Antitrust Law Daily Wrap Up, ANTITRUST NEWS—FTC Commissioner Wright Promotes Evidence-Based Antitrust Approach in China Speech, (Feb 26, 2013)

By E. Darius Sturmer, J.D.

In a speech delivered at the inauguration of the ICT Competition Laboratory in Beijing, China, on February 23, FTC Commissioner Joshua D. Wright discussed the importance of “evidence-based antitrust enforcement” and described some recent highlights from the FTC’s own enforcement efforts in high-tech markets.

“Evidence-based antitrust,” Wright explained, “is the common-sense dictum that antitrust agencies can and should make enforcement decisions based upon sound economic and empirical foundations.” This approach, he noted, relies on the integration of economic analysis into all stages of enforcement, the integration of empirical evidence into the decision-making process, and a commitment to an “error-cost” philosophy aimed at minimizing the costs of inevitably imperfect enforcement decisions. Adherence to these principles is especially critical “when contemplating enforcement in high-tech markets where the stakes are highest for consumers and errors can dampen economic growth.”

Wright remarked that the proliferation of theoretical explanations for business conduct had given rise to a “model selection” problem—which calls upon enforcers and courts to discriminate between sophisticated economic models that, though both plausible, generate differing and sometimes contradictory enforcement implications. “Dogmatic loyalty to particular antitrust “schools” inevitably lead[s] to poor decision-making and adherence to particular theories without regard to whether they are the best suited for the case at hand.” The evidence-based approach to antitrust enforcement seeks to find well-established theories that conform to the facts on the ground. This is a challenge in an area where “the ratio of theories-to-empirical evidence remains exceedingly high,” Wright added. However, one benefit of evidence-based antitrust is that it is “amenable to models from any of these schools so long as they have empirical support.”

“Harnessing the power of economics and disciplined by empiricism, antitrust in high-tech markets can help ensure competition, innovation, and economic growth,” Wright said. He cautioned that “[w]hen untethered from these economic principles, however, antitrust enforcement runs serious risk of doing more harm than good as the discipline provided by economics and empiricism are replaced with subjective considerations, prior beliefs, or political preferences.”

Commissioner Wright detailed his agency’s efforts to undertake research to achieve its competition policy initiatives, citing its release of a report in 2011 examining the competitive effects of branded pharmaceutical firms offering authorized generic drugs, as well as earlier staff reports identifying principles that policy makers should consider in evaluating regulations or legislation relating to broadband Internet access and network neutrality and describing barriers to e-commerce in the contact lens and wine markets. In addition, the FTC encouraged worthwhile empirical research by scholars in the field through conferences and other exchanges of ideas and research, Wright said.

He added that the FTC had also made valuable economic contributions to competition policy in the area of merger review, highlighting the “revolutionary leap forward” that began with the 1982 Merger Guidelines and continued through several subsequent revisions leading up to the 2010 Guidelines, which continue the agency’s trend away from relying upon structural presumptions to infer competitive effects.

Wright then described how the FTC had demonstrated its recent use of evidence-based antitrust enforcement in the high-tech sector, including the agency’s investigation into Google’s search practices, which ended without action and its successful challenge to Realcomp’s exclusion of discount realtors’ listings on a Multiple Listing Service database. He noted that the agency’s consideration of the error-cost framework was on display in its Google closing statement, which observed that significant harm was likely from an erroneous condemnation of Google.

Wright was more critical of the FTC’s complaint against Intel in 2009, which alleged that the company’s loyalty discounts violated the antitrust laws. The case deviated from the evidence-based approach, he said, because whereas loyalty discounts can generate both anticompetitive and precompetitive effects, the precompetitive aspects of Intel’s discounts were far more tangible, intuitive, and apparent than the anticompetitive aspects.

News: Antitrust FederalTradeCommissionNews

CONSUMER PROTECTION NEWS: Identity Theft Again Tops FTC’s List of Consumer Complaints

By Tobias J. Gillett, J.D., LLM.

For the 13th consecutive year, identity theft led the list of consumer complaints received by the Federal Trade Commission, according to a 2012 annual report issued on February 26.

The report (“Consumer Sentinel Network Data Book for January – December 2012”) includes national data on consumer complaints received by the FTC, as well as a state-by-state accounting of top complaint categories and listings of 50 metropolitan areas generating the most complaints for both fraud and identity theft.

The 369,132 identity theft complaints accounted for 18 percent of the more than 2 million complaints overall, with government documents fraud constituting 46 percent of that category, particularly tax- or wage-related fraud.

Other common types of complaints among the 30 categories identified by the FTC included debt collection (10 percent); banks and lenders (6 percent); shop-at-home and catalog sales (6 percent); prizes, sweepstakes, and lotteries (5 percent); imposter scams (4 percent); Internet services (5 percent); auto-related complaints (4 percent); telephone and mobile services (4 percent); and credit cards (3 percent). Under a different measure, 52 percent of complaints were fraud complaints, 18 percent identity theft complaints, and 30 percent other complaints.

The FTC enters complaints into the Consumer Sentinel Network database, an online database providing access to more than 2,000 civil and criminal law enforcement agencies. The database contains 8 million complaints entered between calendar year 2008 and calendar year 2012. More than 11 million do-not-call complaints were entered during the same period.

Other law enforcement agencies—including the Consumer Financial Protection Bureau, the U.S. Postal Inspection Service, the Federal Bureau of Investigation’s Internet Crime Complaint Center, and the offices of 14 state attorneys general—also contribute to the database. Some private-sector organizations—such as all Better Business Bureaus in the U.S. and Canada, PrivacyStar, and Publishers Clearing House—contribute data as well.

Other highlights included a reported $1.49 billion spent in fraud complaints by consumers, with a median amount of $535. Thirty-eight percent of reported fraud contacts were made by e-mail, while 34% were made by phone. Florida and Georgia occupied the number one and number two positions respectively on the lists of most state fraud complaints and most state identity theft complaints on a per capita basis.

News: ConsumerProtection FederalTradeCommissionNews