Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Ohlhausen stresses importance of convergence in IBA speech, (Mar 11, 2014)

By Jeffrey May, J.D.

Commissioner Maureen K. Ohlhausen is cautioning competition authorities in developing nations against including non-competition or public interest factors in their competition analyses. In remarks delivered at the International Bar Association’s Mid-Year Antitrust Conference in Cape Town, South Africa, on March 8, Ohlhausen called on competition agencies “to converge on a consensus enforcement paradigm grounded in contemporary economic principles and focused on competitive effects and consumer welfare.”

In nations with emerging economies exhibiting high levels of unemployment, poverty, and economic dislocation, accounting for public interest factors like employment or protection of export industries may be viewed by many as a responsible approach to governance, Ohlhausen noted. However, she suggested that this was not the best approach. Over the past few years, the competition authorities of some African nations, by balancing public interest concerns like employment with other competitive effects, have sometimes imposed remedies on transactions that might result in negative consequences, such as the retrenchment of employees.

“When government distorts competition, for example by forcing the retention of employees after a merger where doing so reduces efficiencies, it allows firms to escape the demands of the market,” Ohlhausen explained. “It allows inefficiencies to fester, pushing the costs of goods up and the need to innovate down. In addition, inefficiency in any one corner of the economy can spread, like a sickness, elsewhere, even where the hand of government has not yet touched industry directly.”

Ohlhausen pointed to additional challenges raised by the consideration of public interest factors when developing remedies. Reliance on public interest factors could not only prevent procompetitive mergers but also raise the costs of employment-enhancing mergers, thereby reducing employment and growth. Evidence and experience shows that robust competition produces substantial benefits for consumers, by promoting growth, spurring innovation, and facilitating the efficient allocation of resources, according to Ohlhausen.

“[P]ursuing competition values is crucial to improving a nation’s overall wealth and its people’s well-being,” Ohlhausen concluded.

In her speech, entitled “International Convergence, Competition Policy, and the Public Interest,” Ohlhausen also discussed the FTC’s involvement in several multilateral fora on competition law and policy issues, including the International Competition Network (ICN) and the Organization for Economic Cooperation and Development (OECD). At the ICN, the FTC, along with partners from the European Commission, co-leads a project on “investigative process” in an effort to establish best practices or other forms of guidance for the procedural fairness of agency investigations. The FTC also participates in regional capacity-building workshops of eight newer competition agencies in countries in central and southern Africa, it was noted.

News: Antitrust FederalTradeCommissionNews