FTC Seeking Input on Topics to be Explored at Public Hearings on Competition and Consumer Protection in the 21st Century

The Federal Trade Commission announced on June 20 that it “will hold a series of public hearings on whether broad-based changes in the economy, evolving business practices, new technologies, or international developments might require adjustments to competition and consumer protection enforcement law, enforcement priorities, and policy.” The FTC will model the hearings after the agency’s 1995 public hearings, which also solicited input on a variety of policy issues from business leaders, academics, and other interested parties. The 1995 hearings resulted in influential policy statements on joint ventures and the treatment of efficiencies in merger review. The upcoming hearings likewise aim to stimulate “evaluation of the FTC’s near- and long-term law enforcement and policy agenda” and “identify areas for enforcement and policy guidance.”

Opportunity to Participate in Important Policy Developments

The hearings will provide interested companies an opportunity to engage with antitrust regulators on key issues that will shape the future of antitrust enforcement, and by implication, the scope of permissible business conduct.  The FTC is soliciting public comments on the following topics through August 20.

1. The state of antitrust and consumer protection law and enforcement, and their development, since the 1995 hearings;
2. Competition and consumer protection issues in communication, information, and media technology networks;
3. The identification and measurement of market power and entry barriers, and the evaluation of collusive, exclusionary, or predatory conduct or conduct that violates the consumer protection statutes enforced by the FTC, in markets featuring “platform” businesses;
4. The intersection between privacy, big data, and competition;
5. The Commission’s remedial authority to deter unfair and deceptive conduct in privacy and data security matters;
6. Evaluating the competitive effects of corporate acquisitions and mergers;
7. Evidence and analysis of monopsony power, including but not limited to, in labor markets;
8. The role of intellectual property and competition policy in promoting innovation;
9. The consumer welfare implications associated with the use of algorithmic decision tools, artificial intelligence, and predictive analytics;
10. The interpretation and harmonization of state and federal statutes and regulations that prohibit unfair and deceptive acts and practices; and
11. The agency’s investigation, enforcement, and remedial processes.

In addition to a general call for public comments, the FTC will also solicit comments in advance of specific hearings and at the conclusion of the hearings, and invite business leaders to participate in the hearings themselves.

The hearings come at a critical juncture, as antitrust agencies are facing technological advances, new economic thinking, and questions from politicians and academics about the proper role of antitrust. These changes raise questions about the application of antitrust enforcement policies to certain conduct, now and in the future. The hearings offer companies an opportunity not only to monitor the discussion, but to take part in conversations about policies that will have a direct effect on their businesses.

Focus on Technology Companies Operating Multi-Sided Platforms 

The hearings will affect companies across all economic sectors, but FTC Chairman Joe Simons plans to focus in particular on large technology platforms. Platforms connect two or more groups and allow them to transact with each other: some examples are ride-sharing applications that connect riders with drivers; operating systems that connect application developers with application purchasers; social networking sites that connect advertisers, application developers, and consumers; and online marketplaces that connect buyers and sellers.            

The FTC defined three topics of particular relevance in this area: 

• Topic 3: “The identification and measurement of market power and entry barriers, and the evaluation of collusive, exclusionary, or predatory conduct or conduct that violates the consumer protection statutes enforced by the FTC, in markets featuring ‘platform’ businesses.”
  
  • Platform businesses serve customers on two or more sides of the platform, and this “two-sidedness” can have a profound effect on both legal and economic antirust analysis. Two-sidedness is still a very new area in antitrust law with little settled policy or precedent.¹ The hearings may play a key role in clarifying the antitrust approach to two-sided platforms.
• Topic 4: “The intersection between privacy, big data, and competition.”
  
  • The FTC has expressed particular interest in several subjects including, among others:
    • Data as a dimension of competition or a potential barrier to entry;
    • Privacy as a dimension of competition (i.e., do platforms compete on privacy the same way other businesses may compete on price); and
    • The costs and benefits of privacy regulations.
• Topic 6: “Evaluating the competitive effects of corporate acquisitions and mergers.”
  
  • The FTC is looking beyond mergers between direct competitors and is looking for comments on:
    • Vertical and conglomerate mergers;
    • Mergers between potential competitors (i.e., mergers where the acquired company does not currently compete with the purchaser but has plans to do so in the future); and
    • “The identification and evaluation of differentiated but potentially competing technologies, and of disruptive or generational changes in technology, and how such technologies affect competitive effects analysis.”
  • Agency policy on these subjects will determine the antitrust risk in large companies acquiring start-ups with promising technology.
    

  Other subjects flagged by the FTC that are likely to be significant to technology companies include: the role of intellectual property and competition policy in promoting innovation and the use of algorithmic tools, artificial intelligence, and predictive analytics in advertising and other business contexts.

  To access the FTC’s notice, click here.

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  ¹ On June 25, the Supreme Court ruled in Ohio v. American Express Co. that courts must take into account both merchant and cardholder sides of the credit card platform when evaluating the competitive effects of credit card anti-steering rules. While the opinion shows that two-sidedness dramatically impacts traditional antitrust rule of reason analysis of credit card vertical restraints, many questions remain about how courts will treat other conduct and other platforms.

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  This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Katrina Robson, an O'Melveny partner licensed to practice law in California and the District of Columbia, Ian Simmons, an O'Melveny partner licensed to practice law in the District of Columbia and Pennsylvania, and Sergei Zaslavsky, an O'Melveny counsel licensed to practice law in the District of Columbia and Maryland, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
  
  
  
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