In my last roundup, I puzzled over the Federal Trade Commission’s (FTC) suit to block Amgen’s acquisition of Horizon Therapeutics. The deal involved no product overlaps whatsoever (i.e., no horizontal competition), a target firm acknowledged to have no competitors for the orphan drugs at issue, and nobody poised to enter into competition either.
I won’t recapitulate the details of my confusion here, but I will point to a new piece by Bill MacLeod (a past chair of the American Bar Association’s Antitrust Section and a former FTC bureau director) and David Evans, in which they raise an issue I didn’t cover: “The Federal Trade Commission may have filed the first merger complaint in a generation that could be dismissed for failure to state a claim.” Which would not look good.
Using UDAP the Right Way
Acknowledging that I carp a lot, and that it’s not all about the fish, here’s what looks like a bona fide consumer-protection case and a win for the FTC and consumers alike. On May 25, the commission announced that:
A federal court sided with the Federal Trade Commission, ruling that James D. Noland, Jr. illegally owned and operated two pyramid schemes—Success By Health (SBH) and VOZ Travel—in violation of the FTC Act and that Noland violated a previous federal court order barring him from pyramid schemes and from misrepresenting multilevel marketing participants’ income potential.
I don’t know all the details, but on a quick look at the matter (and the prior case), it appears they went after cons, not legitimate businesses. And that there were indeed serial violations of the law, including violations of an order dating to 2002. There are frauds and cons out there, and the FTC’s UDAP authority is supposed to address many of them. And perhaps should do so more often.
Data Is Forever, Apparently
Something new from the cabinet of curiosities: a complaint about the end times, or the end of time, or something. In a complaint filed the last day of May, one of the commission’s allegations against Amazon is that:
Alexa’s default settings still save children’s (and adults’) voice recordings and transcripts forever, even when a child no longer uses his Alexa profile and it has been inactive for years.
I’ve been around a while, but forever seems like a really long time. Exactly how many recordings have been saved forever? And how do they know? More plausibly on time’s arrow they say that:
Amazon’s privacy disclosures assert that it designed Alexa with privacy in mind, that Amazon will delete users’ voice and geolocation data (and children’s voice data) upon request, and that Amazon carefully limits access to voice data. But until September 2019, Amazon retained children’s voice recordings and transcripts indefinitely unless a parent actively deleted them.
An indefinitely long time is not an infinite length of time.
There’s more, of course. The complaint alleges that representations about parents’ ability to have information deleted on request were not always and fully honored; that is, some sensitive information was maintained, in some form, notwithstanding deletion requests that should have applied to that information. And more broadly, it’s alleged that sensitive information was maintained longer than is “reasonably necessary,” independent of the question of whether there was a deletion request.
Maybe. I don’t know all the ins and outs of the matter, even as alleged (and couldn’t possibly just by reading the relatively brief complaint). One thing that’s interesting is the theory of harm. So far as I can tell, there’s no allegation of a breach, much less one that led to concrete harms to certain kids or their families. And I don’t see any allegation that the information was improperly sold (or given) to third parties, much less that such disclosures led to further harm. Rather, it’s the possession of personal information—in some form—longer than is “reasonably necessary,” and in some cases, allegedly inconsistent with “representations that [Amazon’s] Alexa and Echo devices ‘are designed to protect your privacy’ and ‘provide transparency and control’ (emphasis in original)” that is deemed to be harmful.
There’s a suggestion that a false (or misleading) assurance was made and—critically, under Section 5—that the assurance was material to consumers (parents), who were “substantially harmed” by the degree to which the firm allegedly failed to live up to those assurances. Perhaps, although in that case I find myself wanting much more texture than the complaint provides.
If a data tree stands in the forest, and somebody asked that some leaves or branches connected to their kids be pruned, but not all such leaves or branches were pruned, or a regulator thinks that certain leaves persist longer than they should, but nobody breaches the . . . ok, this version of the tree-falling-the-forest story is getting complicated. But I’m wondering, among other things, whether there’s a “reasonably necessary” standard that’s been set and, if so, where? And my annoyingly numerical inner child is wondering how one measures and computes damages.
Taking Credit for Nothing in Particular
Same cabinet, different curiosity: on May 24, the FTC seemed to advertise a win in a merger matter:
In response to the announcement that Boston Scientific Corporation and non-vascular stent manufacturer M.I. Tech Co., Ltd. have terminated their $230 million purchase agreement, Federal Trade Commission Bureau of Competition Director Holly Vedova issued this statement: “I am pleased that Boston Scientific and M.I. Tech have abandoned their proposed transaction in response to investigations by FTC staff and our overseas enforcement partners. The FTC will not hesitate to take action in enforcing the antitrust laws to protect patients and doctors. I would like to thank the entire FTC team for their excellent work on this matter.”
Ok, but why? By all means, the FTC is charged to enforce the antitrust laws and, pace certain nontrivial disagreements about what those laws say, should not hesitate to do so. I’m certainly not arguing that the staff didn’t do excellent work. Many truly fine and experienced staff remain at the FTC (an alarming number of departures notwithstanding), and I’ve no reason to assume that staff in the Bureau of Competition did anything but excellent work here.
And I’m not arguing that the FTC was wrong to open the investigation or that they would have been wrong to file a complaint seeking to block the merger, had they done so. I have no idea one way or the other. But I don’t see anything in the press release about a complaint, much less a final decision. True, there’s work preliminary to opening an investigation, so there’s that, but I don’t see any allegation that the merger was likely to harm competition and consumers (“doctors and patients”) or that the commission had decided that it was (or had decided to authorize issuance of a complaint alleging that it was).
So . . . leaving aside the question of whether risk of antitrust liability is what drove the parties to abandon the merger, I wonder whether the announcement concerns a good result or an unfortunate one. If it’s a win for the FTC, was it a win for competition and consumers? We’ve not yet seen a policy statement suggesting that all mergers are anticompetitive, have we? Or is that in the new merger guidelines that will drop whenever they drop?
Erin Go Blech
There are goings-on at the U.S. Justice Department’s Antitrust Division, but this time, for another agency, it’s hands-across-the-water on the Ireland/EU Meta fine. My ICLE colleague Kristian Stout wrote about it here. My two quick takes:
- Oy, he’s right to worry; and
- Are penalties supposed to bear some relationship to actual harms, or are they supposed to be arbitrary exercises of international taxation?
Over the ocean and into the pockets.
An Interesting Query
Over on that Muskiest of platforms (mea culpa/s’lach lanu/my bad), my ICLE colleague Brian Albrecht tweets an inquiry:
Did we ever learn what the FTC found in its investigation, which started at the end of 2021, into supply chain disruptions and inflation?
— Brian Albrecht (@BrianCAlbrecht) May 31, 2023
It’s a fair question, but I don’t have much useful to say in response. I was at the commission through last August, but cannot share any nonpublic information I might have acquired during my time there. I can, however, point readers to the announcement of the inquiry (also termed a “study”), which contains links to the model 6(b) orders sent to manufacturers, distributors, and retailers (three of each, named by the FTC in the announcement).
And I can reply to my colleague’s question with another question: Do you think that any economists were harmed, or even mildly inconvenienced, in the design of that study? Not counting Marta Wosinska, who didn’t resign her post as director of the FTC’s Bureau of Economics until nearly several months later, and, according to rumors reported in Politico, over issues to do with a different inquiry entirely.
