With rumors swirling that FTC is preparing an antitrust suit against Facebook, the commissioner warns that the task of challenging unilateral conduct should be approached with humility.
In a panel discussion on remedies in unilateral conduct cases involving digital platforms at the virtual 2020 International Competition Network Annual Conference, FTC Commissioner Christine S. Wilson suggested that the availability of a viable remedy should factor into an enforcement agency’s case selection. "If a viable remedy isn't available, efforts to establish liability are unlikely to be justified." She added that, in light of the track record for monopoly enforcement actions in the United States, "competition enforcers should approach the task of challenging unilateral conduct with humility."
Wilson’s remarks came shortly after the Wall Street Journal reported that the FTC is preparing an action against Facebook over its dominant position in social media. In her remarks, Wilson mentioned the press reports of FTC and Department of Justice investigations into digital platform companies but did not provide specifics. She also noted the FTC’s study of prior unreported acquisitions, analyzing information from Alphabet/Google, Amazon, Apple, Facebook, and Microsoft. She said the study would help deepen understanding of large tech firm acquisition activity and help determine whether anticompetitive acquisitions of nascent competitors are "flying under the radar." Also noted was the House Judiciary Committee’s investigation into digital platforms. Wilson said that a report and recommendation was expected later this month.
With respect to remedies, Wilson identified three goals for antitrust enforcement actions: (1) terminating the wrongful conduct; (2) preventing reoccurrence; and (3) re-establishing the opportunity for competition in the affected market. When looking at the most effective remedies, Wilson said that structural relief is tailored to provide the most relief. By evaluating the damages on a case-by-case basis, there is a chance to design the remedy to eliminate the monopoly altogether. In addition, behavioral remedies can be individually tailored to the company and its violations. Finally, Wilson stated that she believed that monetary remedies can have a significant deterrent effect. She pointed to the FTC’s recent fine of $5 billion against Facebook. However, she conceded that monetary fines alone are not enough to correct the anticompetitive behavior.
Wilson cautioned against the use of interim remedies due to the complex nature of the company and the alleged anticompetitive behavior. "An agency should be reluctant to design complex remedies to deter conduct that it doesn’t fully understand," said Wilson. She believes that ultimately, interim measures are more likely to harm consumers then help them and may also deter legitimate competition. Finally, interim measures would likely violate U.S. law by infringing on due process rights.
Wilson also suggested that, in the unilateral conduct space, competition agencies should rely on ex post enforcement and not ex ante rules and regulations.
Other panelists. The panel also included representatives from foreign enforcement agencies. Fellow panelist Olivier Guersent, Directorate-General for Competition at the European Commission, said that remedies are one of the main parameters for determining the effectiveness of enforcement powers. As such, there is no one-size-fits-all solution, it requires a case-by-case analysis.
Andreas Mundt, President of the Federal Cartel Office in Germany, stressed the importance of keeping markets open while preventing consumer harm. While fines are a form of remedy, he does not believe that it is an effective remedy because the companies involved generally have deep pockets and just factor these fines into their budgets. Instead, Mundt believes that enforcement agencies need to change the parameters of the underlying business on an individual case analysis to alter those behaviors that are anti-competitive. According to Mundt, the courts have generally agreed with this approach.
Dr. Katharine Kemp, Professor at the University of New South Wales, Australia, said that the Australian Competition and Consumer Commission has not yet brought a case against a major digital platform, but is currently recommending broad changes to Australia’s privacy law, a proposed data privacy code, and defining actions under the consumer law for misleading or deceptive code.
Companies: Alphabet Inc.; Amazon.com, Inc.; Apple Inc.; Facebook, Inc.; Microsoft Corp.
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