FTC Chairman Pitofsky Discusses Challenges to Antitrust Enforcement in the High-Tech Era

Calls Relationship Between Antitrust and Intellectual Property "Unresolved Issue at the Heart of the New Economy"

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In prepared remarks delivered today before the Berkeley Center for Law and Technology at the University of California, Berkeley, Federal Trade Commission Chairman Robert Pitofsky asserts a continuing important role for antitrust, but also discusses "the need to adjust competition policies to the realities of the 'New Economy.'"

In the speech to be delivered at noon local time and titled "Antitrust and Intellectual Property: Unresolved Issues at the Heart of the New Economy," Pitofsky discusses some of the challenges confronting antitrust enforcement in a high-tech economy. These include the tension between intellectual property and traditional antitrust principles, the potential incompatibility between the fast-changing marketplace and the slower pace of antitrust review and the high degree of technical knowledge necessary for enforcers to properly carry out antitrust reviews of technology companies. According to Pitofsky, "[W]hile much remains to be done, my contention is that antitrust has made significant progress in understanding the 'New Economy' and adjusting its policies to take more fully into account the need to protect both incentives and opportunities to innovate."

Pitofsky acknowledges some of the significant advantages intellectual property rights provide to consumers - such as improvements in efficiency, particularly efficiencies in innovation - "which may produce consumer benefits that dwarf any loss of competition leading to higher prices or fewer discounts." However, Pitofsky states "[T]he issue is not so much whether incentives to innovate should be protected - all agree on that - but how much protection is justified."

Pitofsky reviews some of the key cases before the FTC during his tenure as Chairman - such as Hoechst-Andrx, Abbott-Geneva, Intel, Dell Computers, and AOL/Time Warner. He argues in these cases, the FTC "has tried to ensure that conventional antitrust enforcement is sensitive to incentives to innovate. In some instances the enforcement action itself was designed to discourage behavior that was alleged to suppress other people's intellectual property rights (Intel and Dell); in others it was designed to pursue conventional enforcement but with attention to avoid overreaching that would undermine incentives to innovate (AOL/Time Warner)."

In the final part of his speech, Pitofsky addresses one of the basic challenges to antitrust enforcers in the "New Economy": that the old-economy regulatory bureaucracy is unable to deal with the fast-paced, highly technological developments in this new era. His answer to the question of "is antitrust up to the challenge?" is a qualified "yes."

Copies of Chairman Pitofsky's remarks are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll free at 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Eric London

Office of Public Affairs


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