A Separate FTC Section 2 Report?

Josh Wright —  28 September 2008

[UPDATE: I misread Kroes’ speech in a rush.  As a loyal blog reader points out, Kroes was obviously referring to the European Commission’s release of its own report, not the Federal Trade Commission.  Oops.]. 

I’ve discussed some problems with the FTC statement in response to DOJ’s release of the Section 2 Report.  In particular, I criticized some of the anti-economic rhetoric in the FTC statement.  I wrote:

What really bothers me is  the Commissioners’ failure to consider, at least seriously consider, the evidence and engaging in this anti-economic rhetoric all while taking the DOJ to task for misstating the consensus….I consider these conclusions tentative, but I would be quite disheartened if I were an economist at the FTC in light of some of the anti-economic rhetoric in the Statement and elsewhere, as well as the fact that it attracted 3 out of 4 Commissioner votes.  In related news, I also suspect that this sort of anti-economic rhetoric significantly weakens the ability of our agencies to persuade international competition agencies to engage in serious “effects-based” analysis.

That last sentence was just speculation.  Of course, everybody says they are doing “effects-based” analysis so it is difficult to tell when any progress is made on this front.  It will take some time before we know the impact of this scuffle, if any, on international efforts to increase convergence with respect to monopolization law. Perhaps the worst possible outcome is that the FTC and DOJ announce completely divergent approaches to Section 2 enforcement.  Interestingly, Nellie Kroes recent (September 25) speech at Fordham, amongst other things, hints at the release of a separate Commission report [JW: The European Commission, not the FTC … I misread this].  Perhaps this wasn’t a secret.  Kroes noted that the DOJ Report “together with the Commission’s own forthcoming document” would “provide a vital opportunity to debate serious issues underlying enforcement policy in unilateral conduct.”

The potential release of a separate FTC report strikes me as an interesting development. The original FTC statement noted a few examples of disagreement with the DOJ Report.  Will the new FTC Report be a comprehensive treatment of the FTC’s view of Section 2?  Will monopolization enforcement depend on which agency is involved?  That can’t be what the agencies had in mind when they kicked off the Section 2 hearings.  At the opening of those hearings, then Chairman Majoras noted that:

[D]isagreement among competition authorities about how to treat unilateral conduct produces uncertainty in national and world markets, reducing market efficiency and imposing costs on consumers.

I’m fairly certain the aim of that statement was European and other international competition agencies.  But it takes on quite a different meaning in light of the recent inter-agency developments in Section 2 enforcement.