FTC to Host Public Workshop to Explore Possible Anticompetitive Efforts to Restrict Competition on the Internet

On October 8-10, 2002, the Federal Trade Commission will host a three-day public workshop to explore how certain state regulations and private business practices may be having significantly anticompetitive effects on e-commerce. Some private estimates suggest that the potential costs to consumers of these anticompetitive restrictions "may exceed $15 billion annually."

A Federal Register Notice, to be published July 19, explains that many states have enacted regulations that may have the effect of protecting local bricks-and-mortar merchants from new Internet competitors. For example, some states prohibit online sales of certain products or require that e-businesses maintain a physical office in their state. Industries in which significant restrictions on Internet commerce have been alleged include retailing, the sale of automobiles, cyber-charter schools, real estate and mortgages, health care, pharmaceuticals, telemedicine, the sale of wine, auction services, the sale of contact lenses, and the sale of caskets. All of these restrictions may contribute to sound public policy, or they may constitute attempts by existing industries to forestall the entry of Internet competitors and impede new forms of competition.

"Similarly, some private companies have engaged in conduct that may raise antitrust issues," the Notice continues. For instance, some dealers do not list prices for certain items they sell online; others refrain from selling certain items in their product line over the Internet at all, and urge competitors to follow suit. Again, some or all of these restrictions could be justified as procompetitive, or they could prove anticompetitive upon closer examination.

"Robust competition is vital to our economy, and reducing the barriers to e-commerce dramatically could increase competition and benefit consumers," said FTC Chairman Timothy J. Muris. "E-commerce has tremendous potential, especially if anticompetitive barriers to dynamic new forms of Internet competition can be understood and eliminated," added FTC's Director of Policy Planning Ted Cruz.

The Notice explains that the workshop will have panels composed of representatives from industry, academia, state and federal government agencies, and independent public policy organizations. The panels will address specific industries, which may include retailing, automobiles, cyber-charter schools, real estate and mortgages, health care, pharmaceuticals, telemedicine, wine sales, auctions, contact lenses, and casket sales. "Each of these industries has experienced some growth in commerce via the Internet, but according to various commentators, each also may have been hampered by state regulation or anticompetitive business practices. . . . In addition, these industries involve goods and services that comprise a very large portion of a consumer's budget, such as homes, cars, schools, and health care," according to the Notice.

The FTC is seeking public comment on questions posed for each of the listed industries and soliciting additional questions and industries that should be addressed. Proposed questions or other comments can be sent to ecompetition@ftc.gov.

The workshop will take place October 8-10, 2002 at FTC headquarters, 600 Pennsylvania Avenue, N.W. Washington, D.C.

(FTC File No. P010101)