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FTC Commissioner Cites Benefits of Cooperative Law Enforcement

Emily Myers, Antitrust and Special Projects Counsel

Harbour Urges States to Revise Vertical Restraints Guidelines During NAAG Centennial Symposium

One hundred years ago, Missouri Attorney General Herbert S. Hadley called his fellow Attorneys General together in St. Louis, Missouri to discuss ways to attack the monopolistic behavior of Standard Oil. Attorney General Hadley felt that the federal government was not moving aggressively enough, and was convinced that the Attorneys General, working collectively, could challenge anticompetitive behavior on the part of the oil giant.

To celebrate the 100-year anniversary of this historic meeting, NAAG held a centennial symposium on state antitrust enforcement last month in St. Louis. The distinguished symposium panelists included antitrust academics, a number of past chairs of NAAG’s Multistate Antitrust Task Force and several federal officials.

Pamela Jones Harbour, a commissioner for the Federal Trade Commission, was the keynote speaker, highlighting the historic role of Attorneys General and their significant influence on antitrust law today.

Commissioner Harbour previously served as Assistant Attorney General in the New York Attorney General’s Antitrust Section, and as Chief of the Attorney General’s Public Advocacy Division, which includes both antitrust and consumer protection.

In 1907, the Sherman Act had not yet been interpreted to include all of the conduct that it covers today and states’ actions were important because they filled an enforcement vacuum, Commissioner Harbour said.

Citing Attorney General Hadley, Commissioner Harbour explained that NAAG’s initial missions were 1) promoting information exchanges among state Attorneys General; 2) coordinating the investigation and litigation of matters of common concern; 3) amici support for litigation involving other states; 4) coordinated lobbying; and 5) law reform. Those are the same missions associated with NAAG and its Multistate Antitrust Task Force today.

“NAAG exists to make state Attorneys General, individually and collectively, more effective law enforcement officers,” Commissioner Harbour said. “And NAAG has, in my opinion, been very successful in accomplishing that goal.”
— Pamela Jones Harbour

Cooperative law enforcement has evolved greatly from the “open warfare” between state and federal enforcers in the 1980s, to the modern day cooperative model in which the comparative enforcement advantages of each party are successfully applied.

“Coordinated federal-state enforcement can provide consumers with a scope and diversity of relief that neither state nor federal agencies could obtain working alone,” Commissioner Harbour said.

Turning to the current state of antitrust law, Commissioner Harbour expressed her strong disagreement with the recent Supreme Court decision in Leegin v. PSKS, in which a slim majority of the Court voted to overturn the long-standing per se rule against vertical price fixing in favor of a “rule of reason” analysis. Commissioner Harbour quoted University of Utah S.J. Quinney College of Law Professor Emeritus John Flynn, who said, “Law is a human institution designed to fulfill human aspirations as well as to curb human excesses.”

The “human aspirations” being fulfilled by the Leegin Court are those of manufacturers, not those of consumers, Commissioner Harbour explained. The “human excesses” the Court would curb are not those of manufacturers seeking to avoid competition, but those of consumers who might have the temerity to prefer a lower price and fewer frills over unneeded services, she added.

In light of the Supreme Court’s Leegin decision, Commissioner Harbour also urged Attorneys General to revisit the NAAG Vertical Restraints Guidelines, last revised in 1994. The Leegin decision, and before that, State Oil v. Khan (in which the Court found that maximum resale price maintenance was not per se illegal) had so changed the landscape that the NAAG guidelines were out of date.

The revised guidelines should be “used as a mechanism to establish a law of vertical restraints based on principles of law and economics that accurately reflect how consumer goods markets work in the real world,” Commissioner Harbour said, emphasizing that the “real world” includes countries other than the United States, since convergence of antitrust standards need not mean only movement toward the standards applied in the United States.

Other symposium highlights included remarks by Thomas Barnett, assistant attorney general for antitrust at the U.S. Department of Justice on federal-state cooperation. Panelists also provided historical perspectives on state antitrust enforcement, including enforcement during the early part of the 20th century, the Supreme Court’s antitrust jurisprudence during the past 30 years, and the development of antitrust standards during the past century, including compensation to victims and consumer welfare.

Participants also examined the resurgence of state antitrust enforcement in the 1970s and 1980s, issues of antitrust federalism, future directions in state antitrust enforcement, including the effect of the Supreme Court’s antitrust decisions in its most recent term, the ability of Attorneys General to limit anticompetitive behavior by state agencies, new developments in health care cases, ways to “re-set” the balance between antitrust plaintiffs and defendants and ways to continue to pursue vertical restraints using state law.

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