The state of antitrust and consumer protection law and enforcement, and their development, since the Pitofsky hearings #FTC-2018-0048-D-0125

Submission Number:
Justus Baron
Initiative Name:
The state of antitrust and consumer protection law and enforcement, and their development, since the Pitofsky hearings
In this comment we suggest a topic that implicates the matters directly in item 8 (The role of intellectual property and competition policy in promoting innovation), and also in items 2 (Competition and consumer protection issues in communication, information, and media technology networks) and 11 (The agencys investigation, enforcement, and remedial processes). In particular, we urge the FTC to include the intersection of antitrust law and the activities of Standard Development Organizations (SDOs) as the topic of one or more of its hearings. Technology standards play an important role for innovation, competition, and consumer welfare. At the same time, antitrust agencies around the world have long been concerned about the potential for anticompetitive abuses in SDOs. We believe that it is time to reassess whether existing antitrust guidance and enforcement practice with respect to standard setting are up to the challenges of the 21st century. There is a large diversity in standard development processes, and an even larger diversity in SDO processes for making decisions on policies. These decisions shape the competitive processes in important markets around the world. In light of the far-reaching impact of SDO policy making and the intrinsic potential for anticompetitive outcomes, there is surprisingly little legal guidance on SDO decision making processes. We urge the FTC to address the proper resolution of the issues surrounding SDOs and the attendant uncertainty in one of its Hearings. The following is a non-exhaustive list of open questions that we believe should be addressed in order to provide more comprehensive and up-to-date guidance to SDOs and SDO participants. - Processes for developing rules and polices: Not only standard development processes, but also processes for defining SDO rules and policies, present opportunities for anticompetitive abuses and may deserve antitrust scrutiny. Nevertheless, there is currently no guidance from antitrust agencies or courts how to evaluate processes for developing SDO rules and policies. - Competition between SDOs: Our research and ongoing policy discussions with respect to the antitrust implications of SDOs highlight the important benefits of SDO diversity for consumer welfare. We would welcome a general discussion whether antitrust agencies should be concerned with preserving competition among SDOs (and between SDOs and other means of achieving interoperability). There is currently only very limited guidance to assess cooperation among SDOs, SDO coordination on common rules, SDO mergers, and other collaborative schemes that may potentially restrict the range of competitive options available for developing technological standards. - Ancillary organizations: There is a large number of organizations participating in standard development in a variety of ancillary roles, e.g. consortia, special interest groups, trade associations and industry forums. Our research reveals that these organizations can play an important role in facilitating consensus-building among SDO members. Nevertheless, coordination among SDO members in ancillary forums may lead to 'bloc voting' and restrict other members' effective ability to participate in standard development. Given the large number of additional forums complementing the work of SDOs on technical and policy issues, we see a need to formulate best practices and legal guidance for this interaction. - Consensus v. Diversity of processes: Open and consensus-based processes may be less likely to give rise to antitrust concerns than decisions reached by closed and unbalanced SDO governance bodies. Nevertheless, requiring each SDO to seek general industry consensus on its rules and processes may conflict with the important goal of encouraging a meaningful diversity of SDO processes, and curtail SDOs' ability to prevent and sanction anticompetitive conduct of its members. We believe that there is currently insufficient guidance to determine under what circumstances SDOs should be allowed or even required to make important decisions in the absence of broad consensus. The importance of these and other questions related to SDO decision making has become salient in the context of discussions on SDO policies for IPR. Nevertheless, we believe that questions regarding the proper application of antitrust policy to SDOs are relevant for a much larger range of issues. We trust that the FTC is already well aware of the specific questions relating to the disclosure and licensing of Standard-Essential Patents. We do however see a need for more encompassing guidance regarding the analysis of coordination and collusion in SDOs, and encourage the FTC to use the upcoming hearings to initiate an overdue debate on the complicated and important questions raised by evolving industry practices in the development of technology standards.