Legislature(2003 - 2004)

04/16/2003 05:15 PM House EDT

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 225-MONOPOLY AND RESTRAINT OF TRADE ACTIONS                                                                                
CHAIR HEINZE announced  that the committee would  hear HOUSE BILL                                                               
NO. 225,  "An Act  relating to certain  civil actions  brought by                                                               
the  attorney  general  under monopoly  and  restraint  of  trade                                                               
statutes; relating  to the  award of  damages in  actions brought                                                               
under  those  statutes; and  providing  for  an effective  date."                                                               
[HB 225 was  sponsored by the  House Rules Standing  Committee at                                                               
the request of the governor.]                                                                                                   
Number 0086                                                                                                                     
CLYDE  (ED)  SNIFFEN,  JR.,   Assistant  Attorney  General,  Fair                                                               
Business   Practices   Section,   Civil   Division   (Anchorage),                                                               
Department of Law,  presented HB 225 to  the committee, informing                                                               
members  that   his  duties   include  enforcement   of  Alaska's                                                               
antitrust and  consumer protection  statutes.  Mr.  Sniffen noted                                                               
that HB 225 is a bill  [the department] calls "the Illinois Brick                                                             
repealer bill."   He  explained that currently  there is  a [1977                                                               
U.S. Supreme Court]  case, Illinois Brick Co.  v. Illinois, which                                                             
stands  for the  proposition  that indirect  purchasers of  goods                                                               
cannot   sue  "upstream   antitrust   violators"  for   antitrust                                                               
MR.  SNIFFEN  illustrated   with  a  chart,  noting   that  if  a                                                               
conspiracy  between  two  suppliers results  in  keeping  product                                                               
prices  high, there  is a  violation of  antitrust law.   In  his                                                               
example, the  direct purchaser of  the goods, the  importer, then                                                               
passes the high price on  to the distributor, the wholesaler, the                                                               
retailer, and,  ultimately, the consumer.   Under current federal                                                               
and state antitrust law, the  only person with authority to bring                                                               
an action against  the antitrust violators would  be the importer                                                               
who'd purchased directly from the wrongdoers.                                                                                   
MR. SNIFFEN said the consumer,  however, who ultimately bears the                                                               
burden of  paying a higher  price for the product,  wouldn't have                                                               
that right.   Therefore,  HB 225 gives  the attorney  general the                                                               
right  to  represent consumers  who  are  indirect purchasers  in                                                               
actions against  antitrust violators who may  have committed harm                                                               
Number 0250                                                                                                                     
MR.  SNIFFEN   indicated  this  legislation  is   something  [the                                                               
department] has been trying to get  passed for a number of years.                                                               
The  state's  antitrust  law  was passed  in  1975,  whereas  the                                                               
Illinois  Brick case  was  decided  in 1977.    Since that  time,                                                             
Alaska  just  hasn't  updated  its  antitrust  law  to  give  the                                                               
attorney general the  authority to bring these  kinds of actions.                                                               
He further explained:                                                                                                           
     In  recent multistate  cases that  we've been  involved                                                                    
     in, the  State of  Alaska has  lost out  on significant                                                                    
     recoveries  because we  do not  have  the authority  to                                                                    
     bring actions on behalf of  consumers in these kinds of                                                                    
     cases.  One involved  a couple of vitamin manufacturers                                                                    
     [that] a  bunch of states  sued for conspiring  to keep                                                                    
     prices of  vitamins high.   And the settlement  in that                                                                    
     case gave a  million dollars to every state  that had a                                                                    
     law like this.                                                                                                             
     Because Alaska did not have  this law, we initially got                                                                    
     zero.   And  we  argued with  the settlement  committee                                                                    
     that our laws actually should  allow us to recover some                                                                    
     money;  we ended  up with  a hundred  thousand dollars,                                                                    
     but it  was far short  of the million dollars  we would                                                                    
     have gotten had we had this kind of law in place.                                                                          
MR. SNIFFEN indicated there is  no opposition to this legislation                                                               
that  the department  is aware  of,  and concluded  by saying  it                                                               
makes good sense for Alaska.                                                                                                    
Number 0361                                                                                                                     
MR. SNIFFEN,  in response to  an observation  from Representative                                                               
Crawford,   said  this   bill   had  been   before  [a   previous                                                               
legislature]  and was  heard by  a number  of committees  without                                                               
opposition, but hadn't had a floor hearing.                                                                                     
Number 0438                                                                                                                     
REPRESENTATIVE  CISSNA  asked  what  is meant  by  the  following                                                               
language found in subsection (h) on page 3:                                                                                     
     A distribution procedure authorized  by the court under                                                                    
     this  subsection must  afford each  governmental entity                                                                    
     or  person   participating  in   the  civil   action  a                                                                    
     reasonable  opportunity  to  secure  that  entity's  or                                                                    
     person's  appropriate  portion   of  the  net  monetary                                                                    
MR. SNIFFEN said it essentially  means that whatever distribution                                                               
plan [the state]  comes up with as a result  of an action against                                                               
an antitrust violator must be approved  by the court.  A plan has                                                               
to return  money, first of all,  to the consumers who  are harmed                                                               
and, if there  is money left over, to other  agencies or entities                                                               
harmed by  the conduct.  Remaining  funds might go to  the state,                                                               
or  [the state]  could establish  other distribution  mechanisms.                                                               
He explained:                                                                                                                   
     For  example,   if  the  conduct  involved   music  CDs                                                                    
     [compact  disks],  which  is   actually  a  case  we're                                                                    
     involved in now,  we could ... give  money to libraries                                                                    
     and schools to purchase CDs.   But those plans would be                                                                    
     drawn  together and  submitted to  the  court, and  the                                                                    
     court  would have  to approve  them in  accordance with                                                                    
     the  instruction  of  the statute  that  everyone  gets                                                                    
     their fair share of the proceeds.                                                                                          
MR. SNIFFEN  pointed out that  in some  cases there might  not be                                                               
100-percent  recovery.   "We may  only recover  a portion  of the                                                               
actual damages that we can allege,  or we may agree to settle the                                                               
case for  something that's  less than  100 percent  of everyone's                                                               
damage," he told  members, noting that such a  case would require                                                               
devising a  system to equitably -  perhaps on a pro  rata basis -                                                               
distribute the recovery among those who were harmed.                                                                            
Number 0588                                                                                                                     
REPRESENTATIVE  CISSNA requested  confirmation  that after  money                                                               
was  distributed to  consumers  who were  harmed, leftover  money                                                               
could be put  into state services that  "would make restitution,"                                                               
in a manner of speaking.                                                                                                        
MR. SNIFFEN  affirmed that.  He  said the state now  does cy-pres                                                               
distribution plans  [from a  French term that  means "as  near as                                                               
(possible)"].    He  indicated the  department  would  have  that                                                               
option, and added,  "It's broad enough that we  could fashion the                                                               
remedies with  the recoveries we  get in a  number of ways.   But                                                               
that certainly could be one of them."                                                                                           
Number 0687                                                                                                                     
REPRESENTATIVE CISSNA  moved to  report HB  225 out  of committee                                                               
with   individual   recommendations  [and   accompanying   fiscal                                                               
note(s)].   There being  no objection, HB  225 was  reported from                                                               
the   House   Special    Committee   on   Economic   Development,                                                               
International Trade and Tourism.                                                                                                

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