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On Monday the DC Circuit hears oral argument in Verizon v. FCC – the case challenging the FCC’s Open Internet Order.

Following the oral argument I’ll be participating in two events discussing the case.

The first is a joint production of the International Center for Law & Economics and TechFreedom, a lunchtime debrief on the case featuring:

  • Matt Brill, Latham & Watkins LLP
  • Fred Campbell, Communications Liberty and Innovation Project
  • Markham Erickson, Steptoe & Johnson LLP
  • Robert McDowell, Hudson Institute
  • Sherwin Siy, Public Knowledge
  • Berin Szoka, TechFreedom

I’ll be introducing the event. You can register here.

Then at two o’clock I’ll be leading a Federalist Society “Courthouse Steps Teleforum” on the case entitled, “FCC Regulation of the Internet: Verizon v. FCC.”

Register for the event at the link above.

I suspect we’ll have much more to say about the case here at Truth on the Market, as well. For now, you can find our collected wisdom on the topic of net neutrality at this link.

I hope you’ll join either or both of Monday’s events!

We’re delighted to welcome two new bloggers to Truth on the Market: Gus Hurwitz and Ben Sperry.

Hurwitz-Israel-cropGus is an assistant professor of law at the University of Nebraska. His work looks at the interface between law and technology and the role of regulation in high-tech industries. He has a particular expertise in telecommunications law and technology. His current work focuses on administrative law and the FTC (as you might have noticed from his two contributions to our recent Section 5 UMC Symposium. His SSRN page is here.

Gus was the inaugural Research Fellow at the University of Pennsylvania Law School’s Center for Technology, Innovation and Competition (CTIC), prior to which he was a Visiting Assistant Professor at George Mason University Law School. From 2007–2010 he was a Trial Attorney with the United States Department of Justice Antitrust Division in the Telecommunications and Media Enforcement Section (but I try not to hold that against him).

Gus also has a background in technology, with stints at Los Alamos National Lab and the Naval Research Lab prior to law school. Unique (as far as I know) among the bloggers here, he is also the former holder of a world record (for Internet2 land speed) with the Guinness Book of World Records.

Like others among us at TOTM, Gus earned his JD at the University of Chicago Law School, where he was an articles editor on the Chicago Journal of International Law and received Olin and MVP2 law and economics scholarships. He also holds an MA in Economics from George Mason University. He received his BA from St. John’s College.

sperry square edited

Ben Sperry is the Associate Director of the International Center for Law & Economics. Previously he engaged in technology policy at free market organizations like TechFreedom and the Competitive Enterprise Institute. While in law school, he clerked at the Institute for Justice and served as a summer legal fellow at the Washington Legal Foundation. Sperry graduated from George Mason University School of Law cum laude in 2012, where he was a member of the George Mason Law Review and a research assistant for Todd Zywicki. His areas of expertise include competition policy, telecommunications law, economic freedom and the law and economics of privacy, civil liberties and the First Amendment. He has written most recently on the law and economics of transaction reviews at the FCC and on Section 5 UMC.

We’re delighted to have these excellent new additions to our roster. Look for inaugural posts from each of them this weekend or early next week.

Over at the blog for the Center for the Protection of Intellectual Property, Richard Epstein has posted a lengthy essay that critiques the Obama Administration’s decision this past August 3 to veto the exclusion order issued by the International Trade Commission (ITC) in the Samsung v. Apple dispute filed there (ITC Investigation No. 794).  In his essay, The Dangerous Adventurism of the United States Trade Representative: Lifting the Ban against Apple Products Unnecessarily Opens a Can of Worms in Patent Law, Epstein rightly identifies how the 3-page letter issued to the ITC creates tremendous institutional and legal troubles in the name an unverified theory about “patent holdup” invoked in the name of an equally overgeneralized and vague belief in the “public interest.”

Here’s a taste:

The choice in question here thus boils down to whether the low rate of voluntary failure justifies the introduction of an expensive and error-filled judicial process that gives all parties the incentive to posture before a public agency that has more business than it can possibly handle. It is on this matter critical to remember that all standards issues are not the same as this particularly nasty, high-stake dispute between two behemoths whose vital interests make this a highly atypical standard-setting dispute. Yet at no point in the Trade Representative’s report is there any mention of how this mega-dispute might be an outlier. Indeed, without so much as a single reference to its own limited institutional role, the decision uses a short three-page document to set out a dogmatic position on issues on which there is, as I have argued elsewhere, good reason to be suspicious of the overwrought claims of the White House on a point that is, to say the least, fraught with political intrigue

Ironically, there was, moreover a way to write this opinion that could have narrowed the dispute and exposed for public deliberation a point that does require serious consideration. The thoughtful dissenting opinion of Commissioner Pinkert pointed the way. Commissioner Pinkert contended that the key factor weighing against granting Samsung an exclusion order is that Samsung in its FRAND negotiations demanded from Apple rights to use certain non standard-essential patents as part of the overall deal. In this view, the introduction of nonprice terms on nonstandard patterns represents an abuse of the FRAND standard. Assume for the moment that this contention is indeed correct, and the magnitude of the problem is cut a hundred or a thousand fold. This particular objection is easy to police and companies will know that they cannot introduce collateral matters into their negotiations over standards, at which point the massive and pointless overkill of the Trade Representative’s order is largely eliminated. No longer do we have to treat as gospel truth the highly dubious assertions about the behavior of key parties to standard-setting disputes.

But is Pinkert correct? On the one side, it is possible to invoke a monopoly leverage theory similar to that used in some tie-in cases to block this extension. But those theories are themselves tricky to apply, and the counter argument could well be that the addition of new terms expands the bargaining space and thus increases the likelihood of an agreement. To answer that question to my mind requires some close attention to the actual and customary dynamics of these negotiations, which could easily vary across different standards. I would want to reserve judgment on a question this complex, and I think that the Trade Representative would have done everyone a great service if he had addressed the hard question. But what we have instead is a grand political overgeneralization that reflects a simple-minded and erroneous view of current practices.

You can read the essay at CPIP’s blog here, or you can download a PDF of the white paper version here (please feel free to distribute digitally or in hardcopy).

 

Regulating the Regulators: Guidance for the FTC’s Section 5 Unfair Methods of Competition Authority

August 1, 2013

Truthonthemarket.com

Welcome!

We’re delighted to kick off our one-day blog symposium on the FTC’s unfair methods of competition (UMC) authority under Section 5 of the FTC Act.

Last month, FTC Commissioner Josh Wright began a much-needed conversation on the FTC’s UMC authority by issuing a proposed policy statement attempting to provide some meaningful guidance and limits to the FTC’s authority. Meanwhile, last week Commissioner Maureen Ohlhausen offered her own take on the issue, echoing many of Josh’s points and further extending the conversation. Considerable commentary—and even congressional attention—has been directed to the absence of UMC authority limits, the proper scope of that authority, and its significance for the businesses regulated by the Commission.

Section 5 of the FTC Act permits the agency to take enforcement actions against companies that use “unfair or deceptive acts or practices” or that employ “unfair methods of competition.” The Act doesn’t specify what these terms mean, instead leaving that determination to the FTC itself.  In the 1980s, under intense pressure from Congress, the Commission established limiting principles for its unfairness and deception authorities. But today, coming up on 100 years since the creation of the FTC, the agency still hasn’t defined the scope of its UMC authority, instead pursuing enforcement actions without any significant judicial, congressional or even self-imposed limits. And in recent years the Commission has seemingly expanded its interpretation of its UMC authority, bringing a string of standalone Section 5 cases (including against Intel, Rambus, N-Data, Google and others), alleging traditional antitrust injury but avoiding the difficulties of pursuing such actions under the Sherman Act (or, in a few cases, bringing separate claims under both Section 5 and Section 2).

We hope this symposium will provide important insights and stand as a useful resource for the ongoing discussion.

We’ve lined up an outstanding and diverse group of scholars and practitioners to participate in the symposium.  They include:

  • David Balto, Law Offices of David Balto [1] [2]
  • Terry Calvani, Freshfields [1]
  • James Cooper, GMU Law & Economics Center [1] [2]
  • Dan Crane, Michigan Law [1]
  • Paul Denis, Dechert [1]
  • Angela Diveley, Freshfields [1]
  • Gus Hurwitz, Nebraska Law [1] [2]
  • Thom Lambert, Missouri Law [1]
  • Marina Lao, Seton Hall Law [1]
  • Tad Lipsky, Latham & Watkins [1]
  • Geoffrey Manne, Lewis & Clark Law/ICLE [1]
  • Joe Sims, Jones Day [1]
  • Josh Wright, FTC [1]
  • Tim Wu, Columbia Law [1]

The first of the participants’ initial posts will appear momentarily, with additional posts appearing throughout the day. We hope to generate a lively discussion, and expect some of the participants to offer follow up posts as well as comments on their fellow participants’ posts—please be sure to check back throughout the day and be sure to check the comments. We hope our readers will join us in the comments, as well.

Once again, welcome!

I’ll be headed to New Orleans tomorrow to participate in the Federalist Society Faculty Conference and the AALS Annual Meeting.

For those attending and interested, I’ll be speaking at the Fed Soc on privacy and antitrust, and at AALS on Google and antitrust.  Details below.  I hope to see you there!

Federalist Society:

Seven-Minute Presentations of Works in Progress – Part I
Friday, January 4, 5:00 p.m. – 6:00 p.m.
Location: Bacchus Room, Wyndham Riverfront Hotel

  • Prof. Geoffrey Manne, Lewis & Clark School of Law, “Is There a Place for Privacy in Antitrust?”
  • Prof. Zvi Rosen, New York University School of Law, “Discharging Fiduciary Debts in Bankruptcy”
  • Prof. Erin Sheley, George Washington University School of Law, “The Body, the Self, and the Legal Account of Harm”
  • Prof. Scott Shepard, John Marshall Law School, “A Negative Externality by Any Other Name: Using Emissions Caps as Models for Constraining Dead-Weight Costs of Regulation”
  • ModeratorProf. David Olson, Boston College Law School

AALS:

Google and Antitrust
Saturday, January 5, 10:30 a.m. – 12:15 p.m.
Location: Newberry, Third Floor, Hilton New Orleans Riverside

  • Moderator: Michael A. Carrier, Rutgers School of Law – Camden
  • Marina L. Lao, Seton Hall University School of Law
  • Geoffrey A. Manne, Lewis & Clark Law School
  • Frank A. Pasquale, Seton Hall University School of Law
  • Mark R. Patterson, Fordham University School of Law
  • Pamela Samuelson, University of California, Berkeley, School of Law

All of us here at TOTM are thrilled to announce that the Senate yesterday confirmed Josh Wright to be the next Commissioner of the Federal Trade Commission.

As I wrote upon Josh’s nomination:

Josh is widely regarded as the top antitrust scholar of his generation. He is the author of more than 50 scholarly articles and book chapters, including several that were released as ICLE White Papers. He is a co-author of the most widely-used antitrust casebook, and co-editor of three books on topics ranging from Competition Policy and Intellectual Property Law to the Intellectual History of Law and Economics. And he is the most prolific blogger on the preeminent antitrust and corporate law and economics blog, Truth on the Market.

The FTC will benefit enormously from Josh’s expertise and his error cost approach to antitrust and consumer protection law will be a tremendous asset to the Commission — particularly as it delves further into the regulation of data and privacy . His work is rigorous, empirically grounded, and ever-mindful of the complexities of both business and regulation.

I am honored to have co-authored several articles with Josh, and I have learned an incredible amount about antitrust law and economics from him. The Commissioners and staff at the FTC will surely similarly profit from his time there.

We’ll miss him around these parts, but presumably he’ll provide us with plenty of good fodder for the blog.

The New York Times today has an article on approval of medical devices.  The take is that venture capitalists want a more efficient process.  The tradeoff mentioned is between faster approval for investor returns versus safety of devices if they are approved faster.  There is no mention in the article of the benefits to patients and consumers of more rapid availability of medical devices.  The entire literature following the Peltzman analysis delays in drug approval is totally ignored.

We’re delighted to be joined for the next couple of weeks by guest blogger, Hal Singer.

Hal is Managing Director and Principal at Navigant Economics. He has written, thought and advised extensively on antitrust, finance and general regulatory issues.  His SSRN page is here, and it includes co-authors like David Teece, Dan Rubinfeld, Jerry Hausman, Greg Sidak, Bob Crandall, and Bob Litan, among many others. He is the co-author of the book Broadband in Europe: How Brussels Can Wire the Information Society (Kluwer/Springer Press 2005). and his article have appeared in, among there, American Economics Association Papers and Proceedings, Harvard Journal of Law and Technology, Journal of Industrial Economics, Journal of Network Industries, Journal of Regulatory Economics, Review of Network Economics, Topics in Economic Analysis and Policy, and Yale Journal on Regulation. He has also served as Adjunct Professor at Georgetown University’s McDonough School of Business.

On the policy front, his essays have appeared in several leading newspapers and magazines, including Antitrust, Forbes, The Economist’s Voice, Harvard Business Review, Health Affairs, The Milken Institute Review, Regulation, The Wall Street Journal, and The Washington Post. His M.A. and Ph.D. degrees in economics are from the Johns Hopkins University and his B.S. magna cum laude in economics is from Tulane University.

Perhaps of particular interest to our readers, one of Hal’s most recent articles (with Gerald Faulhaber) is on wireless broadband competition and the FCC’s most recent wireless competition report, a not-uncommon subject around here (see, e.g., here).  It’s an excellent paper, and you can find a link to the article and a podcast of Hal discussing the paper with Jerry Brito here.

We look forward to a stimulating set of posts from Hal — and he isn’t shy, so don’t hesitate to weigh in in the comments!

Today at 12:30 at the Capitol Visitor Center, TechFreedom is hosting a discussion on the regulation of search engines:  “Search Engine Regulation: A Solution in Search of a Problem?”

The basics:

Allegations of “search bias” have led to increased scrutiny of Google, including active investigations in the European Union and Texas, a possible FTC investigation, and sharply-worded inquiries from members of Congress. But what does “search bias” really mean? Does it demand preemptive “search neutrality” regulation, requiring government oversight of how search results are ranked? Is antitrust intervention required to protect competition? Or can market forces deal with these concerns?

A panel of leading thinkers on Internet law will explore these questions at a luncheon hosted by TechFreedom, a new digital policy think tank. The event will take place at the Capitol Visitor Center room SVC-210/212 onTuesday, June 14 from 12:30 to 2:30pm, and include a complimentary lunch. CNET’s Declan McCullagh, a veteran tech policy journalist, will moderate a panel of four legal experts:

More details are here, and the event will be streaming live from that link as well.  If all goes well, it will also be accessible right here:

http://www.ustream.tv/flash/viewer.swf

Live Broadcasting by Ustream

Watching Obamacare dissolve in a morass of legal challenges and waivers points out another benefit of markets.   Markets proceed incrementally.  The Internet has made a huge difference in all of our lives.  But the process was gradual.  It began with just a few academic users and then expanded as entrepreneurs figured out next steps.  In 1990 no one planned today’s Internet; no one could have.  There were individual successes, some of which persisted (Amazon) and some of which succeeded for awhile and then failed (AOL).  But the whole thing is a mass of small steps that led to what we have today.  More small steps will lead to tomorrow’s Internet which will be something no one today can foresee.

Obamacare (and many other government efforts) is not incremental.  It is a 2000 page law trying to remake the entire medical system from the top down.  No such system can succeed.  No one can foresee the interactions of all of the parts that are part of this law.

Other proposals for reform — allow interstate sales of medical insurance, cap tax deductibility of insurance premiums — are incremental in nature.  Such proposals allow us to try a small step and see if it works and proceed from there.  We cannot forecast the results of these small steps, but we do not need to.  They are small and easy to reverse if they fail.  Moreover, they leave room for entrepreneurs to modify them in unpredictable ways.  If we allow interstate sales, which models will work best?  No one knows, but lots of people will try to figure it out and some of them will make lots of money and give us a better system.