House Subcommittee Questions Impact Net Neutrality Order, Section 5 Have on FTC Antitrust Authority
Lawmakers questioned antitrust officials Friday on how the FCC net neutrality order affected their agencies, the FTC 2013 decision not to sue Google and the commission's Section 5 authority over unfair and deceptive practices. Comcast's recently abandoned takeover of Time Warner Cable also came up at the House Regulatory Reform, Commercial and Antitrust Law Subcommittee hearing, as did mergers and acquisitions generally and cybersecurity. FTC Chairwoman Edith Ramirez said staffers are in the final stages of assessing information collected in the study of patent assertion entities. The commission voted in 2013 to begin collecting comments on PAEs (see report in the Sept. 30, 2013, issue).
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House Judiciary Committee Chairman Bob Goodlatte, R-Va., questioned Ramirez on whether the net neutrality order would diminish FTC and Justice Department ability to use antitrust authority and protect consumers. Ramirez responded by urging Congress to repeal the common-carrier exemption. DOJ Antitrust Division Assistant Attorney General Bill Baer discussed Comcast/TWC in his opening statement. The biggest "headline" for DOJ is that “Comcast and Time Warner Cable abandoned a merger that risked making Comcast an unavoidable gatekeeper for Internet-based services that rely on a broadband connection to reach consumers,” Baer said. He added that his division continues to focus on antitrust enforcement in online and brick-and-mortar markets.
Committee ranking member John Conyers, D-Mich., said antitrust enforcement efforts and strategies should be reexamined given there have been 12 telecom deals since 1997. Subcommittee ranking member Hank Johnson, D-Ga., used his opening statement to thank the FTC for its work on consumer privacy and for helping make President Barack Obama’s administration’s consumer protection goals a reality. “Consumer privacy is a key issue of our time” and will grow increasingly complicated as more things become connected, he said.
The FTC predominantly uses the Sherman and Clayton acts in most antitrust cases it brings, Ramirez testified, in a statement approved 5-0 by the agency's members. The commission exercises considerable restraint when bringing stand-alone Section 5 cases, she said. When asked by legislators such as Rep. Darrell Issa, R-Calif., if she would consider creating a formal process for Section 5 use, as proposed by Commissioner Joshua Wright, Ramirez said the commission is considering formal guidelines. Issa thanked the FTC for giving ex-Tiversa employee Rick Wallace whistleblower protection so he could testify in the agency’s case against LabMD that Tiversa often falsified information such as whether a data breach occurred (see 1505050050).Issa questioned whether the FTC should focus more on companies that troll the Internet, scraping data through high-tech, hijacking-like extortion and causing breaches, instead of on companies suffering a breach. Ramirez was interrupted before she could respond.
At DOJ, a growing concern is use of technology to manipulate pricing, said Baer. “We recently secured a guilty plea in a case involving two companies using complex algorithms to fix prices for poster art online,” Baer said. “American consumers have the right to a free and fair marketplace online.” Baer said DOJ and the FTC “appreciate the value that antitrust guidance can provide to industry as new business models and technologies emerge.” In April 2014, DOJ “issued a joint policy statement with the FTC to clarify that properly designed cyber threat information sharing is not likely to raise antitrust concerns,” he said. “We subsequently issued a business review letter stating that the division would not challenge a proposal by a company seeking to offer a cyber intelligence data-sharing platform that allows members to share threat and incident data about cyber attacks.”
The FTC’s antitrust doctrine system has worked well for the agency's 100-year existence, Ramirez said. In the past 20 years, the FTC has won 11 of the 13 appeals in the antitrust arena, she said. Undermining the agency’s antitrust doctrine would be a mistake, Ramirez said. She said stand-alone Section 5 authority can be developed on a case-by-case basis and that it’s an issue the FTC takes seriously. Recent enforcement actions at the FTC include “stopping an allegedly illegal invitation-to-collude between two resellers of Internet bar codes,” Ramirez said. She said that the ongoing patent study "should provide a better understanding of how PAE organization and activity may affect innovation and competition,” Ramirez said.
In regard to Goodlatte’s questions about The Wall Street Journal’s ability to obtain documents that led to questions on why the FTC opted to not file an antitrust lawsuit against Google, Ramirez said the FTC regretted the inadvertent disclosure of documents as part of its investigation into the company. A thorough review has been conducted and the agency has taken several steps to ensure that such a disclosure never happens again, Ramirez said.