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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