FTC Head Pushes Back on Calls to Expand Antitrust Law

Sept. 15, 2017, 1:28 PM

By Alexei Alexis, Bloomberg BNA

Acting Federal Trade Commission Chairman Maureen Ohlhausen is emerging as a vocal defender of existing U.S. antitrust laws amid calls for sweeping changes to rein in dominant technology companies such as Amazon.com Inc. and Alphabet Inc.'s Google.

Ohlhausen is delivering speeches this week that reinforce the government’s decades-old antitrust enforcement approach, which focuses strictly on markets and prices. She is pushing back against public pressure to stop companies from becoming too powerful or to address social problems like wage stagnation.

When it comes to technology, Ohlhausen is a fierce defender of innovators’ rights to alter markets.

“Perhaps the most troubling assumption here is that we, as regulators, can divine how these new technologies should develop and where and how they should be used. Ask yourselves whether antitrust enforcers are truly well qualified to pick the winners and losers in the modern economy,” she said in a speech Sept. 12 at Georgetown University.

Regulators can address anticompetitive problems in technology as they arise, she said. “I do believe that today’s antitrust can confront meaningful competitive harm in the modern, digitally mediated economy.”

Ohlhausen is slated to speak Sept. 15 in New York City at the Fordham University’s annual conference on international antitrust law and policy. That speech will highlight the same themes, although it isn’t focused solely on technology, an FTC official said.

Some public interest advocates say the government’s antitrust approach is weak, particularly when it comes to the technology sector. They cite the FTC’s recent speedy approval of Amazon’s $13.7 billion tie-up with Whole Foods Market Inc. and the agency’s 2013 decision not to bring an anti-monopoly lawsuit against Google as prime examples.

“The current regime has weakened to the point where it just is not able to confront the reality of the current economy that we live in,” Marshall Steinbaum, a fellow and research director at the left-leaning Roosevelt Institute, told Bloomberg BNA.

The group plans to highlight these concerns at a Sept. 25 event on market power. FTC Commissioner Terrell McSweeny, a Democrat, will be among those weighing in.

Concerns about dominant firms is gaining political momentum among Democrats. In July, House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) unveiled a populist-style economic plan that called for a crackdown on “corporate monopolies and the abuse of economic and political power.”

Ohlhausen is pushing back. “There is fear in some quarters that we are spiraling towards a dystopian future where a few giant technology companies will ultimately gain sustained control over our economic lives,” she said in her Georgetown speech.

Antitrust regulators, she said, are now under pressure to adopt a more “interventionist” role when it comes to the technology sector. “History suggests great caution when it comes to efforts of government regulators to design the economy.”

The government’s existing antitrust framework is “sufficiently flexible” to address emerging technology questions, Ohlhausen said. In a related speech at George Washington University Law School Sept. 11, she criticized calls for a broader framework to address social issues that “have very little to do with competition.”

U.S. antitrust enforcers primarily use a “consumer welfare” standard to determine whether a merger or a company’s behavior is anticompetitive, she said, cautioning that regulators should forgo the “temptation to pursue non-competition goals.”

Ohlhausen has supporters in this view. History has shown that efforts to use antitrust laws to serve social and political goals don’t work, said Koren Wong-Ervin, an academic who was recently tapped to join the legal department at Qualcomm Inc. She spoke to Bloomberg BNA in her own capacity.

“This ended in the 1970s when the U.S. Supreme Court shifted the focus of U.S. antitrust law from a mix of economic, social, and political goals to solely economic goals,” said Wong-Ervin, who is departing as director of the Global Antitrust Institute at Antonin Scalia Law School at George Mason University.

Critics say dominant technology firms are going unchecked.

“A lot of the powerful tech companies are structured in such a way that they are essentially blameless under the current enforcement regime,” Steinbaum said.

The government’s standard, which has been around since the late 1970s, is heavily focused on whether companies are or might be in a position to harm consumers by charging higher prices, Steinbaum said. But that approach essentially precludes enforcement against companies like Google and Facebook Inc., which charge advertisers but not consumers, or Amazon, which typically sells consumer products at low prices.

“As long as you’re treating consumers nicely by the relatively weak or myopic standard of price only, you can sort of get away with things that used to be prohibited under the more expansive reading of the antitrust laws that prevailed between the late 1930s and late ‘70s,” Steinbaum said. But consensus around the current system is “breaking down,” he said.

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