The Antitrust Modernization Commission (AMC) was created by the U.S. Congress to provide a complete and extensive report on whether antitrust laws in the United States need to be modernized. The Automotive Service Association (ASA) worked with the U.S. House Judiciary Committee in support of the legislation establishing the AMC. The AMC has 12 bipartisan members including four commissioned by President George W. Bush, four appointed by the Senate leadership and four appointed by the leadership of the House of Representatives.

The AMC is expected to present its report to the president and Congress by the April 2, 2007, deadline. The House of Representatives recently passed legislation that extends the termination date for the AMC to 60 days after the commission's report is distributed. Currently, the commission is scheduled to dissolve 30 days after the report is presented. The bill, H.R. 742, the AMC Extension Act of 2007, was introduced by House Judiciary Committee Chairman John Conyers, D-Mich., and Rep. Lamar Smith, R-Texas. The Senate has not approved the extension as of this writing.

The AMC made available "Tentative Recommendations" prior to Jan. 11, 2007 that had some consensus. The AMC will meet again on Feb. 22, 2007. One of the hearings addressed the McCarran-Ferguson Act specifically. This October 2006 hearing was one of many hearings held by the AMC.

In reviewing the tentative recommendations and discussion with AMC staff, collision repairers should review item, "IV. Exceptions to Competition, B. Immunities and Exemptions, Regulated Industries, and State Actions." With the high level of interest on Capitol Hill for the repeal or reform of the McCarran-Ferguson Act, there is much speculation as to whether the final AMC report will address McCarran or to what degree.

The draft Immunities and Exemptions provision may give repairers a glimpse of what the final report may include in the spring. Several points stand out in these earliest AMC documents. Included in the findings were the following comments:

"Governmental action creating exceptions to free markets can deny consumers the benefits of free-market competition and harm consumer welfare. Such governmental action can take at least three different, but related forms: 1) statutory or court-implied immunities and exemptions from antitrust enforcement; 2) statutes that replace competition with the regulation of prices, costs, and entry; or 3) courts' inappropriate application of the state action doctrine to grant antitrust immunity when not required by federalism concerns. Although the claimed justifications differ, to some extent, for each of these three exceptions to free-market competition, the harm to consumer welfare that they can cause is similar."

In addition, the findings point out "Immunities from antitrust enforcement often have disproportionate costs and benefits. They can benefit a small number of competitors at the cost of harming a large number of consumers. Competitors dislike the rigors of competition and therefore may attempt to avoid it by seeking immunity from antitrust law."

A review of the recommendations indicates a fondness for competition and disfavor for antitrust exemptions. The proposed onus for Congress in its consideration of existing or new antitrust immunities and exemptions is evident in the draft.

The scrutiny today for a McCarran-Ferguson type of bill would most certainly be greater than the time period it was actually considered. Congress has had opportunities to revisit McCarran in the past. The House considered a McCarran reform bill in the 1990s, and the Senate Judiciary Committee held its first review of McCarran in many years on June 20, 2006.

U.S. Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., has been clear in regard to his views about McCarran.

Leahy said, "As far back as 1945, the insurance industry has operated largely beyond the reach of federal antitrust laws. The McCarran-Ferguson Act created this exemption, and so long as the insurance business is regulated by the states, there is no room for federal oversight. Perhaps this was well-advised legislation at the time, and perhaps it served worthwhile policy. But times changed."

Leahy continued, "If insurers around the country are operating in an honest and appropriate way, they should not object to being answerable under the same federal antitrust laws as virtually all other businesses. American consumers, from sophisticated multinational businesses to individuals shopping for personal insurance, have the right to be confident that the cost of their insurance reflects competitive market conditions, not collusive behavior."

In the last Congress, Rep. Peter DeFazio, D-Ore., introduced legislation in the House of Representatives that addressed McCarran-Ferguson. Rep. Gene Taylor, D-Miss., has indicated an interest in pursuing McCarran legislation in the 110th Congress. Sen. Minority Whip Trent Lott, R-Miss., has also advocated abolishing the exemption under McCarran.

How much impact the final AMC report will have on the efforts of advocates for repealing McCarran-Ferguson is yet to be seen. Clearly, the AMC will make strong policy points addressing antitrust exemptions. To stay abreast of issues related to the AMC report and Congress' consideration of antitrust reform, repairers should go to www.TakingTheHill.com.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.

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