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Bill Enhancing Anti-trust Protection for SDOs Offered in Congress

Standards Development Organization Act of 2002 Introduced by Bi-Partisan Group of House Judiciary Committee Members

New York, Jun 10, 2002

Proposed legislation with strong bi-partisan sponsorship from the House Judiciary Committee enhances anti-trust protection for standards developing organizations (SDO) and simplifies the process to file advance notices of proposed research and development projects with the U.S. Justice Department.

Introduced on May 24th, the Standards Development Organization Advancement Act of 2002 (H.R. 4849) makes changes to the National Cooperative Research and Production Act of 1993 (NCRPA). NCRPA allows two or more companies to avoid the risk of treble antitrust damages, by pre-filing a notice with the Justice Department, disclosing the names and addresses of the companies and the scope of their joint project.

If approved, H.R. 4849 would make clear that the protection available to companies engaged in joint research projects, when a proper filing is made with the Justice Department, is also available to a standards developer and the participants in a standard developing activity. In addition, the bill specifies a simplified filing process with the Department of Justice for SDO's sponsoring voluntary consensus standards (VCS) activities. At the same time, it would make clear that anti-competitive activity, such as sharing of price or cost information, or allocation of markets, remains illegal irrespective of the existence of a standards project.

"Theoretically," explained David Karmol, ANSI's director of public policy and government affairs, "organizations developing VCS could file the same notice with Justice as companies do and receive the same protection provided under the NCRPA. In reality, the problems inherent with filing the names and addresses of the very large number of participants involved in a VCS process--and keeping the information current over the course of the two to five years it may take for the standard to be completed--make the current law impractical for standards developers. Plus, the existing legislation does not specifically provide protection to an organization sponsoring the joint project, such as an SDO." Karmol reports that the Institute's National Issues Committee (NIC) voted in support of the concept of the proposed legislation, prior to its introduction, at the March 26th NIC meeting.

The bill cites the benefits of VCS to the government as provided under the National Technology Transfer and Advancement Act (NTTAA), which calls for increased federal agency use of VCS, and asserts "if relief from anti-trust laws is not granted to SDOs…such bodies could be forced to cut back on standards development activities at great financial cost to both the government and to the national economy." SDOs are defined as voluntary consensus standards bodies adhering to the process of openness, balance, transparency, consensus and due process.

The prime sponsor of the bill is House Judiciary Committee Chairman James Sensenbrenner (R-WI), who was joined in introducing the bill by Judiciary Committee ranking minority member John Conyers (D-MI), several members of the House Science committee and other prominent House members. "This legislation will enhance U.S. competitiveness in world markets while providing open communication with the Justice Department so they can vigorously enforce our anti-trust laws," said Chairman Sensenbrenner.

A timetable for hearings and a vote on this legislation has not yet been established; ANSI will actively participate in efforts to inform members of Congress of the advantages of VCS and the benefits to the public that SDOs provide. Further information on this issue will be disseminated as appropriate.

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