The public interest, and its necessarily antecedent competitive interest, is the foundation of antitrust law. In 1974, Congress established undeniably the importance of the competitive interest in the entry of antitrust consent decrees on the part of the Government. Yet there are no statutory protections of the public or competitive interests in the enforcement of consent decrees. Nor does the case law afford protection to injured competitors who are not parties to the decree.

Third parties have no standing to sue for contempt for decree violations, nor as third party beneficiaries to the decree, nor as intervenors. The only recourse for a third party is a complaint to the Department of Justice, and we have seen the kind of results such complaints can bring.

The Antitrust Division's Judgment Enforcement Section, with only 38 employees, cannot possibly police adequately the more than 825 consent decrees outstanding. Consequently, the department must rely heavily on self-reporting provisions contained in the decree to insure compliance. Allowing the fox to guard the henhouse has never had a beneficial effect. Enforcement through contempt proceedings has been rare, with only 53 contempt proceedings initiated despite over 825 consent decrees having been entered since 1906.

If consent decrees are to be read in theory as a gage of what the Government thinks corresponds with its general antitrust policies, nonenforcement of consent decrees can result only in outright confusion and uncertainty. Business cannot properly plan future programs and products in competition with consent decree defendants without knowing whether they can count on the consent decree for protection. Smaller competitors can spend millions of dollars on research and development of new products, only to find themselves later in direct competition with offerings by the defendant in violation of the decree.

The lack of consent decree enforcement compounds the shortage of investment capital for small competitors. Who will recommend investing in, who will invest in, and who will lend to a company whose future can be wiped out at any moment by a monopolist corporation who can violate the letter or the spirit of its consent decree with impunity? Certainly not the prudent man. The effect of nonenforcement is to dry up sources of capital, the lifeblood of high technology industries such as data processing and communications. Without that capital you will not see the innovations that keep the dominant monopolist moving ahead to offer the American people better products and services.

We believe that the enforcement program in the Antitrust Division can and should be strengthened in a number of ways.

First, Congress could increase the Antitrust Division's appropriations, earmarking a specific amount for the Judgment Enforcement Section. Congress should also establish provisions for reporting publicly, on a periodic basis, the findings of investigations of decree compliance, taking into account specific complaints of violations brought by third parties.

Second, Congress could insure that the Antitrust Division makes use of enforcement aids outside of the Justice Department. For example, the Attorney General has the power to require the Feder

al Trade Commission to make investigations of the manner in which defendants have complied with the provision of any consent decree. However, this power is only rarely used.

Third, Congress could insure that provisions for extra-departmental investigations of consent decree compliance be utilized.

For example, section 6(c) of the FTC Act mandates that the Federal Trade Commission will:

Whenever a final decree has been entered against any defendant corporation in any suit brought by the United States to prevent and restrain any violation of the Antitrust Acts to make investigations upon its own initiative of the manner in which the decree has been or is being carried out. And upon the application of the Attorney General it shall be its duty to make such investigation. It shall transmit to the Attorney General a report embodying its findings and recommendations as a result of any such investigation, and the report shall be made public in the discretion of the commission.

According to one official of the Compliance Section of the FTC's Bureau of Competition, the Commission has not in the last 10 to 12 years conducted any investigation on its own initiative of Justice Department antitrust decrees.

Fourth, as an alternative to increased funding for the Judgment Enforcement Section of the Department of Justice, the Congress might well consider removing the enforcement program from the Department of Justice and placing it in the Federal Trade Commission, which may be better equipped, by virtue of access to industry information, to police decree compliance.

These recommendations address only the general problem of increasing investigations into compliance. In many cases the public interest and the rights of nonparties still may not adequately be protected by the decree itself even though the defendant complies with the decree's provisions. The 1959 House report singled out the A.T. & T. consent decree as an example of just such an ineffective decree.

Since Congress has required that the consent decrees be shown to be in the public interest before their entry, Congress could take the next logical step by insuring that decrees, once entered, remain in the public interest. In industries such as data processing and communications where technological change is so rapid, hindsight is the only really effective measure of whether a decree is in the public, and competitive, interest.

Congress has also recognized the utility of private antitrust suits as a means of promoting the goals of the antitrust statutes. In light of the Antitrust Division's inability to enforce the consent decrees obtained as final judgments to actions brought under these statutes, Congress should now recognize the utility of allowing third parties the right to sue to enforce the provisions of these decrees. Allowing third parties the right to enforce the decree would not necessarily open the floodgates to litigation. Rather, it would do. much to insure a defendant's compliance with the terms of the decree, since the defendant would be faced with the prospect of litigation from many sides if it did not live up to the provisions of the decree. At present, the defendant lives in fear only of the 38man Judgment Enforcement Section and knows full well the section's enforcement record. Indeed, it has been suggested that this may be one of the reasons why so many antitrust cases are settled each year through a consent decree.

In sum, the consent decree enforcement program of the Department of Justice has been ineffective in insuring competition, at least in the computer and communications industries. Strong actions are necessary now, before it is too late to restore full, free, and open competition to these two industries. We must insure that consent decrees, which terminate over 80 percent of the department's antitrust cases, not only live up to their purpose of dissipating monopoly power, but also are vigorously enforced to achieve this end.

Thank you, Mr. Chairman.

Mr. BRECKINRIDGE. Thank you very much, Mr. Biddle. I have not had an opportunity to refresh my recollection of your prior testimony but I will say that you have added considerably to this record, for which I thank you.

I would like to make one or two observations.

As you have noted, the next witness is the Honorable John Shenefield, the Assistant Attorney General in charge of antitrust matters, who this committee is delighted to welcome and looks forward to hearing.

He has inherited the conditions of which you complain. He has been there, I think, just a little over a year now. He is addressing himself to these problems. I am going to ask him to address himself to your comments when that time arrives, but of course, not hold him to that, and let him augment the record later to the extent he wishes.

I think you have put your finger on a number of very glaring problems with the antitrust policies of both Justice and the FTC, and, what is perhaps more helpful, you have made some concrete suggestions as to what the Congress might do to help people like Mr. Shenefield in the discharge of their responsibilities and the chairman of the FTC, who will be before us next week, in the discharge of his responsibilities.

We are engaged as a committee, I feel, in a very large assignment whereby we are trying to bring to bear, not in an adversary context, the opposing views that exist throughout the economy, as to what is wrong with it, because it is so visibly sick that it is a matter of national concern and national politics as between members of both parties, as well as the parties.

Our purpose is purely fact-finding and remedial. The cases are going to go on. The calendar will drag out, the problems will continue. But it is this Member's hope that out of the testimony such as you are giving us and other witnesses have given us that we will make a record that will be followed by all segments of the Government with responsibility, in both the legislative and executive branches.

I can assure you that those conditions complained of and those solutions proposed in each and every instance by every witness are going to be identified and will constitute a part of the report, whether the committee endorses or fails to endorse a particular solution or not, in order that we might have an open discussion and debate and decision as to how we can remedy what I think is generally accepted as a condition that requires remedy.

[Recess.]

Mr. BEDELL. First of all, Mr. Biddle, we want to thank you for being here and for your testimony. I think you voice a concern that certainly is felt very strongly on this committee; certainly we share your concern.

I guess the question that I wrestle with is how we best attack the problem and how we best try to move toward the type of a society that your testimony indicates you would like to have and certainly I would like to have, and that is a society where the small operator does have an opportunity in our society. You mentioned your own son and the fact that he really does not have the choice of trying to involve himself in his own business but must become, as you said, I think, part of the bowels of the corporate giants.

You indicated that you felt we should maybe move the Department of Justice to the Federal Trade Commission.

Mr. BIDDLE. No; the enforcement activity perhaps.

Mr. BEDELL. Yes. In the period that I have been in the Congress, which is not particularly long, I have become more and more aware of the power of the special interest groups who are the corporate giants. I am very much involved at this time in the Law of the Sea negotiations. It is very clear to me there are four big mining consortia that are dictating our total foreign policy because of the power that they have within our government.

Now I do not know what the big computer firms have in terms of power, but if it follows the normal pattern, I think it is a difficult situation. I have been involved in the problem that we have with the dumping of Japanese televisions. Indications are that we are going to impose penalties of dumping for some $400 million, which was absolutely proper and should be done but, because of the involvement of the high Japanese officials with the top people in our Government, that was lowered to only 2 years and $43 million. As long as we have an Attorney General appointed by the President, there will be some political involvement in our whole Justice Department and indeed throughout our entire Government.

Do you have any answers to that problem? It seems to me until we attack that problem we are sort of whistling around the edges of the difficulties we face.

Mr. BIDDLE. A couple of observations if I might, sir.

One, supporting your point on the power of the large corporation, I find it fascinating the number of Members of the House of Representatives who were intimidated by A.T. & T. into sponsoring the "Bell Monopoly Preservation Act," so-called Communications Reform Act.

Mr. BEDELL. In all fairness, I think that was not just big business there. I have many, many of my little telephone companies in-Mr. BIDDLE. But if you understand the structure of the communications industry, you will quickly see that because A.T. & T. collects excessive profits on their long-distance service and doles them out to the small independent telephone companies, they put the small company in a position where they must support this type of protectionist legislation.

Mr. BEDELL. But what I am trying to say is, they are responding to small business, or felt they were. By the way, I think that is the problem we have in our whole society. We have the CFC before us and we find their board is all big business, but the ones we hear

from are the small business people in my opinion supporting many times legislation which benefits big business but is not in the best interests of the people who are contacting us.

Mr. BIDDLE. That is a whole 'nother subject I would love to get into sometime as to whether the NAM represents their so-called constituencies or a very small group of giant companies.

Mr. BEDELL. I take it you agree that they represent a small group?

Mr. BIDDLE. From what we have seen, yes. Seldom do they represent small-sized companies, at least in matters pertaining to corporate structure and antitrust. I think one of the ironies we face is, today our country is looking at serious balance of trade problems. Yet those are occurring primarily in industries which have been monopolized in this country for decades. Those monopolies, the automobile industry, the steel industry, the television industry, have not kept up with modern times; now they are crying for protection because foreign manufacturers have kept up with modern times and are beating their pants off in world markets. I think that is a result of that type of concentration.

Personally, I find some testimony that occurred one day before Senator Phillip Hart to continually haunt me. These were hearings that Senator Hart held on his Industrial Reorganization Act about 5 years ago. One of the witnesses was Nicholas Katzenbach, former Attorney General, now chief counsel for the IBM Corp. He had made some very emotional testimony that IBM had succeeded because of industry skill and foresight and it was certainly improper under our system to try to correct any imbalance that existed in the industry structure because they had earned their position fairly.

Senator Hart said:

Mr. Katzenbach, let's assume for the sake of argument that that is the case and that IBM, because of industry, skill, and foresight, is now able to hire the smartest engineers this country has and is able to attract to it the capital that it needs to expand into new markets and build the plants it needs. Let's assume for the sake of the hypothetical that because of industry skill, foresight and good management, IBM built itself to the point that it manufactured and sold everything made and sold in America; would that be socially and politically acceptable, Mr. Katzenbach? There was some hemming and hawing about the theoretical nature of the question, but Senator Hart bore in, and he said, "Would it be socially acceptable, would it be politically acceptable?"

Finally Mr. Katzenbach said, "No, sir, it would not."

Senator Hart said, "The time has come that we have to decide where you blow the whistle; when a company owns half, a quarter, a third, a tenth or what percentage of America's productive capacity."

În my opinion, we have too many giant corporations that have paid economists crying "economy of scale;" this is phony. They have legions of lawyers that outnumber the Department of Justice by 40 to 1 when the Department of Justice tries to enforce our antitrust laws.

Frankly, as we move into our third century as a country, I think we have to go back and look at some Jeffersonian principles and ask ourselves how big is too big? I would suggest for your consider