Forces of globalization and innovation that have been rippling through our economy for more than 200 years are now ripping up the established terrain of many economic sectors. Whether driven by improvements in computers, biotechnology, communications or other technologies, tumbling transportation costs, falling regulatory barriers or freer domestic and international capital markets, increasing globalization and rapid innovation are profoundly altering the marketplace. These changes create new possibilities and raise new problems for consumers, businesses, and government agencies. It is in everyone’s interest that government understand these developments in order to make sure that the marketplace continues to work competitively for businesses and consumers.
Beginning in October 1995, the Federal Trade Commission held two months of public hearings on these issues. The Commission’s power to investigate and make public marketplace developments was the basis for these groundbreaking hearings on how globalization and innovation are affecting the economy and what, if anything, this agency should do to keep pace with these developments.
For competition policy, this staff report analyzes and makes recommendations on how to continue the FTC's missions in light of increased global and innovation-based competition. Although the report proceeds from hearings testimony and proposals, its analysis relies on many other sources as well, including case law and policy, empirical data and research literature, and discussions with FTC staff within the Bureaus of Competition, Consumer Protection, and Economics. Our goal was to articulate recommendations that would effectively ensure the competitiveness of U.S. markets without imposing unnecessary costs on private parties or governmental processes. In the consumer protection area, discussed in Volume II, where the hearings explored new and still evolving technologies and their impact on consumers, the staff report does not make specific recommendations. Based on the hearings record, it reports the views of the hearings participants on the changing marketplace, emerging consumer protection issues, and possible approaches to address those issues. The report will be used to assist Commission staff in planning a consumer protection agenda and will be followed by a report next year on the steps taken to address issues raised during the hearings.