Unilateral Conduct Committee E-Bulletin
Issue 13
December 01, 2003

The Section 2 Committee's monthly E-Bulletin is intended to offer the antitrust community updates and information on the latest developments relating to monopolization law and policy. If you have any comments or suggestions on the E-Bulletin, please email Ankur Kapoor (akapoor@kayescholer.com) and Mark Popofsky (mpopofsky@kayescholer.com).

HOUSE JUDICIARY COMMITTEE HOLDS HEARINGS ON TRINKO

On November 19, the House Judiciary Committee held hearings on whether to overturn the Supreme Court's pending decision in Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko, LLP, U.S., No. 02-682, argued 10/14/03, in the event that the Court dismisses plaintiff's complaint. "If this occurs, a swift and decisive legislative correction will be necessary and it will be forthcoming," said Committee Chairman James Sensenbrenner (R-Wis.).

Some committee members criticized FTC/DOJ's filing of an amicus brief in favor of dismissal, invoking the 1996 Telecommunications Act's antitrust savings clause as evidence of Congress's intent that the antitrust laws apply to violations of the 1996 Act. The savings clause states that "nothing in this Act . . . shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws." 47 U.S.C. § 152. Chairman Sensenbrenner remarked, "The clarity of this savings clause leaves very little to the imagination of a regulator or judge. However, the imaginations of regulators and judges can sometimes be more active than we can predict, and in some cases their apparent misunderstanding of the will of Congress is disappointing and difficult to comprehend." Asked Representative John Conyers (D-Mich.), "How could we have drafted this language more clearly?"

The head of DOJ's Antitrust Division, Hew Pate, also spoke at the hearing, saying that the antitrust savings clause meant simply that the antitrust laws "continue to apply fully in telecommunications," not that a telecommunications provider's failure to fulfill its obligations under the 1996 Act is by itself a violation of the antitrust laws. According to Pate, a corollary of the savings clause is that "the 1996 Act did not have the effect of increasing any party's obligations under the antitrust laws." Rather than judging telecommunications providers' compliance with the antitrust laws vis-a-vis their compliance with the provisions of the 1996 Act, the courts should evaluate telecommunications providers' allegedly anticompetitive practices by asking whether the practice would make economic sense absent its exclusion of competitors.

Pate also discussed DOJ's extensive antitrust enforcement efforts in the telecommunications industry. He first described DOJ's careful evaluation of incumbent local telephone companies' opening-up of local telephone markets to competition pursuant to the 1996 Act. He noted that DOJ had determined that local telephone markets were "fully and irreversibly open to competition" in terms of resale of the incumbents' local services, competitors' use of their own facilities, use of unbundled network elements, whether the systems used by competitors to access information from the incumbents were "appropriately robust," and "whether needed inputs are provided to competitors in a timely and accurate manner." Pate also described DOJ's merger enforcement in the telecomm industry, noting its challenges to SBC/Ameritech, Bell Atlantic/GTE, AT&T/Media One, Sprint/WorldCom, and SBC's joint venture with Bell South.

Sources:

Statement of Chairman F. James Sensenbrenner, Jr., Before the Committee on the Judiciary, U.S. House of Representatives, Concerning "Saving the Savings Clause: Congressional Intent, The Trinko Case, and the Continued Application of the Antitrust Laws in the Telecom Sector," November 19, 2003, available at http://www.house.gov/judiciary/sensen111903.htm.

Statement of R. Hewitt Pate, Assistant Attorney General Antitrust Division, Before the Committee on the Judiciary, U.S. House of Representatives, Concerning "Saving the Savings Clause: Congressional Intent, The Trinko Case, and the Continued Application of the Antitrust Laws in the Telecom Sector," November 19, 2003, available at http://www.ftc.gov/speeches/03speech.htm.

Reuters, "U.S. lawmakers may bolster antitrust role in telecom," November 19, 2003, available at http://www.forbes.com/technology/newswire/2003/11/19/rtr1154079.html.

Additional statements before the Committee are available at http://www.house.gov/judiciary/hearings.htm.

MICROSOFT UPDATE

During the European Commission's November 14 hearings regarding Microsoft's alleged anticompetitive practices in the market for audio/video players, Real Networks, whose audio/video streaming program Real One allegedly has been excluded from the market by Microsoft's bundling of its Windows Media Player with the Windows XP operating system, demonstrated the existence of a version of Windows that functions without Windows Media Player. The operating system is called Windows XP Embedded and is licensed only for industrial use. The demonstration undermined Microsoft's argument that unbundling Windows Media Player would not be technologically feasible.

Source: http://www.nytimes.com/2003/11/17/technology/17soft.html.

Ankur Kapoor
Constantine | Cannon
450 Lexington Avenue
New York, N.Y. 10017
(212) 350-2748
akapoor@constantinecannon.com