Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Commissioner Wright discusses monetary remedies in antitrust cases, (Jul 23, 2013)

By Jeffrey May, J.D.

FTC Commissioner Joshua D. Wright discussed his concerns with the Commission's “clandestine” decision to withdraw its “Policy Statement on Monetary Remedies in Competition Cases,” at the 18th Annual Competition Law and Policy Workshop of the European University Institute Department of Law in Florence, Italy.

In remarks, prepared for delivery on July 19, entitled “The Federal Trade Commission and Monetary Remedies,” Wright questioned the justifications for the withdrawal of the 2003 policy statement. He also offered his views on the types of antitrust violations meriting disgorgement remedies.

The 2003 policy statement outlined three factors that the Commission would consider in seeking equitable monetary remedies, such as disgorgement, in an antitrust case: (1) whether the violation of law was “clear”; (2) whether there was a reasonable basis upon which to calculate the disgorgement payment; and (3) whether remedies in other litigations were likely to fail to accomplish fully the purposes of the antitrust law. The majority of the Commission—over the objections of Commissioner Maureen Ohlhausen—withdrew the 2003 policy statement in 2012. This was before Wright came to the Commission.

According to Wright, the Commission offered the following questionable policy reasons for the withdrawal: (1) the statement “chilled the pursuit of monetary remedies” and (2) there was a need for the federal antitrust agencies to “pick up the slack” because recent decisions by the U.S. Supreme Court had made it more difficult for a private plaintiff to bring a successful antitrust case. In addition, the Commission criticized the legal basis for the three factors laid out in the guidelines. Wright was troubled that the policy statement “was withdrawn with minimal deliberation by the Commissioners, without a request for public comment, and over the dissent of a Commissioner.” Wright also questioned the Commission's failure to cite data or other evidence to support its assertion that the policy statement had a chilling effect.

The FTC's second policy argument for withdrawing the policy statement—that there was a need for the agencies to step in due to the difficulties faced by private antitrust plaintiffs—also was refuted by Wright. He contended that in order for this position to make sense, two testable hypotheses would need to be confirmed: (1) private antitrust lawsuits have become more difficult to win; and (2) anticompetitive conduct is currently underdeterred by the antitrust laws. However, according to Wright, “recent pro-defendant decisions by the Supreme Court fail to justify increased efforts by the Commission to pursue monetary remedies against antitrust defendants for a number of reasons.”

Wright believes that “these recent decisions are motivated by economic learning and an acceptance of the error-cost approach to designing liability rules in antitrust and not out of a concern related specifically to private antitrust suits.” Moreover, the decisions “provide no basis for the FTC to increase systematically its efforts to pursue monetary remedies.”

The conditions under which the FTC ought to pursue disgorgement and other monetary remedies going forward also were discussed by Wright. Based on past disgorgement actions, Wright offered his support for a limitation on the FTC’s ability to pursue disgorgement only against naked price fixing agreements among competitors or, in the case of single-firm conduct, only if the monopolist’s conduct has no plausible efficiency justification.

Wright believes that the FTC should not pursue disgorgement in cases involving vertical restraints. These cases “present the most difficulty in distinguishing between anticompetitive conduct that harms consumers and procompetitive conduct that benefits them,” according to the commissioner.

“Risk averse companies concerned about the financial and reputational effects associated with a disgorgement order from the FTC could respond to the lack of guidance by not engaging in conduct that could plausibly benefit consumers,” Wright contended. “And the threat of disgorgement could lead a company to settle a case even if it has a strong position on the merits.”

News: Antitrust FederalTradeCommissionNews