A Letter to the Subcommittee on Intellectual Property, Competition, and the Internet
The
Honorable Robert W. Goodlatte, Chairman
The
Honorable Melvin L. Watt, Ranking Member
Subcommittee
on Intellectual Property, Competition, and the Internet
Committee
on the Judiciary
United
States House of Representatives
Washington,
DC 20515
Dear
Chairman Goodlatte, Ranking Member Watt, and Members of the Committee:
On
behalf of the 362,000 members of the National Taxpayers Union (NTU), I write to
express our gratitude for the Subcommittee’s recent oversight hearing of antitrust
agencies. These proceedings, along with today’s full Committee hearing on
Department of Justice (DoJ) oversight, have both offered a timely opportunity
to continue and advance discussions on the vital fiscal and economic issue of federal
antitrust policy. We remain greatly concerned that recent actions on the part
of DoJ and the Federal Trade Commission (FTC) against firms such as Google could
endanger the prospects of an economic recovery, all while draining taxpayer
resources that could be better utilized for deficit reduction or core program
priorities.
As
you may know, NTU has a long history of advocating for a sensible federal
approach toward economic competition that carefully limits interventions in the
marketplace to clear and imminent cases of direct harm to consumers. During the
late 1990s and early 2000s, NTU was a leading grassroots participant in the
antitrust debate from the conservative community. Our projects included a major
conference, “Antitrust in the Information Age,” a widely distributed video
interview on the topic with the late Milton Friedman, involvement of
state-level citizen groups against the regulatory excesses of state Attorneys
General, and engagement with numerous economists and think tanks across the
globe to speak out on the issue. As an NTU Policy Paper, written more than 10
years ago by our then-Director of Programs Mark Schmidt, warned:
The greatest threat to free competition comes not
from aggressive businesses, but from government intrusions into the
marketplace. By undermining competition through antitrust enforcement or
subsidies for failing industries, government uses tax dollars to make consumers
pay higher prices. … If any party is guilty of engaging in ‘conspiracies in
restraint of trade’ that keep costs high for consumers, it is government.
Unfortunately,
since the publication of that paper, America’s antitrust enforcement history
has been continually marred by episodes of controversial activities, causing
particular difficulties for the development of high-technology products and
services such as telecommunications and software. Rigid federal policy can fail
to recognize that competition in these emerging innovations may occur among a
wide range of markets serving fast-shifting consumer preferences, not merely
among similarly-situated companies in the same industrial sector. Furthermore,
government regulators have become increasingly overzealous in crafting supposed
“solutions” to perceived competition “problems” that involve manipulation of
companies’ business decisions at their most basic levels.
The
most blatant manifestation of this flawed philosophy is the FTC’s bizarre and
counterproductive investigation of Google and its Internet search engine.
Apparently claiming some vast sanction from Section 5 of the FTC Act, regulators
involved in the Google case are seeking far-fetched remedies (such as
reconfiguring search results to fit federal tastes) for contrived
“anti-competitive” offenses surrounding a service that has innumerable
competitors in a market with very low barriers to entry. This is emblematic of
a process too often driven by the interests of expansion-minded bureaucracies
and politically savvy competitors. In the Google case, as in so many others,
such interests will be rewarded at the expense of taxpayers who are forced to
fund these misadventures, innovators who are discouraged from risk-taking, and
workers and investors who are denied financial opportunities from foregone
economic growth.
At
this stage of America’s fragile economic recovery, we hope that Members of the
Subcommittee and the full Committee would agree that another wave of
heavy-handed antitrust policy would be particularly destructive. As many
lawmakers on both sides of the aisle have noted, a resurgence in the health of
our private sector will occur when businesses and consumers have sufficient
confidence to make bolder investments of time, energy, and capital that will
pay off in the future. While many fiscal and regulatory reforms can help to
bolster such confidence, one highly positive signal that Washington could send
to innovators would be a reform effort to establish affirmative boundaries on
federal policy toward competition. As a September 6, 2011 U.S. Chamber of
Commerce letter to FTC Chairman Leibowitz observed:
[Uncertainty]
can act as a significant deterrent to creativity and experimentation in all its
manifestations, including investments in research and development, and
therefore represents a threat to innovation, the most basic and essential
driver of long-run productivity growth and economic progress. Given the need to
eliminate uncertainty in this challenging economic climate arguably nothing
within the FTC’s purview is in greater need of review and guidance than what is
the standard by which the FTC plans to pursue ‘unfair methods of competition’
that exist beyond traditional theories of consumer harm supported by
established antitrust law precedents.
Accordingly,
we would urge you and your colleagues to conduct a thorough, ongoing exploration
of the following matters after this week’s hearings:
1)
Do DoJ’s and FTC’s interpretations of their authority and powers exceed or
misconstrue Congress’s intent? If so, how can Congress clarify this intent?
2)
Are the latest actions against Google and other high-tech firms likelier to
benefit consumers or competitors?
3)
How will new and expansive approaches to antitrust policy impact large and
small businesses, as well as the chances of a robust economic recovery?
4)
Would taxpayers be better served by redirecting future budgetary allocations
away from programs encouraging excessive antitrust enforcement schemes, and
toward more practical pursuits such as deficit reduction and greater program
oversight?
NTU and its members are hopeful that
the recent Committee- and Subcommittee-level deliberations will mark the
beginning of a concerted effort to reexamine the fundamental purpose of DoJ’s
and FTC’s antitrust operations, and provide a new policy foundation going
forward that facilitates, rather than undermines, the well-being of our
economy. We stand ready to assist you in this critical task.
Sincerely,
Pete Sepp
Executive Vice President
cc: Chairman, Ranking Member, and Members of
the Committee on the Judiciary
Letter
