(WASHINGTON) – Today, the U.S. House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing entitled, “Oversight of the Antitrust Enforcement Agencies.” Specifically, this oversight hearing focused on the Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition’s antitrust efforts. During his opening remarks, Ranking Member John Conyers, Jr. (D-Mich.) delivered the following statement:
John Conyers, Jr.
“Today’s oversight hearing on the Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition, provides an excellent opportunity for us to focus on the critical purpose of antitrust law: to ensure that businesses do not behave in ways that injures markets, and, ultimately, consumers. As to mergers, this means that any transaction that would result in a company obtaining an unfettered ability to raise prices or otherwise harm consumers is contrary to basic antitrust policy. Thus, we should be especially skeptical about the potential detriment presented by a rapid succession of big mergers in a given industry.
“Unfortunately, antitrust scrutiny of mergers has been woefully insufficient over the past 30 years until only recently. The very fact that many industries are now dominated by just a handful of very large firms attests to this failure of aggressive scrutiny. There has been a wave of mergers in industry after industry. Just a few examples include the Whirlpool-Maytag, AT&T-BellSouth, AOL-Time Warner, and JPMorganChase-BankOne mergers. In the banking industry alone there have been 47 mergers since 2001. Basic economics and common sense should tell us that a few dominant firms forces consumers to pay higher prices and to accept suboptimal products or services. This hands-off approach to antitrust merger enforcement reflects the misguided view that corporate power should trump other interests, including the public interest. As a result, the trend in antitrust law has been against the American consumer.
“Fortunately, recent antitrust enforcement initiatives of both the Justice Department and the Federal Trade Commission appear to reflect a positive change from prior practice. I am very heartened by the renewed vigor in antitrust enforcement that these agencies have exhibited in the past year or so. Under the Obama Administration, the Justice Department has aggressively pursued litigation to block large, high-profile, and potentially anticompetitive mergers, including lawsuits to block the proposed mergers of AT&T and T-Mobile, Anheuser-Busch InBev and Grupo Modelo and, most recently, American Airlines and US Airways. Such actions would, for the most part, have been unexpected in previous Administrations going back a generation.
“Even more important is the fact that these suits have achieved pro-consumer results. AT&T and T-Mobile dropped their plans to merge, while Anheuser Busch agreed to divest itself of all of Grupo Modelo’s U.S. business in response to the DOJ’s lawsuit. The FTC, meanwhile, was able to achieve an important victory for consumers before the U.S. Supreme Court this year in the FTC v. Actavis case, which held that agreements between brand-name and generic drug manufacturers to delay introduction of cheaper generic drugs can be subject to antitrust laws.
“Such successes, however, do not necessarily mean further oversight is unnecessary. For instance, the Justice Department’s tentative settlement agreement announced earlier this week with respect to the proposed American Airlines and US Airways presents some concerns. While this settlement agreement leaves consumers somewhat better off than they would have been had the merger gone through as proposed, I remain concerned that the new merged carrier – which would be the largest in the world – will result in only four domestic airlines controlling more than 80% of the market.
“As the New York Times noted in an editorial yesterday, ‘the agreement simply ignores the central concern the Justice Department expressed in its lawsuit: the four big airlines — United, Delta, Southwest and the merged American — will have an even greater incentive to raise fares and fees because consumers will have fewer choices.’
“In closing, I note that strong antitrust enforcement is not possible without adequate resources. As with other federal agencies, the DOJ and the FTC must have sufficient funding to pay for high-caliber attorneys, economists, and other staff and for vigorous and thorough investigations and, when necessary, litigation. The continuing budget battles in Congress, including sequestration and the recent fight over a continuing resolution that led to the shutdown of the federal government, threaten to sap already limited resources for all of our federal agencies. Some of the recent successes in antitrust enforcement would be undermined, and future enforcement efforts could be compromised. That could return us to the bad old days of lax antitrust enforcement, with higher prices and fewer choices for consumers. I urge my colleagues to make every effort not to go down that road.”