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U.S. HOUSE OF REPRESENTATIVES,
Present: Representatives Rodino, Seiberling, Jordan, Mazzoli, Hughes, McClory, and Wiggins.
Staff present: Alan A. Ransom, Tom S. Runge and William L. Sippel, counsel, and Franklin G. Polk and Charles Kern II, associate counsel.
CHAIRMAN Rodixo. The committee will come to order. This morning we will commence the first of our hearings on H.R. 8359, and I would like to welcome the witnesses who will be testifying on our bill to restore effective antitrust enforcement. This bill was jointly introduced by Senator Kennedy and myself, and has the support of other members of this subcommittee. It seeks to reverse what many consider to be one of the most restrictive antitrust decisions in recent years, Illinois Brick Co, v. Ilinois. Identical measures, H.R. 8516 and H.R. 8517, are already cosponsored by 27 Members of the House, and others will soon join. [The text of H.R. 8359 is as follows:]
H. R. 8359
IN THE HOUSE OF REPRESENTATIVES
JULY 15, 1977
JORDAN, Mr. MazzoLI, and 31r. Hecnes) introduced the following bill;
To restore effective enforcement of the antitrust laws.
Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That section' 4 of the Clayton Act (15 U.S.C. 15) is 4 amended by inserting "in fact, direotly or indirectly," im5 mediately after “injured”. 6 SEC. 2. Section 4A of the Clayton Act (15 U.S.C. 158) 7 is amended by inserting "in fact, directly or indirectly,' 8 immediately after “injured”. 9 SEC. 3. Section 4C (a) (1) of the Clayton Act (15 10 U.S.C. 15c (a) (1)) is amended by inserting "in faot" in 11 the first sentence immediately after “injury", and by in
1 serting “, directly or indirectly," immediately after “sus
SEO. 4. The amendments made by sections 1, 2, and 3
4 of this Act shall apply to any action commenced under 5 sections 4, 4A, or 4C (a) (1) of the Clayton Act (15 U.S.C. 6 15, 15a, or 150 (a) (1)), which was pending on June 9,
Chairman Robixo. This indicates the degree of congressional concern with this decision; and it is a well-founded concern. For, simply put, the decision permits recovery in an antitrust lawsuit only by first purchasers, even if that first purchaser is undamaged by reason of a pass-on. Yet, it denies recovery to those further down the line of distribution, even though they have been damaged—and can prove it. This, in my judgment, is patently unfair.
Further, the decision effectively nullifies Federal Government, private, and State parens patriae damage actions brought on behalf of consumers, even though this last remedy, recently enacted into law by the 94th Congress, was not even before the court.
The late Senator James Z. George of Mississippi, a member of the Senate Judiciary Committee and one of the chief drafters of the Sherman Act, in explaining who was “injured" within the meaning of the damage remedy, said:
An advance in the price of the middleman is not mentioned in the bill for the obvious reason that no such advance would damnify them; it would rather be of benefit, as it would increase the value of the goods he has on hand. He buys to sell again. He buys not only for profits on a subsequent sale. So whatever he pays he receives when he sells, together with the profit on his investment; and so on all of them ; including the last, who sells directly to the consumer. The consumer, therefore, paying all its increased price advanced by the middlemen and profits on the same, is the party necessarily damnified or injured.
That was in 1890.
Justices Brennan, Marshall and Blackmun, dissenting in the Illinois Brick decision, said:
The recently enacted Hart-Scott-Rodino Antitrust Improvements Act of 1976, Public Law 94-435, 90 Stat. 1383, 1394-1395, was expressly adopted to create "an effective mechanism to permit consumers to recover damages for conduct which is prohibited by the Sherman Act, by giving State attorneys general a cause of action to sue as parens patriae on behalf of States' citizens against antitrust violators.
They went on to note that, and again I quote: It is difficult to see how Congress could have expressed itself more clearly. Even if the question whether indirect purchasers could recover for damages passed on to them was open before passage of the 1976 act, and I do not believe that it was, Congress interpretation of Section 4 in enacting the parens patriae provision should resolve it in favor of their authority to sue. Indeed, the House Report accompanying the bill actually referred to the opinion of the district court in this case as an example of the correct answer. The court's tortuous efforts to impose a consistency upon this area of the law that Congress has so clearly rejected is a return to the “legal somersaults and twistings and turnings" of the court's earlier opinions that ultimately led to the passage of the Clayton Act in 1914 to salvage the ailing Sherman Act.
A majority of the members of this subcommittee are firm in our resolve to support the concept embodied in the parens patriae bill passed so recently by the 94th Congress. In preparing the legislation now before us, we have worked closely with House colleagues, the Senate, and numerous members of the private bar, all of whom firmly support this bill. We have also worked closely with the Department of Justice and the National Association of Attorneys General, both of whom we shall hear from today.
While I recognize that there are many ways to draft such legislation, the basic premise is simple. If you have been injured by an antitrust violation and can prove it, you should recover—no more, no less.