In 1914, Congress gave the FTC sweeping jurisdiction and broad powers to enforce flexible rules, to ensure that it would have the ability to serve as the national regulator of trade and business. Much, perhaps even the great majority, of what the FTC does is uncontroversial and is widely supported, even by critics of the regulatory state. However, both Congress and the courts have expressed concern about how the FTC has used its considerable discretion in some areas. Now, as the agency approaches its 100th anniversary, the FTC, courts, and Congress face a series of decisions about how to apply or constrain that discretion. These questions will become especially pressing as the FTC uses its authority in new ways, expands its authority into new areas, or gains new authority from Congress (such as over data security or privacy).

Aparticularly unsettling aspect of the FTC’s case against McWane is the complaint counsel’s heavy (and seemingly exclusive) reliance on structural factors to prove its case. The FTC has little or no direct evidence of price communications and no econometric evidence suggesting collusion, and has instead spent a good deal of time trying to show that the market is susceptible to collusion. What makes the FTC’s administrative case so unsettling is that the structural factors they rely on are true of any oligopoly and, in federal courts across the country, are insufficient as a matter of law to raise an inference of conspiracy.

Read the full piece here.

Two modest offices on the first floor of the FTC building are occupied by the FTC Administrative Law Judge and his staff.  Of all of the agencies with an ALJ, the FTC’s operation must be the smallest.  The ALJ handles only a handful of trials each year.  In the past, the FTC ALJ operation has gathered little to no attention.  But in recent years, with renewed focus on administrative litigation and tight litigation deadlines, FTC administrative litigation has become a rocket docket of sorts.

Read the full piece here.

Excerpt

No mattter what you think of network neutrality — for it, against it, it’s complicated, who cares — the fact that a federal court just struck down most of the FCC’s net neutrality rules is clearly cause for concern.

But not for the reasons you think. Others are saying that the FCC just lost the battle but “can finally win the war” — if the agency formally “reclassifies” broadband as a heavily regulated “common carrier” (like traditional telephone services). Actually, the FCC lost the battle, but it just won the war over regulating the internet. It no longer needs to bother with reclassification, a process so difficult and drawn-out it was always a political fantasy anyway.

The FCC’s broad new powers should worry everyone, whatever they think of net neutrality. Because beneath the clever rallying cries of “net neutrality!” lurks a wide range of potential issues. Most concerns are imaginary or simply misplaced. The real concerns would be better addressed through other approaches — like focusing on abuses of market power that harm competition.

But first, we need to look at the ruling in a more nuanced way.

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Today the D.C. Circuit struck down most of the FCC’s 2010 Open Internet Order, rejecting rules that required broadband providers to carry all traffic for edge providers (“anti-blocking”) and prevented providers from negotiating deals for prioritized carriage. However, the appeals court did conclude that the FCC has statutory authority to issue “Net Neutrality” rules under Section 706(a) and let stand the FCC’s requirement that broadband providers clearly disclose their network management practices.

The following statement may be attributed to Geoffrey Manne and Berin Szoka:

The FCC may have lost today’s battle, but it just won the war over regulating the Internet. By recognizing Section 706 as an independent grant of statutory authority, the court has given the FCC near limitless power to regulate not just broadband, but the Internet itself, as Judge Silberman recognized in his dissent.

The court left the door open for the FCC to write new Net Neutrality rules, provided the Commission doesn’t treat broadband providers as common carriers. This means that, even without reclassifying broadband as a Title II service, the FCC could require that any deals between broadband and content providers be reasonable and non-discriminatory, just as it has required wireless carriers to provide data roaming services to their competitors’ customers on that basis. In principle, this might be a sound approach, if the rule resembles antitrust standards. But even that limitation could easily be evaded if the FCC regulates through case-by-case enforcement actions, as it tried to do before issuing the Open Internet Order. Either way, the FCC need only make a colorable argument under Section 706 that its actions are designed to “encourage the deployment… of advanced telecommunications services.” If the FCC’s tenuous “triple cushion shot” argument could satisfy that test, there is little limit to the deference the FCC will receive.

But that’s just for Net Neutrality. Section 706 covers “advanced telecommunications,” which seems to include any information service, from broadband to the interconnectivity of smart appliances like washing machines and home thermostats. If the court’s ruling on Section 706 is really as broad as it sounds, and as the dissent fears, the FCC just acquired wide authority over these, as well — in short, the entire Internet, including the “Internet of Things.” While the court’s “no common carrier rules” limitation is a real one, the FCC clearly just gained enormous power that it didn’t have before today’s ruling.

Today’s decision essentially rewrites the Communications Act in a way that will, ironically, do the opposite of what the FCC claims: hurt, not help, deployment of new Internet services. Whatever the FCC’s role ought to be, such decisions should be up to our elected representatives, not three unelected FCC Commissioners. So if there’s a silver lining in any of this, it may be that the true implications of today’s decision are so radical that Congress finally writes a new Communications Act — a long-overdue process Congressmen Fred Upton and Greg Walden have recently begun.

Szoka and Manne are available for comment at [email protected]. Find/share this release on Facebook or Twitter.

Filed under: federal communications commission, international center for law & economics, net neutrality, regulation, technology, telecommunications, wireless Tagged: Broadband, FCC, Federal Communications Commission, Internet of Things, net neutrality, Open Internet Order, Verizon v. FCC

Today the D.C. Circuit struck down most of the FCC’s 2010 Open Internet Order, rejecting rules that required broadband providers to carry all traffic for edge providers (“anti-blocking”) and prevented providers from negotiating deals for prioritized carriage. However, the appeals court did conclude that the FCC has statutory authority to issue “Net Neutrality” rules under Section 706(a) and let stand the FCC’s requirement that broadband providers clearly disclose their network management practices.

Read the full piece here.

Anyone familiar with the antitrust newstream realizes there is a tremendous amount of controversy about the Federal Trade Commission’s administrative litigation process. Unlike the Antitrust Division which fights its litigation battles in Federal Court, the FTC has a distinct home court advantage. FTC antitrust cases are typically litigated administratively with a trial conducted before an FTC administrative law judge, who issues an initial decision, followed with an appeal to the full Commission for a final decision. I have authored a couple of recent articles as have others that question the fairness of the FTC acting as both prosecutor and judge. These concerns have only been amplified since for the last 19 years the FTC has always found a violation of law. As one Congressman noted the FTC has “an unbeaten streak that Perry Mason would envy.”

Read the full piece here.

Summary

“STELA (and its predecessors) as well as the Cable Act were written to promote competition and to protect consumers in nascent markets. But since their enactment the market has
fundamentally changed, becoming quite competitive. Rather than continuing to try to tweak the laws of a bygone era, Congress should abandon these disparately applied, technology specific regulations and embrace the default tool for dealing with market power across the economy: antitrust law. Antitrust is the best tool for policing market power in evolving (if not
perfectly competitive) markets, to ensure that distributors with market power do not use their power to harm consumers, while recognizing the benefits that come from experimentation in new technologies and business models for delivering video content to consumers…”