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According to the political pundits, the economy is emerging as a leading issue, and perhaps the leading issue, of this 2008 presidential campaign. Recognizing that competition is a cornerstone of our capitalist society, a renewed focus on the economy magnifies the significance of antitrust laws and their enforcement during this election year. While not a “hot button” issue for the national media, a complete understanding of any candidate’s economic policy requires insight into that candidate’s antitrust stance. The purpose of this article, the first in a series, is to report on the presidential candidates’ antitrust views, starting with Sen. Barack Obama, D-Ill., and former Sen. John Edwards. Although Edwards withdrew as a presidential candidate last week, his role in the continuing campaign remains unclear, so his views remain relevant and subject to discussion. Last year, the American Antitrust Institute, an independent, nonprofit organization committed to promoting competition for the benefit of consumers through “vigorous use of antitrust,” invited all the presidential candidates to express their views on antitrust issues. At the time of this publication, only Obama and Edwards have provided statements to the AAI. This article focuses on their expressed antitrust views and the reaction of others to them. OBAMA Consistent with his campaign’s theme of bringing “real change” to Washington, Obama, in his AAI statement, vows to break from, what he claims, is the Bush administration’s “lax” antitrust enforcement policy. In fact, he describes the current administration as having “what may be the weakest record of antitrust enforcement of any administration in the last half century.” Obama supports this characterization through his perception of the recent decline in merger challenges and the apparent disappearance of monopolization cases being brought by the federal authorities. Specifically, Obama explains that, between 1996 and 2000, the Federal Trade Commission and Department of Justice together challenged, on average, more than 70 mergers per year. However, between 2001 and 2006, according to Obama, the annual average fell to 33. Obama also points out that in the last seven years, “the Bush Justice Department has not brought a single monopolization case.” Obama’s interpretation of these numbers has not gone unchallenged. James F. Rill, a former assistant attorney general for antitrust who served from 1989 to 1992 under former President Bush, called Obama’s statement to the AAI “an incomplete and basically incorrect political statement” and “an incredible misuse of statistics.” According to Rill, merger challenges declined not because the Bush administration was asleep at the wheel, but because economic merger activity, which was so prevalent in the late 1990s, itself declined in 2000. Moreover, referring to the Feb. 1, 2001, amendments to The Hart-Scott-Rodino Antitrust Improvement Act, Rill claims that the decline in merger challenges during the current Bush presidency can also be attributed to the fact that the dollar value threshold for mergers the government must automatically examine was lifted from $15 million to $50 million (the threshold is currently $59.8 million and will rise to $63.1 million in the next 30 days). Regarding the claimed absence of monopolization cases, Rill countered that the FTC has brought “about a half dozen” of such cases while both the DOJ and the FTC have held hearings on how to better prevent existing monopolies from harming competition. An example, not cited by Rill, is the FTC’s effort to halt the $565 million merger between Whole Foods Market Inc. and Wild Oats Markets Inc. Even though the FTC failed to secure a preliminary injunction at the district court level, and subsequently lost a motion to stay pending an appeal, the FTC is still aggressively proceeding with that case. Not even the fact that the merger between Whole Foods and Wild Oats has already gone through is apparently enough to stop the FTC’s efforts. In December 2007, the U.S. Court of Appeals for the Columbia Circuit agreed to take the case. Nevertheless, Obama pledges that he would direct his administration to “reinvigorate” antitrust enforcement. He believes that the Bush enforcement policy has resulted in “clear” consequences for consumers, especially when it comes to health care. In fact, antitrust enforcement may actually play a key role in Obama’s efforts to curb what he claims are rising costs associated with insurance premiums and prescription drugs. For instance, Obama argues that consolidation and concentration within the health care industry (he notes 400 health care mergers over the last 10 years), which were supposed to make the industry more efficient, have caused, he says, insurance premiums to skyrocket over 87 percent during the last six years. Obama has declared that his administration will prevent insurance companies from abusing their monopoly power through “unjustified price increases � whether on premiums for the insured or on malpractice rates for physicians.” As to the former, Obama, without providing the specifics of a plan to date, said he will attempt to “force insurers to pay out a reasonable share of their premiums for patient care instead of keeping exorbitant amounts for profits and administration,” which, he claims, will help increase competition between insurers As to the latter, Obama is referring to the Malpractice Insurance Antitrust Act of 2005, a claimed “narrow bill,” which he introduced along with Senators Patrick Leahy, D-Vt.; Edward Kennedy, D-Mass.; Richard J. Durbin, D-Ill.; Jay Rockefeller, D-W.Va.; Barbara Boxer, D-Calif.; Russell Feingold, D-Wis.; Kenneth Salazar, D-Colo.; and Barbara Mikulski, D-Md. If signed into law, which Obama promised to do if he is elected, the bill would repeal a long-standing antitrust immunity afforded to medical malpractice insurers by the McCarran-Ferguson Act but only in the “most egregious cases of price fixing, bid rigging and market allocation.” Notably, there has been no significant movement on this bill since it was first introduced on July 28, 2005. Obama vows to take a similarly tough stance with respect to prescription drug costs by creating and maintaining an environment, he says, that will allow generic drug manufacturers to compete with “big name drug companies” while, at the same time, preserving “the incentives to innovate that drive firms to invent life-saving medications.” As part of this effort, Obama claims he will work to increase the use of generic drugs within Medicare, Medicaid and the Federal Employees Health Benefits Plan. Obama also plans to increase competition, he says, by “allowing Americans to buy their medicines from other developed countries.” In sum, Obama pledges to aggressively enforce the antitrust laws and increase competition � internationally as well as domestically. EDWARDS Edwards, in line with his attacks on “Corporate America” and the status quo, calls for reforms in the farming, health care and oil industries in his AAI statement, along with a strengthening of the antitrust laws and their enforcement. These changes are necessary, according to Edwards, not only to fix a “broken” system dominated by “big business and their lobbyists” but to protect small businesses and the “average American.” Continuing with the populist theme that has become a hallmark of his campaign, Edwards says he wants to protect America’s farmers, who live at the “mercy of big agribusiness.” To illustrate the “problem,” Edwards states that it “used to be that on market days, an Iowa hog farmer could go to five different packers to sell his hogs. Today, the same farmer is down to just one buyer, and often that buyer is playing games to drive hog prices down. Even worse, the big meat packing companies are trying to integrate vertically by buying and raising livestock.” Edwards’ solution is his “Fairness for Farmers” initiative, which he claims is the “toughest, most aggressive enforcement of fair competition laws since Teddy Roosevelt rode into Washington.” While his AAI statement does not offer specifics, the initiative, which was also a talking point during the 2004 presidential campaign, will at the very least “impose a national ban on packer ownership of livestock.” While Edwards’ AAI statement has not received much media attention, some have commented on his antitrust views and argue that Edwards’ “small business” approach to antitrust is outdated and misguided. Specifically, they contend that the antitrust laws should be focused on consumer welfare, not the protection of small business. In fact, critics compare Edwards’ economic theory to the underpinnings of the often-discredited U.S. Supreme Court 1966 decision in U.S. v. Von’s Grocery Co. In that case, the Supreme Court noted that, starting in the late 1890s, it began interpreting the Sherman Act based on the policy of targeting “powerful business combinations” that restrain competition by “driving out of business the small dealers and worthy men whose lives have been spent therein[,]” quoting U.S. v. Trans-Missouri Freight Assn., its 1897 decision. However, some federal courts, like the 7th U.S. Circuit Court of Appeals in Hospital Corp. of America v. FTC, have challenged the economics of Von’s Grocery in favor of a policy aimed toward protecting consumers rather than competitors through antitrust enforcement. However, as to the Supreme Court’s recent Leegin Creative Leather Products Inc. v. PSKS Inc. decision allowing, in certain circumstances, minimum resale price maintenance, some have argued that a majority of the court may be returning to the protection of competitors over consumers. Moving from farmers to doctors, Edwards offers antitrust views on health care that are very similar to Obama’s. Noting that small physician groups are “being squeezed by insurance companies protected by a 60-year old exemption from federal antitrust laws,” again a reference to the McCarran-Ferguson Act, an Edwards administration claims it will reduce malpractice insurance premiums for doctors by “revisiting” the “insurance company exception” in the act that “allows insurers to explicitly fix prices.” To protect consumers in the health care market, Edwards does not set forth a specific plan but promises to “direct the Justice Department to conduct an immediate and comprehensive review of the heath insurance market and make recommendations on how to ensure a competitive market.” Edwards also wants to modernize the antitrust laws in order to protect Americans who are “paying the price at the pump” because of allegedly anticompetitive conduct by the oil industry. Part of the problem, according to Edwards, is a wave of mergers that consolidated 21 oil companies into eight. Another part of the problem, Edwards claims, is vertically integrated companies “like Exxon Mobil [that] own every step of the production process � from extraction to refining to sale at the pump � enabling them to foreclose competition.” Most likely referring to the FTC’s Midwest Gasoline Price Investigation report released on March 29, 2001, Edwards claims that, during that year, the FTC found evidence of oil companies “intentionally withholding supply to raise prices” but could not prosecute the conduct because “there was no evidence of an agreement among rivals.” His solution is to change the federal antitrust laws to expressly proscribe unilateral “anticompetitive acts by oil companies � such as withholding supply in order to raise prices � even without an agreement.” Edwards finally notes that real change will start with the appointment of officials “committed to protecting fair competition” and the nomination of judges “who are committed to protecting the rights of regular Americans.” In short, Edwards is urging Americans to “think big” and “end the game” and appears to view his antitrust reforms as a tool for shattering the status quo and taking on “Corporate America.” Next month, we will report on the antitrust views of some of the Republican presidential candidates. Stay tuned. Carl W. Hittinger is a partner in the litigation group at DLA Piper in its Philadelphia office, where he concentrates his practice in complex commercial litigation with particular emphasis on antitrust and unfair competition matters. Hittinger is also a frequent lecturer and writer on antitrust issues and has extensive experience counseling clients on all aspects of civil and criminal antitrust law. He can be reached at 215-656-2449, or [email protected]. Matthew A. Goldberg is an associate at the firm’s Philadelphia office, and his practice involves a variety of complex commercial, product liability and antitrust litigation matters.

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