Excerpt

Despite much gnashing of teeth about a recent case that turns on a single word in the seemingly arcane 1930 Tariff Act, it’s just not true that The End of The Internet is upon us.

In reality, both the majority and dissenting opinions in the 2014 decision by the International Trade Commission are more like deep anesthetic before an intensive gum cleaning. They both turn on the nitty gritty details of last century’s machinations over the the Smoot-Hawley Tariff Act — which you surely thought was safe to purge from your memory after your final high school US history exam.

The key issue in the case, now on appeal at the Federal Circuit, is the ITC’s decision to use its traditional authority over imports in a case involving electronically transmitted “digital articles.” And what began as a simple patent dispute between two manufacturers that make orthodontic appliances has turned into a cause celebre for a vocal cadre of critics who insist the ITC’s ruling will shut down the Internet.

Rest easy; it won’t. The ruling has only a few teeth, and they bite only cheaters.

Continue reading on Forbes

 

Tomorrow (August 24, 2015) marks once and future TOTM’er Josh Wright’s last day as an FTC Commissioner. Starting tomorrow and continuing throughout the week, Truth on the Market will be hosting a symposium —  a collection of commentaries and contributions — honoring Josh’s tenure at the FTC. We’ve invited contributions from a range of luminaries, including academics, practitioners, former FTC officials, and the like. Watch this space for the contributions, and feel free to add your own thoughts in the comments to the posts. Links to the posts will be collected here.

Monday’s posts will commence with contributions from

• Richard Epstein,
• Jon Jacobson,
• Tom Hazlett, and
• Keith Hylton

— with many more to come!

Filed under: administrative, federal trade commission, JDW Symposium, truth on the market Tagged: Federal Trade Commission, ftc, joshua wright, Symposium

Excerpt

Electronic payments in general and payment cards in particular are rapidly replacing cash and checks as the preferred means of making consumer as well as many business purchases. By enabling faster, more secure, traceable transactions, payment cards have been a key element in promoting greater integration of the world economy.

Indeed, the entire growth of e-commerce and Internet shopping would be inconceivable without modern payment card networks. However, the pace of future innovation and growth is likely to be hampered by increasingly invasive government regulation, especially regarding the fees that may be charged by payment card networks.

Both consumers and merchants benefit from the use of payment cards. Consumers benefit from convenience, such as by making transactions from home and avoiding holding cash. Meanwhile, credit cards enable consumers to make purchases even when they don’t have sufficient liquid resources – enabling them to smooth out their consumption.

Merchants also benefit in several ways. First, they make more sales because consumers are not constrained by the amount of money in their wallet (or the need to make a trip to the bank or cash machine).

Second, they enable businesses to process transactions more quickly (about twice as fast as cash – which in turn is faster than check). Third, the infrastructure required to support electronic payments is less cumbersome, piggybacks in part on existing communications networks, and reduces the need for physical security of currency (e.g., armoured cars and safes). Fourth, credit cards enable retailers to offload the cost and risk of offering their own credit operations.

This has enabled small businesses to flourish and grow, enabling them to compete with larger companies without the need to run their own, expensive credit operations. Fifth, payment card networks facilitate the collection and processing of enormously valuable consumer data that can be used by merchants to expand their sales. Finally, electronic payments enable long-distance transactions (over the Internet, for example), dramatically increasing the size of merchants’ available markets.

Continue reading at Cayman Financial Review

 

 

Today, for the first time in its 100-year history, the FTC issued enforcement guidelines for cases brought by the agency under the Unfair Methods of Competition (“UMC”) provisions of Section 5 of the FTC Act.

The Statement of Enforcement Principles represents a significant victory for Commissioner Joshua Wright, who has been a tireless advocate for defining and limiting the scope of the Commission’s UMC authority since before his appointment to the FTC in 2013.

As we’ve noted many times before here at TOTM (including in our UMC Guidelines Blog Symposium), FTC enforcement principles for UMC actions have been in desperate need of clarification. Without any UMC standards, the FTC has been free to leverage its costly adjudication process into settlements (or short-term victories) and businesses have been left in the dark as to what what sorts of conduct might trigger enforcement. Through a series of unadjudicated settlements, UMC unfairness doctrine (such as it is) has remained largely within the province of FTC discretion and without judicial oversight. As a result, and either by design or by accident, UMC never developed a body of law encompassing well-defined goals or principles like antitrust’s consumer welfare standard.

Commissioner Wright has long been at the forefront of the battle to rein in the FTC’s discretion in this area and to promote the rule of law. Soon after joining the Commission, he called for Section 5 guidelines that would constrain UMC enforcement to further consumer welfare, tied to the economically informed analysis of competitive effects developed in antitrust law.

Today’s UMC Statement embodies the essential elements of Commissioner Wright’s proposal. Under the new guidelines:

1. The Commission will make UMC enforcement decisions based on traditional antitrust principles, including the consumer welfare standard;
2. Only conduct that would violate the antitrust rule of reason will give rise to enforcement, and the Commission will not bring UMC cases without evidence demonstrating that harm to competition outweighs any efficiency or business justifications for the conduct at issue; and
3. The Commission commits to the principle that it is more appropriate to bring cases under the antitrust laws than under Section 5 when the conduct at issue could give rise to a cause of action under the antitrust laws. Notably, this doesn’t mean that the agency gets to use UMC when it thinks it might lose under the Sherman or Clayton Acts; rather, it means UMC is meant only to be a gap-filler, to be used when the antitrust statutes don’t apply at all.

Yes, the Statement is a compromise. For instance, there is no safe harbor from UMC enforcement if any cognizable efficiencies are demonstrated, as Commissioner Wright initially proposed.

But by enshrining antitrust law’s consumer welfare standard in future UMC caselaw, by obligating the Commission to assess conduct within the framework of the well-established antitrust rule of reason, and by prioritizing antitrust over UMC when both might apply, the Statement brings UMC law into the world of modern antitrust analysis. This is a huge achievement.

It’s also a huge achievement that a Statement like this one would be introduced by Chairwoman Ramirez. As recently as last year, Ramirez had resisted efforts to impose constraints on the FTC’s UMC enforcement discretion. In a 2014 speech Ramirez said:

I have expressed concern about recent proposals to formulate guidance to try to codify our unfair methods principles for the first time in the Commission’s 100 year history. While I don’t object to guidance in theory, I am less interested in prescribing our future enforcement actions than in describing our broad enforcement principles revealed in our recent precedent.

The “recent precedent” that Ramirez referred to is precisely the set of cases applying UMC to reach antitrust-relevant conduct that led to Commissioner Wright’s efforts. The common law of consent decrees that make up the precedent Ramirez refers to, of course, are not legally binding and provide little more than regurgitated causes of action.

But today, under Congressional pressure and pressure from within the agency led by Commissioner Wright, Chairwoman Ramirez and the other two Democratic commissioners voted for the Statement.

Competitive Effects Analysis Under the Statement

As Commissioner Ohlhausen argues in her dissenting statement, the UMC Statement doesn’t remove all enforcement discretion from the Commission — after all, enforcement principles, like standards in law generally, have fuzzy boundaries.

But what Commissioner Ohlhausen seems to miss is that, by invoking antitrust principles, the rule of reason and competitive effects analysis, the Statement incorporates by reference 125 years of antitrust law and economics. The Statement itself need not go into excessive detail when, with only a few words, it brings modern antitrust jurisprudence embodied in cases like Trinko, Leegin, and Brooke Group into UMC law.

Under the new rule of reason approach for UMC, the FTC will condemn conduct only when it causes or is likely to cause “harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justifications.” In other words, the evidence must demonstrate net harm to consumers before the FTC can take action. That’s a significant constraint.

As noted above, Commissioner Wright originally proposed a safe harbor from FTC UMC enforcement whenever cognizable efficiencies are present. The Statement’s balancing test is thus a compromise. But it’s not really a big move from Commissioner Wright’s initial position.

Commissioner Wright’s original proposal tied the safe harbor to “cognizable” efficiencies, which is an exacting standard. As Commissioner Wright noted in his Blog Symposium post on the subject:

[T]he efficiencies screen I offer intentionally leverages the Commission’s considerable expertise in identifying the presence of cognizable efficiencies in the merger context and explicitly ties the analysis to the well-developed framework offered in the Horizontal Merger Guidelines. As any antitrust practitioner can attest, the Commission does not credit “cognizable efficiencies” lightly and requires a rigorous showing that the claimed efficiencies are merger-specific, verifiable, and not derived from an anticompetitive reduction in output or service. Fears that the efficiencies screen in the Section 5 context would immunize patently anticompetitive conduct because a firm nakedly asserts cost savings arising from the conduct without evidence supporting its claim are unwarranted. Under this strict standard, the FTC would almost certainly have no trouble demonstrating no cognizable efficiencies exist in Dan’s “blowing up of the competitor’s factory” example because the very act of sabotage amounts to an anticompetitive reduction in output.

The difference between the safe harbor approach and the balancing approach embodied in the Statement is largely a function of administrative economy. Before, the proposal would have caused the FTC to err on the side of false negatives, possibly forbearing from bringing some number of welfare-enhancing cases in exchange for a more certain reduction in false positives. Now, there is greater chance of false positives.

But the real effect is that more cases will be litigated because, in the end, both versions would require some degree of antitrust-like competitive effects analysis. Under the Statement, if procompetitive efficiencies outweigh anticompetitive harms, the defendant still wins (and the FTC is to avoid enforcement). Under the original proposal fewer actions might be brought, but those that are brought would surely settle. So one likely outcome of choosing a balancing test over the safe harbor is that more close cases will go to court to be sorted out. Whether this is a net improvement over the safe harbor depends on whether the social costs of increased litigation and error are offset by a reduction in false negatives — as well as the more robust development of the public good of legal case law.  

Reduced FTC Discretion Under the Statement

The other important benefit of the Statement is that it commits the FTC to a regime that reduces its discretion.

Chairwoman Ramirez and former Chairman Leibowitz — among others — have embraced a broader role for Section 5, particularly in order to avoid the judicial limits on antitrust actions arising out of recent Supreme Court cases like Trinko, Leegin, Brooke Group, Linkline, Weyerhaeuser and Credit Suisse.

For instance, as former Chairman Leibowitz said in 2008:

[T]he Commission should not be tied to the more technical definitions of consumer harm that limit applications of the Sherman Act when we are looking at pure Section 5 violations.

And this was no idle threat. Recent FTC cases, including Intel, N-Data, Google (Motorola), and Bosch, could all have been brought under the Sherman Act, but were brought — and settled — as Section 5 cases instead. Under the new Statement, all four would likely be Sherman Act cases.

There’s little doubt that, left unfettered, Section 5 UMC actions would only have grown in scope. Former Chairman Leibowitz, in his concurring opinion in Rambus, described UMC as

a flexible and powerful Congressional mandate to protect competition from unreasonable restraints, whether long-since recognized or newly discovered, that violate the antitrust laws, constitute incipient violations of those laws, or contravene those laws’ fundamental policies.

Both Leibowitz and former Commissioner Tom Rosch (again, among others) often repeated their views that Section 5 permitted much the same actions as were available under Section 2 — but without the annoyance of those pesky, economically sensible, judicial limitations. (Although, in fairness, Leibowitz also once commented that it would not “be wise to use the broader [Section 5] authority whenever we think we can’t win an antitrust case, as a sort of ‘fallback.’”)

In fact, there is a long and unfortunate trend of FTC commissioners and other officials asserting some sort of “public enforcement exception” to the judicial limits on Sherman Act cases. As then Deputy Director for Antitrust in the Bureau of Economics, Howard Shelanski, told Congress in 2010:

The Commission believes that its authority to prevent “unfair methods of competition” through Section 5 of the Federal Trade Commission Act enables the agency to pursue conduct that it cannot reach under the Sherman Act, and thus avoid the potential strictures of Trinko.

In this instance, and from the context (followed as it is by a request for Congress to actually exempt the agency from Trinko and Credit Suisse!), it seems that “reach” means “win.”

Still others have gone even further. Tom Rosch, for example, has suggested that the FTC should challenge Patent Assertion Entities under Section 5 merely because “we have a gut feeling” that the conduct violates the Act and it may not be actionable under Section 2.

Even more egregious, Steve Salop and Jon Baker advocate using Section 5 to implement their preferred social policies — in this case to reduce income inequality. Such expansionist views, as Joe Sims recently reminded TOTM readers, hearken back to the troubled FTC of the 1970s:  

Remember [former FTC Chairman] Mike Pertschuck saying that Section 5 could possibly be used to enforce compliance with desirable energy policies or environmental requirements, or to attack actions that, in the opinion of the FTC majority, impeded desirable employment programs or were inconsistent with the nation’s “democratic, political and social ideals.” The two speeches he delivered on this subject in 1977 were the beginning of the end for increased Section 5 enforcement in that era, since virtually everyone who heard or read them said:  “Whoa! Is this really what we want the FTC to be doing?”

Apparently, for some, it is — even today. But don’t forget: This was the era in which Congress actually briefly shuttered the FTC for refusing to recognize limits on its discretion, as Howard Beales reminds us:

The breadth, overreaching, and lack of focus in the FTC’s ambitious rulemaking agenda outraged many in business, Congress, and the media. Even the Washington Post editorialized that the FTC had become the “National Nanny.” Most significantly, these concerns reverberated in Congress. At one point, Congress refused to provide the necessary funding, and simply shut down the FTC for several days…. So great were the concerns that Congress did not reauthorize the FTC for fourteen years. Thus chastened, the Commission abandoned most of its rulemaking initiatives, and began to re-examine unfairness to develop a focused, injury-based test to evaluate practices that were allegedly unfair.

A truly significant effect of the Policy Statement will be to neutralize the effort to use UMC to make an end-run around antitrust jurisprudence in order to pursue non-economic goals. It will now be a necessary condition of a UMC enforcement action to prove a contravention of fundamental antitrust policies (i.e., consumer welfare), rather than whatever three commissioners happen to agree is a desirable goal. And the Statement puts the brakes on efforts to pursue antitrust cases under Section 5 by expressing a clear policy preference at the FTC to bring such cases under the antitrust laws.

Commissioner Ohlhausen’s objects that

the fact that this policy statement requires some harm to competition does little to constrain the Commission, as every Section 5 theory pursued in the last 45 years, no matter how controversial or convoluted, can be and has been couched in terms of protecting competition and/or consumers.

That may be true, but the same could be said of every Section 2 case, as well. Commissioner Ohlhausen seems to be dismissing the fact that the Statement effectively incorporates by reference the last 45 years of antitrust law, too. Nothing will incentivize enforcement targets to challenge the FTC in court — or incentivize the FTC itself to forbear from enforcement — like the ability to argue Trinko, Leegin and their ilk. Antitrust law isn’t perfect, of course, but making UMC law coextensive with modern antitrust law is about as much as we could ever reasonably hope for. And the Statement basically just gave UMC defendants blanket license to add a string of “See Areeda & Hovenkamp” cites to every case the FTC brings. We should count that as a huge win.

Commissioner Ohlhausen also laments the brevity and purported vagueness of the Statement, claiming that

No interpretation of the policy statement by a single Commissioner, no matter how thoughtful, will bind this or any future Commission to greater limits on Section 5 UMC enforcement than what is in this exceedingly brief, highly general statement.

But, in the end, it isn’t necessarily the Commissioners’ self-restraint upon which the Statement relies; it’s the courts’ (and defendants’) ability to take the obvious implications of the Statement seriously and read current antitrust precedent into future UMC cases. If every future UMC case is adjudicated like a Sherman or Clayton Act case, the Statement will have been a resounding success.

Arguably no FTC commissioner has been as successful in influencing FTC policy as a minority commissioner — over sustained opposition, and in a way that constrains the agency so significantly — as has Commissioner Wright today.

Filed under: antitrust, Efficiencies, error costs, exclusionary conduct, exclusive dealing, federal trade commission, ftc, law and economics, monopolization, resale price maintenance, section 5, settlements, UMC symposium Tagged: antitrust law, Commissioner Wright, Edith Ramirez, Federal Trade Commission, ftc, guidelines, joshua wright, Maureen Ohlhausen, section 5, UMC, unfair methods of competition

Summary

Is net neutrality necessary to protect First Amendment values in the 21st Century? Or does the First Amendment actually prevent net neutrality regulation?  How can both of these questions be considered simultaneously?

At issue is a conflict of visions about the nature of the liberty protected by the First Amendment. Philosopher Isaiah Berlin famously described two clashing concepts of liberty — negative and positive. Simply, negative liberty is freedom from external interference. Positive liberty, on the other hand, is freedom to do something, including having the power and resources necessary to do it.

For example, negative liberty means that no one may rightfully take my property away from me without my consent. Positive liberty means that I have a right to health care that must be provided for me if I cannot afford it on my own.

Positive rights necessarily involve at least some subjugation of the rights of others. A right to health care, for instance, would violate the rights of those who must provide or subsidize health care services without their consent. Further, it would infringe upon others’ positive rights insofar as there are scarce resources available to pay for all such rights.

Conversely, negative rights are compossible with one another, which means all people could hold them simultaneously. These rights apply only against aggressors—e.g., rapists, murderers, and thieves—and not against those who are respecting the rights of others.

In this article, we examine the debate over the First Amendment merits of the Federal Communications Commission’s (“FCC”) “Open Internet” Order issued in March 2015.

On Thursday I will be participating in an ABA panel discussion on the Apple e-books case, along with Mark Ryan (former DOJ attorney) and Fiona Scott-Morton (former DOJ economist), both of whom were key members of the DOJ team that brought the case. Details are below. Judging from the prep call, it should be a spirited discussion!

Readers looking for background on the case (as well as my own views — decidedly in opposition to those of the DOJ) can find my previous commentary on the case and some of the issues involved here:

• Why I think the Apple e-books antitrust decision will (or at least should) be overturned
• Why I think the government will have a tough time winning the Apple e-books antitrust case
• The procompetitive story that could undermine the DOJ’s e-books antitrust case against Apple
• How Apple can defeat the DOJ’s e-book antitrust suit
• The US e-books case against Apple: The procompetitive story (in a special issue of Concurrences on “E-books and the boundaries of antitrust” that includes several other essays worth reading)
• Amazon vs. Macmillan: It’s all about control

Other TOTM authors have also weighed in. See, e.g.:

• Alden Abbott: The Second Circuit Misapplies the Per Se Rule in U.S. v. Apple
• Josh Wright: The Apple E-Book Kerfuffle Meets Alfred Marshall’s Principles of Economics
• Josh Wright: Apple and Amazon E-Book Most Favored Nation Clauses

DETAILS:

ABA Section of Antitrust Law

Federal Civil Enforcement Committee, Joint Conduct, Unilateral Conduct, and Media & Tech Committees Present:

“The 2d Cir.’s Apple E-Books decision: Debating the merits and the meaning”

July 16, 2015
12:00 noon to 1:30 pm Eastern / 9:00 am to 10:30 am Pacific

On June 30, the Second Circuit affirmed DOJ’s trial victory over Apple in the Ebooks Case. The three-judge panel fractured in an interesting way: two judges affirmed the finding that Apple’s role in a “hub and spokes” conspiracy was unlawful per se; one judge also would have found a rule-of-reason violation; and the dissent — stating Apple had a “vertical” position and was challenging the leading seller’s “monopoly” — would have found no liability at all. What is the reasoning and precedent of the decision? Is “marketplace vigilantism” (the concurring judge’s phrase) ever justified? Our panel — which includes the former DOJ head of litigation involved in the case — will debate the issues.

Moderator

• Ken Ewing, Steptoe & Johnson LLP

Panelists

• Geoff Manne, International Center for Law & Economics
• Fiona Scott Morton, Yale School of Management
• Mark Ryan, Mayer Brown LLP

Register HERE

Filed under: administrative, antitrust, cartels, contracts, doj, e-books, economics, Efficiencies, error costs, law and economics, litigation, market definition, MFNs, monopolization, resale price maintenance, technology, vertical restraints Tagged: agency model, Amazon, antitrust, Apple, doj, e-books, iBookstore, major publishers, MFN, most favored nations clause, per se, price-fixing, publishing industry, Rule of reason, vertical restraints

If you haven’t been following the ongoing developments emerging from the demise of Grooveshark, the story has only gotten more interesting. As the RIAA and major record labels have struggled to shut down infringing content on Grooveshark’s site (and now its copycats), groups like EFF would have us believe that the entire Internet was at stake — even in the face of a fairly marginal victory by the recording industry. In the most recent episode, the issuance of a TRO against CloudFlare — a CDN service provider for the copycat versions of Grooveshark — has sparked much controversy. Ironically for CloudFlare, however, its efforts to evade compliance with the TRO may well have opened it up to far more significant infringement liability.

Read the full piece here.

The FTC recently required divestitures in two merger investigations (here and here), based largely on the majority’s conclusion that

[when] a proposed merger significantly increases concentration in an already highly concentrated market, a presumption of competitive harm is justified under both the Guidelines and well-established case law.” (Emphasis added).

Commissioner Wright dissented in both matters (here and here), contending that

[the majority’s] reliance upon such shorthand structural presumptions untethered from empirical evidence subsidize a shift away from the more rigorous and reliable economic tools embraced by the Merger Guidelines in favor of convenient but obsolete and less reliable economic analysis.

Josh has the better argument, of course. In both cases the majority relied upon its structural presumption rather than actual economic evidence to make out its case. But as Josh notes in his dissent in In the Matter of ZF Friedrichshafen and TRW Automotive (quoting his 2013 dissent in In the Matter of Fidelity National Financial, Inc. and Lender Processing Services):

there is no basis in modern economics to conclude with any modicum of reliability that increased concentration—without more—will increase post-merger incentives to coordinate. Thus, the Merger Guidelines require the federal antitrust agencies to develop additional evidence that supports the theory of coordination and, in particular, an inference that the merger increases incentives to coordinate.

Or as he points out in his dissent in In the Matter of Holcim Ltd. and Lafarge S.A.

The unifying theme of the unilateral effects analysis contemplated by the Merger Guidelines is that a particularized showing that post-merger competitive constraints are weakened or eliminated by the merger is superior to relying solely upon inferences of competitive effects drawn from changes in market structure.

It is unobjectionable (and uninteresting) that increased concentration may, all else equal, make coordination easier, or enhance unilateral effects in the case of merger to monopoly. There are even cases (as in generic pharmaceutical markets) where rigorous, targeted research exists, sufficient to support a presumption that a reduction in the number of firms would likely lessen competition. But generally (as in these cases), absent actual evidence, market shares might be helpful as an initial screen (and may suggest greater need for a thorough investigation), but they are not analytically probative in themselves. As Josh notes in his TRW dissent:

The relevant question is not whether the number of firms matters but how much it matters.

The majority in these cases asserts that it did find evidence sufficient to support its conclusions, but — and this is where the rubber meets the road — the question remains whether its limited evidentiary claims are sufficient, particularly given analyses that repeatedly come back to the structural presumption. As Josh says in his Holcim dissent:

it is my view that the investigation failed to adduce particularized evidence to elevate the anticipated likelihood of competitive effects from “possible” to “likely” under any of these theories. Without this necessary evidence, the only remaining factual basis upon which the Commission rests its decision is the fact that the merger will reduce the number of competitors from four to three or three to two. This is simply not enough evidence to support a reason to believe the proposed transaction will violate the Clayton Act in these Relevant Markets.

Looking at the majority’s statements, I see a few references to the kinds of market characteristics that could indicate competitive concerns — but very little actual analysis of whether these characteristics are sufficient to meet the Clayton Act standard in these particular markets. The question is — how much analysis is enough? I agree with Josh that the answer must be “more than is offered here,” but it’s an important question to explore more deeply.

Presumably that’s exactly what the ABA’s upcoming program will do, and I highly recommend interested readers attend or listen in. The program details are below.

The Use of Structural Presumptions in Merger Analysis

June 26, 2015, 12:00 PM – 1:15 PM ET

Moderator:

• Brendan Coffman, Wilson Sonsini Goodrich & Rosati LLP

Speakers:

• Angela Diveley, Office of Commissioner Joshua D. Wright, Federal Trade Commission
• Abbott (Tad) Lipsky, Latham & Watkins LLP
• Janusz Ordover, Compass Lexecon
• Henry Su, Office of Chairwoman Edith Ramirez, Federal Trade Commission

In-person location:

Latham & Watkins
555 11th Street,NW
Ste 1000
Washington, DC 20004

Register here.

Filed under: antitrust, federal trade commission, ftc, law and economics, markets, merger guidelines, mergers & acquisitions Tagged: ABA, dissent, economic analysis, empirical evidence, Federal Trade Commission, ftc, joshua wright, merger guidelines, mergers, presumption, structural presumption

Summary

Increasingly, people use the internet to connect with one another, access information, and purchase products and services. Along with the growth in the online marketplace have come concerns, as well, particularly regarding both the privacy of personal information as well as competition issues surrounding this and other data.

While concerns about privacy and data are not unique to the internet ecosystem, they are in some ways heightened due to the ubiquitous nature of information sharing online. While much of the sharing is voluntary, a group of scholars and activists have argued that several powerful online companies have overstepped their bounds in gathering and using data from internet users. These privacy advocates have pushed the U.S. Federal Trade Commission (“FTC”) and regulators in Europe to incorporate privacy concerns into antitrust analysis.

We have undertaken a classification of the various proposed approaches to incorporating privacy into antitrust law elsewhere. Here, we focus on the two most-developed theories: first, that privacy should be considered in mergers and other antitrust contexts as a non-price factor of competition; and second, that the collection and use of data can be used to facilitate anticompetitive price discrimination. In addition, we analyze the underlying conception of data as a barrier to entry that is a necessary precondition for supporting either proposed theory of harm.