Friday, December 16, 2011
Posted by D. Daniel Sokol
William E. Kovacic, George Washington University - Law School and Marc Winerman, Federal Trade Commission have an interesting article on Competition Policy and the Application of Section 5 of the Federal Trade Commission Act.
ABSTRACT: Since the 1970’s, U.S. courts generally have narrowed the range of single-firm behavior subject to condemnation as monopolization under the Sherman Act. This article examines the possibility of applying principles from Section 5 of the Federal Trade Commission Act to address apparent instances of anticompetitive conduct that go beyond the reach of other federal antitrust statutes. The FTC, through Section 5, offers a superior platform for elaborating competition policy, has the tools to perform empirical and policy work that can inform the design of legal rules, and is a specialized tribunal whose Section 5 decisions have no collateral effect in private cases. However, FTC’s application of Section 5 has played a fairly insignificant role in shaping competition policy. Its experience with Section 5 has a bleak record of establishing distinctive competition policy jurisprudence both because of federal court reluctance to sustain its decisions due to concerns about the absence of limiting principles and doubts about the depth and quality of FTC’s expertise; and hostile legislative reactions to FTC’s use of Section 5 that object to Section 5’s reach. Before Section 5 enforcement can be expanded, the FTC must develop a strategy that rest upon corrections to Section 5’s past failings. This requires (1) using policy statements or guidelines to state FTC’s views about what constitutes an unfair method, describe how the agency will exercise its enforcement discretion, and establish a high-level framework for analyzing Section 5 cases in adjudication; (2) articulating a framework that accounts for similarities to, as well as differences from, other antitrust laws; and (3) and building institutional competence by using research and policy instruments to signal to courts that the FTC has a sound basis for specific proposed application of Section 5.