Contact:	Clarence Mills (202) 543-1440 c.mills@att.net
For Release:	Immediate News Bulletin PR-67 October 21, 2009

Antitrust Exemption Debated
in U.S. Senate Judiciary Committee

Proposed Legislation Falls Short of Including Property, Casualty Insurers

WASHINGTON, D.C., October 21, 2009 —The U.S. Senate Committee on the Judiciary, chaired by Sen. Patrick Leahy, D-Vt., held a hearing Oct. 14 to discuss “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry.” The hearing focused on the exemption of the insurance industry from federal antitrust laws.

With health insurance reform being such a hot topic in Washington, the McCarran-Ferguson Act, which exempts the insurance industry from federal antitrust laws, is being reviewed as a possible barrier to meaningful reform.

Witnesses at the hearing included:

• Sen. Harry Reid, D-Nev., U.S. Senate majority leader
• Christine A. Varney, assistant attorney general for antitrust, Department of Justice, Washington, D.C.
• J. Robert Hunter, insurance director, Consumer Federation of America, Washington, D.C.
• Lawrence S. Powell, Ph.D., associate professor and Whitbeck-Beyer chair of Insurance and Financial Services, University of Arkansas, Little Rock – College of Business, Little Rock, Ark.

Varney presented her testimony with an outline of the McCarran-Ferguson Act’s history as well as the arguments for its repeal. She explained that McCarran’s antitrust exemption “applies where three basic requirements are met: 1) the challenged activity must be part of the ‘business of insurance,’ 2) that business must be regulated by state law and 3) the activity must not constitute boycott, coercion, or intimidation.”

Further, she described the debate of its repeal as perennial, and then outlined the opposing arguments. In favor of the repeal is the Antitrust Modernization Commission (AMC), which recently reviewed the necessity of the McCarran-Ferguson Act. She said, “The AMC said that insurance companies ‘would bear no greater risk than companies in other industries engaged in data sharing and other collaborative undertakings,” and added “‘to the extent that insurance companies engage in anticompetitive collusion … they appropriately [should] be subject to antitrust liability.’”

Varney also said, “The [Justice] Department is generally opposed to exemptions from the antitrust laws, whether they be industry-specific or general, in the absence of a strong showing of a compelling need. The antitrust laws reflect our society’s belief that competition enhances consumer welfare and promotes our economic and political freedoms. Exceptions from that policy should be – and fortunately are – relatively rare. Those who advocate the creation of a new antitrust exemption, or the preservation of a longstanding exemption such as that contained in the McCarran-Ferguson Act, rightfully bear a heavy burden in justifying the exemption.”

Varney continued, “It is fair to say that the McCarran-Ferguson Act antitrust exemption is very expansive with regard to anything that can be said to fall within ‘the business of insurance,’ including premium pricing and market allocations … Repealing the McCarran-Ferguson Act would allow competition to have a greater role in reforming health and medical malpractice insurance markets than would otherwise be the case.”

H.R. 1583, the Insurance Industry Competition Act of 2009, has been introduced in the U.S. House of Representatives. This bill would repeal McCarran, impacting the entire insurance industry including property and casualty insurers. This legislation is sponsored by Reps. Peter DeFazio, D-Ore., and Gene Taylor, D-Miss.

The Automotive Service Association (ASA) supports H.R. 1583 because:

• A competitive marketplace will only enhance consumers’ options.
• The state insurance regulatory structure has failed for consumers and collision repairers. After years of complaints, many states lag in addressing important consumer and small business property and casualty issues: i.e. consumer steering, insurer pressure to use inferior auto parts, paint caps, etc. These problems are increasing for consumers and repairers, not decreasing.

To view testimony from the Senate Judiciary Committee’s hearing and to view the text of H.R. 1583, visit ASA’s legislative Web site at www.TakingTheHill.com.

The Automotive Service Association is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry. ASA's headquarters is in Bedford, Texas.

ASA advances professionalism and excellence in the automotive repair industry through education, representation and member services. For additional information about ASA, including past news releases, go to www.ASAshop.org, or visit ASA's legislative Web site at www.TakingTheHill.com.

# # #