Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC enforcement promotes innovative, competitive high-tech markets: McSweeny, (Jan 28, 2015)

By Greg Hammond, J.D.

FTC Commissioner Terrell McSweeny discussed the agency’s vital role in promoting innovative, open, and competitive markets during her keynote address, delivered yesterday at the “Antitrust in the Technology Sector” seminar, co-hosted by Skadden, Arps, Slate, Meagher & Flom LLP and Compass Lexecon in Palo Alto, California.

In prepared remarks, entitled “The Role of Antitrust Enforcers in Dynamic High-Tech Markets,”

McSweeny listed three ways in which modern antitrust law and enforcers promote innovative, competitive markets: (1) by protecting competition and innovation through merger enforcement; (2) by advocating for the competition introduced by innovators; and (3) by working to keep the balance between competition and intellectual property policy right.

In discussing merger enforcement in the high-tech markets, McSweeny noted the recently-challenged acquisition of EagleView Technology by Verisk Analytics, a challenge that focused on the relatively new product offering, rooftop aerial measurement. The FTC concluded that Verisk was well positioned to compete against EagleView and that there were significant barriers to entry or expansion by other firms.

“While I don’t think there was anything particularly novel about the analysis in Verisk, it is nonetheless a reminder that the Commission takes innovation and quality competition seriously and is focused on the future effects of transactions,” McSweeny said. “[The] key lesson is that anticompetitive effects and harm to innovation must be offset by efficiencies—even in high-tech markets that are rapidly evolving and subject to potential disruption.”

The Commissioner also noted how the FTC is playing an important role in promoting innovation by advocating for disruptive entrants. In the ride-sharing industry, the Commission has submitted comments to numerous cities and taxicab authorities, urging that regulation not impede competition from new ride-sharing platforms like Uber and Lyft. The FTC has also publicly criticized state laws that are designed to protect automobile dealership models from competition from Tesla’s direct-to-consumer sales strategy. McSweeny has encouraged states to be cautious in overly restricting experimentation in broadband delivery at the local level, in order to promote faster and better Internet service.

These examples, according to McSweeny, demonstrate that “antitrust agencies are frequently out in front, using the principles of competition law to help ensure that new and exciting ideas have the opportunity to succeed on their merits.”

Commissioner McSweeny ended her remarks with a discussion on the intersection of competition and intellectual property. There are three areas where competition and IP intersect and where the Commission plays an active role, she said, including: (1) addressing reverse payment settlements in the pharmaceutical industry; (2) studying the conduct of patent assertion entities; and (3) identifying the problem of standard essential patent “hold up.”

“The task of the 21st century competition enforcers is to protect competition and innovation—to make sure that hi-tech markets remain dynamic, fertile grounds for new products and ideas,” McSweeny said. “I think we’re up to the challenge.”

News: Antitrust FederalTradeCommissionNews