BACKGROUND

The 1979 Report of the National Commission for the Review of Antitrust Laws and Procedures (NCRALP) was not a broad review of antitrust policy or antitrust law. Rather, the Commission was directed by Executive Order 12022 to study and make recommendations on (1) the resolution of complex and protracted antitrust cases, and (2) the desirability of retaining the various exemptions and immunities from the antitrust laws.

The Commision was a well-rounded one whose members represented diverse antitrust philosophies. The Commission's recommendations included no radical suggestions for resolving the problems of unreasonably protracted litigation in complex antitrust cases. Nevertheless, the results of the NCRALP deliberations were enforcement oriented. The Commission's specific recommendations and the general principles it espoused with regard to the "big case" were clearly consistent with a view that antitrust laws should be vigorously enforced in a way that would produce results. In the area of immunities, they constituted a serious and well-thought-out criticism of existing economic regulations.

THE "BIG CASE" PROBLEM

The Commission Report recommended ways to speed up complex antitrust litigation and urged Congress to consider several changes in the antitrust laws to implement these recommendations. A consistent theme was the Commission's call for more aggressive and orderly involvement by judges and lawyers handling complex cases. The Commission recognized the appropriateness of leaving intact broadly drawn, substantive rules of antitrust law so that fundamental and general principles could be applied to changing economic and industrial conditions. The Commission did not find that the substantive laws cause litigation delay. Rather, the Commission stated that "the failure of some judges to manage and control complex antitrust litigation adequately is a major component of unreasonable delay” and that “an uninvolved, unaggressive judicial posture is a prescription for directionless litigation and excessive delay." Therefore, at the outset of its Report, the Commission recommended early and active judicial involvement and control in all antitrust litigation.

The Commission also recognized that there are strong financial incentives operating on private par

ties, both plaintiffs and defendants, which contribute to delay. Related lawyer excesses and inefficiencies must also be curbed.

The Commission recommended specific changes in the rules relating to time limit and sanctions.

The Commission's recommendations for resolving complex antitrust litigation were not limited to changes basically procedural in nature, however. The Commission focused on relief and substantive standards in monopolization cases. Since such cases are obviously the primary source of delay in antitrust litigation, the Commission analyzed means of improving antitrust remedies in Chapter Seven and in Chapter Eight the feasibility of revising the substantive law. The Commission made certain recommendations for major substantive changes in Sherman Act section 2 which are particularly noteworthy.

The Commission flatly recommended that "whenever a violation of the antitrust laws involving market power has been shown, courts should order relief that will effectively eliminate that power." The Commission chastised the government, potentially the best source of expertise with respect to structural relief, for failing to devote adequate attention and resources to the question of remedies. Finding that "the existence of unlawful monopoly power is at the heart of a Sherman Act section 2 violation," the Commission recommended that structural relief should be the preferred remedy whenever a violation. of Sherman Act section 2 or Clayton Act section 7 has been found. The Commission's conclusion:

"In essence, the effectiveness of structural relief in ending the illegal conduct, preventing its recurrence, curing the ill effects of the conduct, and depriving defendants of the benefits of their illegal conduct is more certain and brings the matter to a conclusion more quickly. Structural relief requires an immediate adjustment, but once it has been accomplished, the defendant firm regains control of its operations. With respect to third parties, structural relief is often preferable because its effects are clearer and more certain. For these reasons, the Commission concludes that structural relief should be the preferred remedy whenever a vio

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lation of Sherman Act section 2 or Clayton Act section 7 has been found."

The Commission also recommended that laws inconsistent with antitrust objectives be reevaluated and, if necessary, changed.

Chapter Eight, in Section II of the Report, comes as close to endorsing a so-called "no fault monopolization" statute as can reasonably be expected. First, it recognized that the "dangerous probability of success" standard necessary to establish an attempt to monopolize has led to an "overly restrictive" view of the attempt to enforce provisions of section 2. The Commission favored an approach to this provision which looks to the defendant's capacity and intent and the anticompetitive character of the defendant's behavior. The court would then determine that a dangerous probability of monopoly exists when the defendant's conduct substantially threatens the maintenance of competition.

In the second part of Chapter Eight, the Commission endorsed the concept of a conduct-free liability standard for section 2 cases. In addressing the problem of "persistent monopoly power," the Commission first recognized that persistent monopoly power is contrary to "a fundamental tenet" of antitrust laws that "markets ought not to be under the control of a single individual or enterprise, but rather should receive the benefit of competition among several firms." Therefore, the Commission concluded:

"On the basis of the arguments presented, and on the basis of the judgment and experience of its members, the Commission believes that persistent monopoly power, in all but the most exceptional instance, can only result from culpable conduct. Thus, the Commission concludes that, as a practical matter, liability can safely be presumed without an affirmative showing of culpable conduct. Hence, even if the government is not required to offer affirmative proof of conduct, it is highly unlikely that the adoption of a no-conduct standard would impose liability on an innocent monopolist."

The Commission could not agree on a proposal that would implement this liability policy. However, it recognized that proof of past bad conduct "is simply not central" to a proceeding under section 2 if the goal of the Sherman Act is the dissipation of persistent monopoly power. The Commission urged Congress to undertake hearings to explore the impact of business and consumers of adopting a no-conduct proposal.

ANTITRUST IMMUNITIES

Part Two of the Commission's Report dealt with antitrust immunities and economic regulation. The Commission's Report provided a comprehensive framework in which to review individual antitrust immunities.

The Commission clearly opted in favor of a free market approach to presently regulated areas of the economy. In all of the areas analyzed the Commission would, in effect, put the burden on those advocating regulation to justify its continued existence.

The Commission therefore adopted the following analytical approach to the question of antitrust immunities. First, what was the original purpose of Congress in enacting the immunity in question? Second, have the regulatory goals originally conceived by Congress been achieved; or have changed conditions or new learning undermined the assumption on which the regulatory structure was first justified? Third, what costs or benefits have been associated with the immunity and its attendant regulatory scheme? Finally, if removal of the antitrust immunity and deregulation appear justified based on changed economic conditions or unacceptably high social costs, what questions relating to methods of transition should be considered? The Commission recognized that this framework suggests that an industry-by-industry examination of each exemption and regulatory scheme is preferable and it structured its report in that manner.

THE SBLC'S INTEREST IN THE COMMISSION REPORT

It appears obvious that the small business community should be encouraged by the NCRALP Report. If as a conceptual matter vigorous antitrust enforcement is deemed to benefit small businesses, and if sincere and significant measures are taken which will result in those laws being applied seriously and in an effort to do more than create a good public relations image, then the small business community will want to rally behind the Commission's recommendations.

The Commission's procedural reforms would make it easier to bring antitrust actions against large targets. The Commission's recommendations regarding time limits for complex civil actions would have forced both lawyers and judges to maintain an orderly proceeding.

Of particular note is the Commission's recommendation in Chapter Three that Rule 26(b) be amended to narrow the scope of discovery and that Rule 26(c) be

amended to make it clear that the court may, on its own initiative, protect against annoyance, embarassment, oppression, or undue burden or expense related to discovery. No one can justify unreasonably protracted litigation. Amending existing discovery rules to limit unreasonable delays, and, in particular, to limit the ability of a party to flood its opponent with non-information and overly broad discovery requests will likely result in greater access to the courts. This, of course, will better enable small businesses to protect themselves.

Also in Chapter Three the Commission recommended that the government be allowed to share in materials discovered in private litigation. The Small Business Legislative Council supports suggestions such as this one which make it easier for the government to carry out its role as an antitrust enforcer on behalf of the public.

The Commission's recommendation in Chapter Four that parties exchange contentions and information concerning relevant market shares early in proceedings will conceivably eliminate unnecessary, complex factual questions and lead to quicker judicial resolution of a dispute.

The Commission's Report stressed the need to restore marketplaces dominated by persistent monopoly power to effective competition. More importantly, the Commission's discussion emphasized the need to create workable competition through the establishment of new entities, if necessary.

There should be more competitors in the marketplace, rather than less, as one means to restore effective competition particularly in its discussion of no conduct proposals. On page 156, the Commission Report stated:

"The presence of persistent monopoly is contrary to a fundamental tenet of the antitrust laws, that markets ought not to be under the

control of a single individual or enterprise, but rather should receive the benefit of competition among several firms."

The Commission's Report nowhere recognized the unique needs of the small business community; nor does it adopt expressly a conduct-free liability standard under section 2. However, it seems clear that at least a majority of the Commission favored a conduct-free standard, and that the Commission as a whole officially approved of the concept. Moreover, the thrust of the Commission's recommendations and the principles underlying its discussion of section 2 problems were completely consistent with the Small Business Legislative Council's position that the government must take decisive action to introduce more competition into today's concentrated

economy.

Finally, if it is easier for the government to bring the "big case" because of changes in the substantive standards which are to apply, then it is easier for the government to abandon its "two-tier" enforcement philosophy. Such a result is of course strongly supported by the small business community.

CONCLUSION

The Commission's Report was candid, but not inclined to recommend radically new legislation. It can serve as a springboard for advancing changes in the law which will benefit the constituency of the Small Business Legislative Council membership. The Commission's discussion of section 2 was especially illustrative. While the report offered no clear answers, it created a favorable opportunity for the small business community to make its views known on the question of how section 2 could be amended to restore effective competition in the marketplace. The Commission made recommendations and embraced principles which are important to the small business community and which are consistent with its aims.

RESOLVED