increasingly interpreted their statutory authority as a

mandate to overlook or even suppress competition in pursuing regulatory goals. 2/ As one experienced antitrust practitioner told the Commission, "[I]t has been my experience that competition policy is a marvelous idea and rather few agencies of this government have ever heard of it." 3/

As we have detailed earlier in this report, existing antitrust immunities must be individually examined in their proper context. 4/ Elimination of those exemptions and attendant regulatory schemes that are not currently justified can be accomplished only through an industry-by-industry approach. Nevertheless, a more general measure can deal effectively with the problem of unfettered administrative discretion. Competition should be a principal consideration in agency decisionmaking, and legislation mandating that concept can serve a dual purpose. Until such time as existing immunity and regulatory schemes are subjected to analysis and appropriate change, such legislation will limit unnecessarily anticompetitive regulatory actions. For those activities that remain subject to regulatory oversight, enactment of a legislative mandate to weigh the competitive impact of agency actions will significantly increase the likelihood that regulatory intervention complements rather than inhibits existing market forces.

II. A Proposed Solution: S. 2625

The Commission studied one proposal dealing with

a general approach to the interaction of regulation and

competition, the Competition Improvements Act of 1978, S.
2625. 5/ We believe a bill along the lines of S. 2625
can provide a needed message to regulatory agencies that
have previously functioned with vague statutory guide-
lines. The proposal would encourage and facilitate the
use of procompetitive policies in regulatory decision-
making. It would require agencies to focus on the economic
effects of their actions, and to maximize competition as a
regulatory tool. 6/ To accomplish these general goals, the
bill establishes a uniform antitrust standard to guide both
administrative agencies and reviewing courts and provides
additional procedures to promote adherence to the new
standard. For the most part, the mandate of S. 2625 would
apply within established regulatory procedures and structures.
The heart of S. 2625 is section 3(a). This section
establishes a three-part test for all federal agencies
to apply to any action "the effect of which may be sub-
stantially to lessen competition, to tend to create a
monopoly, or to create or maintain a situation involving a
significant burden on competition." 7/ The agency could
not approve any such action unless it found:

(1) such action is necessary to accomplish
an overriding statutory purpose of the
agency;

(2) the anticompetitive effects of such
action are clearly outweighed by signif-
icant and demonstrable benefits to the
general public; and

(3) the objectives of the action and the
overriding statutory purpose cannot be
accomplished in substantial part by
alternative means having less anti-
competitive effects. 8/

The

The first part of the test requires the agency to specify the statutory purpose it seeks to accomplish by its action. The second part of the test demands that the benefits to the general public must clearly outweigh the anticompetitive effects of the action that is approved. criteria of this balancing test are very similar to those contained in the Bank Merger Act and Section 105 of the Atomic Energy Act, 9/ and to the revised public interest standard approved by the Supreme Court in Federal Maritime Commission v. Akteibolaget Svenska Amerika Linien. 10/ Finally, the third element of the test specifies that the proposed action must be the least anticompetitive option available that could accomplish the stated regulatory objective.

The bill also provides that enumerated independent regulatory agencies 11/ would be subjected to additional requirements. Those agencies would have to notify the Attorney General of important pending actions that may have anticompetitive consequences. The Attorney General and the Federal Trade Commission could appear as a party of right in these agencies' proceedings, and in particular circumstances the Attorney General could require the agency to hold a hearing. The statute would also authorize the Department of

Justice and the Federal Trade Commission to use all of their investigatory powers, including those provided by the

Antitrust Civil Process Act, in carrying out their responsibilities under the Act.

Section 5 of the bill provides that in any pro

ceeding for judicial review, the agency has the burden of showing by substantial evidence that it has met the competitive standards set by S. 2625. All federal agencies would be required to review their statutory mandates, rules and policies in order to determine whether changes are warranted to facilitate compliance with the competitive standard established by the bill. Finally, the Federal Trade Commission would be required to report annually on the progress made by federal agencies in fostering effective competition.

III. The Advantages of a Specific Legislative Standard

Legislation embodying the principles of S. 2625 would push the regulatory agencies and courts beyond their current sporadic attention to competitive concerns to more meaningful and consistent application of competitive principles. Current law on agency responsibility to consider competition in reaching decisions has been aptly described as a collection of rules that "are very often articulated in a variety of cases that may be difficult to understand, may be internally inconsistent, will differ fom industry to industry, and will be lacking in the kind of clarity and

existing law, virtually every agency has at some point demonstrated or been forced to demonstrate some deference to antitrust concerns in its "public interest" or "public convenience and necessity" determinations. 13/ These examples fall well short, however, of providing a set of clearly articulated rules whose application has solved the problems created by the excessively vague standards in regulatory statutes.

The general balancing tests contained in Section 3(a) of S. 2625 are similar to those already utilized in previous legislation, and experience in those areas has shown that regulatory agencies and antitrust enforcers can work together successfully to implement such standards. 14/ Above all, a bill like S. 2625 would help tip the balance of agency decisionmaking in favor of competition. Those proposing agency decisions with anticompetitive consequences would have the burden of showing that overriding regulatory purposes required the action and that no less intrusive alternatives exist for achieving the same goals. 15/ Such a required showing would not unduly burden agencies in the pursuit of legitimate regulatory goals, but would provide a specific set of requirements that could not be disregarded as casually as, for example, a simple admonition to the agencies to consider competition where appropriate. 16/

Those who oppose the approach of S. 2625 argue that