Thursday, January 7, 2010
Posted by Dan Crane
I should disclose at the outset that I have been retained by Intel to provide policy analysis on the FTC enforcement action, although the views I express here are solely my own. Also, I will shortly be disseminating a white paper addressing the Section 5 issues. This is just a short preview of some of its key themes.
For several years, I have been advocating a separation between the liability norms in public and private antitrust enforcement, for many of the reasons expressed in the Commission's press release accompanying the Intel complaint. Last fall, at the FTC's Section 5 hearings, I testified in favor of declaring Section 5 independence from the Sherman Act. Still, the Intel case strikes me as a very bad one in which to declare independence. It is likely to provoke a negative reaction from the reviewing courts and stymie further efforts at Section 5 independence.
The reason, in short, is that there is very little, if anything, in the FTC's comparative institutional advantages, that justifies Section 5 independence in the Intel case. As I have previously written, it is imperative that when the FTC strikes out for Section 5 independence, it first articulate the reasons that Section 5 independence is justified in that particular case and suggest some judicial review principles that make clear that courts will continue to have a reviewing role to play. In Intel, the Commission did no such thing.
To his credit, Commissioner Rosch made an attempt (in a statement that, tellingly, dissented from the Commission's filing of a supplemental Sherman Act Section 2 claim). However, none of Commissioner's Rosch's four supposed justifications have anything to do with the FTC's comparative institutional advantages. Rather, they sound like complaints with the interpretation courts have given to the Sherman Act. This is exactly the sort of Commission rhetoric mostly like to provoke a strong judicial reaction.
In my forthcoming white paper, I articulate principles--based in the Commission's comparative institutional advantages--for when it should and should not declare Section 5 independence. To give just one example here, much of the case law on Section 5 suggests that the Commission may have prophylactic powers in cases of incipient conduct.
Perhaps this is because the Commission is better than the courts at predicting likely effects of emerging market forces. But such a justification cannot possibly serve in Intel, since the conduct at issue has been in play for over a decade.
In short, while I strongly support separating Section 5 from the Sherman Act, great care has to be taken to pick the right cases for making the arguments. Intel--a high-profile case with punitive and drastic proposed remedies entailing conduct paradigmatically covered by the Sherman Act--is the wrong case.