The Reagan administration yesterday said it opposes a proposed change in federal antitrust law that would limit liability in private suits.
The Justice Department is concerned that provisions in a bill proposed by Senate Judiciary Committee Chairman Strom Thurmond (R-S.C.) would reduce the law's deterrence value, said Charles F. Rule, acting assistant attorney general, in testimony before the committee.
However, Griffin B. Bell, attorney general during the Carter administration, and several business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, strongly endorsed Thurmond's bill. Bell and the business groups argued that the legislation would increase deterrence and eliminate serious inequities in private actions.
Thurmond's bill would alter the "joint and several liability" rule, which currently holds that all members of an antitrust conspiracy -- such as among competitors to fix prices -- are jointly liable for treble damages. Thurmond argues that this provision can unfairly favor large defendants, who may agree to small settlements out of court, leaving smaller defendants liable for the remaining damages, which may be greatly out of proportion to the smaller defendants' involvement in the alleged conspiracy.
Under Thurmond's bill, defendants in private antitrust suits would remain liable for treble damages, but each defendant would be liable for only three times the damages caused by its own conduct.
Exceptions would be allowed for bankrupt defendants or those beyond the jurisdiction of the courts.
The purpose of the bill "is to ensure that those who engage in price-fixing conspiracies are held accountable for the injuries caused by their conduct," Thurmond said at the hearing.
Rule, speaking for the Justice Department, acknowledged the concerns raised by the current law, but said that Thurmond's bill was not the best way to address the problem and was "not a desirable legislative reform."
The Justice Department believes that eliminating joint liability would reduce deterrence of antitrust violations by making it harder for victims to bring suit, Rule said. The Thurmond bill would raise the costs of private antitrust suits by creating a system where victims must take action against all potentially liable parties, rather than against the alleged conspiracy as a whole.
A firm also would have less to fear from participating in a conspiracy because it would not be potentially liable for the total amount of damages, the Justice Department argued.
"While the bill may have some 'fairness' appeal, it is difficult to quantify the benefits to society from being 'fair' to antitrust felons," Rule said.
Bell, however, said the bill would increase deterrence and "represents a long-sought solution to well-recognized problems of antitrust damage allocations."