Thursday, January 7, 2010

Section 5 FTC Act Blog Symposium: Comments of Keith Hylton

Posted by Keith Hylton

The FTC claims that Intel violated Section 5 by giving discounts and rebates to customers in a manner that harmed its rival AMD, by designing its products in a manner that disadvantages rivals, and by acting too aggressively in protecting its intellectual property.  The remedies the FTC is seeking would impose burdensome restrictions on pricing, product design, and protection of intellectual property.

These claims are not well founded in U.S. antitrust law.  Unlike the EU courts, the U.S. courts have been reluctant to use antitrust law to regulate pricing and product design decisions, and to interfere with the protection of intellectual property.  Since the FTC’s likelihood of victory is low, one has to wonder what’s behind this enforcement action.  The most likely reason is that the FTC is pushing for a settlement that will result in the imposition of at least some of the restrictions.

If the FTC gets the settlement it is looking for, it will create an informal layer of monopolization law that is closer to EU law than U.S. law – informal law that gets enforced by the threat of litigation costs rather than the decision of a court.  Moreover, it will create a new function for Section 5 that is hard to square with its original purpose.

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