Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Commissioner Ohlhausen discusses competition enforcement and protecting consumer privacy in the online marketplace, (Dec 9, 2013)

By Linda O’Brien, J.D., LL.M.

FTC Commissioner Maureen Ohlhausen discussed the interaction between the agency’s enforcement of the competition laws and consumer privacy concerns in a speech on December 6 before Premier Cercle’s 2013 Competition Summit in Brussels.

Ohlhausen opened her speech, entitled “Competition, Consumer Protection, and The Right [Approach] to Privacy,” by addressing the explosive growth in e-commerce and the online marketplace due to low barriers to entry and technology advances of Internet protocol communications which has allowed an unprecedented experimentation in online business models. While advertising-supported content and services provide benefits to consumers, such as free access to rich sources of information and the convenience of home shopping, the ease with which companies can collect data from consumers online has raised concerns about consumer privacy. The FTC has responded to these developments with an active enforcement record in this area, as well as extensive policy work and guidance.

Although the FTC’s efforts provide an effective shield for consumers, the agency is in the midst of a critical policy debate that will determine, in part, the direction of commercial development on the Internet and the fate of the business model for supporting free web content through interest-based advertising, Ohlhausen noted. She acknowledged a tension between the historical understanding of an individual’s expectation of privacy and the use of data to support the Internet economy. In Ohlhausen’s view, the right approach to privacy understands that competition laws and consumer protection laws are complementary by design.

Since competition alone cannot fully discipline the marketplace against dishonest individuals and businesses, the FTC uses its consumer protection authority to stop unfair or deceptive practices under the FTC Act. Ohlhausen observed that the evolution of these two distinct but complementary bodies of law reflect a consensus in the U.S. about the limits of our competition laws. While competition law enforcement objectives are focused on economic efficiencies, consumer protection goals focus on harm to individuals.

Ohlhausen stated that the competition laws are not intended to promote non-economic goals and should not consider privacy issues in competitive analysis as to erode the focus on calculable economic efficiencies. Because society’s understanding of privacy varies from one geographic area to another, it is impossible to transform privacy into a meaningful, reliable, and objective metric that fits within our competition network.

Privacy regulations should avoid unduly burdening competition, according to Ohlausen. The FTC should use an analytical framework when applying its’ competition advocacy to develop privacy regulations that provide consumers with the benefits of a competitive market while addressing any identified privacy harms.

Ohlhausen noted that the FTC is already protecting privacy online by actively enforcing its prohibition against unfair and deceptive trade practices in the areas of privacy and data security. The FTC has hosted numerous public workshops, issued reports on online data collection practices, monitored industry self-regulatory efforts, and closely followed technological developments affecting consumer privacy.

In 2012, the FTC released a comprehensive report on the best practices for protecting privacy. First, companies should build consumer privacy protections at every stage in developing their products. Second, companies should adopt notice and choice options that appropriately reflect the context of the transaction and the relationship the company has with the customer. Third, companies should disclose details about their collection and use of consumer information and provide consumers access to the data collected about them.

The best way for the FTC to continue responding to issues, such as whether there is enough competition in online markets to provide sufficient consumer choices on privacy preferences and do consumers know how their information is being collected and used, is to focus its energy and resources on maintaining competitive online markets through antitrust oversight, enforcing current consumer protection laws, and continuing to invest in education and research of online privacy issues, Ohlhausen concluded.

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