FTC Chairman Pitofsky Speaks on The Application of Antitrust Law to The New Economy

In prepared remarks delivered today before the American Antitrust Institute Conference: An Agenda for Antitrust in the 21st Century at the National Press Club in Washington, D.C., Federal Trade Commission Chairman Robert Pitofsky discussed the challenges of applying antitrust laws enacted in the 19th and 20th centuries to the dynamic and fast-moving developments of the 21st century. Pitofsky argues that the core principles of antitrust law are still valid today, and that these principles should not be abandoned when dealing with today's high-tech economy.

Pitofsky's speech presents a point-by-point rebuttal of three prominent arguments advanced to support the claim that the current antitrust laws should not be applied to the high-tech sector of the economy: the durability of market power in the high-tech sector; the need to protect incentives to innovate; and the claim that high-tech industries operate in ways that are unprecedented in industrial economies.

The remarks also address the century-old relationship between antitrust and intellectual property - "complementary regimes, both designed to encourage innovation through appropriate limits." Pitofsky states that since intellectual property is "now a principal, if not the principal, barrier to new entry in high-tech markets," it is more important than ever to ensure intellectual property law is not interpreted in a way that distorts the "traditional balance" between the two regimes.

Pitofsky raises concern over recent court cases that may have "upset that traditional balance in a way that has disturbing implications for the future of antitrust in high-technology industries," particularly the Federal Circuit's opinion in Independent Service Organizations Antitrust Litigation.(1) This ruling, Pitofsky posits, would place "extremely narrow limits on a virtually unfettered right of a patent holder to refuse to deal in order to achieve an anti-competitive objective."

According to Pitofsky, the fine and constructive balance between the values of antitrust law and intellectual property could become distorted. Pitofsky concludes by saying any tilt in favor of intellectual property is unnecessary to encourage the process of innovation and may come at the cost of adequate antitrust protection.

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

202-326-2180

1. 203 F.3d 1322 (Fed.Cir. 2000)