Markets Wired

In testimony before a U.S. House of Representatives subcommittee, the Federal Trade Commission explained how it protects consumers by applying well-established principles of competition to fast-changing technology markets.

“Some have argued that there should be different rules for markets characterized by rapid technological development, but Congress drafted the antitrust laws in general terms to accommodate changing markets and new products, and the laws are flexible enough to meet the challenges of the high-tech era,” said Bureau of Competition Director Richard Feinstein, testifying on behalf of the FTC before the House Committee on the Judiciary, Subcommittee on Courts and Competition Policy.

The testimony discusses two recent FTC matters to illustrate the agency’s flexibility in investigating and bringing enforcement actions in high-tech markets. Last year, the FTC charged Intel Corporation with using unfair methods of competition dating back to 1999 to stifle competition. The agency recently reached a settlement with the company that will help restore lost competition and prevent Intel from suppressing competition in the future, while allowing the company to compete aggressively.

Also last year, the FTC investigated Google’s proposed acquisition of mobile advertising firm AdMob and ultimately decided not to oppose the transaction. The Commission initially had concerns that the loss of head-to-head competition between the two leading mobile advertising networks would harm competition. However, Apple’s acquisition of the third-largest mobile ad network, Quattro, and the introduction of its own mobile advertising network, iAd, indicated that Apple would quickly become a strong player in the mobile advertising market.

The investigation provided an example of how the agency addresses rapidly changing technology markets, in which there is sometimes a short track record of past competition and great uncertainty about the future path of the market.

Going forward, the testimony states, the FTC’s merger reviews will continue to focus on market facts to predict how competition is likely to take place in the future. While that may be slightly more challenging in markets that are experiencing rapid change, “the Commission relies on time-tested tools . . . to protect consumers from anticompetitive mergers, and promote competitive markets where innovation and change can occur.”

The FTC vote approving the testimony and its inclusion in the formal record was 4-0, with Commissioner William E. Kovacic abstaining. The testimony can be found on the FTC’s website at http://www.ftc.gov/os/testimony/100916digitalagetestimony.pdf.

Copies of the Commission’s testimony are available from the FTC’s website at http://www.ftc.gov. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. P9859910)
(High-Tech Testimony.final.wpd)