FTC, Verizon at Odds on Effect of SCOTUS Trinko Decision
Recent Supreme Court cases haven’t displaced antitrust law in telecom and other highly regulated industries, Verizon Senior Vice President John Thorne said at a hearing Tuesday of the House Judiciary Subcommittee on Courts and Competition Policy. But an FTC official and others urged Congress to use legislation to clarify the meaning of the high court’s 2003 Trinko and 2007 Credit Suisse decisions. Democratic and Republican subcommittee members said they were troubled by the rulings, but Republicans seemed hesitant to back legislative action. House Judiciary Committee Chairman John Conyers, D-Mich., told us a legislative fix is unlikely.
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The Supreme Court rulings were “offensive” to Subcommittee Chairman Hank Johnson, D-Ga. The cases could be cited by lower courts to dismiss antitrust cases in telecom and other regulated industries, he said. In Trinko, the court reasoned that a consumer didn’t have an antitrust claim in alleging a breach of Verizon’s network sharing duties under the 1996 Telecom Act, because those rules didn’t alter antitrust law. Similarly, in Credit Suisse, the court ruled that the large body of federal securities regulation preempted an antitrust lawsuit against several Wall Street firms.
Ranking Member Howard Coble, R-N.C., said he has mixed feelings about the court rulings. He said he opposes weakening antitrust laws but is wary of regulating businesses too much. It’s unclear whether Trinko is “merely a limit” on how far antitrust law can be used to deal with dominant providers or is “a blanket antitrust exemption for the telecommunications industry,” he said.
Conyers “can’t see a legislative fix right now” but hopes the court is listening to the discussion, the Judiciary Committee chairman told us after the hearing. “This isn’t like a single case to which a legislative response would be appropriate,” he said. “What I see is a trend.”
The Supreme Court’s Trinko decision didn’t say that highly regulated industries are immune from antitrust action, said Thorne, who argued the case for Verizon in the 2nd U.S. Circuit Court of Appeals. A few years ago, the Antitrust Modernization Commission, set up by Congress, studied how antitrust applies to highly regulated industries, he said. The bipartisan body found unanimously that the Trinko decision “is best understood only as a limit on refusal of new claims under Section II of the Sherman Act,” Thorne said.
But other witnesses said Congress should intervene. Taken together, the two Supreme Court rulings have made it tougher for private plaintiffs and public agencies to bring antitrust suits in regulated industries, said Howard Shelanski, antitrust deputy director in the FTC Economics Bureau. The commission is worried that the rulings could affect its ongoing proceedings, he said. The decisions “should not be interpreted to block public cases” brought by a federal antitrust agency to benefit consumers, Shelanski said. Congress should clarify that neither decision “prevents public antitrust agencies from acting when they conclude that anticompetitive conduct has otherwise escaped effective regulatory scrutiny.”
Thorne questioned the wisdom of exempting public agencies. “The idea of breaking apart public enforcement and private enforcement under two different regimes is a new idea,” he said. That raises a “series of questions,” including whether private cases could no longer “tag along” with public cases, he said.
"Congress should act swiftly to restore the balance between antitrust and regulation that worked so well in the 20th Century,” said Mark Cooper, director of research for the Consumer Federation of America. “To preemptively sideline antitrust in industries where it is needed most” destroys that balance.
Congress should consider an amendment to antitrust law to clarify that “there is no implied repeal of the antitrust laws in government regulation,” said Mark Lemley, a professor at Stanford School of Law. He recommended a rule preventing courts from interpreting an exemption to antitrust laws unless Congress expressly wrote the exemption into law.