By Jeffrey May, J.D.
FTC Chairman and assistant attorney general for antitrust testified before House antitrust subcommittee today regarding the state of competition in the tech sector.
The House Judiciary Committee’s antitrust subcommittee held a hearing today at which the heads of the federal antitrust agencies testified on competition issues in the tech sector. Makan Delrahim, Assistant Attorney General in charge of the Department of Justice Antitrust Division, and FTC Chairman Joseph Simons defended their agencies’ records in the face of skepticism from Democratic lawmakers. Both House Judiciary Committee Chairman Jerrold Nadler (D., N.Y.) and Rep. David N. Cicilline (D., R.I.), chairman of the antitrust subcommittee, raised concerns about underenforcement of the antitrust laws by the FTC and Department of Justice Antitrust Division.
Kicking off the proceeding, Cicilline explained that the hearing was part of the subcommittee’s investigation into competition issues in digital markets. A key task of the effort is understanding the enforcement record of the antitrust agencies, he noted. The congressman suggested that an "enforcement gap" in tech markets has created a de facto antitrust exemption for online platforms, and he expressed hope that the congressional inquiry would explain the perceived dearth of enforcement actions.
Nadler said that he was deeply concerned about "the antitrust agencies’ lax merger enforcement, which has permitted these harmful levels of concentration and the rise of market power in the digital economy."
Nadler’s concerns went beyond merger enforcement. "Despite mounting evidence of illegal monopolization activities by some of the dominant platforms and numerous cases brought by international enforcers, U.S. enforcers appear to be paralyzed," Nadler added.
Republican members were less critical. Rep. Jim Sensenbrenner (R., Wis.), ranking member on the antitrust subcommittee, reminded the enforcers to be careful to avoid overreach and to "extend or apply the antitrust laws to punish success, suppress innovation, and ultimately limit consumer welfare." He also pointed out the policy differences between U.S. antitrust law and European competition law that have resulted in different approaches to competition enforcement on each side of the Atlantic.
Rep. Doug Collins (R-Ga.), ranking member of the House Judiciary Committee, added that proposals to break up big companies just because they are big risk throwing out the baby with the bath water and are simply punishing success. He also warned against the creation of unnecessary regulations in this fast-moving market.
Antitrust chief’s remarks. In his opening remarks, Delrahim reported that the Antitrust Division was hard at work reviewing business practices by market-leading online platforms. He pointed out that Facebook and Google have publicly acknowledged the agency’s probes into their companies but added that these companies were not the only companies that were subject to the investigation.
Delrahim explained that, as part of the Facebook and Google probes, the Antitrust Division is working to understand how personalized advertising transactions work and their competitive dynamics. "Other online platforms make money in other ways, and we are reviewing those other business models as well," he said. Delrahim would not comment on the non-public aspects of the investigation.
Delrahim also provided a prepared statement, which went beyond antitrust enforcement efforts in the tech sector. On the topic of the inquiry into digital platforms announced in July, the statement notes that the Antitrust Division "has been meeting with consumers, competitors and other participants in the digital markets to learn from their perspectives."
FTC chair’s remarks. Simons highlighted recent competition enforcement matters, including the agency’s monopolization complaint against Surescripts, LLC, involving vertical restraints on a digital platform. He also pointed to the Commission’s decision against 1-800 Contacts for unlawfully entering into agreements with rivals to restrict the scope of truthful, non-deceptive online advertising. The creation of an agency task force dedicated to monitoring competition in U.S. technology markets was also identified in the Commission’s statement. In addition, Simons defended the FTC’s merger enforcement record.
This was the fourth hearing in the series. In closing, Cicilline expressed his hope that the exchange with the enforcement heads would continue to be an ongoing conversation.
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