Statement of Administration Policy: S. 865 - The Consumer Protection Against Price-Fixinc Act of 1989

(Senate)
(Metzenbaum (D) Ohio and 19 others)

If S. 865 were presented to the President in its current form, the President's senior advisors would recommend that the bill be vetoed.

The Administration opposes S. 865 because it would inhibit manufacturers and distributors from entering into pro-competitive distribution agreements for products in a wide variety of markets.

Under existing antitrust law, and notwithstanding the short title of the bill, distribution agreements that set resale prices are already per se illegal. S. 865 would reduce the level of evidence needed to proceed to trial by creating a new evidentiary standard for a finding of unlawful conspiracy in certain cases. Such findings under the new standard would be based on evidence that is equally consistent with lawful, unilateral decisions by manufacturers. The result is that juries could misinterpret lawful business decisions as price fixing conspiracies. Because of the availability of treble damages, S. 865 could invite a substantial increase in complex antitrust litigation.

S. 865 could also render certain nonprice distribution agreements per se illegal, even though such agreements should be considered, instead, under the antitrust "rule of reason." Consideration under the "rule of reason" provides for the evaluation of pro-competitive effects.