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Thursday, 05 April 2007 14:43

Leahy introduces legislation to remove federal antitrust exemption

 Sen. Patrick Leahy, (D-Vt.), chairman of the U.S. Senate Judiciary Committee, has introduced the Insurance Industry Competition Act. This legislation would remove the federal antitrust exemption from the insurance industry. Currently, the McCarran-Ferguson Act protects the insurance industry from federal antitrust laws.

  Sen. Arlen Specter, (R-Pa.), Senate Judiciary ranking member, joined Leahy in introducing Senate Bill 618 – as did Sen. Harry Reid, (D-Nev.), Senate majority leader, and Sen. Trent Lott, (R-Miss.), Senate Republican whip.

 The U.S. House of Representatives introduced companion legislation to The Insurance Industry Competition Act. The House legislation, H.R. 1081, is co-sponsored by Rep. Peter DeFazio, (D-Ore.); Rep. Gene Taylor, (D-Miss.); Rep. Bobby Jindal, (R-La.); Rep. Charles Melancon, (D-La.); Rodney Alexander, (R-La.); and Rep. Walter Jones, (R-N.C.)
 The Insurance Industry Competition Act would give the U.S. Department of Justice and the Federal Trade Commission the authority to apply the antitrust laws to anti-competitive behavior by insurance companies. However, this legislation will not affect the right each individual state has to regulate its insurance businesses.
 Originally, the McCarran-Ferguson Act was enacted in 1945 to permit the states to continue regulating the insurance business. Under the Act, the business of insurance is exempt from some federal antitrust statutes to the extent that it is regulated by the states.
 “ASA has supported the repeal of McCarran-Ferguson for a number of years. We are very proud of these leaders in the Congress stepping forward to protect consumers and small businesses. Although this legislation would not resolve all of the insurer-repairer-consumer issues, it is the right first step toward a more level playing field. ASA encourages repairers to contact their members of Congress asking that they co-sponsor the House or Senate repeal legislation,” said Bob Redding, ASA’s Washington, D.C., representative.
 The U.S. Senate Judiciary Committee recently held a hearing on the McCarran-Ferguson Act titled “The McCarran-Ferguson Act and Antitrust Immunity: Good for Consumers?”
 Present to testify at the hearing were U.S. Sen. Lott, U.S. Sen. Mary Landrieu, (D-La).; Michael Homan, a New Orleans homeowner; Robert Hunter, insurance director for Consumer Federation of America; Marc Racicot, president of the American Insurance Association; and Susan Voss, Iowa insurance commissioner with the National Association of Insurance Commissioners.
 Sen. Lott went through a brief legislative history of McCarran-Ferguson. This included a timeline for the congressional debate.
 Sen. Leahy offered in the hearing, “The bottom line is, right now we do not know what anticompetitive acts insurers may be engaging in because the antitrust immunity insurers enjoy acts as a curtain that hides their activity from federal antitrust authorities.”
 Lott stated, “So for more than six decades, the insurance industry has operated largely beyond the reach of federal competition laws. I truly believe that the McCarran-Ferguson Act’s antitrust exemption has allowed insurers to engage in anticompetitive conduct, and I can find no justification to exempt the insurance industry from federal government oversight. Such oversight could help make certain that the industry is not engaging in anticompetitive conduct such as price fixing, agreements not to pay, and market allocations.”
 “Sen. Lott’s statement was unique in that it established a more detailed legislative history for McCarran-Ferguson than discussed by congressional committees in the last Congress,” said Bob Redding, Washington, D.C., representative for the Automotive Service Association (ASA). “This history raises very real questions about the original intent of Congress for the McCarran-Ferguson Act.”
 For more information on how to send a letter to your senator and representative to ask that they sign on as co-sponsors to Senate Bill 618 or House Bill 1081, or for the language of both bills, visit www.TakingTheHill.com.
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