CHART IV ANTITRUST CASELOAD EVALUATION SYSTEM administration required reports Time Allocation Categories January 1978 is the first month in which we attempted to prioritize our workload. I expect that as we gain experience with this process, we may refine it somewhat. Nonetheless, I believe it represents a significant step in our efforts to develop meaningful data upon which to base policy choices and resource allocation decisions. I have also initiated efforts to get our section and field office chiefs more involved in planning and justifying our budget requests. While this imposes additional work on a group of already very busy individuals, they are on the "front line" of our enforcement activity. As a result, they have a wealth of knowledge and experience which should be applied to developing the best justification possible for our programs and budget request. I have dwelled at some length upon all these changes and initiatives because of the importance I attach to managing the Division. Although the Antitrust Division has become a very large organization, its mission continues to grow faster than its resources, and thus, it is incumbent upon us to manage our resources well to create a working environment which allows our personnel to use fully their talents and energy; to streamline our procedures so that paper, information and decision-making flow smoothly and expeditiously; and to develop and implement policies that truly promote competition in our economy. I must also say that these initiatives have not been mine alone; rather I have served as a catalyst for encouraging and bringing to fruition many excellent ideas and recommendations from the Division's very able career staff. VII. MAJOR ANTITRUST DIRECTIONS FOR FY 1979 Let me turn now to our substantive enforcement programs. Our formal authorization submission to the Committee describes our programs and objectives in detail; therefore, I will discuss only the highlights and major antitrust directions I see for fiscal year 1979 and future years. A. Price-fixing We will continue to emphasize the investigation and prosecution of pricefixing cases and our efforts to persuade judges to pass severe sentences when convictions are obtained. Price-fixing is a willful violation of the criminal law, a major white collar crime. It takes money directly and dramatically from the pocketbooks of consumers. In addition, as more cases are prosecuted under the felony penalties, the public attention generated should deter similar conduct by others. To date, in the felony cases terminated by the Division, over $6,000,000 in corporate and individual fines has been levied and jail sentences totalling almost 8 years have been imposed. The average corporate fine has been approximately $150,000 and the average jail term over 4 months. Thus, it is clear that the magnitude of penalties is increasing sharply. One change we are making in the price-fixing program is to spin-off to the States and the U.S. Attorneys the investigation and prosecution of more localized matters where violations are fairly clear-cut and do not require extensive investigation. This will allow the Division to use its resources for the more difficult pricefixing prosecutions. To assist the State Attorneys General and the U.S. Attorneys in this endeavor, we have established training programs and provided various kinds of written materials to them. Thus, I expect that the price-fixing cases the Division will be prosecuting will be larger in scope and economic impact than in past years. B. Shared monopoly A second high priority area in the Division is to investigate and, where appropriate, challenge the structure or concerted practices of so-called "shared monop oly" industries. Shared monopoly has become somewhat of a term of art and means any number of things to those learned in antitrust theory as well as to the general public. Our shared monopoly focus is on industries with dangerous levels of concentration and questionable performance. We are convinced that major industries dominated by a handful of firm particularly firms exhibiting parallel behavior can engender most of the same ill effects as might be expected from a classically monopolized industry. We are also convinced that the antitrust laws can be effectively used to prevent or eliminate parallel practices in such industries that facilitate the coordination of prices or production, or cause the exclusion of new competitors. We are actively seeking to develop improved tests and methods for identifying such industries and such practices. We are tailoring ongoing investigations to include the search for unreasonable shared monopoly situations. We are committed to bringing enforcement actions whenever the facts warrant, regardless of whether we are compelled to argue novel theories of law, and we are placing no limits on the relief we may be seeking in the courts. Should judicial rulings preclude what we consider effective use of existing antitrust laws against these dangerous economic combinations, we would be fully prepared to devise or support new legislation that would provide adequate tests and remedies. C. Big case management It is no secret to any of you that the very large antitrust case, for example IBM and AT&T, presents problems for the Division; however, to fail to pursue this kind of litigation would be to give our biggest industries a de facto exemption from prosecution because of their size. We cannot and will not do that. To ensure that we are more a part of the big-case solution than the problem, the Antitrust Division must first put its own house in order. We must resist the natural fear of leaving something out and draw our pleadings, discovery requests, and witnesses lists as narrowly as can be done responsibly. We must be willing to take some litigation risks to restore public confidence in our ability to streamline and expedite big cases. As I mentioned earlier, and as reflected in our fiscal year 1979 budget and authorization requests, we are improving our ligitation support capability through the establishment of a central information systems support function, upgrading of library research facilities, and by providing more paralegal assistance. We readily accept our responsibility to improve big case management; however, we cannot do it alone. To make any real progress in this area, groups such as the Presidential Commission for the Review of Antitrust Law and Procedures must develop ways to deal with the epidemic abuse of discovery and motion practice, and the inability or unwillingness of many trial judges to get control of big antitrust cases and manage them to an efficient conclusion. There are several disincentives to delay that might be explored; for example, the use of automatic stays similar to to that provided in bank merger cases; strengthening the sanctions under 28 U.S.C. § 1927, which assesses costs to counsel who are responsible for excessive delay; and mandatory segregation of profits for defendant corporations during the pendency of certain types of antitrust cases. Serious consideration might be given to creation of a pool of district judges, similar to the Panel on Multidistrict Litigation, who are interested and experienced in trying antitrust cases. For judges willing to serve on such a panel, some docket relief could be provided if necessary. We would have then, experienced judges, interested in the case, giving their undivided attention to the big case and able to impose discipline upon counsel and the course of the discovery process and trial. As a member of the Presidential Commission and as head of the Antitrust Division, I intend to devote my best efforts over the next several years, and that of the Division staff, to managerial and procedural reforms that will allow big cases to be brought to conclusion more expeditiously. D. Energy A fourth area of high priority for the Division is competition in the production and distribution of energy. We firmly believe that maximizing competition in energy development and delivery is fully consistent with and indeed must be an integral part of any long-run solution to the energy problem we all face. Promotion of new sources of energy, conservation of what we have, and the search for efficiencies of all kinds-all tasks that will continue for the foreseeable future-will be spurred by the removal of anticompetitive restraints. As I noted earlier in my testimony, to better coordinate our efforts in the in the energy field, I have created an Energy Section within the Antitrust Division with broad jurisdiction and investigative powers. In addition to its many other activities, this Section has begun a major civil investigation of the international oil industry. The Section is also working closely with the Department of Interior and Department of Energy to fashion a methodology for the assessment of competitive implications of outer continental shelf lease sale transactions. We continue to examine fuel pipelines to determine whether litigation or legislation may be appropriate to prevent anticompetitive conduct by pipeline owners. At the same time, our Foreign Commerce Section is completing a grand jury investigation of possible international cartel activity in the uranium industry. We are also working with the Department of Energy to obtain the fullest possible information that is essential to an examination of concentration and competition in the petroleum industry in all its facets. On the legislative front, we are working carefully to analyze possible legislation relating to vertical or horizontal divestiture in the oil industry. We have previously indicated our tentative view that legislation or administrative action to lessen control by major companies of indispensable instrument for distribution, such as certain pipelines or deep water seaports, would be particularly valuable to the competitive process. Since energy is a cornerstone commodity for a modern industrial society, these and similar activities will continue into fiscal year 1979 and future years as we seek to find solutions to the dislocations and threats to our economy posed by energy pricing, cartels, and scarcity. E. Regulatory reform Finally, we will continue to devote high priority to achieving more competition in our crucial federally regulated industries; minimizing the prohibitions against and restrictions of competition under the guise of state regulation; and taking a hard look at antitrust immunities enjoyed by particular industries. In addition to straight enforcement activities, we will continue to intervene in regulatory rulemaking and adjudicatory proceedings and to draft and support legislation to achieve deregulation. Again, Mr. Chairman, let me thank you for the opportunity to appear before the Committee during its initial effort to provide authorizing legislation for the Antitrust Division. I will be happy to answer any questions the Committee may have. TESTIMONY OF JOHN H. SHENEFIELD, ASSISTANT ATTORNEY GENERAL, CIVIL RIGHTS DIVISION, DEPARTMENT OF JUSTICE Mr. SHENEFIELD. Thank you, Mr. Chairman and members of the committee. I apologize for presuming on the time and patience of the committee by submitting a statement that is 50 pages long; however, it was a helpful exercise for us and I hope for the committee as well, to put together a snapshot of the Antitrust Division as of this date. The first three or four sections of the statement represent a narrative discussion of the way in which the Antitrust Division now operates. The concluding two sections represent a variety of initiatives we have taken or plan to take within the Antitrust Division separated into management initiatives and policy or case initiatives. I would like briefly to allude to the highlights of the latter two sections, if I may. I think it is most appropriate to begin with a statement of what the Antitrust Division considers its basic mission to be, which is to help to make competition work throughout the American economy, thus promoting both the national economic goal and competition and its political and social implications as well. I came to the Division last April, and assumed the position of Acting Assistant Attorney General last May. My first effort was to attempt to reorganize the Division and to provide a number of kinds of support within the Division so that we could do our job better than we had done it previously. The written statement discusses each of those in some detail. Briefly, they include reorganization of the Division, some commodity reallocations within the Division, including consolidating all energy matters within one section, all iron ore and steel matters within another section, and all transportation within yet a third section. We have also attempted to provide better support for our lawyers. and economists in the form both of ADP services and facilities, paralegals, secretaries, and the hardware without which lawyers simply cannot be effective. We have also upgraded our training program considerably and we have reorganized our review process and our clearance process with the Federal Trade Commission. As to substantive programs and policies, first we continue to emphasize investigation and prosecution of major price-fixing cases. A second high priority is the problem of concentrated industries and the challenge in particular both to mergers and parallel practices within concentrated industries that has come to be known as shared monopoly. Third, we are devoting increased attention to the management of big antitrust cases. We are devoting that attention both within the Division to improve our own trial of those cases, and as staff to, and I as a member of, the President's Antitrust Study Commission which has as one of its major roles the study of the expedition of major litigation. A fourth area of high priority is the maximization of competition within the production and distribution of energy. Finally, we will continue our emphasis on the program of trying to enhance competition within industries regulated at the Federal or State level. Mr. Chairman, members of the committee, that is a very brief overview. I would be happy to try to elaborate or answer questions. [The prepared statement of Mr. Days follows:] STATEMENT OF DREW S. DAYS III, ASSISTANT ATTORNEY GENERAL, I am pleased to appear before you today to testify in support of the Civil Rights Division's authorization request for fiscal year 1979. My remarks are intended to supplement our detailed submission of January 23, 1978, and to highlight the changing trends in the Division's enforcement role in recent years. The Civil Rights Division was established in late 1957 following passage of the first federal civil rights legislation since Reconstruction. For the first six years, our litigation efforts were directed primarily against voting discrimination and violations of criminal civil rights laws. In 1964, the Division's authority was greatly expanded by the first comprehensive civil rights act designed to eliminate racial, ethnic, and in certain instances, sex discrimination, by public schools, private employers, places of public accommodation, public facilities, and recipients of federal financed assistance. Expansion of the Attorney General's authority to enforce civil rights laws in new areas has continued steadily since 1964, with passage of the Voting Rights Act in 1965, and its amendments in 1970 and 1975; the Civil Rights Act of 1968 (covering fair housing, Indian civil rights and criminal interference with federally protected activities); the Education Amendments and Equal Employment Opportunity Act Amendments of 1972, the Equal Credit Opportunity Act of 1976; and the Overseas Citizens Voting Rights Act of 1976. The Civil Rights Division is the Federal government's chief agency for enforcing civil rights laws in the courts with a staff of 185 attorneys, 60 paralegals, and 150 other support personnel, most of whom are assigned to nine litigating sections. Our annual appropriation has increased from $148,000 in FY 1958 to $12 million in FY 1978. The enforcement role of the Civil Rights Division has changed in reaction to the expansion of our authority and the evolution of civil rights law in the courts. I would like to address my remarks to what I believe to be the major changes: from a program designed to eradicate blatant forms of discrimination to one which seeks to eliminate today's more subtle, sophisticated and complex practices, as well; from a largely prosecutorial role to one that includes more frequent participation as amicus curiae in diverse private civil rights cases; from a focus on cases involving only racial discrimination against black citizens to broad-based challenges of unlawful practices directed against other groups, i.e. women, Hispanics, American Indians, and institutionalized persons; from a regional focus to one that is national in scope; from an exclusively litigative role to one that encompasses diverse administrative and regulatory responsibilities; and, finally, from a crisisoriented enforcement program to one that is institutionalized in nature. 1. The first major change in our enforcement role reflects a change in the nature of discrimination itself. During the 1960's, the Division's litigation efforts were primarily directed toward combatting blatant forms of racial discrimination against, and intimidation of, blacks. Typical employment cases involved such issues as segregated lines of progression or absolute refusal to hire blacks. Public 24-750 - 78 - 18 |