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Wednesday, January 6, 2010

A Refreshingly Intelligent Editorial in the Washington Post
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The Washington Post is not known for its antitrust skepticism, so it is to be commended for its even-handed editorial last week regarding a recent FTC action against Intel, one of America's great technology concerns ("Keeping Competition, and Intel's Prices, in Check," Dec. 27, 2009).

The FTC, apparently unable to make a substantial antitrust complaint stick against Intel, has instead brought an administrative complaint against the company under Section 5 of the FTC Act. According to the FTC's Chairman, Jon Leibowitz, the standard required to sustain out a full-blown antitrust case are just a little too rigorous, so the Commission is taking something of a short cut. As the Post concluded, the approach is, to say the least, "potentially worrisome."

To be fair, Section 5 does, as a legal matter, give the Commission authority beyond that which is conferred by the antitrust laws. But as a practical matter, the Commission's past efforts to read its Section 5 authority expansively have been rejected by the courts as excessive. This seems just another such case.

Oddly enough, the conduct that so troubles the Commissioners involves discounts that Intel has given its customers in order to retain market share, i.e., Intel is charging too little, the FTC believes, for its microprocessor chips. Of course there is a prohibition on "predatory" pricing encompassed within the antitrust laws, but the showing required to make out such a case is quite substantial - deliberately so in order to ensure that only conduct that is harmful to consumers is proscribed. The FTC apparently is not content to live by that standard.

More troubling still is that the FTC is considering potential "remedies" that are, in the words of the Washington Post, "disconcertingly intrusive." Indeed, as the Post warned, the remedies being considered may actually lead to higher prices for computer chips and, accordingly, higher prices for consumer electronic equipment that employs such chips. As a consumer, forgive me for not feeling protected by the FTC's rash action.

posted by W. Kenneth Ferree @ 10:45 AM | Antitrust & Competition Policy , The FTC

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