TheHonorable Robert W. Goodlatte, ChairmanTheHonorable Melvin L. Watt, Ranking MemberSubcommitteeon Intellectual Property, Competition, and the InternetCommitteeon the JudiciaryUnitedStates House of RepresentativesWashington,DC 20515
DearChairman Goodlatte, Ranking Member Watt, and Members of the Committee:
Onbehalf of the 362,000 members of the National Taxpayers Union (NTU), I write toexpress our gratitude for the Subcommittee’s recent oversight hearing of antitrustagencies. These proceedings, along with today’s full Committee hearing onDepartment of Justice (DoJ) oversight, have both offered a timely opportunityto continue and advance discussions on the vital fiscal and economic issue of federalantitrust policy. We remain greatly concerned that recent actions on the partof DoJ and the Federal Trade Commission (FTC) against firms such as Google couldendanger the prospects of an economic recovery, all while draining taxpayerresources that could be better utilized for deficit reduction or core programpriorities.
Asyou may know, NTU has a long history of advocating for a sensible federalapproach toward economic competition that carefully limits interventions in themarketplace to clear and imminent cases of direct harm to consumers. During thelate 1990s and early 2000s, NTU was a leading grassroots participant in theantitrust debate from the conservative community. Our projects included a majorconference, “Antitrust in the Information Age,” a widely distributed videointerview on the topic with the late Milton Friedman, involvement ofstate-level citizen groups against the regulatory excesses of state AttorneysGeneral, and engagement with numerous economists and think tanks across theglobe to speak out on the issue. As an NTU Policy Paper, written more than 10years ago by our then-Director of Programs Mark Schmidt, warned:
The greatest threat to free competition comes notfrom aggressive businesses, but from government intrusions into themarketplace. By undermining competition through antitrust enforcement orsubsidies for failing industries, government uses tax dollars to make consumerspay higher prices. … If any party is guilty of engaging in ‘conspiracies inrestraint of trade’ that keep costs high for consumers, it is government.
Unfortunately,since the publication of that paper, America’s antitrust enforcement historyhas been continually marred by episodes of controversial activities, causingparticular difficulties for the development of high-technology products andservices such as telecommunications and software. Rigid federal policy can failto recognize that competition in these emerging innovations may occur among awide range of markets serving fast-shifting consumer preferences, not merelyamong 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 ofcompanies’ business decisions at their most basic levels.
Themost blatant manifestation of this flawed philosophy is the FTC’s bizarre andcounterproductive investigation of Google and its Internet search engine.Apparently claiming some vast sanction from Section 5 of the FTC Act, regulatorsinvolved in the Google case are seeking far-fetched remedies (such asreconfiguring search results to fit federal tastes) for contrived“anti-competitive” offenses surrounding a service that has innumerablecompetitors in a market with very low barriers to entry. This is emblematic ofa process too often driven by the interests of expansion-minded bureaucraciesand 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 tofund these misadventures, innovators who are discouraged from risk-taking, andworkers and investors who are denied financial opportunities from foregoneeconomic growth.
Atthis stage of America’s fragile economic recovery, we hope that Members of theSubcommittee and the full Committee would agree that another wave ofheavy-handed antitrust policy would be particularly destructive. As manylawmakers on both sides of the aisle have noted, a resurgence in the health ofour private sector will occur when businesses and consumers have sufficientconfidence to make bolder investments of time, energy, and capital that willpay off in the future. While many fiscal and regulatory reforms can help tobolster such confidence, one highly positive signal that Washington could sendto innovators would be a reform effort to establish affirmative boundaries onfederal policy toward competition. As a September 6, 2011 U.S. Chamber ofCommerce letter to FTC Chairman Leibowitz observed:
[Uncertainty]can act as a significant deterrent to creativity and experimentation in all itsmanifestations, including investments in research and development, andtherefore represents a threat to innovation, the most basic and essentialdriver of long-run productivity growth and economic progress. Given the need toeliminate uncertainty in this challenging economic climate arguably nothingwithin the FTC’s purview is in greater need of review and guidance than what isthe standard by which the FTC plans to pursue ‘unfair methods of competition’that exist beyond traditional theories of consumer harm supported byestablished antitrust law precedents.
Accordingly,we would urge you and your colleagues to conduct a thorough, ongoing explorationof the following matters after this week’s hearings:
1)Do DoJ’s and FTC’s interpretations of their authority and powers exceed ormisconstrue Congress’s intent? If so, how can Congress clarify this intent?
2)Are the latest actions against Google and other high-tech firms likelier tobenefit consumers or competitors?
3)How will new and expansive approaches to antitrust policy impact large andsmall businesses, as well as the chances of a robust economic recovery?
4)Would taxpayers be better served by redirecting future budgetary allocationsaway from programs encouraging excessive antitrust enforcement schemes, andtoward more practical pursuits such as deficit reduction and greater programoversight?
NTU and its members are hopeful thatthe recent Committee- and Subcommittee-level deliberations will mark thebeginning of a concerted effort to reexamine the fundamental purpose of DoJ’sand FTC’s antitrust operations, and provide a new policy foundation goingforward that facilitates, rather than undermines, the well-being of oureconomy. We stand ready to assist you in this critical task.
Sincerely,Pete SeppExecutive Vice President
cc: Chairman, Ranking Member, and Members ofthe Committee on the Judiciary