Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Ohlhausen addresses concerns U.S. economy lacks competition, (Jun 1, 2016)

By Michael Menzhuber, J.D., LL.M.

Questions of whether the United States has a monopoly problem, whether antitrust enforcers can do more to promote competition, and what is the right way to promote competition were addressed today by FTC Commissioner Maureen K. Ohlhausen in speech before a Hong Kong Competition Association meeting at Hogan Lovells in Hong Kong.

Olhausen began her remarks—entitled: “Does the U.S. Economy Lack Competition, And If So What To Do About It?”—by addressing the difficulty in reliably analyzing the state of competition in an entire economy. Although she debunked the use of a Structure-Conduct-Performance (SCP) paradigm in reaching the conclusion that the United States has a monopoly problem, she did not suggest that United States markets were optimally competitive.

Ohlhausen countered concerns that the FTC and the Department of Justice (DOJ) must enforce competition laws more aggressively by suggesting that optimal enforcement must reflect the competitive realities of each market and that there should be no intervention when an investigation reveals a lack of harm to competition. According to Ohlhausen, properly calibrated divestures, rather than banning a merger because the firms are big or there is some horizontal overlap, are effective mechanisms for both protecting competition and for allowing merging parties to realize efficiencies. She also stated that claims that the government had not effectively enforced antitrust laws could not be squared factually.

Those claiming that the FTC and the DOJ should more aggressively enforce antitrust laws misunderstand competition policy, according to Ohlhausen. After noting that competition law is not regulatory, she explained that it was government’s role to protect the competition process, rather than to intervene and order more competition or to reengineer market structure. She also suggested that calls for more stringent enforcement were problematic because they were often abstract.

Ohlhausen went on to say that proposals to weaken intellectual property (IP) laws are misguided. She acknowledged that there are problems, such as the potential reduction of downstream incentives to commercialize technology as the result of ex post enforcement of weak patents. However, she pointed to leading studies that find a positive correlation between patent protection, research and development (R&D), and macroeconomic growth in developed countries.

She recapped her position that claims of abundant monopoly derive from faulty analysis and that demands for more aggressive enforcement are unrealistic at best and damaging at worst. Ohlhausen then suggested that an obvious hole in competition policy lies in government itself. She advocated a regulatory design that recognizes the limitations of government oversight. While recognizing that politics cannot be totally rid of special-interest groups and laws that disproportionately harm competition, she assessed that the more egregious examples of unjustified government restrictions on entry are appropriate targets for consumer advocacy.

Ohlhausen concluded her remarks with the following points: (1) the fact that industry concentration and firm profits trend upward for a time does not show that competition is in decline; (2) antitrust should remain a precision tool: a scalpel rather than a hammer; (3) the role that IP rights play in driving an economy’s technological output should not be discounted; and (4) government restrictions on entry are a loophole in today’s antitrust enforcement.

News: Antitrust FederalTradeCommissionNews