Statement of Administration Policy: H.R. 1236 - Price Fixing Prevention Act

(FINAL -- sent to House floor)

(House)
(Brooks (D) Texas and 71 others)

If H.R. 1236 were presented to the President in its current form, the President's senior advisers would recommend that the bill be vetoed.

The Administration opposes H.R. 1236 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. H.R. 1236 would reduce the level of evidence needed to proceed to trial by creating an inference of unlawful conspiracy in certain cases. The inference would be based on evidence that is equally consistent with lawful, unilateral decisions by manufacturers regarding who will distribute their products. The result is that juries could misinterpret lawful business decisions as price fixing conspiracies. Because of the availability of treble damages, H.R. 1236 could invite a substantial increase in complex antitrust litigation.

H.R. 1236 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.