 meet some, but not all of our concerns. By listing specific factors, the revised bill no longer requires courts to attempt to determine by a simple balancing test when another country's interests outweigh those of the United States and to dismiss whenever that test is met. However, we believe that the list should be exclusive and should be limited to the following: (1) the relative significance, to the violation alleged, of conduct within the United States as compared to conduct abroad, (2) the nationality of the parties and the principal place of business of corporations, (3) the presence or absence of a purpose to affect United States consumers or competitors, 92:51 98/01/10 - 2 - (4) the relative significance and foreseeability of the effects of the conduct on the United States as compared with the effects abroad, (5) the existence of reasonable expectations that would be furthered or defeated by the action, and (6) the degree of conflict with foreign law. This guidance to the courts should be sufficient. Moreover, we believe that the legislation ought not to refer to a general "jurisdictional rule of reason" the existence, nature and contents of which are controversial. No need exists for such a controversy to be imported into the statute. It would suffice to enunciate a statutory rule for the antitrust area, e.g, by requiring the courts to dismiss when they conclude that "the exercise of jurisdiction by the United States would be unreasonable in light of consideration of the following exclusive factors. Eliminating the requirement for the Attorney General to appear at a court's direction to comment on the foreign relations impact of a private suit is an improvement in the bill. We have serious reservations, however, about your new proposed statutory requirement of dismissal upon Executive Branch certification that the action will interfere with the foreign relations of the U.S. I recognize that this was an effort to accomodate certain of our concerns stated at your June hearings. However, a statutory provision allowing the Executive to compel dismissal of cases for diplomatic reasons upon certification by the Attorney General would probably generate diplomatic problems in private cases from which they might otherwise have remained absent and exacerbate them in others should the Executive decline to exercise its discretion to compel dismissal. Such a provision might result in preempting the jurisdictional adjudication by which such matters ought to be decided as a general rule. Thus, we would recommend its deletion. Finally, regarding the proposed revision of Section 5 on detrebling damages, the Administration believes that the treble damage provisions of the antitrust laws should be modified as a whole, not simply as they apply to foreign commerce. We plan to introduce legislation shortly in order to accomplish this. - 3 - I appreciate the opportunity to comment and I look forward to working with you further on this important matter. Sincerely yours, Abraham D. Bofaer December 6, 1985 CONGRESSIONAL RECORD SENATE S17105 United States or of any state or municipal- of the Benate committees or the chairman sel) and such part of the cierical staff as sty in connection with the defection attempt of any subcommittee of any committee of may be adequate. of Miroslav Medvid. including. but not limit- the Benate the facilities or services of any ed to 18 U.S.C. 241, 18 U.S.C. 242, 18 U.S.C members of the staffs of such other Senate 1201. 18 U.S.C. 1505, 18 U.S.C. 2. 18 U.S.C. committees or any subcommittees of such AMENDMENTS SUBMITTED 18 U.S.C. 371. or any other statute, regula. other Benate committees whenever the spe- tion. or procedure promulgated pursuant to cial panel or Its chairman deems that such the laws of the United States, or any state action is necessary or appropriate to enable DEPARTMENTS OF LABOR, law or local ordinance. the special panel to make the investigation HEALTH AND HUMAN SERV- (3) Whether there have been any addi- and study authorized and directed by this tional instances in which persons asking the resolution: (11) to have access through the ICES, EDUCATION, AND RELAT- United States for asylum have been re- agency of any members of the special panel, ED AGENCIES APPROPRIATION, turned to the Soviet Union or other Com- chief majority counsel, minority counsel, or 1986 munist nations in violation of the laws of any of its investigatory assistants jointly the United States or any state or municipal- designated by the chairman and the ranking ity thereof, or any regulation or procedure minority member to any data. evidence. in- HOLLINGS (AND OTHERS) promulgated thereunder. formation, report, analysis. or document or AMENDMENT NO. 1323 (4) What changes in the laws of the papers relating to any of the matters or United States should be adopted to more questions which It is authorized and direct. Mr. HOLLINGS (for himself, Mr. adequately protect the constitutional. statu- ed to investigate and study in the custody or ZORINSKY, Mr. WEICKER, Mr. MATTING- tory, and moral rights of persons asking the under the control of any department, LY, Mr. BUMPERS, Mr. HEFLIN, and Mr. United States for asylum. agency. officer. or employee of the execu- RUDMAN) proposed an amendment to Sec. 3. (a) To enable the special panel to tive branch of the United States Govern- the amendment of the House to the make the investigation and study author- ment having the power under the laws of tsed and directed by this resolution. the the United States to investigate any alleged amendment of the Senate numbered Senate hereby empowers the special panel criminal activities or to prosecute persons 134 to the bill (H.R. 3424) making ap- as an agency of the Senate (1) to employ charged with crimes against the United propriations for the Departments of and fix the compensation of such clerical, States which will aid the special panel to Labor, Health and Human Services, investigatory. legal, technical. and other as- prepare for or conduct the investigation and Education, and related agencies for sistants as it deems necessary or appropri- study authorized and directed by this reso- the fiscal year ending September 30, ate: (2) to alt and act at any time or place lution: and (12) to expend to the extent it 1986. and for other purposes; as fol- during sessions, recesses, and adjournment determines necessary or appropriate any periods of the Senate: (3) to hold hearings moneys made available to It by this resolu- lows: for taking testimony on oath or to receive tion and to make the investigation and At the end of the amendment insert: documentary or physical evidence relating study It is authorized by this resolution to Notwithstanding any other provision of to the matters and questions It is authorized make. this Act. none of the funds appropriated in to investigate or study; (4) to require by sub- (b) Subpoenas may be issued by the spe- this Act may be made available to the Na- poens or otherwise the attendance as wit- cial panel acting through the chairman or tional Endowment for Democracy. nesses of any persons who the special panel any other member designated by him, and believes have knowledge or information con- may be served by any person designated by cerning any of the matters or questions it is such chairman or other member anywhere APPLICATION OF ANTITRUST authorized to investigate and study: (5) to within the borders of the United States. LEGISLATION TO INTERNA- require by subpoens or order any depart- The chairman of the special panel, or any TIONAL COMMERCE ment. agency. officer. or employee of the other member thereof, is hereby authorized executive branch of the United States Gov- to administer oaths to any witnesses appear- ernment, or any private person, firm or cor- ing before the committee. poration to produce for its consideration or (c) In preparing for or conducting the in- DECONCINI AMENDMENT NO. for any use as evidence in its investigation vestigation and study authorized and direct- 1324 and study any books, correspondence, com- ed by this resolution, the special panel shall (Ordered referred to the Committee munications, document, papers, physical be empowered to exercise the powers con- on the Judiciary.) evidence, records, recordings, tapes, or mate- ferred upon committees of the Senate by rials relating to any of the matters or ques- section 6002 of title 18 of the United States Mr. DECONCINI submitted an tions It is authorized to investigate and Code or any other Act of Congress regulat- amendment intended to be proposed study which they or any of them may have ing the granting of immunity to witnesses. by him to the bill (S. 397) to amend in their custody or under their control: (6) Sec. 4. The special panel shall have au- the Sherman Act and the Clayton Act to make to the Senate any recommends- thority to recommend the enactment of any to modify the application of such Acts tions it deems appropriate in respect to the new congressional legislation which its in- to international commerce; as follows: willful failure or refusal of any person to vestigation considers is necessary or desira- Strike out all after the enacting clause appear before It in obedience to a subpoens ble to safeguard the rights of persons asking or order, or in respect to the willful failure and insert in lieu thereof the following: the United States for asylum. or refusal of any person to answer questions Sec. 5. The special panel shall make a That this Act may be cited as the "Foreign or give testimony in his character as a wit- final report of the results of the investiga- Trade Antitrust Improvements Act of 1985". ness during his appearance before it, or in tion and study conducted by It pursuant to SEC: 2. Section 7 of the Sherman Act (15 respect to the willful failure or refusal of this resolution, together with its findings U.S.C. 6a) is amended by- any officer or employee of the executive and its recommendations as to new congres- (1) inserting "(a)" before "This Act": and branch of the United States Government or sional legislation It deems necessary or de- (2) adding at the end thereof the follow- any person, firm or corporation to produce sirable. to the Senate at the earliest practi- ing new subsection: before the panel any books, correspondence, cable date. but no later than one year after "(b) Whenever a motion to dismiss for documents, financial records. papers, physi- the effective date of this resolution. The lack of subject matter furisdiction under cal evidence, records, recordings, tapes, or special panel may also submit to the Senate this section shall be made in any action materials in obedience to any subpoena or such interim reports as it considers appro- under the antitrust laws, the judge desig- order, (7) to take depositions and other tes- priate. After submission of its final report, nated to hear and determine the case shall, timony on oath anywhere within the United the special panel shall have three calendar except for good cause shown, hear and de- States or in any other country: (8) to pro- months to close its affairs, and on the expi- termine such motion, after such discovery cure the temporary or intermittent services ration of such three calendar months shall or other proceedings directly related to the of individual consultants. or organizations cease to exist. motion as the court deems appropriate, thereof, in the same manner and under the Src. 6. The expenses of the special panel before conducting or permitting the parties same conditions as a standing committee of under this resolution shall not exceed to conduct any further proceedings in the the Senate may procure such services under $300,000. of which amount not to exceed action.". section 202(1) of the Legislative Reorganiza- $25,000 shall be available for the procure- BEC. 3. The Clayton Act (15 U.S.C. 12 et tion Act of 1946; (9) to use on a reimbursa- ment of the services of individual consult- meq.) is amended by adding after section 20 ble basis, with the prior consent of the Gov. ants or organizations thereof. Such ex- the following new section: ernment department or agency concerned penses shall be paid from the contingent "SEC. 21. (a) Notwithstanding any other and the Committee on Rules and Adminis- fund of the Senate upon vouchers approved provision of the antitrust laws or any provi- tration. the services of personnel of any by the chairman of the special panel. The sion of any State laws similar to the anti- such department or agency: (10) to use on a minority members of the special panel shall trust laws, in any action brought by any reimbursable basis or otherwise with the have one-third of the professional staff of person or State under the antitrust laws or prior consent of the chairman of any other the special panel (including minority coun- similar State laws which involves trade or S17106 CONGRESSIONAL December 6, 1985 commerce with a foreign nation. the court ney's fee, If such claim results from conduct mal communications of support and shall enter a judgment dismissing the action occurring in the course of trade or com- constructive criticism from individuals as to all parties whenever it determines that merce with & foreign nation and the court in the business, governmental, aca- the Jurisdictional rule of reason requires determines that- such dismissal. In determining whether to "(A) the exercise of jurisdiction over the demic. and private legal sectors, both dismiss the action, the court shall consider. claim would be more consistent with the tu in the United States and abroad. From as appropriate and without limitation risdictional rule of reason If the claim were all these sources, I drew many useful except as provided in this Act, such factors limited to actual damages or total damage insights that were incorporated into as- as provided herein, and the modified bill that was the subject "(1) the relative significance, to the viola- "(B) the antitrust enforcement interest of of the October 5 hearing. tion alleged. of conduct within the United the United States would not be substantial States as compared to conduct abroad, ly impaired if the claim were limited to From everything I have heard, I ((2) the nationality of the persons in- actual damages or total damage as provided think It is clear that there is strong volved in or affected by the conduct, herein. In determining whether limiting the and widespread agreement with my "(3) the presence of absence of a purpose claim to actual damages or total damage judgment that the Congress should to affect United States consumers or com- renders the exercise of jurisdiction more act to reduce the conflicts between the petitors, consistent with the jurisdictional rule of United States and its trading partners "(4) the relative significance and foreseea- reason. the court shall consider, as appropri- over private antitrust enforcement. bility of the effects of the conduct on the ate and without limitation except as provid- ed in this Act. the factors specified in sec- Reducing such conflicts is in the inter- United States as compared with the effects abroad, tion 21(a) of this Act. In determining the ests of the United States and of U.S. "(5) the existence of reasonable expects- effect of the limitation to actual damages or corporations doing business interna- tions that would be furthered or defeated total damage on the antitrust enforcement tionally. for reasons that I have set by the action. interest of the United States. the court shall forth in my statements before this "(6) the degree of conflict with foreign consider. as appropriate and without limita- body on February 6, 1985, when I first law or foreign econtmic policies, and tion exept as provided herein, such factors introduced this legislation, and on "(7) the effect of the exercise of jurisdic- as the nature of the violation claimed, the tion on international commerce. availability of governmental criminal or civil February 27. 1985, when I shared with "(b) Whenever a motion to dismiss pursu- proceedings, the likely effect on the plain- you the initial favorable reactions to ant to the jurisdictional rule of reason is tiff's prosecution of the action if the claim the bill Everything that I have been made under this section. the court shall is limited to single damages or total damage, told strengthens my conviction that after such discovery or other proceedings di- and the existence of other private plaintiffs. we are on the right track with this bill. rectly related to the motion as the court "(b) Whenever a motion to limit damages that It is in fact long overdue, and that deems appropriate, and except for good is made under this section, the court shall, we should press forward to complete cause shown, hear and determine such except for good cause shown, hear and de- motion before conducting or permitting the termine such motion. after such discovery the legislative process and secure its parties to conduct any further proceedings or other proceedings directly related to the enactment. in the action. The court shall notify the AL motion as the court deems appropriate, In my judgment, Mr. President, the torney General upon the filing of any such before conducting or permitting the parties bill that I reintroduce today solves the motion and invite the views of the United to conduct any further proceedings in the problems identified in the original bill States as to proper disposition of the action. The court shall notify the Attorney and accommodates the legitimate con- motion. General upon the filing of any such motion and invite the views of the United States as cerns of the administration witnesses "(c) If, in any action brought subsequent to the date of enactment of this section by to the proper disposition of the motion." at the June 21 hearing-without in any person or State under the antitrust laws @ Mr. DeCONCINL Mr. President, I any way lessening the effectiveness of or similar State laws and involving trade or am introducing today an amendment the bill. Indeed, as the strongly sup- commerce with a foreign nation. the Attor- in the nature of a substitute to the portive testimony at the October 15 ney General certifies to the court that the Foreign Trade Antitrust Improve- hearing confirms, the revised bill I in- action will interfere with the conduct of the foreign relations of the United States, then ments Act of 1985, a bill designed to troduce today is a better bill, not just the court shall enter a judgment dismissing ameliorate the serious economic and a compromise. It is my hope and ex- political problems that can and do pectation that this new draft. as re- the action as to all parties.". Sec. 4. Section 12 of the Clayton Act is arise when the United States applies vised and clarified, will gain the active amended by- its antitrust laws to international support of the administration In this (1) inserting "(a)" before "That suit"; and trade and commerce. The amendment connection, it is my particular hope (2) adding at the end thereof the follow- incorporates several clarifications and that the current review of antrtrust tng: "(b) The doctrine of forum non conven- modifications to reflect the very legislation by the Cabinet councils on tens shall be applicable in any suit, action, useful testimony of the witnesses at domestic and economic policy will or proceeding under the antitrust laws that the hearing on June 21. 1985, before casue the administration to focus on involves trade or commerce with a foreign the Senate Judiciary Committee and the problems addressed by my bill and nation. and nothing contained in this sec- the consultations among interested the desirability of a solution along the tion or any other venue provision applicable parties that have taken place since the lines that I have proposed. to such suits, action, or proceedings shall be hearing. The modified bill that I intro- The major modifications and clarift- construed to prevent dismissal of such suits, duce today was the subject of further cations tn the Foreign Trade Antitrust actions, or proceedings on the ground of hearings before the Senate Judiciary Improvements Act of 1985 that I re- forum non conveniens." Sec. 5. The Clayton Act is amended by Committee on October 15, 1985, at introduce today may be summarized as adding after section 4H the following: which time it received the strong en- follows: "Sec. 41. (a) Notwithstanding sections 4 dorsement of leading U.S. business First, in sections 2(b). 3(b), and 5(b). and 4C. and in lieu of the relief provided for groups including the U.S. Chamber of providing for early judicial determina- in such sections, and notwithstanding any Commerce and the Business Roundta- tion of motions based on the substan- provision of any State law providing dam- ble. tive provisions of these sections, I have ages for conduct similar to that forbidden At the June 21 hearing, my proposed adopted the suggestion of the Bar As- by the antitrust laws, any person or State entitled to recovery on a claim under such legislation was subject to thoughtful, sociation of the City of New York that section or provision shall recover (1) the extensive scrutiny by the representa- while there should be a presumption actual damages sustained by such person or, tives of the Departments of State and favoring a stay of proceedings on the in the case of a claim under section 4C, the Justice, the international and anti- merits until these motions are decided, total damage as described in subsection trust sections of the American Bar As- for good cause shown the court should (a)(1) of such section, (2) interest calculated sociation, and the private internation- be permitted to allow discovery on the at the rate specified in section 1961 of title al antitrust bar. In addition. written merits to proceed during the pendency 28, United States Code, on such actual dam- submissions were received from the of the motion or motions. This change ages or the total damage as specified in sub- Federal Trade Commission and the will reduce the temptation of defend- section (d) of section 4 of the National Co- Bar Association of the City of New ants to file unmeritorious motions to operative Research Act of 1984 (15.U.S.C. 4303(d)), and (3) the cost of suit attributable York. Finally. Mr. President, I have dismiss or limit damages simply as a to such claim. including a reasonable attor- continued to receive formal and infor- tactic to prevent the plaintiff from ob. December 6, 1985 CONGRESSIONAL RECORD SENATE S17107 taining dicovery on the merits that its views on motions to dismiss on foreign. If the action is to be limited to will be less effective If delayed-as comity grounds. On the other hand, single damages, it is to be so limited as where plaintiff faces the imminent where political foreign policy consider- to all defendants, United States as well loss of needed testimony or docu- ations dictate that jurisdiction should as foreign. That was, I submit, the ments. not be exercised, the executive branch clear purport of the original text of Second, several important changes should play the decisive role. In such a the bill, but I am happy to put the have been made in the substantive case what is required from the Attor- question entirely to rest in this revi- provisions of section 3, providing ney General is a certification that the sion. courts with the authority to dismiss executive branch has determined that Let me mention one further techni- private antitrust damage actions that the action will interfere with the con- unnecessarily create international con- duct of U.S. foreign relations and cal point on this same subject, because the modification that 1 am about to flicts. To begin with, I have rephrased ought therefore to be dismissed. A new the operative jurisdictional test to rest subsection provides for such certifica- note represents the one change in the explicity on the "jurisdictional rule of tion and dismissal. bill that I introduce today as com- reason" that is well recognized even if Third, section 5, the detrebling pro- pared with the version that was the not always applied, in American apti- vision. continues in the revised bill to subject of the October 15 hearing. At trust jurisprudence. This change has perform the vital function of mitigat- the hearing the U.S. Chamber of Com- the advantage of making it clear that ing the impact on the international merce drew attention to the fact that the bill's "balancing test" requires trading system of antitrust damage ac- including the nationality of the par- consideration not only of the foreign tions that raise substantial comity ties as & factor to be considered in op- interests that may be affected by the issues but do not quite meet the re- erating the jurisdictional rule of private antitrust action but also quirements for outright dismissal reason might in some cases enable a the U.S. Interest in promoting an effi- under section 3. Section 5 remains, plaintiff to avoid a dismissal by omit- cient international trading system in therefore, a carefully limited step ting as defendants foreign corpora- which U.S. nationals engage in mutu- toward harmonizing the U.S. antitrust tions that were in fact involved in the ally beneficial commerce with foreign enforcement scheme with the competi- conduct being challenged I have dealt firms. This interest will be served by tion laws of our trading partners and with this point by eliminating any ref- promoting the international system allies, who strongly object to our erence to the nationality of "parties" values inherent in the traditional con- treble damage remedy. As redrafted, and providing instead that the court cept of "comity," such as fairness to however, section 5 attacks the problem should consider. among other things, parities engaged in international in a somewhat different way. the nationality of the "persons in- trade, protection of justified expecta- Revised section 5 contains, in addi- tions, efficiency in business decision- tion to clarifying and conforming volved in or affected by the conduct" constituting the alleged violation- making and dispute resolution, and changes, two principal changes con- the like. sistent with its basic purpose. One is thus making it clear that it is the na- Next. I have purged the balancing that as redrafted, section 5 now pro- tional connections of the persons or test of any suggestion that the court, vides that in considering detrebling companies who engaged in the con- in applying the applying the jurisdic- the court should address the basic duct about which the plaintiff com- tional rule of reason should consider question of whether, even when it is plains, not the plaintiff's choice of de- any foreign policy issues that are the reasonable for the court to permit the fendants in the action, that is relevant exclusive province of the executive action to go forward, it is more reason- to the court's determination as to branch. This result has been accom- able that the action go forward only whether to accept jurisdiction. plished by giving examples of the fac- for compensatory. not punitive. dam- Mr. President, this last point about tors to be considered by the court in ages. The factors that are relevant to avoiding any possible discrimination deciding whether to exercise jurisdic- determining whether the action would against U.S. corporate defendants tion over a private antitrust case in- better satisfy comity requirements if It leads me to conclude by emphasizing volving international commerce. The were detrebled are essentially the the important benefits that will accrue factors specified are drawn principally same factors that are relevant in ap- to U.S. companies doing business from the Timberlane decision and plying the jurisdictional rule of internationally and thus to U.S. eco- Kingman Brewster's seminal discus- reason, and the redrafted bill makes a nomic interests if the Foreign Trade sion in 1958; excluded are the more cross-reference to section 3 at the ap- Antitrust Improvements Act is enacted "political" considerations added in propriate point in section 5. into law. At the present time, the over- Mannington Mills, as well as the too The other major change in section 5 broad exercise of U.S. jurisdiction in narrow formulations of the relevant is the addition of a new provision au- private antitrust cases subjects U.S. foreign interests in the 1965 Restate- thorizing the court to refuse to detre- firms and their foreign subsidiaries ment of U.S. Foreign Relations Law. I ble If to do so would substantially and affiliates to added risks and un- trust that this will satisfy the con- impair U.S. antitrust enforcement in- necessary uncertainty about the legal cerns of State and Justice over the ju- terests. Some of the factors bearing on this determination are specified in the consequences of their business con- dicial branch intruding into questions duct abroad. Moreover, United States of foreign relations for which the ex- text of the bill. I believe that limiting private antitrust actions to actual "extraterritoriality" angers our trad- ecutive branch is responsible. Consistent with the foregoing clarifi- damages in cases raising substantial ing partners and contributes to a cli- cations, the role of the Attorney Gen- comity issues will, in the great majori- mate of international opinion in which eral in private antitrust cases affecting ty of such cases, not significantly U.S. business interests are too often foreign national interests should be impair any U.S. enforcement interest, considered fair game for retaliatory or somewhat different from what was and I believe that in applying the discriminatory legal action by foreign provided in the original draft of the specified factors and other appropri- governments. And because the U.S. bill. With the balancing test depoliti- ate considerations the courts will come antitrust enforcement interest is so at- cized and focused on the traditional to the same conclusion. tenuated in 80 many of these cases, we legal concept of comity. the court will Fourth, the language of both sec- get virtually nothing in return for all not require the assistance of the At- tions 3 and 5 has been clarified to the trouble we cause ourselves. It is torney General in applying the test. remove any possible doubt about the time for our courts to exercise a little Such assistance should. however, be equal applicability of these sections to judicial restraint in applying U.S. anti- offered by the Justice Department as United States as well as foreign de- trust to international commerce, so a matter of discretion more frequently fendants. If an action is to be dis- that we do not unnecessarily burden than is now its practice, and the bill missed under the jurisdictional rule of U.S. companies' efforts to compete, for thus provides in section 3 for the court reason, it is to be dismissed as to all the good of the United States, in for- to invite the United States to express defendants, United States as well as eign and international markets.e