Speaking at ABA Fall Forum, FTC Chairman Discusses Evolution of Antitrust Enforcement And Its Impact on Decision-Making

Speaking yesterday at the Annual Fall Forum of the American Bar Association's Section of Antitrust Law in Washington, DC, Federal Trade Commission Chairman Timothy J. Muris said that the history of competition policy can and should inform government enforcement practice in two key respects. First, this history provides an accurate view of how federal antitrust agencies exercised their authority in the past to help them formulate normative proposals for how they should use their resources in the future. Second, historical analysis involves interpreting past experiences to develop an understanding of why the agencies made specific policy choices and why their initiatives succeeded or failed.

Muris's remarks today focused on three primary aims: 1) to describe how federal antitrust law enforcement has evolved since 1961, emphasizing what FTC Commissioner Thomas Leary has called the "essential stability" of competition policy since 1981; 2) to assess why antitrust law enforcement patterns evolved as they have, to illuminate strengths and weaknesses in decision making; and 3) to make suggestions regarding how modern experience can inform future policy making.

Muris began his remarks by noting that "changes in leadership routinely inspire discussion about future policy." He stressed that when he returned to the FTC 30 months ago, he predicted that "my initiatives would feature substantial continuity with my predecessor, Bob Pitofsky." He stated that this prediction was met with disbelief by some, but that this skepticism was based on faulty premises.

Muris noted that the source of this skepticism was an uncritical acceptance of "the pendulum narrative of modern enforcement," which classifies the last 40 years of antitrust enforcement into three phases: too active before the 1980s, too passive in the 1980s, and properly moderate in the 1990s.

In fact, this narrative is bankrupt, he said. "Modern experience does not feature dramatic shifts in antitrust enforcement." Instead, "there was a paradigm shift, led by the academy and the courts," with government agencies the last to shift, and that "the institutional forces that create continuity help explain why our competition system has escaped the mistakes of its past and has built on prior successes." Muris then presented data to show why the pendulum narrative fails, even when based on simple case counts.

In presenting a review of enforcement trends over the past 40 years, Muris stated that specific lessons can be derived from "a more careful examination of modern enforcement activity," and that "these lessons can improve our understanding about how to formulate sensible policies." It is an "error for an antitrust agency [to ignore] developments in economic learning and industry conditions that undermine enforcement programs," he said. Muris noted "the experience with dominant firm misconduct in the 1970s" is an example of such an error. Another error, he said, is "the failure to evaluate an agency's competition policy commitments in light of its institutional capabilities." The shared monopoly cases of the 1970s are an example: "If you believe it was sensible to try one shared monopoly case . . . was it wise to begin a second bet-your-agency case of the same type . . . and then start . . . [an] investigation contemplating a third?"

Muris also credited Pitofsky for the "keen insight" of using Commission hearings and workshops as policy making instruments. Muris stated that these beneficial activities have been continued, with a corresponding expansion of the reliance on administrative litigation and "attention to seeking synergies and policy lessons in the integration of competition policy and consumer protection." He also stressed the importance of continued cooperation and coordination between U.S. and European antitrust policy makers.

Concluding his remarks, Muris said, "In the past two years, we have devoted considerable attention to the historical evolution of competition policy. Today, I have described good policy as, in part, the result of cumulative development over time. Our history is forward-looking as well . . . There is an urgency to see that the competition policy community and new agency leaders understand the past. Strong future policy builds on this understanding and on a sound interpretation of intellectual and institutional forces that account for changes in emphasis and activity over time. So it is that history should, and does, inform practice."

Copies of the Chairman'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, DC 20580. 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, D.C. 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the competition laws that the Commission enforces, the FTC 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.