Vigorous Enforcement of Antitrust Laws, Guided by Economic Analyses, Protects Consumers
Providing Federal Trade Commission testimony today before the U.S. House Judiciary Committee’s Antitrust Task Force, Chairman Timothy J. Muris outlined the principles that underlie the FTC’s competition agenda and described a wide range of Commission antitrust accomplishments achieved over the past year in both the merger and non-merger areas. “To maximize our success,” Muris said, “we need to articulate both our substantive aims and the strategies that we employ to achieve them. By doing so, we can be proactive rather than reactive, and we can better protect consumers.”
The Commission’s testimony began with an overview of the FTC’s strategic framework regarding its antitrust enforcement efforts. The key elements of this framework are: 1) concentrating on those segments of the economy that have the biggest impact on consumers, currently health care, energy, and technology-related markets, and on conduct that poses the largest threat to consumer welfare; 2) taking full advantage of the “unique broad set of powers” that Congress has given the FTC, including law enforcement, research and reporting, and advocacy on behalf of consumers and competition; 3) recognizing that the scope of the FTC’s activities are as important as their content – that is, while certain immunities from antitrust laws are necessary and appropriate, undue expansion of those immunities harms consumers; 4) conveying to the public, with as much clarity as possible, the FTC’s policies and standards it applies in making antitrust decisions; and 5) assisting and cooperating with competition agencies in countries worldwide.
The testimony next described the Commission’s competition workload, asserting that merger enforcement continues to be a major focus of the FTC’s efforts. At the same time, in the post-merger boom of the past three years, the FTC “has worked to reinvigorate its non-merger enforcement program” as well, opening 56 new investigations in 2001 and another 59 in 2002. As a result of this increased activity, the testimony stated, the Commission has taken 16 non-merger enforcement actions to date in FY2003, more than in any year since 1980, and eight non-merger matters are currently in administrative litigation.
The testimony continued by focusing on the key sectors of the economy in which the Commission conducts its antitrust oversight and enforcement, including health care, energy, and technology, as detailed below.
Health Care. Over the past year, the FTC investigated a variety of mergers affecting the U.S. pharmaceutical industry, including reaching a settlement that allowed Pfizer, Inc., the largest drug company in the world, and Pharmacia Corporation to merge, while remedying alleged anticompetitive effects in nine separate product markets. The Commission also reviewed and conditionally cleared the mergers of Baxter and Wyeth and Amgen and Immunex in the injectable anesthetic and biotechnology markets, respectively.
In addition, the Commission continued to investigate and bring enforcement actions against drug firms’ efforts to thwart competition from generic entrants. These included first-generation cases involving agreements not to enter or compete, and second-generation cases involving improper listings in the FDA’s Orange Book, as well as anticompetitive agreements among generic drug manufacturers.
Other merger enforcement actions involving health care included the FTC seeking a preliminary injunction blocking Cytyc Corporation’s proposed acquisition of Digene Corporation, after which the two manufacturers of complementary cervical cancer screening tests abandoned the proposed transaction. The Commission also has settled with seven doctors’ groups in the past three months alone for allegedly colluding to raise consumers costs, has held a series of hearings on health care and competition law and policy, and has continued its evaluation of the competitive effects of consummated hospital mergers in several cities.
Energy. In the energy arena, the Commission has conducted in-depth studies of evolving energy markets and investigated numerous oil company mergers. Law enforcement actions involving energy included oil merger investigations such as Conoco/Phillips, in which the FTC required the merged company to divest certain assets to protect competition in the post-merger environment. The FTC also has reviewed and conditionally cleared mergers in the natural gas production and transportation markets, and issued an administrative complaint against Unocal for allegedly subverting the California Air Resources Board (CARB) regulatory standards-setting procedures in the late 1980s relating to low-emissions reformulated gasoline.
In addition, the testimony details other FTC initiatives related to the energy industry, including two public conferences conducted in August 2001 and May 2002 held to examine the price of refined petroleum products in the United States, as well as an ongoing nationwide gasoline price monitoring project to identify possible anticompetitive activities and determine whether law enforcement investigations would be warranted.
Technology. In the area of technology, the testimony outlines FTC law enforcement actions such as a complaint issued in June 2002 against Rambus, Inc. for allegedly abusing the standards-setting process while a participant in the development of such standards. The matter is currently pending before an administrative law judge at the Commission.
Other technology initiatives include FTC intellectual property hearings held jointly with the Department of Justice in 2002 and the work of an Internet task force that has been analyzing state regulations that may have pro-consumer or pro-competition rationales, as well as barriers that arise when parties use potentially anticompetitive tactics to restrict sales. The Commission also recently conducted an Internet competition workshop, has been involved in e-commerce advocacy efforts, and has issued a report on the competitive issues related to the sale of wine on the Internet.
Finally, the testimony addressed the scope of the Commission’s antitrust authority, including when immunity may be appropriate under the State Action and Noerr-Pennington doctrines. The testimony also provides information on the Commission’s efforts to improve internal competition-related processes and transparency and an overview of international FTC competition activities, new initiatives, enforcement actions, and assistance.
Concluding the FTC’s testimony, Muris said, “We believe that the Commission’s antitrust enforcement has demonstrable benefits for consumers and the American economy – benefits that far outweigh the resources allocated to maintaining our competition mission.” The FTC vote to approve the testimony and place a copy on the public record was 5-0. The written statement presented by the Chairman at the hearing represents the views of the FTC.
The FTC’s Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580, Electronic Mail: firstname.lastname@example.org; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published “Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws,” which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
(FTC File No. P859910)
Office of Public Affairs
Bureau of Competition