Comments on: Section 2 Symposium: Tim Brennan on the Relationship Between Regulation and Antitrust http://www.truthonthemarket.com/2009/05/06/section-2-symposium-tim-brennan-on-general-standard/ Academic commentary on law, business, economics and more Fri, 19 Mar 2010 20:08:11 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: Herb Hovenkamp http://www.truthonthemarket.com/2009/05/06/section-2-symposium-tim-brennan-on-general-standard/comment-page-1/#comment-144475 Herb Hovenkamp Wed, 06 May 2009 17:53:49 +0000 http://www.truthonthemarket.com/?p=1703#comment-144475 I agree with what Tim says although I have a quibble about the antitrust saving clause, which I believe the Supreme Court misread in Trinko. The clause provides that nothing contained in the telecommunications legislation should be read so as to "modify, impair, or supersede" the applicability of the antitrust laws. That of course immediately invites the question of what was the status quo ante that might be modified or impaired. Manifestly, telecommunications was not treated like cement, aluminum or some other commodity. Immediately prior to passage of the 1996 Telecommunications Act interconnection agreements were overseen mainly under the AT&T consent decree administered by the late Judge Harold Greene. During this period, from roughly 1982 to 1996, such disputes were not generally addressed separately under the antitrust laws. But this regime was almost certainly not the status quo that Congress had in mind when it commanded that nothing in the 1996 Act should be construed to modify the applicability of the antitrust laws. Indeed, one of the purposes of the 1996 Telecommunications Act was to dissolve the AT&T consent decree, and the regime administered under it no longer exists. Prior to the entry of the AT&T breakup decree, the telephone company was a unitary price-regulated firm governed by the implied antitrust immunity rules controlling federally regulated markets. First, under the doctrine of "primary jurisdiction" the courts sometimes dismissed antitrust claims or transferred them to the FCC in deference to its expertise. Second, under these pre-consent decree rules AT&T was not entitled to a blanket antitrust immunity, but rather immunity was given on a case-by-case basis to conduct that was compelled or supervised by the FCC or relevant state agency. The leading decision was MCI, handed down shortly before the AT&T consent decree. The Seventh Circuit held that mere "pervasiveness" of a regulatory scheme was insufficient to create an immunity. Rather, determination of immunity "requires an evaluation of the specific regulatory scheme involved and the administrative authority exercised pursuant to that scheme." In sum, a Saving Clause standard that compels that antitrust rules not be "modified" would seem to preserve implied immunity on a case-by-case basis in situations where the agency has jurisdiction over the disputed conduct and is actually exercising its jurisdiction by resolving such disputes consistent with its statutory mandate. This approach seems quite consistent with recent Supreme Court holdings to the effect that saving clauses should not be read so as to produce unnecessary conflict between two different legal regimes. E.g., Geier v. American Honda Motor Co., 529 U.S. 861 (2000). To me, it is striking how much the analysis in Billings vs. Credit Suisse tracks that in Trinko, notwithstanding that the former case purports to apply an implied immunity standard, while Trinko states that this analysis is barred by the saving clause. I agree with what Tim says although I have a quibble about the antitrust saving clause, which I believe the Supreme Court misread in Trinko. The clause provides that nothing contained in the telecommunications legislation should be read so as to “modify, impair, or supersede” the applicability of the antitrust laws. That of course immediately invites the question of what was the status quo ante that might be modified or impaired. Manifestly, telecommunications was not treated like cement, aluminum or some other commodity.

Immediately prior to passage of the 1996 Telecommunications Act interconnection agreements were overseen mainly under the AT&T consent decree administered by the late Judge Harold Greene. During this period, from roughly 1982 to 1996, such disputes were not generally addressed separately under the antitrust laws. But this regime was almost certainly not the status quo that Congress had in mind when it commanded that nothing in the 1996 Act should be construed to modify the applicability of the antitrust laws. Indeed, one of the purposes of the 1996 Telecommunications Act was to dissolve the AT&T consent decree, and the regime administered under it no longer exists.

Prior to the entry of the AT&T breakup decree, the telephone company was a unitary price-regulated firm governed by the implied antitrust immunity rules controlling federally regulated markets. First, under the doctrine of “primary jurisdiction” the courts sometimes dismissed antitrust claims or transferred them to the FCC in deference to its expertise. Second, under these pre-consent decree rules AT&T was not entitled to a blanket antitrust immunity, but rather immunity was given on a case-by-case basis to conduct that was compelled or supervised by the FCC or relevant state agency. The leading decision was MCI, handed down shortly before the AT&T consent decree. The Seventh Circuit held that mere “pervasiveness” of a regulatory scheme was insufficient to create an immunity. Rather, determination of immunity “requires an evaluation of the specific regulatory scheme involved and the administrative authority exercised pursuant to that scheme.”

In sum, a Saving Clause standard that compels that antitrust rules not be “modified” would seem to preserve implied immunity on a case-by-case basis in situations where the agency has jurisdiction over the disputed conduct and is actually exercising its jurisdiction by resolving such disputes consistent with its statutory mandate. This approach seems quite consistent with recent Supreme Court holdings to the effect that saving clauses should not be read so as to produce unnecessary conflict between two different legal regimes. E.g., Geier v. American Honda Motor Co., 529 U.S. 861 (2000). To me, it is striking how much the analysis in Billings vs. Credit Suisse tracks that in Trinko, notwithstanding that the former case purports to apply an implied immunity standard, while Trinko states that this analysis is barred by the saving clause.

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