[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]







          RECENT TRENDS IN INTERNATIONAL ANTITRUST ENFORCEMENT

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON REGULATORY REFORM,
                      COMMERCIAL AND ANTITRUST LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 29, 2017

                               __________

                           Serial No. 115-26

                               __________

         Printed for the use of the Committee on the Judiciary




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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan,
    Wisconsin                          Ranking Member
LAMAR SMITH, Texas                   JERROLD NADLER, New York
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
STEVE KING, Iowa                     STEVE COHEN, Tennessee
TRENT FRANKS, Arizona                HENRY C. ``HANK'' JOHNSON, Jr.,
LOUIE GOHMERT, Texas                   Georgia
JIM JORDAN, Ohio                     THEODORE E. DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC L. RICHMOND, Louisiana
TREY GOWDY, South Carolina           HAKEEM S. JEFFRIES, New York
RAUL LABRADOR, Idaho                 DAVID CICILLINE, Rhode Island
BLAKE FARENTHOLD, Texas              ERIC SWALWELL, California
DOUG COLLINS, Georgia                TED LIEU, California
RON DeSANTIS, Florida                JAMIE RASKIN, Maryland
KEN BUCK, Colorado                   PRAMILA JAYAPAL, Washington
JOHN RATCLIFFE, Texas                BRAD SCHNEIDER, Illinois
MARTHA ROBY, Alabama
MATT GAETZ, Florida
MIKE JOHNSON, Louisiana
ANDY BIGGS, Arizona

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel

                                 ------                                

    Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                   TOM MARINO, Pennsylvania, Chairman
                 BLAKE FARENTHOLD, Texas, Vice-Chairman
DARRELL E. ISSA, California          DAVID CICILLINE, Rhode Island
DOUG COLLINS, Georgia                HENRY C. ``HANK'' JOHNSON, Jr.,
KEN BUCK, Colorado                     Georgia
JOHN RATCLIFFE, Texas                ERIC SWALWELL, California
MATT GAETZ, Florida                  PRAMILA JAYAPAL, Washington
                                     BRAD SCHNEIDER, Illinois





































                            C O N T E N T S

                              ----------                              

                             JUNE 29, 2017
                           OPENING STATEMENTS

                                                                   Page
The Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on 
  Regulatory Reform, Commercial and Antitrust Law, Committee on 
  the Judiciary..................................................     1
The Honorable David Cicilline, Rhode Island, Ranking Member, 
  Subcommittee on Regulatory Reform, Commercial and Antitrust 
  Law, Committee on the Judiciary................................     2
The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the 
  Judiciary......................................................     4
The Honorable John Conyers, Jr., Michigan, Ranking Member, 
  Committee on the Judiciary.....................................     5

                               WITNESSES

Ms. Deborah A. Garza, Esq., Partner and Co-chair, Antitrust and 
  Competition Law Practice Group, Covington & Burling LLP
    Oral Statement...............................................     8
Prof. Koren W. Wong-Ervin, Esq., Director of the Global Antitrust 
  Institute (GAI), Adjunct Professor of Law at Antonin Scalia Law 
  School, George Mason University
    Oral Statement...............................................    10
Mr. Alden Abbott, Esq., Deputy Director and the John, Barbara, 
  and Victoria Rumpel Senior Legal Fellow Edwin Meese III Center 
  for Legal and Judicial Studies, The Heritage Foundation
    Oral Statement...............................................    11
Prof. Eleanor M. Fox, Esq. , Walter J. Derenberg Professor of 
  Trade Regulation, New York University School of Law
    Oral Statement...............................................    13
Mr. Randy M. Stutz, Esq., Associate General Counsel, American 
  Antitrust Institute
    Oral Statement...............................................    14

                        OFFICIAL HEARING RECORD

Responses to Questions for the Record from Deborah A. Garza, 
  Esq., Partner and Co-chair, Antitrust and Competition Law 
  Practice Group, Covington & Burling LLP........................    32
Responses to Questions for the Record from Prof. Koren W. Wong-
  Ervin, Esq., Director of the Global Antitrust Institute (GAI), 
  Adjunct Professor of Law at Antonin Scalia Law School, George 
  Mason University...............................................    35
Responses to Questions for the Record Mr. Alden Abbott, Esq., 
  Deputy Director and the John, Barbara, and Victoria Rumpel 
  Senior Legal Fellow, Edwin Meese III Center for Legal and 
  Judicial Studies, The Heritage Foundation......................    43
Responses to Questions for the Record from Prof. Eleanor M. Fox, 
  Esq., Walter J. Derenberg Professor of Trade Regulation, New 
  York University School of Law..................................    46
Responses to Questions for the Record from Mr. Randy M. Stutz, 
  Esq., Associate General Counsel American Antitrust Institute...    48
                    

              Additional Material Submitted for the Record

Statement for the Record from Greg S. Slater Vice President & Director 
    of Antitrust, Standards and IP Policy Intel Corporation submitted 
    by the Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee 
    on Regulatory Reform, Commercial and Antitrust Law, Committee on 
    the Judiciary. This material is available at the Committee and can 
    be accessed on the Committee Repository at:
            http://docs.house.gov/meetings/JU/JU05/20170629/105986/
        HHRG-115-JU05-20170629-SD010.pdf
Hills & Company Letter submitted by the Honorable Tom Marino, 
    Pennsylvania, Chairman, Subcommittee on Regulatory Reform, 
    Commercial and Antitrust Law, Committee on the Judiciary. This 
    material is available at the Committee and can be accessed on the 
    Committee Repository at:
            http://docs.house.gov/meetings/JU/JU05/20170629/105986/
        HHRG-115-JU05-20170629-SD011.pdf
ACT/The App Association Letter submitted by the Honorable Tom Marino, 
    Pennsylvania, Chairman, Subcommittee on Regulatory Reform, 
    Commercial and Antitrust Law, Committee on the Judiciary. This 
    material is available at the Committee and can be accessed on the 
    Committee Repository at:
            http://docs.house.gov/meetings/JU/JU05/20170629/105986/
        HHRG-115-JU05-20170629-SD012.pdf
International Competition Policy Expert Group Report submitted by the 
    Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on 
    Regulatory Reform, Commercial and Antitrust Law, Committee on the 
    Judiciary. This material is available at the Committee and can be 
    accessed on the Committee Repository at:
            http://docs.house.gov/meetings/JU/JU05/20170629/105986/
        HHRG-115-JU05-Wstate-GarzaD-20170629-SD001.pdf

 
          RECENT TRENDS IN INTERNATIONAL ANTITRUST ENFORCEMENT

                              ----------                              


                        THURSDAY, JUNE 29, 2017

                        House of Representatives

    Subcommittee on Regulatory Reform, Commercial and Antitrust Law

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2141, Rayburn House Office Building, Hon. Tom Marino 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Marino, Goodlatte, Collins, Buck, 
Ratcliffe, Cicilline, Conyers, Johnson of Georgia, and 
Schneider.
    Staff Present: Ryan Dattilo, Counsel; Andrea Woodard 
(Lindsey), Clerk; Slade Bond, Minority Counsel; Joe 
Ehrenkrantz, Minority Professional Staff Member; and Perry 
Apelbaum, Minority Chief Counsel and Staff Director.
    Mr. Marino. Good morning. The Subcommittee on Regulatory 
Reform, Commercial and Antitrust Law will come to order. On 
behalf of Mr. Cicilline and myself, I apologize for the two, 
three, or four times that this hearing has been postponed and 
rescheduled, but it is not like we were not doing anything. We 
had a lot of things going on and still do, but please accept 
our apologies.
    Without objection, the Chair is authorized to declare 
recesses of the committee at any time. Welcome, everyone, to 
today's hearing on recent trends in international antitrust 
enforcement. And I now recognize myself for an opening 
statement.
    Antitrust and competition laws have existed in the United 
States since the late 1800s. It was not until the last 30 
years, however, that the adoption of such laws began to spread 
globally. Today, nearly every Nation in the world has some form 
of antitrust or competition law. As a result of this global 
expansion, there have been efforts to enhance consistency and 
advance best practices through the establishment of several 
international organizations. These organizations include the 
International Competition Network, the Organization for 
Economic Cooperation and Development Competition Committee, and 
the United Nations Conference on Trade and Development.
    U.S. antitrust agencies have been active participants in 
these international organizations, with the goal of promoting 
consumer welfare and economic efficiency as the top priorities 
of competition policy. Despite their efforts, consumer welfare 
and economic efficiency are only one aspect of a multitude of 
goals in the global antitrust regulatory environment.
    These goals frequently include several other unrelated 
factors. For example, competition rules in several foreign 
jurisdictions include inherently subjective concepts, such as 
protecting fair competition and social public interest, and 
even promoting the healthy development of the socialist market 
economy.
    These subjective factors often result in legal treatment of 
business conduct that differs profoundly on a case-by-case 
basis, as it is driven by political considerations. These 
differences have begun to have considerable impact on U.S. 
companies and citizens. In particular, there have been recent 
concerns relating to due process in foreign jurisdictions, the 
treatment of intellectual property rights, the imposition of 
extraterritorial remedies, and nonaction against state-owned 
enterprises and national champions.
    The recent report, issued by the International Competition 
Policy Expert Group and commissioned by the Chamber of 
Commerce, found that certain of our major trading partners 
appear to have used their laws to actually harm competition by 
U.S. companies, protecting their own markets from foreign 
competition, promoting national champions, forcing technology 
transfers, and, in some cases, denying U.S. companies 
fundamental due process.
    We convene today's hearing to examine the enforcement of 
competition laws across the globe, with a focus on this report 
and recommendations to address these prevalent issues. It is 
essential we ensure that U.S. companies are treated fairly, 
consistently, and objectively by international jurisdictions. 
Today's hearings will help us inform the committee regarding 
several recent trends in international competition law 
enforcement.
    Additionally, the hearing will provide us insight in how 
the administration and the executive agencies can coordinate 
with each other on the treatment of U.S. companies and citizens 
abroad. We have an excellent set of witnesses before us today, 
who will help us to evaluate these issues more fully and 
consider the next steps in addressing them. I look forward to 
our witnesses' testimony.
    Mr. Marino. The Chair now recognizes the Ranking Member of 
the Subcommittee on Regulatory Reform, Commercial and Antitrust 
Law, Mr. Cicilline, former mayor in the State of Rhode Island, 
my friend, for his opening statement.
    Mr. Cicilline. Thank you, Mr. Chairman, and welcome to our 
witnesses, and I too apologize for the inconvenience in 
scheduling, but really grateful that you are here.
    Today's hearing will focus on a recently-issued report by 
the International Competition Policy Expert Group, concerning 
the need for fair, transparent, and impartial enforcement of 
competition laws internationally. The U.S. Chamber of Commerce 
commissioned this report for the purposes of developing 
recommendations for a potentially more effective and better-
integrated international trade and competition law strategy. 
According to the report, there is increasing concern among 
American businesses that some major trading partners are, in 
some cases, denying foreign companies fundamental due process 
and, in other cases, applying their competition laws to protect 
their home markets from foreign competition, promote national 
champions, and/or force technology transfers.
    Although this report did not engage in fact finding or 
study of specific cases involving procedural unfairness, it 
made a series of recommendations to address this overarching 
concern. These recommendations include the establishment of a 
White House working group to study and address these concerns 
through targeted sanctions. While I agree that resolving 
procedural divergence in international antitrust enforcement is 
a laudable goal, I am concerned that the use of extraordinary 
trade remedies to resolve minor disputes may undermine our 
national interests. This is particularly true given that 
nations may not apply their own laws in a discriminatory manner 
against American companies under current law.
    For example, the dispute settlement body at the World Trade 
Organization has provided the U.S. with an avenue to pursue or 
defend trade disagreements. As of 2015, the United States was a 
direct party to 232 cases either as a complainant or as a 
respondent. The U.S. has won or settled without litigation a 
majority of these active cases. The United States has more than 
a century of experience in developing and expanding the 
antitrust laws.
    Over the past several decades, the United States antitrust 
agencies have relied on this experience to engage their 
international counterparts in ongoing, thoughtful dialogue to 
build consensus on advancing competition and reduce cross-
border inconsistencies. These relationships are built on a 
foundation of trust and mutual respect. Whether it is a 
memorandum of understanding, a joint investigation, or just a 
phone call, international cooperation in criminal and civil 
enforcement depends on effective communication of shared goals 
to protect and promote competition. Bilateral cooperation may 
not work in every case, but it does preserve and strengthen the 
relationships that will be so crucial to successfully working 
together in the future, as former Assistant Attorney General 
Renata Hess observed last year.
    In contrast, using trade remedies to resolve the procedural 
concerns of American businesses in international proceedings 
could backfire. Abusive sanctions could have serious, 
unforeseen consequences and should be reserved, in my 
judgement, for egregious misconduct. I would also note that 
working toward substantive and procedural consistency should 
not be confused with seeking identical outcomes among the more 
than 130 international competition authorities.
    Earlier this year, together with Ranking Member Conyers and 
leaders of the Congressional Progressive Caucus, I sent a 
letter urging additional congressional appropriations for the 
purpose of reducing corporate concentration through the 
vigorous enforcement of the antitrust laws. As I noted then, 
there is mounting evidence of overall decline of antitrust 
enforcement in the United States over the past several decades, 
and the alarming result of this decline is increased costs and 
less choice for consumers, wage stagnation and depression for 
workers, diminished private investment, innovation and small 
business ownership, particularly among minorities, and reduced 
political freedom due to the outsized political influence of 
large corporations.
    American companies should receive fair treatment abroad, 
but antitrust scrutiny is not in and of itself unfair or 
discriminatory. As Professor Fox will testify today, ``Since 
standards of misuse of power differ, and the U.S. has one of 
the least interventionist monopoly laws in the world, these 
American firms may understandably feel that they are unfairly 
targeted by our sister trading partners.'' Just like Congress 
may establish enforcement priorities through appropriations or 
antitrust exemptions, international systems may adjust their 
own enforcement priorities to align with national policy goals.
    I look forward to exploring these issues in today's 
hearings. I thank our panel of expert witnesses for their 
testimony and input on this topic. I thank the Chairman for 
holding today's hearing, and I yield back the balance of my 
time.
    Mr. Marino. The Chair now recognizes the Chairman of the 
full Judiciary Committee, Mr. Goodlatte of Virginia, for his 
opening statement.
    Chairman Goodlatte. Thank you, Mr. Chairman, I appreciate 
your holding this hearing.
    The Judiciary Committee routinely exercises its oversight 
authority to ensure that our Nation's antitrust laws are 
applied in a manner that is transparent, fair, predictable, and 
reasonably stable over time. A natural extension of this 
oversight is ensuring that our Nation's companies and citizens 
receive comparable treatment in foreign jurisdictions. As 
commerce becomes an increasingly global enterprise, the manner 
in which antitrust and competition laws are applied to 
companies and citizens located or engaged in business outside 
of the United States also grows in importance.
    Over the past several years, reports have surfaced that 
certain jurisdictions are deploying their antitrust and 
competition laws in manners that strain the boundaries of due 
process, focus on advancing domestic industrial policies, or 
seek to extract valuable American innovations without fair 
compensation. I would like to thank Chairman Marino for holding 
today's hearing to delve into these potentially serious abuses 
and address potential solutions.
    Today's testimony will help the committee gain a better 
understanding of the seriousness of these issues, and how they 
might be addressed. Furthermore, it will provide a record 
regarding how the administration and our executive agencies, 
including our antitrust enforcement agencies, can coordinate 
among each other and engage with foreign countries on 
international competition law enforcement.
    This hearing also serves as a reminder that the United 
States should be a leader in fair and reasonable antitrust 
enforcement. To that end, enacting important antitrust reforms, 
such as the SMARTER Act, will help to ensure that the U.S. 
continues to be an example to international competition law 
authorities.
    I look forward to hearing from today's excellent panel of 
expert witnesses on these important issues, and I yield back. 
Thank you, Mr. Chairman.
    Mr. Marino. Thank you. The Chair now recognizes the Ranking 
Member of the full Judiciary Committee, Mr. Conyers of 
Michigan, for his opening statement.
    Mr. Conyers. Thank you, Mr. Chairman. Top of the morning to 
the witnesses. We have got a full slate here, and it is 
appropriate, because international antitrust enforcement is a 
subject that we have not really neglected; we just have not got 
around to yet. And this is a good first step toward the inquiry 
and reexamination of a very complex subject.
    Now, given the increasingly interconnected economic 
relationships among nations, American firms depend on the fair 
enforcement of antitrust and competition laws by other 
countries as a critical factor with respect to their ability to 
do business abroad. Yet some American firms believe, in my 
view, that certain countries do not consistently apply their 
competition laws in a sound and nondiscriminatory manner. They 
allege a lack of due process and transparency, when these firms 
have become the target of antitrust investigations by 
competition authorities in those countries. Accordingly, we 
should keep the following points in mind as we discuss foreign 
antitrust enforcement practices.
    My greatest concern is whether and to what degree these 
problematic foreign antitrust enforcement practices impact 
American jobs. To the extent that foreign antitrust enforcement 
actions unfairly disadvantage American firms, and to the extent 
this results in American companies going out of business and 
American workers losing their jobs, I, of course, am deeply 
concerned, since jobs, justice, and peace is one of my rallying 
presentations across the years.
    The witnesses should provide us guidance on just how real 
and extensive this problem is. That being said, however, there 
are and should be limits to what we can insist on from other 
countries. When it comes to antitrust and competition policy, 
divergences in outlook and philosophy are not always rooted in 
a desire to protect national champions, or to discriminate 
against American firms. Various countries may be at different 
stages of development, with laws shaped by culture and 
historical circumstances that, of course, differ from ours. 
Where complaints about other countries' laws simply reflect 
such differences, rather than concerns about discrimination, 
due process, or transparency, we should be careful about 
overstating our criticism and reaction.
    And finally, we must be careful not to provoke retaliation 
against American businesses with any effort to penalize or 
pressure any countries to change their enforcement practices. 
Many helpful recommendations have been made regarding how to 
address the concerns of American businesses about foreign 
antitrust enforcement practices. The best ones emphasize 
dialogue, multicultural standards, and agreements on best 
practices, and the promotion of cooperation among international 
antitrust enforcement agencies.
    An excessively punitive approach, however, may ultimately 
prove counterproductive and be harmful to American interests in 
the long run. So, I thank you for your presence here, and look 
forward with anticipation to this discussion. Thank you, Mr. 
Chairman.
    Mr. Marino. Thank you. Without objection, other members' 
opening statements will be made part of the record.
    Mr. Marino. I will begin today's hearing by swearing in our 
witnesses before I introduce you. If you would all please stand 
and raise your right hand.
    Do you swear that the testimony that you are about to give 
before this committee is the truth, the whole truth, and 
nothing but the truth, so help you God?
    Please let the record reflect that all the witnesses have 
responded in the affirmative. Please be seated. Thank you. And 
if I mispronounce anyone's name, please do not hesitate to tell 
me.
    Ms. Garza. Thank you, Chairman.
    Mr. Marino. Ms. Garza, I am going to introduce each of you 
first, and then ask you to make your statements. Ms. Garza is a 
partner at Covington & Burling, and the co-chair of the firm's 
antitrust and competition law practice group. Ms. Garza has 
been involved in some of the largest antitrust matters, 
including the merger of Exxon and Mobil, and the U.S. 
Government's suit against Microsoft, the USFL suit against the 
NFL, and many other litigation and regulatory matters on behalf 
of Fortune 500 companies.
    Before working at Covington, Ms. Garza served as Acting 
Assistant Attorney General in charge of the Antitrust Division 
at the Department of Justice, and also as Deputy Assistant 
Attorney General for Regulatory Affairs overseeing the matters 
in the telecommunications, transportation, energy, health care, 
agricultural, insurance, broadcast radio, real estate, and 
other industries.
    During two prior tours of service, Ms. Garza served as a 
special assistant, and as Chief of Staff and counselor to the 
Assistant Attorney General in charge of the Antitrust Division. 
Ms. Garza was also appointed by President George W. Bush to 
chair the Antitrust Modernization Commission, a bipartisan, 
blue-ribbon panel created by Congress to study and report to 
the President and Congress on the state of antitrust 
enforcement in the United States. Ms. Garza received her B.S. 
from Northern Illinois University and her J.D. from the 
University of Chicago. Welcome this morning.
    Professor Wong-Ervin is the Director of the Global 
Antitrust Institute and an adjunct professor of law at the 
Antonin Scalia Law School at George Mason University. Prior to 
joining GAI, Professor Wong-Ervin served as counsel for 
intellectual property and international antitrust in the Office 
of International Affairs at the Federal Trade Commission. She 
also served as an attorney advisor to Federal Trade 
Commissioner Joshua D. Wright.
    Prior to working at the Commission, Professor Wong-Ervin 
spent almost a decade in private practice, focusing on 
antitrust litigation and government investigations. She 
currently serves on the International Antitrust Task Force, the 
Antitrust Due Process Task Force of the ABA, and was previously 
co-chair of the ABA's 2016 Antitrust in Asia Conference.
    Professor Wong-Ervin is also coeditor of Competition Policy 
International's North American column, and also serves as co-
chair of the Federalist Society Antitrust and Consumer 
Protection Working Group for the Law and Innovation Project. 
Professor Wong-Ervin received her bachelor's degree from Santa 
Clara University and graduated second in her class from the 
University of California, Hastings College of Law, where she 
was associate editor of the Hastings Law Review. Welcome.
    Mr. Alden Abbott is the Rumpel Senior Legal Fellow and 
deputy director of the Meese Center for Legal and Judicial 
Studies at the Heritage Foundation. Prior to joining the 
Heritage Foundation, he served as director of patent and 
antitrust strategy for Blackberry and in a variety of senior 
government positions, including director of antitrust policy 
for the Federal Trade Commission, acting general counsel of the 
Commerce Department, chief counsel for the National 
Telecommunications and Information Administration, and senior 
counsel in the Justice Department.
    Mr. Abbott is an adjunct professor at the Antonin Scalia 
Law School at George Mason University and was a Visiting Fellow 
at All Souls College, Oxford University, and a Wasserstein 
Fellow at Harvard Law School. He is also a member of the 
leadership of the American Bar Association Antitrust Section, 
and a nongovernmental advisor to the International Competition 
Network. Mr. Abbott received his bachelor's degree from the 
University of Virginia, his master's degree in economics from 
Georgetown University, and his J.D. from Harvard Law School. 
Nice to have you with us.
    Ms. Eleanor Fox is the Walter J. Derenberg Professor of 
Trade Regulation at the New York University School of Law. 
Before joining NYU Law, Professor Fox was a partner at the New 
York law firm Simpson Thacher & Bartlett. She has advised 
numerous younger antitrust jurisdictions, including South 
Africa, Egypt, Tanzania, Gambia, Indonesia, Russia, Poland, and 
Hungary, and the Common Market for Eastern and Southern Africa.
    Professor Fox was awarded an Inaugural Lifetime Achievement 
Award in 2011 by the Global Competition Review for substantial 
lasting and transformational impact on competition policy and 
or practice. She has served as a member of the International 
Competition Policy Advisory Committee for the Attorney General 
of the United States, Department of Justice, and as a 
Commissioner on President Carter's National Commission for the 
Review of Antitrust Laws and Procedures.
    Professor Fox received her bachelor's degree from Vassar 
College, her law degree from the New York University School of 
Law, and an honorary doctorate from the University of Paris 
and, here it goes, Dauphine. I did not take French. Welcome.
    Randy M. Stutz is the associate general counsel of the 
American Antitrust Institute, or AAI. Mr. Stutz has broad 
responsibilities across all of AAI's research, education and 
advocacy programs. He has published numerous white papers, 
amicus briefs, and journal articles on important competition 
issues. He has also served as the coeditor of two handbooks, 
including the International Handbook on Private Enforcement of 
Competition Law.
    Prior to joining AAI, Mr. Stutz practiced antitrust law in 
the Washington, D.C., Office of Skadden, Arps, Slate, Meagher, 
& Flom LLP, where he consulted on merger and cartel 
investigations and multidistrict class actions. Mr. Stutz 
earned his bachelor's degree in English from Washington 
University in St. Louis, and his J.D. with honors from the 
Catholic University Columbus School of Law. Welcome, sir.
    Each of our witnesses' statements will be entered into the 
record in its entirety, but I ask each of you to summarize your 
statements in 5 minutes or less. And to help you, you see the 
lights in front of you; that will keep time. The light will 
switch from green to yellow, indicating that you have 1 minute 
to conclude your testimony, and when the light turns red, it 
indicates that your 5 minutes have expired. And I know you are 
going to be concentrating on your comments, so when we start to 
get over the 5-minute mark, I will very diplomatically and 
politely raise the end of the gavel and give a little tap to 
give you an indication to please wrap up.
    Ms. Garza, please.

   STATEMENTS OF DEBORAH GARZA, ESQ., PARTNER AND CO-CHAIR, 
   ANTITRUST AND COMPETITION LAW PRACTICE GROUP, COVINGTON & 
BURLING LLP; KOREN WONG-ERVIN, ESQ., DIRECTOR, GLOBAL ANTITRUST 
 INSTITUTE (GAI), ADJUNCT PROFESSOR OF LAW, ANTONIN SCALIA LAW 
  SCHOOL, GEORGE MASON UNIVERSITY; ALDEN ABBOTT, ESQ., DEPUTY 
    DIRECTOR, EDWIN MEESE III CENTER FOR LEGAL AND JUDICIAL 
   STUDIES, JOHN, BARBARA, AND VICTORIA RUMPEL SENIOR LEGAL 
 FELLOW, THE HERITAGE FOUNDATION; RANDY STUTZ, ESQ., ASSOCIATE 
GENERAL COUNSEL, AMERICAN ANTITRUST INSTITUTE; AND ELEANOR FOX, 
  WALTER J. DERENBERG PROFESSOR OF TRADE REGULATION, NEW YORK 
                    UNIVERSITY SCHOOL OF LAW

                   STATEMENT OF DEBORAH GARZA

    Ms. Garza. Thank you, Chairman Marino, Chairman Goodlatte, 
Ranking Member Cicilline, Ranking Member Conyers, and members 
of the Subcommittee. Thank you for inviting me to appear here 
today. I have had the pleasure of appearing before the 
Subcommittee in the past to testify on recommendations of the 
Antitrust Modernization Commission and in support of the 
SMARTER Act, and it is always an honor to be invited to address 
the Subcommittee and to witness the good, thoughtful work of 
its members and its staff.
    I am here today in my capacity as the antitrust co-chair of 
the International Competition Policy Expert Group, so named so 
that we could abbreviate it as ICPEG. ICPEG was a bipartisan 
volunteer group of 13 competition and international trade 
policy experts that was convened by the U.S. Chamber of 
Commerce in August of 2016 for this purpose: to consider how 
the U.S. can most effectively address the perceived misuse of 
competition law by some foreign jurisdictions that distorts 
international trade and harms U.S.-based companies.
    ICPEG's members included distinguished academics and 
thinkers, like Professor Eleanor Fox, who is here today, who 
have studied and participated in the development of 
international competition and trade policy for decades, and 
former enforcers and policymakers from every prior Republican 
and Democratic administration in the past 36 years. And I would 
like to pause here to recognize Jim Rill, who was a member of 
ICPEG, that is here with us today.
    The chamber asked this diverse group to leverage our 
collective experience to develop practical and actionable steps 
forward that will serve to advance sound trade and competition 
policy. And that is what we did, with a remarkable degree of 
consensus. A copy of ICPEG's resulting report and 
recommendations in our transmittal letter to the President and 
to the 115th Congress is attached to my statement.
    My testimony today is limited to ICPEG's report and 
recommendations. I am not speaking today on behalf of any 
specific client interest, and I am not prepared to talk about 
any particular investigation or enforcement matter. My 
testimony will be brief, because the ICPEG report and 
recommendations speak for themselves, and are consistent with 
my personal views.
    Simply put, there is a concern that certain of our major 
trading partners have, in some cases, denied foreign companies 
fundamental due process and, in other cases, applied their 
competition laws to protect their home markets from foreign 
competition to promote national champions, and/or to force the 
transfer of technology at royalty rates that favor local 
technology implementers. Such conduct has a significant unfair 
adverse impact on the ability of U.S. firms to compete at home 
and in global markets. Koren Wong-Ervin, who is here testifying 
today, and Alden Abbott, have provided examples of some of 
these things in their testimony.
    Prior administrations have devoted substantial resources of 
the very highest political levels to address the problem, with 
some success. But it has been a difficult nut to crack, and 
requires persistent efforts and a multifaceted approach that 
engages both the competition and the trade law levels. Even for 
those who are wary of the use of trade rules recognize the need 
for a careful, integrated competition and trade law approach. 
As Professor Fox put it in her testimony, ``It is time that 
officials from trade and competition sat down at the table and 
discussed strategies for the good of the country. We need to 
work toward a coherent trade and competition policy that, among 
other things, tackles unjustified State restraints and the 
distorting competition of privileged and cronyistic SOEs,'' and 
I say, ``Hear, Hear,'' Eleanor.
    I will not go into any great length in describing the 
recommendations that ICPEG made. But I will say that the first 
six recommendations focused on the coordination of competition 
and international trade policy within the U.S. Government. We 
suggested that it be through a White House working group. Among 
other things, the working group would determine which 
international agreements should include competition chapters, 
including through amendment of existing agreements, what 
provisions should be included, and how those provisions should 
be enforced. The working group would also focus on how to most 
effectively ensure that other countries apply their competition 
laws in a manner that is consistent with accepted standards of 
process to ensure transparent, accurate, and impartial 
enforcement decisions.
    I recognize the concerns of some of the members of the 
Subcommittee about the effects of using trade sanctions and the 
effects of overreacting to issues. I will note that our report 
suggested many things that fall far short of imposing 
sanctions, and an example would be to have these competition 
chapters in these trade agreements that will create a framework 
for discussion and a less explosive way to deal with these 
problems as they arise.
    I thank you for your attention and look forward to 
answering your questions.
    Ms. Garza's written statement is available at the Committee 
or on the Committee Repository at: http://docs.house.gov/
meetings/JU/JU05/20170629/105986/HHRG-115-JU05-Wstate-GarzaD-
20170629.pdf
    Mr. Marino. Thank you. Professor Wong-Ervin.

                 STATEMENT OF KOREN WONG-ERVIN

    Ms. Wong-Ervin. Thank you, Chairman Marino, Chairman 
Goodlatte, Ranking Member Cicilline, Ranking Member Conyers, 
and members of the Subcommittee. Thank you for the honor of 
appearing before you today. My testimony will begin with the 
discussion of the problem as framed by the chamber's expert 
report, and then I will move on to possible solutions.
    To begin, I agree with the report that certain foreign 
governments appear to be using their competition laws in ways 
that unfairly harm U.S. companies and inappropriately reduce 
incentives to innovate. These include, first, denying U.S. 
companies fundamental due process. Second, in the case of 
intellectual property rights, using competition laws to reduce 
royalty payments by U.S. companies to unduly favor domestic 
manufacturers. And third, imposing unwarranted extra-
jurisdictional remedies, namely global, portfolio-wide remedies 
on foreign conduct involving foreign patents.
    Examples of denials of due process include failure to 
notify the parties of the legal and the factual basis of an 
investigation, lack of an independent tribunal to review 
decisions, and the ability to stay remedies pending appeal. 
Refusal to allow parties to cross-examine witnesses at 
hearings, and failure to protect confidential information, and 
recognize attorney-client privilege and other important legal 
privileges. One case example from earlier this year is the 
Korea Fair Trade Commission's decision against Qualcomm, in 
which the agency allegedly refused to allow the company to 
fully cross-examine witnesses at hearings, and sought to act as 
the world's competition police by imposing global, worldwide 
remedies, including on U.S. patents.
    Moving on to possible solutions. Based on my experience at 
the U.S. Federal Trade Commission, it is my belief that public 
exposure, including expressions of concerns at the highest 
levels of our government, is one effective means to achieve the 
desired change. To that end, I favor the report's 
recommendation to consider creating a listing mechanism for 
competition enforcement, akin to the USTR's annual Special 301 
listing of foreign nations that have inadequate IP protections.
    In my experience, the good news is that most foreign 
jurisdictions seem to want to be considered part of the 
international mainstream and respond to public statements of 
concerns. For example, the egregious alleged violations in 
China against U.S. companies, for example, reportedly locking 
them in rooms and ordering them to confess their sins under 
threat of refusing to return their passports, were remedied 
through a multipronged approach, which included a letter from 
the then-Secretary of the Treasury Department, followed by 
statements by President Obama to China's President Xi. These 
public statements were followed by reportedly better process in 
China and also China abandoning its previously stated intention 
to impose extra-jurisdictional remedies.
    Lastly, I agree with the report about the dangers of using 
vague and subjective standards such as fairness in other 
noncompetition goals, such as employment, or the healthy 
development of an economy. And I agree that the U.S. should 
continue to advocate for a consumer welfare standard as set 
forth by our Supreme Court. Consumer welfare is a broad concept 
that values what consumers are willing to pay for. It is also 
an important standard because it connects competition to the 
methodological commitments of economics in terms of giving 
theories that can be tested and rejected. Yet, as has been 
mentioned here today, many foreign jurisdictions currently 
explicitly provide for the consideration of noncompetition 
factors. I believe that an effective interim measure is to 
require transparency from these governments as to what factors 
they consider and how they are weighed and balanced.
    I have often found myself, when I am reading foreign 
competition decisions, as if there is missing pages. The 
analysis may start off sounding like mainstream competition 
analysis, but then the conclusions often lack any evidentiary 
support and leave me puzzling as to what industrial policy 
concerns or noncompetition factors may have influenced, or 
perhaps dictated, the outcome. I believe that requiring 
transparency and decision-making will go a long way to 
requiring accountability by foreign jurisdictions and providing 
some measure of predictability for our companies. Thank you.
    Ms. Wong-Ervin's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170629/105986/HHRG-115-JU05-
Wstate-Wong-ErvinK-20170629.pdf
    Mr. Marino. Thank you. Mr. Abbott.

                   STATEMENT OF ALDEN ABBOTT

    Mr. Abbott. Well, thank you. Chairman Marino, Chairman 
Goodlatte, Ranking Member Cicilline, Ranking Member Conyers, 
distinguished members of the Subcommittee, I am delighted to be 
asked to participate here today, and I applaud you for holding 
this hearing on a very important topic. I am here because I was 
asked to serve as rapporteur, or principal drafter, of the 
ICPEG report, which has already been discussed, which 
represented a consensus opinion of all the ICPEGs members, not 
anybody's personal opinion. And by the way, again, I want to 
stress the views expressed today are my own and not necessarily 
those of the Heritage Foundation.
    As already emphasized, this was a bipartisan effort, and 
because it represented the views of trade experts as well as 
antitrust experts, it is not too surprising to find some report 
recommendations touching on the possible role of trade law as a 
remedy for harmful foreign misapplication of competition law.
    Now, as already mentioned, a key aspect of the report is 
its extensive discussion of consensus U.S. understanding of 
consumer welfare as the heart of antitrust law. This is 
reflected in the report's first recommendation, which calls for 
the Trump administration to expressly confirm that, as an 
organizing principle, competition law and policy should focus 
on eliminating artificial impediments to competition, both 
private and governmental, as a way of promoting economic 
growth, innovation and consumer welfare.
    And let me underscore the fact, the report strongly 
supports the ongoing excellent work, domestic and international 
work, of the two Federal antitrust agencies, the Federal Trade 
Commission and the Justice Department's Antitrust Division. In 
calling for a White House working group, it does not call for 
the involvement of non-antitrust agencies or the White House in 
carrying out American antitrust agency investigations, or in 
the antitrust agencies making any policy determinations, in the 
antitrust agencies' regular cooperation with foreign 
counterparts, or in any of the antitrust agencies' periodic 
consultations involving competition authorities from around the 
world.
    Simply put, the report contains no language that would 
support curbing the independence of the Federal antitrust 
agencies in carrying out their statutory roles, which encompass 
antitrust-related law enforcement and policy functions. 
Basically, what the report calls for is better coordination of 
work on situations where a foreign nation's alleged misuse of 
its competition law seriously impedes international trade and 
investment by posing an unreasonable, unjustified, or 
discriminatory burdens or restrictions on U.S. commerce. And it 
does this through a working group, the idea not being that the 
working group is going to seize authority, but that it is going 
to come up with sort of a measured, thoughtful way of looking 
at allegations, whether or not there is a working group.
    If a major U.S. company is concerned it is being treated 
unfairly overseas, people in Congress and in the administration 
from different agencies will be hearing about it. The notion of 
the working group is to create a structure by which the orderly 
views of the different departments around the executive branch 
and the independent agencies can be heard. And again, the 
notion of the working group is not to get in the way of what 
the U.S. antitrust agencies are doing in trying to improve 
things with their counterparts.
    The report also calls for additional work by multilateral 
institutions in which the U.S. is already heavily involved, 
including the Organization for Economic Cooperation 
Development, the World Bank, the International Competition 
Network, and the World Trade Organization. In particular, as 
already mentioned, the concern about shaming and naming, it 
calls for more peer-review studies, open analysis of the 
application of competition law, because I think it is safe to 
say there is sort of a general consensus view among 
international economists worldwide that consumer welfare is of 
central importance, so this is perhaps a way to point out to 
other agencies their need to keep that in mind.
    Already, reference has been made to intellectual property. 
I will just briefly mention, put in a plug for, the current 
Acting Chairman of the FTC, who has done a recent article in 
the Harvard Journal of Law and Technology on the problem of 
intellectual property and competition; well worth reading.
    That closes my statement. I would be pleased to take any 
questions you might have. Thank you so much.
    Mr. Abbott's written statement is available at the 
Committee or on the Committee Repository at: http://
docs.house.gov/meetings/JU/JU05/20170629/105986/HHRG-115-JU05-
Wstate-AbbottA-20170629.pdf
    Mr. Marino. Thank you. Professor Fox.

                    STATEMENT OF ELEANOR FOX

    Ms. Fox. Thank you very much. Chairman Marino, Chairman 
Goodlatte, Ranking Member Cicilline, Ranking Member Conyers, 
and distinguished members of the Subcommittee, thank you very 
much for the invitation to appear before you today. I was 
honored to be a member of the committee of experts that was 
organized by the U.S. Chamber of Commerce on which Deborah 
Garza and Andrew Shoyer were co-chairs, and Alden Abbott was 
reporter, and I want to thank them for the excellent work that 
they have done on the problem that we have before us.
    So, the problem that we have before us has, let us say, 
three parts. One is definition: what is the problem? Second is, 
how big is the problem? What kind of response does it call for? 
And third is what to do about it. So, I want to say a word 
about each.
    How big is the problem of U.S. trading partners using their 
competition laws in ways that are illegitimate and that hurt 
American business? I would like to enlarge the picture. The 
problem is that nations may use antitrust laws illegitimately 
outside of the bounds of proper antitrust, hurting other 
countries and their citizens. I want to include the U.S. in 
that paradigm. I think we are in a position today where we have 
to watch that our own country does not use antitrust 
politically. It has not yet, but one has to be alert, and the 
problem is on all sides.
    What exactly is the problem, and how big? First, there is a 
question of substantive law; our trading partners', using 
substantive law, antitrust law, in an inappropriate way. 
Second, one could ask about industrial policy. Third, one could 
ask about nation-state restraints, like Chinese SOEs, or any 
country's national government use of policy that is creating 
competition. And lastly, a word about discrimination or putting 
it to U.S. trading partners; is there discrimination against 
us? As to substantive law, my view is slightly different from 
the rest of my committee in terms of, should there be one 
particular focus, such as consumer welfare, for antitrust law? 
In my view, the problem is a bit larger in that almost every 
nation agrees that they are trying to make markets work better 
by their competition law that is just a little more elastic, 
giving countries and jurisdictions, even our own jurisdiction, 
a little more elbow room in defining what is hurting 
competition.
    Because I have a broader view of what is legitimately 
called ``harming competition'', I also have a view that the 
problem before us may be a little narrower than many of my 
colleagues think. I think that we must respect how our trading 
partners formulate their competition laws, and it is not always 
how the U.S. formulates it. We must have respect for 
formulations that are, in general, within the confines of a 
good competition policy.
    Industrial policy: I think we should have respect for other 
nations' choices except where nations are using their antitrust 
laws specifically to target us, and to hurt us. State 
restraints I will pass on now because of time. Discrimination, 
I think, is very hard to prove, that our trading partners are 
applying different rules to us than they are to their own 
companies, and, therefore, the problem as I see it is smaller.
    But there is a problem, and the problem, as my colleagues 
and panel members have said, includes lack of due process. 
There is definitely a problem of illegitimate antitrust and 
antitrust without due process. What to do about it? In my view, 
the first best attack is to keep talking. Our competition 
agency heads in the United States have been very clear and very 
persuasive to other countries. Talking about good standards has 
worked; at least it has worked sometimes. I think that is 
definitely the first line of defense.
    I do not believe that trade remedies ought to be used as 
sanctions. I do not think they will work. They may lead to a 
race to the bottom. So, I do think there should be a working 
group. It might or might not be called a White House working 
group. There is a benefit to taking it out of a possibility of 
thinking of it politically. But there must be better 
integration between trade and competition.
    I want to recognize Jim Rill, who is here. When Jim Rill 
was head of the Antitrust Division and Carla Hills was the 
United States' Trade Representative we saw perhaps the high 
point in the integration of trade and competition used at that 
time to open the Japanese market, among other things.
    Lastly, I want to say: I think the main thing that we have 
to do in antitrust is keep our eye on the fact competition does 
not know borders, and should not. We all gain when competition 
is free and open without borders, and not politicized. We all 
lose if we become sucked into a circle of tit-for-tat; you do 
this to us, we will do it to you. I trust our heads of 
competition, Department of Justice and Federal Trade 
Commission, who believe strongly in that principle. I trust 
them very much to carry on the conversation to call out 
illegitimate antitrust and to press on with what we have always 
had: a cosmopolitan antitrust. Thank you.
    Ms. Fox's written statement is available at the Committee 
or on the Committee Repository at: http://docs.house.gov/
meetings/JU/JU05/20170629/105986/HHRG-115-JU05-Wstate-FoxE-
20170629.pdf
    Mr. Marino. Thank you. Mr. Stutz.

                    STATEMENT OF RANDY STUTZ

    Mr. Stutz. Thank you. Chairman Marino, Chairman Goodlatte, 
Ranking Member Cicilline, Ranking Member Conyers, and members 
of the committee, I appreciate the opportunity to appear today 
on behalf of the American Antitrust Institute.
    The expert report commissioned by the Chamber of Commerce 
recognizes that U.S. businesses operating internationally face 
difficult challenges posed by the enforcement of foreign 
competition law. The report addresses allegations involving due 
process violations, foreign enforcement under subjective legal 
standards, and problematic extraterritorial remedies. But as I 
explain in more detail in my written testimony, there is a 
good-faith species and a bad-faith species of each of these 
allegations. It is important to distinguish between a foreign 
authority's bad-faith denial of basic rights in pursuit of 
protectionism and its good-faith disagreements over appropriate 
legal standards, and how to assess market facts.
    With this in mind, there are four key points I wish to 
leave you with today. First, bad-faith conduct by foreign 
competition enforcers likely does require better coordination 
between U.S. trade and competition agencies. The AAI agrees 
that trade law, including possibly the threat of trade 
sanctions, could be a valuable tool in addressing the bad-faith 
denial of fundamental rights like due process and equal 
protection in competition proceedings. Trade agencies have a 
strong claim to authority in these circumstances, because, in 
many respects, these are competition issues in name only. The 
behavior is equally problematic regardless of the antitrust 
standard that is being applied and regardless of whether a U.S. 
company has actually committed an antitrust violation.
    Second, the good-faith conduct of foreign enforcers 
requires a different policy response, even if some may think a 
foreign enforcer's standards or remedies are very misguided. 
The most effective way to deal with good-faith divergences from 
U.S. standards is to empower the U.S. antitrust agencies to 
cooperate effectively with their foreign counterparts. I want 
to stress that this is not just a theory. The U.S. antitrust 
agencies know this from decades of experience, and they have 
the benefit of hindsight.
    Cooperative relationships with foreign enforcers going back 
to the 1970s have also helped preempt such divergences in the 
first place. Through cooperation, U.S. competition experts have 
been invited to participate directly in foreign policymaking. 
They have helped draft foreign competition laws, jointly 
develop best practices, and even train foreign judges and 
agency staff, and much more. Progress is sometimes slow and 
incremental, but I think everyone on this panel would agree it 
has been enormously successful in the long run.
    Third, creating a working group to improve coordination 
between U.S. trade and competition agencies is a good idea, in 
principle, but it has its limits. Generally speaking, the 
concept of a working group sounds mostly benign. But if we were 
to put a working group in the White House and give it 
government wide power to set international competition policy, 
we would create a massive lobbying target and risk politicizing 
competition law enforcement internationally. We would also send 
the wrong message to the rest of the world.
    In our words, we would be telling our trading partners to 
use an apolitical consumer welfare antitrust standard that 
protects competition, not competitors. But in our actions, we 
would be putting a political body in charge of international 
competition policy. And implicitly, we would be putting the 
threat of trade sanctions on the table at the behest of U.S. 
competitors.
    Our actions would speak louder than our words. We can 
expect our counterparts to respond in kind. We would risk 
losing our antitrust leadership status in the world, and worst 
of all we would imperil the U.S. antitrust agencies' 
international cooperation efforts which have been most 
effective. Alternative approaches to a politicized working 
group, such as an interagency working group that has an 
advisory role, are worth exploring.
    Fourth and finally, it is important to remember that U.S. 
businesses operating internationally are sometimes mistreated 
in their capacity as buyers, not only in their capacity as 
sellers. Many U.S. manufacturers, for example, are dependent on 
global supply chains and have to do business with foreign 
cartels. When they do, foreign governments sometimes harm 
competition and U.S. competitors by refusing to enforce their 
antitrust laws.
    To be fully effective, international competition policy 
reform should ensure that U.S. business victims are empowered 
to seek appropriate relief in U.S. court in these 
circumstances. Reform of this kind can help deter the 
proliferation of international cartels that are targeting 
American businesses and consumers. Finally, these reforms would 
complement many of the reforms discussed in the ICPEG report.
    I thank you for your time, and look forward to your 
questions.
    Mr. Stutz's written statement is available at the Committee 
or on the Committee Repository at: http://docs.house.gov/
meetings/JU/JU05/20170629/105986/HHRG-115-JU05-Wstate-StutzR-
20170629.pdf.
    Mr. Marino. Thank you very much. Now, it is time for 
Congress members to ask their 5 minutes of questioning. And we 
will begin with the Chairman of the full committee, Congressman 
Goodlatte.
    Chairman Goodlatte. Thank you very much, Mr. Chairman. Mr. 
Abbott, I will start with you on this question, but I will ask 
all the panelists to chime in on this as well.
    So, we have been hearing a lot in this hearing about the 
problem of overly aggressive antitrust enforcement in some 
countries. But is it not true that weak or nonexistent 
antitrust enforcement can also be an international issue? For 
example, in May of 2015, 20 members of this committee wrote a 
letter urging that the U.S. take action to remedy unfair 
competition from the three major Gulf Air carriers, Qatar, 
Emirates, and Etihad. In this instance, the three airlines are 
completely exempted from their countries' competition laws, and 
as a result, they are able to control aspects of the airline 
industry in ways making it impossible for others to compete.
    So, are there not two sides to this problem? Is there 
precedent for antitrust enforcement against state-sponsored or 
state-owned enterprises?
    Mr. Abbott. Thanks for that question, Mr. Chairman. I think 
in principle, there should be. I will start with a quick 
analogy. The U.S. Foreign Sovereign Immunities Act does not 
apply to the commercial activities, say, of instrumentalities 
of a foreign sovereign. And it seems to me that if there is a 
direct, substantial, reasonably foreseeable effect on U.S. 
commerce from the activities of such instrumentalities, in 
principle there is a strong argument for applying jurisdiction.
    I will not get into it, there are some questions about 
doctrines such as foreign sovereign compulsion or the Act of 
State Doctrine, which are limitations, they are not really 
international law rules. They are really rules of abstention, 
in which courts, U.S. courts, agree not to interfere in foreign 
policy decisions committed to the executive branch. But it 
seems to me that there is no constitutional reason why we could 
not, if we chose, take jurisdiction when jurisdictional harm 
and appropriate contacts could be made out.
    Chairman Goodlatte. Mr. Stutz.
    Mr. Stutz. Thank you. This is, I think, a really important 
question. Non-enforcement is problematic in a variety of 
different ways. One of the issues that arises is an incentive 
problem. When, for example, a foreign cartel is injuring a U.S. 
business, oftentimes the host country of foreign cartel has no 
incentive to prosecute it. It is actually benefitting from the 
wealth transfer that is occurring from a U.S. business to the 
host country. And so, that is why we have the effects test. It 
is a doctrine created in the 1940s by Judge Learned Hand.
    Chairman Goodlatte. I have only got 2 minutes left, and I 
want three more people to chime in, so.
    Mr. Stutz. Just to sum up, it is incredibly important that 
U.S. victims and the U.S. government have the ability to bring 
cases internationally.
    Chairman Goodlatte. Thank you. Ms. Garza.
    Ms. Garza. Not to repeat what has already been said, but to 
say something new: this is an example, I think, of where you 
can use the trade function of our U.S. government to help solve 
a problem. For example, in trade agreements it is not uncommon 
in the competition chapter or another jurisdiction to commit to 
the enforcement of antitrust laws to allow for a non-distortive 
free competition, including by SOE. So, I agree with you that 
in some cases, trade can be distorted by the fact that you do 
not have sound antitrust enforcement within another 
jurisdiction. That is something that we should continue to work 
on, both from the antitrust enforcement and from the trade 
perspective.
    Chairman Goodlatte. Thank you. Professor Wong-Ervin.
    Ms. Wong-Ervin. Thank you for the question. So, I agree 
with the report that addresses this, that calls for the Trump 
administration to support the establishment of an ICN working 
group on this serious issue of anticompetitive harm caused by 
state-owned enterprises. The OECD in a 2010 study reported that 
SOEs are often the recipients of State aids, and, in many 
countries, the largest share of these subsidies is devoted to 
preserving lossmaking SOEs.
    Chairman Goodlatte. Thank you. And Professor Fox.
    Ms. Fox. Thank you. I agree there is a problem of under-
enforcement, and this is a particular problem in cases where 
there are State measures, or SOEs, state-owned enterprises, to 
which the antitrust laws are sometimes not applied. Our laws 
should be applied against state-owned enterprises when they are 
acting in a commercial interest.
    In addition, I agree with Deborah Garza. There is much room 
for an integrated trade and competition committee to focus on 
exactly the problem of State restraints, which is usually 
foreign restraints that hurt us, it could be vice versa. And I 
would cite in particular, the Vitamin C case in which, so far 
in the litigation, China has been allowed essentially to 
immunize an export cartel into the United States, hurting 
Americans directly.
    Chairman Goodlatte. Thank you. Mr. Chairman, my time has 
expired, but I do think that it is well worth exploring the 
underlying issue here, which is allowing state-owned 
enterprises to do business in the United States. We shy 
strongly away from, not that we have never done it, but we have 
very little in the way of State-run enterprises in the United 
States domestically. But they have to compete with foreign 
competition, and that has all the benefits of that State 
subsidy, and sovereignty that goes with it. Thank you, Mr. 
Chairman.
    Mr. Marino. Mr. Cicilline has graciously deferred to the 
Ranking Member, but Mr. Collins has to the Rules hearing 
meeting, and Mr. Conyers has graciously agreed to allow Mr. 
Collins to ask his questions for 5 minutes. So, thank you, both 
of you.
    Mr. Collins. Thank you all for the courtesy of both sides, 
and I appreciate it, Mr. Chairman. And again, I think, just 
focusing on the issue here of developing, you know, what is 
happening in the international realm, and how they are 
antitrust, and keeping this very open as far as how do we 
address this and how do we not. I think, you know, it is really 
also something we need to understand. Antitrust laws were 
enacted for the protection of competition, not competitors. And 
I think that is something as we look at, and this is, you know, 
Supreme Court actually saying that as well, so. And the concern 
is foreign countries are not doing that. They are using it 
basically to harm, in many ways, the markets, or shake the 
markets, if you would.
    And Ms. Garza, in your testimony, there was a 
recommendation from the White House working group that was 
meant to produce a form in which sound and coherent trade and 
competition policies could be forged, not create an antitrust 
czar to direct antitrust enforcement decisions. Can you 
elaborate on that, please?
    Ms. Garza. Sure. I was really addressing the concern that 
was raised by Randy and Eleanor and that I have heard in the 
past. That is not what we are calling for, an antitrust czar in 
the White House to direct antitrust policy. That is definitely 
not what our recommendation is. Our concern is, basically, as 
has been said here today, to address this question of the 
misuse, potential misuse, of antitrust law and lack of process 
that we have experienced in other jurisdictions, and to make 
sure that the administration, through all of its resources, 
including on the trade side as well as on the antitrust 
enforcement side, are marshaled to focus on this issue.
    So, the focus of our group was not domestic antitrust 
enforcement. It was a question of how do we help to further our 
efforts to ensure that the 130 other nations that have 
antitrust laws are not misusing them in a way that distorts 
trade and harms U.S. companies.
    Mr. Collins. Okay, and keeping with that, I think you 
brought up a good point. And I think when you are looking at 
our situation, Mr. Abbott, how can we, as the U.S., better 
situate ourselves to deal with this emerging issue as it is 
continued here, you know, to counter preventing proper foreign 
enforcement actions? Then, we will go to Ms. Fox, we will just 
sort of catch her on the line here.
    Mr. Abbott. Sure, that is a good question, Congressman. I 
think, you know, part of the recommendation was that we act a 
lot more vigorously to get the international bodies we are 
already involved in to highlight, to do peer review studies, 
and to emphasize those issues. And perhaps, you know, a working 
group could not just in the bilateral antitrust discussions, 
but in perhaps higher-level government discussions, raise these 
issues directly. I think it was already mentioned that 
President Obama raised an issue with the Chinese government 
about lack of due process, about locking people up in rooms. 
There needs to be, perhaps, more of that, and perhaps more 
public attention, and public statements about that, you know, 
in context of international meetings, bilateral. Not to tell 
governments what to do, but to raise the concerns at a much 
higher level.
    Mr. Collins. Ms. Fox, I am going to elaborate further. The 
question here is, are we dealing, then, more with an emphasis 
from the administration, from Congress? Is this a fix that we 
need to do in more a diplomatic sense, or is this something 
that there is a legislative fix, or is there a policy fix? Take 
Mr. Abbott, and take that, that is a great answer, I was just 
curious. Let us follow that logical step. What do you think? 
Push the button. There you go.
    Ms. Fox. One should first understand what one means by 
misuse. It is used in at least two different senses. One sense 
it is used is: our trading partners are not following, for 
example, U.S. principles of monopolization law. Some people 
call that misuse, and I do not. If that is the question and 
some nations are applying their law in a way, for example, that 
privileges contestability of markets, I think that the answer 
is talk, between the competition agencies to try to get 
accepted their point of view. If they do not get it accepted in 
the international marketplace, maybe it is not right, or maybe 
it is just not the way most people do it, and we have to live 
with that if it is within the area of protecting robust 
markets.
    If it is, the kind of atrocities that Alden Abbott just 
mentioned, that is a serious problem that probably does need a 
higher level and a higher push. Starting with an integrated 
committee of trade and competition is a good idea.
    Mr. Collins. Well, you have definitely found the city for 
talk and integrated committees. So, we can definitely look at 
that. Ms. Wong-Ervin, I know I am running out of time. I think 
the biggest thing what we need to focus on is those examples 
that are always out there, but I think the focus of this 
hearing is a proper one, and saying, ``What is our response, 
what is the U.S.'s response, how are we dealing with it 
internationally, how are we dealing with it, you know, 
internally''. But also say, ``Is there ways that we can also, 
as we already are, with the leaders, especially in many of 
these areas where they are being challenged?'' I guess is the 
best way to put that.
    So, I think, we are the leaders there, let us continue to 
do so, and I appreciate the opportunity to ask these questions. 
And I appreciate again the kindness of the Chair and the 
Ranking Member and others. Thank you. I yield back.
    Mr. Marino. The Chair now recognizes the Ranking Member of 
the full committee, Congressman Conyers.
    Mr. Conyers. Thank you very much. I think today's hearing 
is the beginning of an examination and, for some people a 
reexamination, of antitrust laws, American antitrust laws. I 
want to ask generally for any of you or all of you that want to 
respond, how is our country doing in terms of developing a fair 
antitrust policy in comparison to other countries? In other 
words, how does this thing rank globally? And any of you may 
start it off, and continue it.
    Ms. Wong-Ervin. Thank you for the question. I think that 
the U.S. is a leader in this field. We saw a revolution in our 
courts in the '60s and '70s, aligning antitrust with economics, 
with consumer welfare, which is a broad concept, which really 
values what consumers are willing to pay for. And I think that 
that linking it to an economic concept, and getting away from 
vague and subjective standards that can be misused and abused 
by agencies, really gave a credibility to the U.S., and really 
helped to, you know, promote what competition is about, which 
is about consumers and lower prices and better products.
    Mr. Conyers. Yeah, but how do we stack up with other 
countries? Are they looking to us for leadership? Or do they 
think, as the leading capitalist Nation in the world, I mean, 
we may come off in a poor light. I mean, after all, everybody 
is not into capitalism. And you know, I am reading between 
editions of review articles that we are failing in some 
respects, and that we are doing great in others, and I have 
never had five people with your backgrounds to give me a little 
free advice. Which direction are we going in, and what more 
should we be doing on this subject? And I will look at 
Professor Fox to start us off, and let everybody who wants to 
chime in. And if you do not want to answer it, that is okay, 
too.
    Ms. Fox. Thank you, Congressman, for that very interesting 
question. How is the U.S. doing in its fair competition policy 
compared with others in the world? In cartels, such as price-
fixing agreements, we are up there; gold standard; number one. 
In monopolization, abuse of dominance, I think, unfortunately, 
the U.S. has lost leadership by becoming very conservative, and 
not finding very much that a dominant firm does is illegal. The 
European Union standard has gotten more prominence in the 
world. It focuses more on access to markets by those who have 
been excluded. I think that is, in the world, perceived as more 
fair.
    What we should be doing, though, is a very difficult 
question, because this is law formation, it goes through our 
courts, it goes up to the Supreme Court. Our Supreme Court has 
handed down decisions that fit with the narrow view of what 
should be illegal as monopolization.
    Mr. Conyers. Well, that is a good start. Where do you come 
in, Attorney Stutz?
    Mr. Stutz. Thank you for the question. I think it is 
possible to admire the coherence and principled nature of the 
U.S. Approach to antitrust law, and at the same time feel 
concerned about some of the results it has wrought. We have a 
large concentration problem in this country. Competition is 
declining in a lot of sectors. It is understandable, perhaps, 
that other countries would look to the United States and seek 
to experiment. And there has been a lot of interest in finding 
ways to more aggressively enforce the antitrust laws in a 
principled way, and I support that.
    Mr. Abbott. Very briefly, Congressman, I think with all due 
respect, I do not believe that competition has diminished. I 
think that some recent economic research, I know that claims 
have been made in the last year, too. I just do not think the 
best recent economic research supports that. And more 
generally, I think there needs to be a real concern that 
overemphasis on, and it is true, lots of countries emulate 
Europe, they have an administrative system, but overemphasis on 
analyzing actions that do not harm consumers directly or do not 
deny access, and there has been some of that, could dis-
incentivize innovation, and then harm our leading competitors.
    Mr. Conyers. Anybody else? We have 193 countries, and we 
have 130 standards. The little countries, they look at a 
discussion like the one we are having this morning, and say, 
``We cannot even get in the door.'' I mean, there is such a 
disparity between the big nations and the little nations. And I 
feel a little bit uncomfortable, because the little nations, I 
mean, people say, well, who cares, and who asked you to get in 
here, anyway? This is my last try at trying to put this into 
some perspective.
    Ms. Garza. May I take a shot?
    Mr. Conyers. Please.
    Ms. Garza. So, two things. One is, just to be clear, I do 
not think it is the smaller economies that are the problem 
here. It is actually some of the larger economies that are 
throwing their weight around.
    But the other thing I would say is that competition law has 
actually been very good for some of these younger and smaller 
economies. I have had the honor of being able to participate 
through the years in the International Competition Network and 
other international fora, and have met and talked to, as have 
other people here, Eleanor, Koren, Alden, Jim Rill, a lot of 
those enforcers in countries in Africa, in South America, in 
Asia. And they recognize that a sound competition law is 
actually good for them, because it frees up the ability of 
their economy to grow. It removes artificial barriers to 
competition. It allows the spread of better distribution of 
wealth. It allows for innovation.
    So, competition law, we really feel, is good for not just 
the big developed economies, but is good for the smaller 
economies. Not having distortion of international trade, that 
benefits them. So, I have actually seen that there is a fair 
amount of consensus that has developed in all of these 
international fora about the value of antitrust competition for 
even those economies. For especially those economies.
    Mr. Conyers. Mr. Chairman, I am troubled by the fact that 
there is such an extreme difference between the big nations and 
the little nations. And I resist the notion that the little 
ones are going to be very grateful to us for being so thorough 
and fair and concerned. Look, capitalism does not work like 
that, I mean, in my political perspective. Everybody has got to 
turn in some profit, or you are going to be hitting the door. 
And this sounds like a very mild discussion we are having, and 
for some reason I feel that there is some huge considerations 
about the differences laying around out here that we have got 
to get into, and we probably will. What can five members of 
Congress do with five expert witnesses in a couple hours? So, 
what can you tell me that will make me feel more satisfied than 
I am at the present moment?
    Ms. Fox. Congressman, thank you again. I think there is a 
huge problem that you have put your finger on--that little 
countries have needs that are not recognized, and not 
recognized by the U.S. model of competition. This does not mean 
the U.S. model is wrong for the U.S. There are some problems of 
jurisdiction, there are some problems of simply inability of 
the small countries to, for example, enforce their law against 
cartels coming from the developed countries. The developed 
countries ought to have a rule that they cannot have cartels 
even they do not hurt Americans. If they hurt only Africans, if 
they are clear, illegal cartels in the U.S., it should be 
illegal in the U.S.; that should be stopped where the action 
is. Right now, it is very hard for small countries to defend 
themselves, and there are many actions that are targeted 
against small developing countries.
    Second, if you look at monopolization. As you pointed out, 
there are many small countries that have very different 
circumstances on the ground of what are the barriers to 
competition. They have many more barriers, they have excluded 
many, many people for a long time; they need laws that are more 
inclusive; that focus more on exclusionary behavior. There are 
laws, formulations, that can be against exclusionary behavior, 
and helping competition, not protecting inefficient 
competitors.
    So, I think the first line is that we, as a country, ought 
to recognize that, and we ought to recognize that some 
countries need different standards than the way the U.S. has 
applied them. Thank you.
    Mr. Conyers. Mr. Chairman, you have been very good to me, 
and I appreciate it. I want the witnesses to know that there is 
going to be trouble with some people getting their full amount 
of sleep tonight as a result of what has gone on here in the 
House Judiciary Committee this morning, and I thank you very, 
very much for your presence.
    Mr. Marino. The Chair now recognizes the gentleman from 
Colorado, Congressman Buck.
    Mr. Buck. Thank you, Mr. Chairman. And I want to thank the 
witnesses for being here. Professor Wong-Ervin, I listened to 
your testimony, and you mentioned the Korean sanctions against 
Qualcomm, and I read your testimony, and you also not only 
mentioned the Korean sanctions against Qualcomm, but also the 
Chinese sanctions against Qualcomm. I did not read in there a 
dispute that Qualcomm had, in fact, engaged in anticompetitive 
behavior, but rather an analysis of the sanctions against them 
as being over broad. And I should note, I believe that Taiwan 
is investigating Qualcomm's anticompetitive behavior. The 
European Union as well as the United States FTC are all doing 
that.
    You are not suggesting, are you, that the fact that a 
foreign government has found a United States corporation to 
have engaged in anticompetitive behavior, that that in and of 
itself is somehow wrong or unfair?
    Ms. Wong-Ervin. Thank you for the question. No, I am not. 
So, many of the examples I gave, some were against Qualcomm, 
some were involved with Microsoft, Nokia, there are several 
others involving Merck, A.Z., Ericsson. They all have in common 
the lack of an effects-based approach; the lack of evidence of 
any actual harm to the competitive process or consumers. So, 
for example, the Chinese decision against Qualcomm was based on 
excessive pricing, something that we do not do in the United 
States. We do not regulate price, particularly with IP, because 
we do not want to harm incentives to innovate, and because high 
prices alone do not harm competition. In fact, they can signal 
to a market that this market is profitable, and you should 
enter and increase entry.
    Mr. Buck. And I do not mean to cut you off, but I only have 
a limited amount of time, and I am not sure that I will receive 
the same treatment from the Chair if I do go over, so I want to 
make sure that I ask a few more questions. But Apple is also 
suing Qualcomm, are they not, for a dispute concerning 
competitive behavior with their licenses? Is that right?
    Ms. Wong-Ervin. Yes, I believe that.
    Mr. Buck. Okay. Do you know of any investigation of 
Qualcomm's anticompetitive behavior by the EU, Taiwan, the 
United States, that has been fully investigated, and where a 
country has come to the conclusion that Qualcomm has not 
engaged in anticompetitive behavior?
    Ms. Wong-Ervin. Where an investigation has been dismissed?
    Mr. Buck. After a full investigation?
    Ms. Wong-Ervin. After a full investigation, I do not. And 
many of the ones you mentioned, like you said, are just in the 
beginning stages. The one in the U.S. is just, you know, the 
government just pled its case; they still have to prove its 
case.
    Mr. Buck. But there is some threshold to even begin an 
investigation. There has to be some evidence that would lead a 
government agency to direct resources to do that, would there 
not?
    Ms. Wong-Ervin. Not in other countries. So, in China and 
elsewhere, they are obliged to investigate when there are 
complainants. So, remember, China is largely an implementer of 
technology, not an innovator, and they have a lot of 
manufacturers that complain and say, ``I want lower 
royalties.'' And so, they are obligated; they do not have to 
have a good-faith basis that they have to investigate.
    Mr. Buck. Mr. Stutz, I want to ask you a quick question. 
What are the ramifications to the United States in terms of 
retaliation if the United States acts, either through a trade 
policy or otherwise, with a foreign country to benefit a 
particular United States corporation?
    Mr. Stutz. Thank you for the question, Congressman. I think 
the obvious, immediate risk is retaliation. And just the 
adoption of a political stance toward competition policy, 
rather than a law enforcement orientation.
    Mr. Buck. Now, would that retaliation involve just one 
United States company, or would it involve many United States 
companies and affect our economy in terms of workers, 
employment, and our ability to trade with that foreign country?
    Mr. Stutz. Thank you for the question. I think it should be 
seen as a risk, that there would be a policy response, rather 
than an individual response to a particular matter. I do think 
it bears mentioning, with respect to disputes involving 
multiple authorities investigating, you know, a single entity 
like Qualcomm, it is important to remember that oftentimes 
there are not disputes in antitrust standards between 
countries. Oftentimes, they agree. In the area of standard 
essential patent abuse, there is a widespread consensus among 
enforcers, at least, that this is problematic and that 
competition law should address it.
    So, oftentimes, when there is extraterritorial remedies, 
lots of countries investigating a single defendant, you can 
have a lot of efficiencies with a single remedy that can 
resolve universal concerns. So, it cuts both ways.
    Mr. Buck. Thank you for your answer, and Mr. Chairman, I 
yield back.
    Mr. Marino. The Chair now recognizes the Ranking Member of 
the Subcommittee, Congressman Cicilline.
    Mr. Cicilline. Thank you, and thank you again to the 
witnesses. I would like to begin, Professor Fox, you mentioned 
that the United States might well be on its way to using 
antitrust laws to achieve nationalistic ends, and sort of 
warned us about that. Could you speak a little more to that, of 
what concerns you are referring to?
    Ms. Fox. Yes, I mentioned I have this concern, and I also 
mentioned I have not seen it happen yet. It is a general 
concern that simply comes out of, for example, meetings of the 
highest executive with merger parties, who agreed to invest in 
America. I have the uneasy feeling that at some point that 
might be taken into account in letting a merger through 
lightly. So, I am only saying, be on alert.
    Mr. Cicilline. I know. I understand.
    Ms. Fox. I think the head, the acting Chair of our FTC, in 
my view, clearly would not cave in lightly. The nominee for 
Justice Department Antitrust would not cave in lightly. But I 
just say, be on alert, because if that should happen, rule of 
law unravels and tit-for-tat could happen.
    Mr. Cicilline. Yeah, absolutely. And I think that is what 
makes the suggestion that we do everything that we can, and I 
think everyone has suggested, to depoliticize this work as much 
as we can. And so, Mr. Stutz, you mentioned maybe the idea of 
an integrated kind of interagency advisory role might be the 
best way to preserve the integrity of the work, but also reduce 
the likelihood that it becomes politicized in a way which would 
undermine the arguments we are trying to make to our trading 
partners around the world.
    Mr. Stutz. That is right, thank you for the question. And I 
want to stress, I very much agree and admire the expert 
report's approach to thinking about the need for coordination 
and to conduct an examination into how competition and trade 
policies fit together, and how these agencies can more 
effectively function by cooperating with one another.
    I think there is a devil in the details in how you do the 
working group. There is a way to approach achieving those 
coordination benefits without putting the risk of politicizing 
on the table. And so, you know, I think an important point to 
remember is that not all decisions in competition and trade 
policy are necessarily susceptible to group decisionmaking. 
Sometimes, it is more effective to empower a single expert, or, 
in this case, an expert agency, to lead. And in my view, when 
you are dealing with good-faith disagreements over technical 
questions like antitrust standards and antitrust remedies, the 
U.S. agencies need to be empowered to set policy.
    Mr. Cicilline. Yeah, and I think the thing that strikes me 
from the testimony of all the witnesses is that we have really 
four categories of cases in sort of our disagreements that 
would arise. One would be for countries that share our 
antitrust laws and the framework that we have, and enforce it 
evenly against U.S. companies, and everyone else, which is of 
no concern to us. That is sort of the best kind of trading 
partner. The second group is people who share our standards, 
and have a framework which is similar to the United States, but 
apply it unfairly against the U.S. company as compared to their 
own companies, which is bad-faith, and, I think, obviously of 
concern. The third is a country that does not share our 
standards, has a different set of standards than we might use, 
but applies it evenly to everyone, which is complicated. And 
then, the fourth area is maybe the worst, they do not share our 
standards and they apply it worse against the U.S.
    But it seems to me we have to have the ability to 
understand those differences and shape remedies that reflect 
that. And what I wonder if, Professor Wong-Ervin, you 
mentioned, and I think Professor Fox, the notion of trying to 
create at least some transparency in the way that we have seen 
success with the TIP Report, obviously, in a different area, 
trafficking in persons. Where at least there is a kind of 
standard that has developed, and some information about how the 
country meets a standard in terms of seriously responding to 
the issue of human trafficking. This would be a lot more 
complicated, because you have to acknowledge what is the 
standard? Is due process available? Are there anticompetitive 
policies? Are they being applied evenly even if they are bad 
policies?
    But it would seem like if we could agree on the creation of 
that report, it might be a good way to, at least, educate kind 
of the international community and American consumers and 
businesses what the landscape is. And then, you know, encourage 
people to kind of think about wanting to improve where they 
stand on that report. And I would be curious to know what the 
panel thinks about that kind of approach as part of what we 
might do. Maybe start with Professor Fox.
    Ms. Fox. Thank you, Congressman. Yes, transparency would go 
a very long way. Transparency is a part of due process. If 
standards are transparent, that is the first step. And a second 
step is simply transparent but different. Lots of conversation 
to argue one way or the other that there is a better standard, 
and taking into account when countries cannot agree.
    Ms. Wong-Ervin. I agree, thank you for the question, that 
it would be an effective interim measure to require this 
transparency. But in the long run, I think it is important for 
trading partners to understand the tradeoffs, right, the 
tradeoffs of considering noncompetition factors, are the 
difficulties of weighing and balancing various factors across 
different markets, it can actually undermine consumer welfare, 
and undermine clear and predictable antitrust. So, I think we 
should to continue to advocate for a consumer welfare standard, 
but in the interim require transparency.
    Mr. Cicilline. Thank you very much, and I yield back, Mr. 
Chairman.
    Mr. Marino. The Chair now recognizes the gentleman from 
Texas, Congressman Ratcliffe.
    Mr. Ratcliffe. Thank you, Mr. Chairman, I thank the 
witnesses for being here. Ms. Garza, as you stated in your 
written testimony, one of the concerns here is the 
misapplication of foreign antitrust laws by some of our trading 
partners to protect their home markets from competition, to 
protect their national champions, and to force the transfer of 
technology at royalty rates that favor local technology 
implementers. One of the solutions that the ICPEG report talks 
about is for the U.S. to consider recommending that the OECD 
and other multilateral bodies adopt minimum due process 
guarantees. And you in your testimony suggested that the 
administration should continue and strengthen both bilateral 
and multilateral efforts to establish standards, and ensure 
that other countries abide by them.
    So, in the context of trade law, I think we have seen that 
this administration is emphasizing the need to shift away from 
broader multilateral trade agreements towards more narrow, 
bilateral trade agreements as a way to protect America's 
interests. I want your perspective on how significant a role 
bilateral agreements play compared to the multilateral 
approaches in the context of antitrust law, and what would be 
the impact of a shift that the administration is proposing.
    Ms. Garza. Well, that may be a little bit above my ability 
to respond. But I think what we recommended in the ICPEG report 
was a combined approach. Basically, working within 
multinational entities on multicountry agreements, but also on 
a bilateral basis.
    If the trend was to go to bilateral agreements, we could 
achieve our ends through those bilateral agreements through 
competition chapters. You know, having an understanding with 
the other country that the agreement is with about standards. 
And they could be if you had an effort to develop an 
international consensus on certain minimum standards, that 
could be a reference point. So, the multinational activities 
should continue to take place, and they really create the 
context and reference for the bilateral agreements. I do not 
know if that answers your question.
    Mr. Ratcliffe. It does. Let me move it from theoretical 
into practice. So, one of the report recommendations is the 
evaluation of trade agreements and the further assessment of 
the inclusion of competition chapters, as you mentioned. And 
right now, NAFTA is currently being renegotiated, so what is 
your view on including a competition chapter in NAFTA?
    Ms. Garza. So, the view of ICPEG was that it would be very 
helpful. I think there may be a competition chapter in NAFTA, 
too. But what has happened with these competition chapters, as 
I understand it, is progressively they have gotten better and 
better. And so, I think, one of the things that we had 
suggested was that this working group take a look at what 
should be in, ideally, these competition chapters. And to the 
extent that the administration is about to renegotiate or 
reopen any of these agreements, it would be good to have in 
mind what could be put in these chapters.
    And so, the nice thing about having these chapters is that 
you have a built-in framework for discussion, when you think 
that there have been violations and potential solutions, how do 
we resolve disputes. We do not necessarily have that right now, 
so you can have a problem, but the antitrust enforcement 
agencies are really ill-suited to do anything to really address 
it. And you could address it on an ad hoc basis, but that has 
difficulties, too.
    So, the notion is, step back, look at what we would ideally 
want, put it into these bilateral or multilateral agreements, 
and increase your ability when things come up to address them 
early, and to address them effectively to have a meeting of the 
minds as to how you are going to address them.
    So, we think that that could actually be very helpful in 
resolving the issues going forward.
    Mr. Ratcliffe. Thanks very much. Professor Wong-Ervin, 
Professor Fox, as I understand her testimony, it is that she 
does not think that the United States has the one right mold 
for antitrust rules and standards, or the balance between 
antitrust laws and intellectual property rights. Do you agree 
with that assessment?
    Ms. Wong-Ervin. I do not. I think that the U.S. is a leader 
in innovation, and a lot of that is because of our incentives 
to innovate. I also think the Supreme Court correctly 
recognized the errors of the concerns about false positives, or 
type one errors, and the idea that it is more dangerous to 
intervene when it is unwarranted, than to not intervene, 
because the market can more readily correct, than when courts 
or agencies intervene inappropriately.
    Mr. Ratcliffe. Thanks very much. I will yield back.
    Mr. Marino. Thank you. The Chair recognizes the Congressman 
from Georgia, Mr. Hank Johnson.
    Mr. Johnson of Georgia. Thank you, Mr. Chairman, and I 
thank you all for your testimony today. I think we can agree 
that there should be more integration between global trade and 
antitrust policies; laws and agreements between nations. I take 
it from what you all have said that you all would agree with 
that statement. And also, that we must respect how foreign 
trading partners formulate and apply their antitrust laws. We 
must respect that, but if they fall short, then there should be 
name and shame applied from the highest levels of our 
government. In other words, public disclosure of abusive 
practices and applications by foreign governments of their own 
laws. I think we can all agree on that.
    What I want to ask the panel is, to what extent do the 
Trump policies and pronouncements of ``America First,'' the 
rhetoric and the policies that ensue from that, the policies to 
withdraw from negotiations for the TPP, the threats surrounding 
NAFTA made by the President; to what extent do the rhetoric and 
practices of this administration have on foreign governments 
and their mindset in terms of applying their own antitrust 
laws? Professor Fox?
    Ms. Fox. Thank you. I think the announcement of ``my 
country first'' is not fortunate, and it is not limited to the 
United States. We are in a world today where many countries 
across the world have a ``my country first'' policy.
    Mr. Johnson of Georgia. The U.S. being the leading trade 
partner, and the preeminent antitrust enforcement regimen, what 
does it say when we stoop to the level of ``America First?''
    Ms. Fox. If it means that we will uphold conduct by our 
companies and apply a different standard to the rest of the 
world, it is a very negative message. It can mean other things. 
I am hopeful maybe it would mean other things. But if it does 
mean nationalism and parochialism, and this applies to the 
trade agreements you mentioned, it is bad for America. America 
gains from these trade agreements; America would have gained 
from the Trans-Pacific Partnership.
    I want to add here that the competition chapter and the SOE 
chapter in the Trans-Pacific Partnership are very well done and 
very important, and can be models for whenever we are ready 
again to have multilateral agreements.
    Mr. Johnson of Georgia. Okay, thank you. I hate to cut you 
off, Professor Fox, but I wanted to get Professor Wong-Ervin's 
view on that.
    Ms. Wong-Ervin. Sure, thank you for the question. So as 
part of my job, what I do is I train foreign enforcers and 
judges around the world. My institute trained over 300 last 
year, primarily in China. And I get this question a lot, and my 
answer is that I am optimistic that antitrust has remained 
largely nonpolitical, across administrations.
    Mr. Johnson of Georgia. But it seems that we are headed in 
the opposite direction under this current administration. Would 
you agree?
    Ms. Wong-Ervin. I am hopeful that the appointees for the 
Department of Justice Antitrust and the Acting Chair, 
particularly I know the Acting Chair of the FTC, that they 
are----
    Mr. Johnson of Georgia. I must interrupt you. Let me move 
to Ms. Garza, and let me get a straight answer from Ms. Garza.
    Ms. Garza. A straight answer, okay. All right, what I will 
say is, I recognize the concern, but I do not think we have 
seen any evidence yet of a problem.
    Mr. Johnson of Georgia. Okay, thank you, thank you, Ms. 
Garza. Mr. Abbott, I am trying to do this within my five 
minutes.
    Mr. Abbott. Congressman, I think I will second Ms. Garza. I 
know there is some discussion, but I agree.
    Mr. Johnson of Georgia. Okay, thank you, Mr. Abbott. And 
last but not least, Mr. Stutz, who appeared to be very intense 
in his desire to respond.
    Mr. Stutz. Well, thank you, Congressman. Time being what it 
is, I will just say that the merits of nationalistic policies 
are more debatable in other contexts, but it is important to 
remember that antitrust is law enforcement, and it needs to be 
driven by facts and law. And that is critically important, and 
it becomes dangerous to apply policy in a law-enforcement 
context.
    Mr. Johnson of Georgia. Thank you. I yield back, Mr. 
Chairman.
    Mr. Marino. Thank you. I recognize myself for questioning. 
I am not a supporter of NAFTA. I have seen what it has done to 
my district, significantly, and people on both sides of the 
party, people not involved in politics, how much they have been 
out of work. And I think it is about time we have a President 
that stands up and says, ``U.S. First.'' We have tremendous 
trade deficits with other countries, that we have not even 
approached over the last 8 years.
    So, each of you can respond if you would like to this 
question, or the statement that I am going to make. How do you 
deal with countries, whether they are democracies or whether 
they are dictatorships, to follow the rules? Do you actually 
think that China is going to sit down, and we throw this word 
``transparency'' around like it is the panacea; do you actually 
think China is going to be transparent with us? Do you actually 
think other countries are going to be transparent? This is 
about profit. This is about making sure that whoever, such as 
China, as they did with Qualcomm; this is about profit. I 
wonder if China is going to reduce its prices based on how they 
force or are forcing U.S. companies to lower their prices. You 
do not see that.
    So, let us get down to where the rubber meets the road, and 
give me just one example, other than penalizing countries, 
whether it is through sanctions, whether it is through trade, 
on how to play on a level playing field. Ms. Garza.
    Ms. Garza. The issue that you have identified is really 
part of the impetus for our report, which is to say that there 
are some things that you can deal with through talk, and 
through the antitrust enforcement agencies, and there are other 
things, other instances, where you cannot. So, with respect to 
China, China has an antitrust enforcement agency that the U.S. 
and Europe have worked with, but a lot of their decisions are 
not being driven by the conclusions of their competition law 
enforcement agency, they are being driven by different 
conclusions. And so, part of what the group felt was that when 
you have decisions being taken at that level by another 
jurisdiction, you have to meet them at that level. You know, it 
is, like, I cannot take a knife to a gun fight, right? So, with 
their dealing with it at that level, we have to deal with it at 
that level.
    And during the Obama administration, that happened, in 
fact. And part of what we are saying is, to the new Congress 
and to the new administration, let us talk about what we have 
seen over the last 8 years, let us try to get this right. We 
realize that there are a lot of issues competing for your 
attention and resources, we think that this is a good issue. 
You are focused on trade, you are focused on ``America First,'' 
this is a component of that, and why we recommended that there 
be a focused look at that, integrate competition, and also 
trade, and think about how to deal with the issue that you have 
raised, in a smart way, and in an effective way.
    Mr. Marino. Professor.
    Ms. Wong-Ervin. Thank you for the excellent question. So, I 
serve as a scholar in a prominent Chinese university, and there 
is a member who is of the expert advisory committee. And I was 
told by him by many other people that China was horrified when 
President Obama and when others made these public statements of 
concern, that they want to be considered as part of the 
mainstream, they are worried about their credibility, and that 
it did make a big difference. I agree, though, that it is about 
profit and about lower prices for them, and I think this needs 
a multipronged solution.
    Mr. Marino. Mr. Abbott.
    Mr. Abbott. Mr. Chairman, I sort of echo what Ms. Garza 
said. If you really believe that something has been driven 
purely politically, and it is doing real harm, certainly the 
U.S. has some statutory authority. It is not saying when you 
should use them, but there are things like Section 301 of the 
Trade Act, which allows for some retaliation. Not saying in any 
case, but it is out there, and in the appropriate times might 
be weighed.
    Also, there are cases, for instance the merger of two 
state-owned Chinese enterprises we think will harm competition 
in the U.S., you could take antitrust action against that. 
There is also ways of blocking imports under Section 337 of the 
Tariff Act if they violate U.S. patent rights and impair 
competition. We have not raised that, but there are a number of 
tools out there that at least merit consideration.
    Mr. Marino. Professor.
    Ms. Fox. Thank you. I think this is exactly the question 
that an integrated working group would try to deal with. It is 
very hard to deal with. I want to echo remarks that Professor 
Wong-Ervin made about Chinese enforcers who really want to 
abide by international standards, and the people on the ground 
cannot always get their way. But they have made progress. The 
more they really want to abide by international standards, 
including holding SOEs to account, the more we gain somewhat in 
a level playing field. How to deal with the fact that the 
highest ministries of China are pushing for unlevel 
nationalistic policy is a very big, high-level question.
    Mr. Marino. Mr. Stutz.
    Mr. Stutz. Thank you, Mr. Chairman. I want to read a short 
quote from the Deputy Assistant Attorney General Debbie Platt 
Majoras after a high-profile divergence in a high-profile 
merger case between the United States and EU. They reached 
different conclusions on the same merger. She said, ``We 
recognize that we and the EU will not always agree, and that 
our way is not always best. We have no power to change EU law 
other than by persuasion, and vice versa.''
    That is a really important point. Even when we are talking 
about sanctions and more aggressive tactics, ultimately we have 
no power other than to persuade. And so, I think it is 
extremely important that we think about what is most effective, 
and how we can persuade. And it is my view that when there are 
aggressive bad-faith acts by our trading partners, we may want 
to consider aggressive responses, but the past has shown that 
when we are dealing with good-faith differences, cooperation is 
more effective. Thank you.
    Mr. Marino. I think the U.S. on its own would have a 
tremendous impact on this, but we cannot change the minds of 
the leaders in China. What that is going to take is a unified 
effort of most of the countries around the world, to let China 
know that we will come together and move as one, if China wants 
to continue to abuse these antitrade issues. In numbers, there 
is strength.
    So, with that, this concludes today's hearing. I want to 
thank all of you for attending. It has been very enlightening; 
we could probably spend the next 6 hours here talking about 
these issues. But I think we have started something here today 
that we can take that ball and run with it.
    So, without objection, all members will have 5 legislative 
days to submit additional written questions for the witnesses, 
or additional materials for the record. This hearing is 
adjourned. Thank you.
    [Whereupon, at 11:49 a.m., the Subcommittee was adjourned.]
    
    
    
    
    
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