A proposal to bar the Federal Trade Commission from ordering divestiture in antitrust cases could debilitate the federal government's powers to combat monopoly practices, the administration's chief antitrust enforcer charged yesterday. John Shenefield, assistant attorney general for antitrust matters, made the statements in a letter to Sen. Howard Cannon (D-Nev.), chairman of the Senate Commerce Committee, which is to consider the proposal today.
"The proposal may interfere, to a substantial degree, with effective allocation of the relatively limited enforcement resources available to the government to combat monopolistic or other anticompetitive practices," Shenefield wrote.
The proposal, submitted by Sen. Howell Heflin (D-Ala.) would curtail dramatically the FTC's antitrust powers. Consideration of the Howell amendment to an FTC funding bill comes at a time when the commission's powers are being wiped away by other proposals already approved by the full House of Representatives and by the Seate Commerce Committee.
A staff memo stating the case for the Heflin amendment was taken verbatim, in parts, from a brief submitted to the FTC by attorneys representing General Mills Inc., the target of a major FTC divestiture action. The so-called cereal case is among FTC actions that would effectively be killed if the Heflin amendment became law.
In testimony prepared for delivery today, Jack Blum, an attorney representing the Independent Gasoline Marketers Council, urges Heflin to investigate the preparation of the memo.
Charging that the amendment "represents a radical change in antitrust law" and appears to be an "attempt by a major industry to end-run" pending cases, Blum calls on the Senate committee to block the Heflin plan.
Blum also points out that the Heflin staff memo was prepared by the Washington law firm of Howrey & Simon, which also represents Exxon Corp. and Shell Oil Co., the targets of a separate FTC antitrust action. c
Heflin's amendment to the FTC authorization bill would include prohibiting any FTC orders involving "divestiture or other similar relief" in investigations of competitive practices.
The amendment would effectively kill five major antitrust proceedings pending at the FTC, all of which have divestiture as a proposed result:
Exxon. The FTC alleges that the top eight petroleum companies combined, or agreed to monopolize, refining operations in the east, Gulf Coast and parts of the Midwest.
Kellogg. Here the FTC staff alleges that three manufacturers have monopolized the ready-to-eat cereal market through widespread advertising, brand proliferation and attempts to restrict shelf space at supermarkets to only their products.
ITT-Continental Baking. In this complaint, the FTC claims ITT's Continental Baking subsidiary illegally has monopolized the wholesale bread baking industry through predatory pricing and other anticompetitive tactics.
DuPont. This controversial FTC probe seeks to break up DuPont's hold on the titanium dioxide (a paint whitener) market.
Brunswick. In this case the FTC only yesterday ruled that a joint venture arrangement between two outboard motor manufacturers was illegal because it gave one of the manufacturers an unfair domination of that market in the United States.