PRELIMINARY VERSION -- June 29, 19951
FTC HEARINGS ON THE
CHANGING NATURE OF COMPETITION
The FTC will hold hearings this fall to address whether there
have been broad-based changes in the contemporary competitive
environment that require any adjustments in antitrust and
consumer protection enforcement in order to keep pace with those
changes.
The core provisions of antitrust and consumer protection law
serve as effective tools against the exercise of unrestrained
private economic power and the deception and abuse of consumers.
Enforcement that results in vigorous competition in domestic
markets also best facilitates international competitiveness and
advancements in innovation-driven industries. Nonetheless, some
have argued that the globalization of the economy and the
increasingly rapid rate of technological change are making
certain aspects of antitrust an unnecessary impediment to the
ability of U.S. companies to compete internationally. Concerns
also have been expressed that antitrust needs to adjust to ensure
that consumers are not the victims of new anticompetitive
strategies available in innovation-driven markets.
To ascertain whether antitrust and consumer protection law
will continue to protect the operation of the free market and
unimpeded consumer choice, the FTC will examine whether
adaptations in the enforcement of those laws are warranted in
light of changes in the nature of global and innovation-based
competition.
To varying degrees, more rapid innovation, increased and more
rapid communication among and within firms, the expansion of free
markets, privatization of companies and industries, lower
shipping costs, the greater tendency of firms to operate
worldwide, deregulation and cost containment pressures have
contributed to an increase in global competition and to
transitions in the structures of particular industries. The FTC
will examine how these changes in the competitive environment
have affected U.S. consumers and U.S. firms. In asking the public
what areas of the antitrust and consumer protection laws deserve
review, the FTC anticipates exploring:
- Whether antitrust's traditional approach to defining a
relevant market and measuring market power fully accounts
for global competition.
- Whether antitrust analysis can improve its ability to
assess the likelihood of entry by foreign firms into
particular markets.
- Whether antitrust enforcers can improve how they define
the scope of and measure market power in innovation
markets, such as those involving research and
development.
- How antitrust can maximize the likelihood of realizing
beneficial efficiencies and minimize the likelihood of
injuring consumers from an increase in market power when
agencies review mergers, joint ventures, or network-type
operations that have apparent efficiencies. When should
antitrust concerns with undue increases in market power
trump claims of increased efficiency?
- Whether antitrust enforcers should permit an otherwise
illegal merger if the merger would significantly cut the
costs or improve the quality and effectiveness of
innovation efforts.
- Whether U.S. merger analysis should revise its approach
to corporate failure and distressed industry conditions.
Would shareholders, creditors and workers be better off
if agencies, in analyzing mergers, tried to facilitate
the transition of salvageable firms to a stronger market
position, particularly when the companies involved
compete in foreign markets or face vigorous foreign
competition in domestic markets?
- Whether there are particular regulatory barriers that
unduly impair the ability of small firms to compete in a
global environment.
- How antitrust analysis should balance the incentive to
innovate that intellectual property protection creates
with the disincentive to innovate that might occur if
enforcers were to require a firm to provide access to its
otherwise protected property (for example, when that
property becomes the industry standard).
- Whether networks, such as those in banking or computer
systems, or de facto industry standards may foreclose
competition in some circumstances and whether antitrust
enforcement should protect the ability of competitors to
access or benefit from another firm's network or
standard.
- Whether international consumer protection standards are
needed to address the increase in fraud or consumer harm
likely to stem from the burgeoning number of cross-border
consumer transactions.
- What institutional processes the FTC itself should adopt
to better protect consumers and promote competition,
given the realities of global competition and rapid
innovation.
1.
This agenda is a draft and has not received Commission
approval.
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Rev. July 19, 1995
geh