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RECOMMENDATIONS OF NATIONAL COMMISSION FOR THE REVIEW OF ANTITRUST LAWS AND PROCEDURES

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

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

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 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 “BIG CASE" PROBLEM

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 u 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:

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.

"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

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

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

ANTITRUST IMMUNITIES

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

Part Two of the Commission's Report dealt with ancitrust 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.

Chapter Eight, in Section Il of the Report, comes as close to endorsing a so-called "no fault monopolization" statute us 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 ", 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:

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.

"On the basis of the arguments presented, and THE SBLC'S INTEREST IN on the basis of the judgment and experience of

THE COMMISSION REPORT its members, the Commission believes that per. sistent monopoly power, in all but the most ex

It appears obvious that the small business community ceptional instance, can only result from culp

should be encouraged by the NCRALP Report. If as able conduct. Thus, the Commission concludes

a conceptual matter vigorous antitrust enforcement is that, as a practical matter, liability can safely be

deemed to benefit small businesses, and if sincere and presumed without an affirmative showing of

significant measures are taken which will result in culpable conduct. Hence, even if the govern

those laws being applied seriously and in an effort to ment is not required to offer affirmative proof

do more than create a good public relations image, of conduct, it is highly unlikely that the adop

then the small business community will want to rally tion of a no-conduct standard would impose

behind the Commission's recommendations. liability on an innocent monopolist."

The Commission's procedural reforms would make it The Commission could not agree on a proposal that casier to bring antitrust actions against large targets. would implement this liability policy. However, it The Commission's recommendations regarding time recognized that proof of past bad conduct "is simply

limits for complex civil actions would have forced not central" to a proceeding under section 2 if the

both lawyers and judges to maintain an orderly progoal of the Sherman Act is the dissipation of persis

ceeding. tent monopoly power. The Commission urged Congress to undertake hearings to explore the impact of

of particular note is the Commission's recommendabusiness and consumers of adopting a no-conduct tion in Chapter Three that Rule 26(b) be amended to proposal.

narrow the scope of discovery and that Rule 26(c) be - continued

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

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.

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.

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 carly in proceedings will conceivably eliminate unnecessary, complex factual questions and lead to quicker judicial resolution of a dispute.

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 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 effect. ive competition particularly in its discussion of no conduct proposals. On page 156, the Commission Report stated:

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.

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

RESOLVED

In support of the thrust of the Commission Report, the Small Business Legislative Council adopts these positions:

The Small Business Legislative Council endorses and supports the recommendations contained in Chapter

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Three of the Report of the National Commission on Andtrust Laws and Procedures to the effect that more effective controls be imposed on a court-supervised bads on pretrial discovery and other proceedIngs in complex antitrust Litigation.

The Small Business Legislative Council endorses and rapports the recommendations contained in Chapter Four of the Report of the National Commission on Antitrust Laws and Procedures to the effect that cartier definition of the issues should occur as a means of limiting discovery and simplifying pretrial proceedings. These reforms call for increased use of stipulations and requests for admissions, the early achange of the contentions of the parties, and employment of summary judgment or partial summary Judgment for the purpose of narrowing, resolving, and eliminating issues, and the more liberal use of interlocutory appeals.

The Small Business Legislative Cound endorses and supports the recommendations contained in Chapter Seven of the Report of the National Commission on Antitrust Laws and Procedures to the effect that structural relief by way of divestiture of monopoly power shold be employed more frequently by the courts, both in government cases and private litigation. This would include the development of guideUnes for the use of the divestiture remedy such as spin-off, sale of assets, etc., with a view toward restoring effective competition in the marketplace.

The Small Business Legislative Council endorses and supports the recommendations contained in Chapter Eight of the Report of the National Commission on Antitrust Laws and Procedures to the effect that the Sherman Act should be amended to broaden the present scope of the "attempt to monopolize" language of section 2 of the Sherman Act. The proposed reform would also permit the full use of economic data as an alternative to proof of predatory conduct, and would upgrade antitrust enforcement to deal with the problem of the existence of persistent monopoly power, even in the absence of proof of predatory behavior or the maintenance of market entry bar. ner.

The Small Business Legislative Council endorses and supports the recommendations contained in Chapter Fifteen of the Report of the National Commission on Antitrust Laws and Procedures to the effect that all statutory-based regulatory schemes be critically reviewed with a view toward limiting their functional scope as inhibitors of competition and limiting and curtailing the attendant antitrust immunities as to such regulatory schemes.

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PROCUREMENT AND INNOVATION POLICY

For decades, Administrations of the major political
parties have promised small business a "fair" or
“adequate" share of federal procurement (currently
running close to S80 billion a year.) The share of con-
tracts actually awarded to small business has ranged
from 16 percent to 23 percent, and small business
subcontracting requirements have not been adequate-
ly applied to all large federal contract agreements.

Expenditures for federal research and development
have been even more concentrated towards large
business. Less than 5 percent of the federal R&D
dollar now goes to small businesses, which have
historically been the most fertile spawning ground
for innovations in technology. In many cases the
large corporations have a vested interest in continued
use of existing technologies and products, which
creates a conflict of interest in their R&D work for
the government.

Even in the face of growing economic concentration
in other areas, studies by the Department of Com-
merce and the Office of Management and Budget
indicated that in 1975, small firms and individual
inventors continued to account for more than one-
half of all inventions and innovations. On 3.4% of
all federal R&D dollars, small firms have produced
24 times the new commercial ideas, inventions and
innovations per dollar than large companies.
Government policy should encourage this inven-
tiveness by making funds for research and develop-
ment, as well as production capital, more readily
available to small business.

RESOLVED
The Small Business Legislative Council urges that the
federal government set firm goals of 50 percent of
prime contracts and 75 percent of sub-contracts for
award to small businesses. In addition, the federal
government should implement policies that reward
innovation and encourage the traditional small busi-
ness willingness to explore and expand in new direct-
lons by increasing small business share of federal
R&D expenditures to at least 25 percent of the total.

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