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On November 1, 2006, David Evans presented testimony before the U.S. Department of Justice and Federal Trade Commission at the Public Hearing on Single-Firm Conduct and Antitrust Law Modernization. This viewpoint offers excerpts from his testimony.
Some commentators have suggested that the recent Independent Ink decision shows that the Supreme Court has backed away from the standard set in Jefferson Parish. But in my view, Justice Stevens was quite careful in saying nothing whatsoever in his decision in Independent Ink that repudiates his decision in Jefferson Parish. There are good vibes though from Independent Ink and I’m optimistic that the Court will eventually conclude that tying is a relic of a by-gone era in antitrust when populist hostility towards business practices prevailed and economics hadn’t yet pointed the way. But the U.S. Department of Justice and the Federal Trade Commission shouldn’t just sit still and wait another five or ten years or whatever for that to happen. So in the interim, I have four recommendations:
- First, the Justice Department should adopt a policy that it will not file claims that companies have committed a per se violation of Section 1 of the Sherman Act as a result of engaging in tying. Now I’m not suggesting that DOJ has been trigger happy. In fact the Department hasn’t filed any Section 1 tying cases in the last five years although I don’t believe it has filed any significant single-firm conduct cases of any stripe.
- Second, at the next opportunity, the DOJ and the FTC should encourage the Supreme Court to overrule Jefferson Parish. Unfortunately, there isn’t anything in the pipeline as far as I know. The two enforcement agencies should also encourage Congress to modify or kill Section 3 of the Clayton Act. By the way, it’s unfathomable to me that the Antitrust Modernization Commission hasn’t considered tying as part of its agenda for reform. The antitrust laws for the 21st century shouldn’t target tying as an especially pernicious practice.
- Third, there is a bill in Congress to repeal certain exemptions that the insurance industry has from the antitrust laws. Now that’s a debate I sure don’t want to wade into today. But HR 2401 perpetuates the mistake of treating tying as a separate and presumably especially harmful antitrust offense. The enforcement agencies should oppose that provision of the bill.
- Fourth, the Justice Department should embark on a global recall of American tying law. Following our lead the courts and competition authorities in many jurisdictions have subjected tying to some form of conditional per se liability. We should let them know that there is no sound support for that approach.
Links to Full Content
Testimony on Tying for the DOJ/FTC Hearings on Single-Firm Conduct
