Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Ohlhausen makes recommendations for FTC’s future competition policy, (Feb 7, 2014)

By Linda O’Brien, J.D., LL.M.

FTC Commissioner Maureen Ohlhausen today addressed the agency’s efforts to evaluate its performance and provided recommendations for improving its future competition policy, in a speech before the Global Competition Review (GCR) Antitrust Law Leaders’ Forum 2014 in Miami, Florida.

Ohlhausen began her speech, entitled “100 is the New 30: Recommendations for the FTC’s Next 100 Years,” by marking the FTC’s 100th anniversary and noting that the agency is still dynamic and effective in the pursuit of its core mission to promote competition and protect consumers. The Commission’s “Federal Trade Commission at 100: Into Our 2^nd Century” report represented an effort to create a framework for assessing the FTC’s performance and to identify where and how the agency may improve as it moves into its second century. The report posed two fundamental questions: (1) how well did the FTC fulfil the role Congress foresaw when the agency was created in 1914? and (2) what type of institution should the FTC aspire to be as it starts its second century in 2014?

Ohlhausen explained that the report sets forth that a fundamental requirement for the agency is to clearly articulate its mission of preventing business practices that are anticompetitive or deceptive or unfair to consumers, enhance informed consumer choice of the competitive process, and accomplish its goals without undue burdens on legitimate business activity. Another key recommendation in the report is that the Commission use all of its tools to further its mission and to evaluate carefully what tools are appropriate for any given perceived problem.

The report also urges that the FTC pay close attention to outcomes, examine whether agency activity is actually improving consumer welfare, and determine whether it can be done more effectively. The report counsels the FTC to continue to build and maintain support for the agency’s mission throughout the administration, Congress, state governments, industry, and the public at large. Finally, a recurring theme in the report is the importance of transparency and predictability in its enforcement activities to maintain the support of consumers, businesses, Congress, and other stakeholders.

Available FTC tools. The FTC should use the anniversary not just to celebrate a milestone, but also to evaluate the agency’s strengths and weaknesses so that it can build on its successes and learn from its mistakes, in Ohlhausen’s view. As an advocate for the FTC using all the tools that are available, Ohlhausen recommended that the agency always consider the many non-enforcement tools it can use to help stop consumer harm before it arises, such as policy research and development, competition advocacy, and consumer and business education.

Antitrust laws and competition policy. Ohlhausen’s second recommendation is for the FTC to stay focused on its core competency, which is the development of the antitrust laws and competition policy more generally. A real success as an agency has come from using its administrative litigation function and competition policy tools to develop the antitrust laws, particularly in the cases of novel or factually complex conduct. The FTC has contributed significantly to developing the antitrust laws through its unique characteristics of policy and research tools, as well as its administrative litigation capability.

Scope of authority. There has been ongoing discussion of the scope of the FTC’s authority under Section 5 of the FTC Act to prevent unfair methods of competition (UMC), Ohlhausen observed. In her view, there are six factors that should guide the FTC whenever it reviews conduct beyond the reach of antitrust laws: (1) substantial harm to competition; (2) lack of procompetitive justification/disproportionate harm test; (3) avoiding/minimizing institutional conflict; (4) grounding UMC enforcement in robust economic evidence; (5) use of non-enforcement tools as alternatives to UMC enforcement; and (6) providing clear guidance on UMC.

FTC authority over broadband issues. Although she cautioned against the expansive use of UMC authority, Ohlhausen believes there may be instances in which expanding existing FTC statutory authority would be in the public interest. For example, the exemption from FTC jurisdiction for communications common carriers frustrates effective enforcement with respect to a wide variety of activities—including privacy, data security, and billing practices—in the increasingly important telecommunications industry. Ohlhausen supports the repeal of this exemption in order to put these competing technologies on an equal footing.

International cooperation. Ohlhausen next recommended that the FTC continue to pursue international cooperation and convergence over the next 100 years. Inter-agency cooperation on competition cases is critical given the global nature of many businesses and transactions and the inter-connected nature of the global economy. The FTC works bilaterally with a large and growing number of jurisdictions on case cooperation and assistance.

Transparency and predictability. Ohlhausen’s final recommendation is for the agency to be as transparent and predictable as possible, which she believes are crucial to maintaining support for the FTC’s mission. In her view, the FTC has offered significant transparency and predictability in the merger review context. One of the most useful means for providing such transparency and predictability is the issuance of closing statements in significant investigations that the Commission ultimately closes without taking any action. Whether they are issued by the FTC or the Bureau of Competition Director, these statements offer important insights into the agency’s merger analysis to firms contemplating transactions and the counselors who advise them. She noted that agency predictability does not necessarily mean that the FTC reaches the same result in the same market over time, particularly when the relevant facts change. Ohlhausen concluded by stating it was her hope that the FTC will be guided by the recommendations of the report as it enters its second century.

News: Antitrust ConsumerProtection FederalTradeCommissionNews