Antitrust Law Daily FTC chairman urges caution when using studies to justify competition policy changes
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Friday, October 9, 2020

FTC chairman urges caution when using studies to justify competition policy changes

By Jeffrey May, J.D.

Joe Simons also noted the agency’s concerns over recent attacks on its Section 13(b) authority.

In remarks delivered to a virtual meeting of the Fordham Competition Law Institute today, FTC Chairman Joseph Simons stressed the need "to be disciplined and careful in using economic studies for policymaking, especially when we consider major changes." While he welcomed efforts by economists at the FTC and outside the agency that develop an understanding of antitrust law, he pointed out the limits of particular studies. Among them was a study that concluded that merger enforcement had been too narrowly focused. Although Simon concluded that the work should not be ignored despite some concerns raised about methodology, he warned that "we also should not rush to conclude that we need wholesale changes in our merger policy."

Simons identified three types of problems with how economics has been deployed in efforts to justify changes in competition policy: (1) economic studies with methodological limitations have been used to support overly broad conclusions; (2) economic studies have been cited to support propositions without accounting for more obvious, alternative explanations; and (3) new economic models or tools have been widely incorporated into everyday practice without rigorously testing them. "We need to be careful in how we use research to advocate for policy changes—particularly significant policy changes," Simons said.

Simons cautioned against blaming weak antitrust enforcement as the cause for marketplace changes or declines in income when other explanations exist. "If other explanations are more likely, the appropriate policy response is not to change antitrust," he said.

In an effort to support research at the FTC, Simons noted the launch of a "more formalized and robust" Merger Retrospectives Program. The agency plans to allocate more staff time and resources to retrospective studies. A website has been launched devoted to highlighting retrospective studies.

"As policymakers, we have an obligation to carefully evaluate new work and not move away from a strong bipartisan approach to antitrust without making sure we are confident that is the right thing to do," the chairman concluded.

FTC Act, Section 13(b) authority. In response to questions from expert panelists, Simons noted his concerns about recent appellate court decisions from the Seventh and Third Circuits rejecting the agency’s long-held view that Section 13(b) of the FTC Act authorizes the FTC to seek monetary relief. Simons said that the decision impact both the agency’s consumer protection and competition missions. He added that the agency was calling on Congress to clarify the authority. Meanwhile, the U.S. Supreme Court is expected to weigh in on the issue during its current term.

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