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Popular Media (Affiliate) On Dec. 1, the Supreme Court is scheduled to hear oral argument in Jouppi v. Alaska, a case stemming from the seizure of an airplane . . .
On Dec. 1, the Supreme Court is scheduled to hear oral argument in Jouppi v. Alaska, a case stemming from the seizure of an airplane valued at $95,000 as punishment for the misdemeanor offense of transporting a small quantity of beer to a “dry village.” Expected to be “one of the most significant criminal law decisions in the coming term,” Jouppi will shed light on the constitutional permissibility of the myriad of criminal forfeiture actions that generate massive revenue each year for federal, state, and local government. Jouppi also promises to be a milestone in the constitutional doctrine relating to civil forfeiture, which is even more lucrative for government than its criminal counterpart. That is because the Eighth Amendment’s excessive fines clause, which in the opinion of the plane’s owner prohibits Alaska from permanently depriving him of his property, applies to civil forfeitures as well as criminal ones, provided that the civil forfeiture at issue is (at least in part) “punitive.”
Read the full piece here.
Regulatory Comments Introduction The International Center for Law & Economics (ICLE) submits these comments on the Korea Fair Trade Commission’s (KFTC) proposed amendment to the Notification Guidelines . . .
The International Center for Law & Economics (ICLE) submits these comments on the Korea Fair Trade Commission’s (KFTC) proposed amendment to the Notification Guidelines for Business Combinations (Proposed Amendment), published for public comment on Sept. 9.[1] ICLE is a nonprofit, nonpartisan global research and policy center that applies law & economics methods to public-policy debates. Its scholars have written extensively on acquihires—transactions centered on hiring a firm’s team—and artificial intelligence (AI) partnerships.[2] ICLE has also commented on the KFTC’s merger review guidelines.[3]
The Proposed Amendment would treat transactions in which a firm hires a target’s key personnel, often alongside a license to its technology, as business transfers under Article 9(1)(iv) of the Monopoly Regulation and Fair Trade Act (MRFTA).[4] The KFTC describes the amendment as a clarification. In its view, acquihires already constitute business transfers under Article 9(1)(iv), and the amendment would make that clear so parties do not fail to notify. We welcome greater certainty for parties, but the proposed text goes beyond restating existing law.
The Proposed Amendment would expand the definition of a “business” to include organized personnel whose technology or knowledge enables them to perform a core business function. It would treat a “material part” of a business as transferred whenever the acquirer becomes able to carry on the same activities as the transferor. It would count any consideration paid to the transferor toward the transfer price, whatever its label, including payments to release rights over departing personnel and license fees. It would also treat the transferor’s cessation of business as implementation of the transfer.[5]
We share the principle behind the Proposed Amendment. Competition law should look to a transaction’s substance, not its form. A transaction that strips a firm of its competitive significance should not escape scrutiny merely because it takes the form of a hiring arrangement and no shares change hands. As drafted, however, the amendment would bring ordinary licensing and hiring within merger control. We recommend that the KFTC withdraw it or narrow it substantially. Our comments make three points.
First, the case for extending notification has not been made (Section I). No competition authority has found an acquihire anticompetitive. The United Kingdom’s Competition and Markets Authority (CMA) cleared the Microsoft/Inflection transaction in Phase 1. Brazil’s Administrative Council for Economic Defense (CADE) also cleared it through an expedited review, finding that “[t]he transaction is not likely to result in significant changes to the competitive landscape in Brazil and therefore does not require a more in-depth analysis.”[6] Structuring a transaction to stay below notification thresholds is not misconduct. It is consistent with shareholders’ interest in minimizing transaction costs. Nor does the concern that an acquihire might neutralize a nascent competitor warrant amending or clarifying competition law. Error-cost considerations counsel restraint: Wrongly deterring these transactions is costly and difficult to reverse, while errors from wrongly permitting them tend to correct themselves.
Second, most acquihires are not mergers in the competition-law sense (Section II). The Notification Guidelines define a business as a bundle of property rights. Employment contracts are not property rights in employees, who have a constitutional right to choose where they work.[7] An acquirer instead obtains a coordinated but revocable set of employment decisions, often alongside a nonexclusive license that leaves rivals free to use the same technology. Against this backdrop, the proposed “material part” test asks what the acquirer can do rather than what the transferor has lost. The proposed implementation rule also ties the parties’ obligations to decisions they do not control.
Third, the proposed transfer-price calculation would not track competitive significance and would create perverse incentives (Section III). It would count license fees paid for access without control. And because it would count only payments to the transferor—payments that return capital to a startup’s investors—it would burden compensated, cooperative transactions while leaving uncompensated raids on a startup’s workforce untouched.
The KFTC explains that the Proposed Amendment seeks to prevent parties from evading notification obligations, noting that large global technology firms have used acquihires to recruit key personnel from AI startups.[8] This concern echoes statements by U.S. enforcers and legislators.[9]
A transaction’s exclusion from a notification regime says little about its competitive effects. Every threshold invites parties to structure transactions around it. Notification regimes deliberately leave many transactions unreviewed to focus scarce resources on those most likely to alter competitive conditions and give parties a predictable basis for planning.[10]
Acquihires also arise partly because conventional acquisitions face heightened scrutiny. When firms respond with licensing and hiring arrangements that leave the target independent, extending merger control to those arrangements tells them they are “damned if they buy and damned if they don’t.”[11] The relevant question is whether the transactions the Proposed Amendment would capture are likely to restrain competition. The published materials offer no evidence that they are.
Before extending notification obligations to a new class of transactions, the KFTC should establish that the class poses a significant risk to competition, that existing law cannot adequately address that risk, and that the benefits of review outweigh the costs. The Proposed Amendment meets none of these conditions.
Published reviews and evidence from evolving AI markets favor restraint rather than a presumption of harm (Subsection A). Existing law reaches harmful hiring practices and allows authorities to weigh the evidence, reasonable justifications, and efficiencies (Subsection B). Acquihires also support team mobility, workers’ bargaining power, and startup investment. Wrongly deterring them would impose broad, often unobservable costs that could exceed those of wrongly permitting them, across sectors well beyond AI (Subsection C).
The KFTC states that it developed the Proposed Amendment through exchanges with authorities in the European Union, Germany, and the United Kingdom.[12] But if anything, those authorities’ experience points toward restraint. The CMA and CADE have both reviewed Microsoft’s arrangements with Inflection AI and cleared the transaction. These published reviews provide a more useful starting point than a presumption that acquihires harm competition.
Microsoft reportedly paid about $620 million for a nonexclusive license to Inflection’s models and $30 million for a waiver of claims arising from its hiring of Inflection staff, most of whom joined Microsoft.[13] The CMA asserted jurisdiction but cleared the transaction at Phase 1. It found that Inflection had a very small share of chatbot use, had struggled to grow or sustain its user base, and exerted no material competitive constraint on rival services.[14]
CADE likewise cleared the transaction through an expedited review, concluding that it was “not likely to result in significant changes to the competitive landscape in Brazil and therefore does not require a more in-depth analysis.”[15] CADE also observed:
Microsoft would not exceed a 30% market share in any of the segments related to the development and application of artificial intelligence tools, which would mitigate major vertical competition concerns. It is worth noting that the artificial intelligence sector is rapidly evolving, with the boundaries of relevant markets not yet clearly defined; it is reasonable to assume that there remains scope for market contestability and significant gains before a state of stabilization is reached. Furthermore, there are no strong indications of a decline in rivalry that would warrant intervention.[16]
Microsoft would not exceed a 30% market share in any of the segments related to the development and application of artificial intelligence tools, which would mitigate major vertical competition concerns.
It is worth noting that the artificial intelligence sector is rapidly evolving, with the boundaries of relevant markets not yet clearly defined; it is reasonable to assume that there remains scope for market contestability and significant gains before a state of stabilization is reached. Furthermore, there are no strong indications of a decline in rivalry that would warrant intervention.[16]
Germany’s Bundeskartellamt concluded that the transaction could, in principle, constitute a concentration but declined jurisdiction because Inflection had no substantial operations in Germany.[17] The European Commission took no decision after the Court of Justice curtailed referrals of transactions below notification thresholds in Illumina.[18] U.S. agencies have opened investigations but, to our knowledge, have brought no enforcement action against an acquihire.
The markets in which these transactions occur also show little sign of the entrenchment that critics predict. The cost of AI inference—running a trained model to produce an output—has fallen sharply. Epoch AI reports that “the price to achieve GPT-4’s performance on a set of PhD-level science questions fell by 40x per year. The rate of decline varies dramatically depending on the performance milestone, ranging from 9x to 900x per year.”[19]
New firms continue to enter at every layer of the AI supply chain, from computing resources to consumer services. Startups, rather than incumbents with the largest data holdings, produced the most successful early generative-AI services.[20] The empirical record on “killer acquisitions” also offers little basis for presuming harm. The study that popularized the term and prompted several investigations estimated that 5.3% to 7.4% of pharmaceutical acquisitions preempted future competition.[21] Evidence of comparable effects in digital markets remains limited.
One of that study’s authors, Florian Ederer, has since examined roughly 1,200 startup acquisitions by eight leading technology firms and found little evidence that they suppress innovation. Patenting in the relevant technology areas rose before acquisition and continued afterward where further acquisitions followed. Acquired patents received more citations, including from firms that hired the targets’ employees, and target inventors who stayed with the acquirer went on to patent more.[22]
We encourage the KFTC to take a wait-and-see approach while the evidence develops and generative AI remains in a formative stage. A notification obligation covering an entire class of transactions should rest on evidence that the class poses a significant risk to competition.
The harms critics attribute to acquihires—hollowing out a rival or hoarding talent to deny it to competitors—are forms of conduct the MRFTA already reaches. Article 45(1)(viii) prohibits unfair interference with another firm’s business activities. The Enforcement Decree identifies unjustly inducing or hiring another firm’s personnel as one form of interference when it significantly impedes that firm’s business.[23] The KFTC’s guidelines give examples that closely match the concerns raised about acquihires: recruiting a large share of a firm’s core personnel with excessive benefits, or recruiting key personnel the hiring firm does not need to obstruct a competitor. The guidelines also allow the KFTC to consider reasonable justifications and efficiency gains.[24]
The talent-hoarding theory also rests on thin evidence. The most prominent study of this theory infers that incumbents keep researchers idle using data that shows only that certain software firms retained more skilled employees after their patent protection weakened. Yet ordinary management decisions could explain the same pattern.[25] Where hoarding does occur and impedes a rival, the KFTC can assess it under the existing rules on the evidence.
Other provisions of Korean competition law address related conduct. Article 5 reaches abuse of a dominant position, including unfair interference with rivals’ business activities. Article 40 reaches agreements among competitors, including restraints on hiring. Korea’s trade-secret law addresses the misappropriation of confidential information by departing employees.[26] These laws allow authorities to assess conduct on an actual record without burdening the many transactions that raise no concern.
Acquihires serve important economic functions. They give founders and investors an opportunity for exit when a startup cannot raise further capital, preserve teams whose joint value exceeds the sum of individual hires, and reward entrepreneurial risk-taking. Sought-after engineers often prefer to move through an acquihire rather than leave individually, which could damage their standing with investors who might finance future ventures.[27]
Competition for AI talent has also boosted workers’ compensation.[28] Treating coordinated team moves as reportable business transfers would weaken those workers’ bargaining position. A team that can move together has a better alternative to its current employer—and therefore more bargaining power—than individuals who must move one at a time. Burdening employers who bid for teams would reduce competition for their services, contrary to competition law’s aims in labor markets.
For many target firms, failure is the realistic alternative to an acquihire. Practitioners and scholars describe acquihires as a soft landing for startups that cannot secure further funding, although the recent AI transactions that prompted regulatory scrutiny involved considerably better-capitalized targets.[29]
Making these exits costlier or less certain lowers the expected return on venture investment and, with it, the funding available to the next generation of startups.[30] Japan offers a useful contrast. Acquisitions now account for 88% of Japanese startup exits, and the Japanese government has made raising that share an explicit policy objective.[31]
The costs of enforcement errors are asymmetric. If the KFTC wrongly permits an acquihire, the error tends to correct itself because employees remain free to leave, join rivals, or found new firms. As Section II.B explains, acquired employees leave at higher rates than ordinary hires. If the KFTC wrongly deters acquihires, the costs fall on labor mobility and venture investment across the economy. Those costs are largely unobservable because the deterred transactions never occur.[32]
These costs would extend beyond AI and global technology firms. The Proposed Amendment applies to any acquirer that meets the MRFTA’s thresholds, and Chairman Joo Byung-ki has identified semiconductors and pharmaceuticals among the sectors of concern.[33] Their importance raises the costs of both mistaken intervention and inaction. Well-intentioned rules that chill procompetitive deals can do lasting harm to the competition they aim to protect.
The Proposed Amendment would bring acquihires within merger control by redefining a “business” under Article 9(1)(iv) of the MRFTA rather than amending the statute. This approach stretches provisions designed for transfers of assets, contracts, and an organized business to cover voluntary employee moves, often accompanied by a nonexclusive license.
The amendment departs from the existing definition of a business transfer and raises questions about the KFTC’s authority to expand statutory obligations through an administrative notice (Subsection A). Employees retain control of their human capital and remain free to leave, limiting the acquirer’s ability to retain a team (Subsection B). The proposed “material part” test overlooks what the transferor retains and whether rivals can still access its technology (Subsection C). Finally, the implementation rule ties the acquirer’s obligations to decisions it may not control, while conventional merger remedies cannot reliably restore a team to its former employer (Subsection D).
These problems call for a narrower approach tied to transferred property rights, the target’s loss of competitive significance, and acts within the parties’ control.
Article 9(1)(iv) of the MRFTA reaches the acquisition or lease of all or a material part of another company’s business, and the acquisition of all or a material part of its fixed operating assets.[34] The Notification Guidelines define a business as “a bundle of property rights organized for the company’s business purposes and functioning as an integrated whole,” including sales rights, intellectual-property rights, and permits of economic value.[35] A part of a business is “material” if it can operate as an independent business unit or its transfer significantly reduces the transferor’s sales.[36]
Both definitions describe something that changes hands. A business transfer moves assets, contracts, and the organization that uses them from one owner to another. The associated employment relationships generally pass to the transferee, subject to each employee’s right to object. In an acquihire, by contrast, employees resign and accept new offers, while the transferor retains its property.
The existing definition mentions personnel only as a component of sales rights, which include “sales-related organization, personnel, and agency relationships.”[37] Personnel therefore count when they form part of an organized business that changes hands together with its contracts and assets. The Proposed Amendment would make the movement of personnel and their know-how sufficient, even when the transferor transfers nothing else and continues to operate.
Adding organized personnel to a category defined by bundles of property rights makes the definition internally incoherent. Employees remain free to change employers after a deal. Their movement does not itself transfer property rights.
The amendment also raises a question of legal authority. The KFTC presents it as a clarification, but it would substantially expand statutory notification obligations. An administrative notice should not bring transactions within the statute’s scope when its existing provisions do not cover them. The National Assembly should decide whether to expand Article 9(1)(iv).
Article 15 of the Korean Constitution guarantees every citizen’s freedom to choose an occupation.[38] Other legal systems recognize similar principles. Section 6 of the U.S. Clayton Act provides that “the labor of a human being is not a commodity or article of commerce.” The House of Lords held in Nokes v. Doncaster Amalgamated Collieries that, absent a contrary statutory provision, an employment contract cannot transfer without the employee’s consent.[39] An employer offers terms that individuals remain free to accept or reject.
An acquirer therefore gains the prospect that a team will move together, rather than ownership of its human capital. Coordinated offers, bonuses tied to the team’s joining, and agreements not to sue align the incentives of individuals who could otherwise decide separately. Each employee remains free to decline, leave later, or join a rival.[40] Economic theory supports the same distinction. Under the property-rights theory of the firm, a firm owns the complementary assets around which employees organize their work, but cannot own their human capital.[41]
The evidence confirms that employee retention is uncertain. A study of roughly 230,000 acquired startup workers finds that “acquired workers show significantly higher turnover rates than regular hires,” with attrition concentrated among the highest earners.[42] Other research finds the same pattern among senior and technical staff, and finds that acquisitions increase acquired employees’ later entrepreneurship.[43] Acquihire theories of harm depend on the acquirer retaining a team. That assumption weakens fastest for the people whose departure from the target supposedly causes the harm.
Some commentators identify the relevant asset as the know-how the team carries.[44] This argument conflates two kinds of knowledge. Codified know-how—source code, model weights, and documentation—moves through licenses or assignments, to which existing legal analysis already applies. Tacit know-how—knowledge embedded in employees’ skills and experience—is inseparable from the people who hold it. Those employees remain free to leave. Where departing employees take information they have no right to use, trade-secret law supplies the remedy rather than merger control.
The Proposed Amendment adds a third way to satisfy the first component of the “material part” test. It would suffice that the acquirer becomes able, after the transaction, to carry on the same business activities as the transferor.[45] This test focuses on the acquirer’s capabilities rather than the transferor’s loss, treating hiring arrangements coupled with exclusive and nonexclusive licenses alike. An incumbent already active in the field will often satisfy it by definition, as will almost any hire that adds capability. As an alternative to the existing criteria, it also bypasses the requirement that the transferred part be capable of operating as an independent business unit—the requirement that gives “material part” its meaning.
The other jurisdictional requirements do little to narrow the test. The price threshold requires consideration equal to only 10% of the transferor’s total assets or 10 billion South Korean won (KRW).[46] The thresholds for the parties’ size reach any acquirer group with KRW 300 billion in assets or turnover and any transferor with KRW 30 billion.[47] Because total assets count toward these thresholds, a well-capitalized startup holding venture funding may qualify despite having little revenue.
Consider a hypothetical transaction. A Korean electronics group hires 15 engineers from a chip-design startup holding KRW 40 billion in venture funding and pays it KRW 12 billion for a nonexclusive license to its design tools. The startup retains its remaining staff, continues to serve other customers, and remains free to license the same tools to the group’s rivals. Under the Proposed Amendment, the transaction could qualify as a business transfer. The engineers form an organized team whose knowledge enables them to perform a core function, the group can now carry on the startup’s design activities, and the license fee exceeds KRW 10 billion. Yet nothing in this sequence suggests that the transaction has transferred or eliminated the startup’s competitive significance.
A more accurate test would focus on what the transaction removes from the market, including whether the acquirer’s rivals retain commercially meaningful access to the target’s technology.[48] When the target remains free to license its technology to others and continue operating, the acquirer gains a workforce it cannot own and a license its rivals can also obtain. By contrast, a formally nonexclusive license that operates as exclusive in practice, or prevents the target from using or licensing its technology, may transfer the target’s competitive position and properly qualify as a business transfer.
The transactions that prompted the Proposed Amendment—including those involving Inflection, Character.AI, Windsurf, and Groq—rested on nonexclusive licenses under which the target retained the right to use and license its technology.[49] The guidelines should distinguish these arrangements from transfers that remove a business’s competitive significance.
The KFTC has publicly indicated that ordinary recruitment and the hiring of a handful of employees will not count as business transfers.[50] The Proposed Amendment contains no such exclusion. The final guidelines should state it expressly.
The new implementation rule illustrates the mismatch. For organized personnel, the Proposed Amendment treats a business transfer as implemented when the transferor ceases its existing business.[51] Implementation determines when parties must submit a post-closing notification and what parties subject to pre-closing notification may do before clearance.[52]
The transferor’s board and investors decide when to cease operations, and the Proposed Amendment does not define cessation. A full wind-down would presumably qualify. A product pivot, a reduction in operations, or the sale of the remaining business to a third party is less clear. An acquirer could face liability for implementing a transaction before clearance because of a decision it neither made nor knew about.
The rule would also pressure startups to keep hollowed-out operations running during review, consuming investors’ capital to avoid triggering the acquirer’s obligations. The transitional provision compounds this uncertainty. It applies the amendment to business combinations whose notification obligation arises after its effective date, so a transaction signed years earlier could become notifiable if the transferor winds down afterward.[53]
Remedies present a further difficulty. Corrective measures for unlawful business combinations, such as orders to dispose of shares or transfer a business, presuppose assets the acquirer can relinquish.[54] The KFTC cannot order employees to return to a former employer without conflicting with their constitutional freedom to choose an occupation. Requiring the acquirer to dismiss the team would not restore competition, because nothing would ensure that the employees return to the target. Rescinding the license would deprive the target and its investors of the consideration that often keeps the target alive. A pre-closing hold would, in practice, prevent individuals from starting jobs they have already accepted.[55] A notification obligation that cannot lead to a workable remedy imposes costs without corresponding benefits.
Recommendation: Delete subparagraph (2) of the definition of a business, or limit it to personnel who move together with transferred property rights, such as exclusive intellectual-property rights, ownership of source code or model weights, or customer contracts. Replace the new “material part” criterion with a test focused on what the transferor loses and whether rivals retain access to the technology. Tie implementation to acts within the parties’ control.
Under the current Notification Guidelines, the “transfer price” includes consideration paid for the business or fixed operating assets, liabilities assumed, and annual fees for leases and management entrustment.[56] Each element reflects something the transferor gives up, such as ownership of assets or the right to operate a business for a specified period.
For organized personnel, the Proposed Amendment would count any economic consideration paid to the transferor for the transaction, “regardless of its designation.” Examples include payments to release rights relating to departing personnel and license fees for intellectual property needed for the business.[57] The KFTC presents this as a technical change to account for consideration spread across several contracts.[58] Its consequences are substantive. The transfer price determines whether a transaction meets the price requirement of the “material part” test. A personnel-based transfer that falls below that threshold is not notifiable, even if it satisfies the test’s other component.[59]
These rules would poorly distinguish transactions that warrant review. License fees and payments supporting lawful hiring do not establish that the acquirer gains control over the target’s competitive position, and their size does not establish competitive harm (Subsection A). Counting only payments to the transferor would burden cooperative deals, encourage uncompensated recruitment, and shift value toward selected employees at the expense of investors and those who remain. Unclear aggregation rules would compound the uncertainty and encourage parties to restructure payments to avoid notification (Subsection B).
A nonexclusive license fee buys access to technology without control over it. The licensor remains free to use the technology and license it to others, including the licensee’s rivals. For this reason, the U.S. Federal Trade Commission’s Premerger Notification Office has long treated exclusive licenses as potentially reportable asset acquisitions and nonexclusive licenses as outside the notification requirement.[60]
The transactions that prompted the Proposed Amendment illustrate the point. After Microsoft’s arrangements with Inflection, Inflection retained “the unfettered ability to commercialise” its models, including by licensing them to third parties. It also announced that it would offer its latest model through licensing partnerships and application programming interfaces (APIs) that let other software access its models.[61] Counting a nonexclusive license fee as the price of a business conflates access with control. The test proposed in Section II.C would capture a formally nonexclusive license that operates as exclusive in practice. The transfer-price calculation need not substitute for that inquiry.
The same problem affects the transaction-value threshold. Korea introduced it in 2021 on the premise that a high price for a target with little revenue may signal competitive significance that revenue-based thresholds miss. Authorities have rarely invoked it since.[62] Whatever the merit of that premise for acquisitions, it does not carry over to license-and-hire arrangements. Those payments buy a license the licensor can grant again and a set of employment decisions it cannot guarantee.
Payments to release rights over departing personnel serve a similar function. In the Microsoft/Inflection arrangements, the reported $30 million payment secured a waiver of claims arising from Microsoft’s hiring of Inflection staff. Such payments remove a litigation threat that would otherwise deter lawful mobility. They support the hiring arrangement without purchasing the target’s business.[63]
More generally, transaction prices reflect scarce talent, the opportunities new technology may create, the benefits of combining the target’s capabilities with the acquirer’s assets, and competition among bidders. None of these establishes that the transaction eliminates a competitive constraint imposed by the target.[64]
The price requirement compounds the problem. Measured against the transferor’s total assets, the 10% threshold captures the transaction’s size relative to the target rather than its effect on competition. For a small startup, almost any meaningful payment will meet it.
The Proposed Amendment counts only consideration paid to the transferor. These payments allow a startup’s investors, remaining employees, and option holders to recover value. An acquirer that recruits a startup’s team without paying the startup would not meet the price requirement. The rule would therefore burden cooperative transactions while leaving uncompensated raids on a startup’s workforce untouched. This result runs counter to the Proposed Amendment’s stated purpose of protecting venture companies.[65] It would encourage structures that leave investors with less and substitute litigation for negotiated settlements.
The rule would also encourage parties to shift value from payments to the transferor toward compensation paid directly to individual employees. This would arbitrarily favor founders and senior researchers over investors and employees who stay behind. The disputes following the Windsurf transaction illustrate these conflicts over how to distribute a deal’s proceeds.[66]
The press release explains that “regardless of its designation” aims to capture consideration spread across several contracts, but the Proposed Amendment provides no aggregation rules.[67] It does not identify which agreements form part of a transaction or the period over which payments count. Nor does it explain whether accompanying agreements for cloud computing, chips, or distribution count toward the price, or whether payments to the transferor’s shareholders count at all. These gaps prevent parties from determining whether they must notify and encourage them to stagger payments or route them through affiliates.
Recommendation: Exclude nonexclusive license fees and payments ancillary to hiring, such as releases of noncompete covenants and agreements not to sue, from the transfer price. Specify which agreements count, the aggregation period, and whether payments to the transferor’s shareholders count. If the KFTC retains a price rule for personnel-based transfers, set a separate, substantially higher threshold to reduce the risk of capturing harmless transactions, rather than treating price as a measure of competitive significance.
The concern that a firm might acquire a competitor’s business in substance without acquiring it in form supports a narrow rule. The Proposed Amendment instead would reach ordinary licensing and hiring, measure transactions by prices that do not establish competitive harm, and tie notification obligations to events outside the acquirer’s control. Employees remain free to leave, and conventional merger remedies cannot reliably restore a team to its former employer.
Published reviews and the evidence from AI markets instead favor restraint. Existing law already addresses harmful hiring practices, while acquihires can preserve teams, strengthen workers’ bargaining power, and provide exits that support startup investment. Wrongly deterring these transactions would impose broad, often unobservable costs extending beyond AI and global technology firms. Acquirers could shift toward uncompensated recruitment, staggered payments, and litigation, while costlier, less certain exits would reduce the returns that finance venture investment in Korea.
Firms would also face obligations they cannot reliably assess in advance under a combination of tests no peer jurisdiction has adopted. The United Kingdom, which the KFTC consulted, is moving toward narrower jurisdiction. Its government has proposed to narrow the open-ended share-of-supply test that gives the CMA broad discretion to assert jurisdiction, and the CMA has said it is less likely to investigate global transactions that other authorities are reviewing.
Guidelines serve their purpose when firms can predict how the KFTC will treat a transaction. Predictable merger control also helps make Korea an attractive place to found, finance, and acquire innovative companies. We recommend that the KFTC withdraw the Proposed Amendment and address harmful conduct through Articles 5, 40, and 45 of the MRFTA. Any expansion of statutory notification obligations should come from the National Assembly.
If the KFTC nonetheless proceeds, we recommend that it:
[1] Press Release, Korea Fair Trade Comm’n, Sinyuhyeong Gieop Gyeolhap-ui Sagakjidae Haeso-reul Wihan Gieop Gyeolhap-ui Singo Yoryeong Gaejeongan Haengjeong Yego [Advance Notice of Proposed Amendment to the Notification Guidelines for Business Combinations to Eliminate Blind Spots for New Types of Business Combinations] (Sept. 9, 2026) [hereinafter Press Release]; id. attach. (comparison of current and proposed provisions) [hereinafter Proposed Amendment]. This comment cites lettered subdivisions of the Notification Guidelines by their English equivalents (가 = a, 나 = b, and so on). Unless otherwise noted, translations of Korean-language materials are our own.
[2] See, e.g., Dirk Auer & Onyeka Aralu, ‘Reverse Acquihires’ and the Market for Talent: Antitrust Theory in Search of a Case, Concurrences No. 9-2026 (forthcoming) [hereinafter Auer & Aralu, Reverse Acquihires]; Dirk Auer & Mario A. Zúñiga, AI Partnerships and Competition: Damned if You Buy, Damned if You Don’t (Int’l Ctr. for L. & Econ., Working Paper, May 2026).
[3] Geoffrey A. Manne, Dirk Auer & Lazar Radic, Comment of the International Center for Law & Economics Concerning the Proposed Amendments to Korea’s Merger Review Guidelines (Int’l Ctr. for L. & Econ., Dec. 5, 2023).
[4] Dokjeom Gyuje mit Gongjeong Georae-e Gwanhan Beomnyul [Monopoly Regulation and Fair Trade Act], Act No. 3320, Dec. 31, 1980, amended by Act No. 17799, Dec. 29, 2020, art. 9(1)(iv) (S. Kor.) [hereinafter MRFTA].
[5] Proposed Amendment, supra note 1, §§ 4(b)(2), 4(c)(1), 4(d)(3), 4(f).
[6] Microsoft/Inflection, Merger Case No. 08700.005792/2026-71, Decision No. 475/2026/CGAA5/SGA1/SG, ¶ 19 (Braz. Admin. Council for Econ. Def. 2026), https://sei.cade.gov.br/sei/modulos/pesquisa/md_pesq_documento_consulta_externa.php?HJ7F4wnIPj2Y8B7Bj80h1lskjh7ohC8yMfhLoDBLddbNMaDk2AO6MZR6aBnSzp6KvSE3SnFkJaYX5WBvy-aRe0rVTcGut04mNHPDwDq9y_ebH8rs7cqfZFpufAf0t1Iw (“Neste contexto, entende-se que a Operação não possui o condão de acarretar alterações significativas ao ambiente concorrencial no Brasil, não demandando, deste modo, um maior aprofundamento da análise.”).
[7] Daehanminguk Heonbeop [Constitution] art. 15 (S. Kor.) (“All citizens shall enjoy freedom of occupation.”).
[8] Press Release, supra note 1.
[9] See Bloomberg Podcasts, FTC Chair Andrew Ferguson Talks Acquihires | Bloomberg Talks, YouTube (Jan. 16, 2026), https://www.youtube.com/watch?v=8u_hazxCplM; Letter from Sens. Elizabeth Warren, Ron Wyden & Richard Blumenthal to Gail Slater, Assistant Att’y Gen., Antitrust Div., U.S. Dep’t of Just., and Andrew N. Ferguson, Chairman, Fed. Trade Comm’n (Feb. 4, 2026), https://www.warren.senate.gov/wp-content/uploads/media/doc/final_-_warren_wyden_blumenthal_letter_to_the_department_of_justice_and_the_federal_trade_commission_on_big_tech_reverse_acqui-hires.pdf.
[10] See Auer & Zúñiga, supra note 2, at 6–7.
[11] Id. at 23–24; Brian J. Broughman, Matthew T. Wansley & Samuel N. Weinstein, No Exit, 100 N.Y.U. L. Rev. 1481, 1484–86 (2025) (situating license-and-hire transactions among responses to tougher merger enforcement).
[12] Press Release, supra note 1.
[13] Krystal Hu & Harshita Mary Varghese, Microsoft Pays Inflection $650 Mln in Licensing Deal While Poaching Top Talents, Source Says, Reuters (Mar. 21, 2024), https://www.reuters.com/technology/microsoft-agreed-pay-inflection-650-mln-while-hiring-its-staff-information-2024-03-21.
[14] Competition & Mkts. Auth., Microsoft Corporation’s Hiring of Certain Former Employees of Inflection AI and Its Entry into Associated Arrangements, Case ME/7103/24, Phase 1 Decision, ¶ 22 (Sept. 4, 2024), https://assets.publishing.service.gov.uk/media/6719ff5f549f63039436b3c8/__Full_text_decision__.pdf.
[15] Microsoft/Inflection, Decision No. 475/2026/CGAA5/SGA1/SG, ¶ 19.
[16] Id. ¶¶ 14–15.
[17] Press Release, Bundeskartellamt, Taking Over Employees May Be Subject to Merger Control in Germany—Bundeskartellamt Not Competent to Review Microsoft/Inflection Transaction as Inflection Has No Substantial Operations in Germany (Nov. 29, 2024), https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2024/29_11_2024_Microsoft.htm.
[18] See Joined Cases C-611/22 P & C-625/22 P, Illumina, Inc. v. Comm’n, ECLI:EU:C:2024:677 (Sept. 3, 2024), https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62022CJ0611; Bundeskartellamt, supra note 17 (noting the Commission’s Sept. 18, 2024, announcement that it would not issue a decision).
[19] Ben Cottier, Ben Snodin, David Owen & Tom Adamczewski, LLM Inference Prices Have Fallen Rapidly but Unequally Across Tasks, Epoch AI (Mar. 12, 2025), https://epoch.ai/data-insights/llm-inference-price-trends.
[20] Auer & Zúñiga, supra note 2; Geoffrey A. Manne & Dirk Auer, From Data Myths to Data Reality: What Generative AI Can Tell Us About Competition Policy (and Vice Versa), CPI Antitrust Chron., Feb. 2024, at 2, 7–8.
[21] Colleen Cunningham, Florian Ederer & Song Ma, Killer Acquisitions, 129 J. Pol. Econ. 649 (2021).
[22] Florian Ederer, Regina Seibel & Timothy Simcoe, Digital (Killer?) Acquisitions (Nat’l Bureau of Econ. Rsch., Working Paper No. 35762, Sept. 2026), https://www.nber.org/papers/w35762.
[23] MRFTA, supra note 4, art. 45(1)(viii); Dokjeom Gyuje mit Gongjeong Georae-e Gwanhan Beomnyul Sihaengnyeong [Enforcement Decree of the Monopoly Regulation and Fair Trade Act], annex 2, item 8(b) (S. Kor.). This provision treats the conduct as an unfair trade practice rather than an abuse of dominance. The burden of proof is therefore lower: Plaintiffs need not show that the defendant holds a dominant position.
[24] Korea Fair Trade Comm’n, Bulgongjeong Georae Haengwi Simsa Jichim [Guidelines for Review of Unfair Trade Practices] pt. V, item 8(b) (S. Kor.).
[25] Geoffrey A. Manne, Gotta Catch ’Em All? Antitrust and the AI Talent Wars, Truth on the Mkt. (June 18, 2026), https://laweconcenter.org/resources/gotta-catch-em-all-antitrust-and-the-ai-talent-wars (discussing Shaolong Wu & Zefan Qian, Talent Hoarding and Upstream Innovation: Labor Market Distortions by Large Incumbents (working paper)).
[26] MRFTA, supra note 4, arts. 5, 40; Bujeonggyeongjaeng Bangji mit Yeongeopbimil Boho-e Gwanhan Beomnyul [Unfair Competition Prevention and Trade Secret Protection Act], Act No. 911, Dec. 30, 1961 (as amended) (S. Kor.).
[27] John F. Coyle & Gregg D. Polsky, Acqui-Hiring, 63 Duke L.J. 281 (2013).
[28] Auer & Zúñiga, supra note 2, at 14–15.
[29] See Elizabeth Pollman, Startup Failure, 73 Duke L.J. 327 (2023) (discussing soft-landing acquisitions and acquihires as alternatives to formal insolvency); Louis Lehot, What an Acqui-Hire Looks Like for an AI Startup Today, Medium (July 16, 2026) (noting that most acquihires involve companies that raised less than $5 million and could not raise another round).
[30] Geoffrey A. Manne, Samuel Bowman & Dirk Auer, Technology Mergers and the Market for Corporate Control, 86 Mo. L. Rev. 1047 (2022).
[31] Geoffrey A. Manne, Dirk Auer, Lazar Radic & Mario A. Zúñiga, Comments of the International Center for Law & Economics to the Japan Fair Trade Commission Re: Opinions on the Draft of the Business Combination Guidelines 3–4 (Int’l Ctr. for L. & Econ., Aug. 27, 2026).
[32] For an explanation of the error-cost framework, see Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1, 15 (1984).
[33] Kim Nam-myung, Korea to Screen “Acqui-Hire” Deals as Corporate Mergers, Seoul Econ. Daily (Sept. 10, 2026), https://en.sedaily.com/finance/2026/09/10/korea-to-screen-acqui-hire-deals-as-corporate-mergers.
[34] MRFTA, supra note 4, art. 9(1)(iv).
[35] Korea Fair Trade Comm’n, Gieop Gyeolhap-ui Singo Yoryeong [Notification Guidelines for Business Combinations] § 4(b) (S. Kor.) [hereinafter Notification Guidelines].
[36] Id. § 4(c).
[37] Notification Guidelines, supra note 35, § 4(b).
[38] S. Kor. Const. art. 15.
[39] 15 U.S.C. § 17; Nokes v. Doncaster Amalgamated Collieries Ltd. [1940] AC 1014 (HL).
[40] Auer & Aralu, Reverse Acquihires, supra note 2; Onyeka Aralu & Dirk Auer, Acquihires and Antitrust: When Buying the Team Isn’t Buying the Company, Truth on the Mkt. (Apr. 9, 2026), https://truthonthemarket.com/2026/04/09/acquihires-and-antitrust-when-buying-the-team-isnt-buying-the-company [hereinafter Aralu & Auer].
[41] Oliver Hart & John Moore, Property Rights and the Nature of the Firm, 98 J. Pol. Econ. 1119 (1990).
[42] J. Daniel Kim, Startup Acquisitions as a Hiring Strategy: Turnover Differences Between Acquired and Regular Hires, 9 Strategy Sci. 118 (2024).
[43] Weiyi Ng & Toby E. Stuart, Acquired Employees Versus Hired Employees: Retained or Turned Over?, 43 Strategic Mgmt. J. 1025 (2022); J. Daniel Kim, Startup Acquisitions, Relocation, and Employee Entrepreneurship, 43 Strategic Mgmt. J. 2189 (2022).
[44] See Nina Fridman, When a Mass Resignation Becomes a Merger: Rethinking Asset Acquisitions for the AI Era, 93 U. Chi. L. Rev. 999 (2026); David T. Wong, Comment, An Acquisition by Another Name: Reverse Acquihires Under the Clayton Act, 135 Yale L.J. 3175 (2026) (treating human capital as an asset while distinguishing it from employees themselves).
[45] Proposed Amendment, supra note 1, § 4(c)(1).
[46] Notification Guidelines, supra note 35, § 4(c); Proposed Amendment, supra note 1, § 4(c)(2).
[47] MRFTA, supra note 4, art. 11(1); Shin & Kim LLC, Merger Control in Korea Vol. 13—KFTC to Bring “Acquihires” Within the Scope of Merger Review (May 29, 2026), https://shinkim.com/eng/media/newsletter/3312 [hereinafter Shin & Kim].
[48] Aralu & Auer, supra note 40.
[49] Auer & Aralu, Reverse Acquihires, supra note 2; Press Release, Groq, Groq and Nvidia Enter Non-Exclusive Inference Technology Licensing Agreement to Accelerate AI Inference at Global Scale (Dec. 24, 2025).
[50] Kim Nam-myung, supra note 33.
[51] Proposed Amendment, supra note 1, § 4(f).
[52] MRFTA, supra note 4, art. 11(8); Notification Guidelines, supra note 35, § 4(e).
[53] Proposed Amendment, supra note 1, addendum ¶ 2.
[54] MRFTA, supra note 4, art. 14.
[55] Auer & Aralu, Reverse Acquihires, supra note 2.
[56] Notification Guidelines, supra note 35, § 4(d).
[57] Proposed Amendment, supra note 1, § 4(d)(3).
[58] Press Release, supra note 1 at 2.
[59] Proposed Amendment, supra note 1, § 4(c).
[60] Fed. Trade Comm’n, Premerger Notification Off., Informal Interpretation 9307006 (July 1993), https://www.ftc.gov/legal-library/browse/hsr-informal-interpretations/9307006; Eric Fruits, Daniel J. Gilman, Onyeka Aralu & Brian Albrecht, ICLE Comments to FTC and DOJ on Premerger Notifications pt. IV.B (Int’l Ctr. for L. & Econ., May 22, 2026).
[61] Competition & Mkts. Auth., supra note 14, at 21.
[62] Shin & Kim, supra note 47, § 3.
[63] Broughman, Wansley & Weinstein, supra note 11; Auer & Aralu, Reverse Acquihires, supra note 2, pt. III (describing such covenants as ancillary to lawful hiring).
[64] Manne, Bowman & Auer, supra note 30; Geoffrey A. Manne et al., Comments of the International Center for Law & Economics: EU Draft Merger Guidelines—Public Consultation pt. II.A.3 (Int’l Ctr. for L. & Econ., June 22, 2026) (explaining that acquisition prices reflect complementarity, option value, and talent).
[65] See Kim Nam-myung, supra note 33.
[66] Auer & Aralu, Reverse Acquihires, supra note 2, pt. IV.
[67] Press Release, supra note 1, at 2.
TL;DR TL;DR Background: Personalized pricing uses data about a customer to estimate what that person will pay. Maryland and New Jersey have enacted restrictions on the . . .
Background: Personalized pricing uses data about a customer to estimate what that person will pay. Maryland and New Jersey have enacted restrictions on the practice in grocery sales, while Connecticut has adopted a broader retail restriction. The Federal Trade Commission (FTC) has also proposed guidance warning that undisclosed personalized pricing is likely unfair or deceptive.
But… The effects on consumers depend on the market and how sellers set prices. In the three major empirical studies the FTC cites in its proposed guidance, most consumers paid less, received a lower offer, or gained from personalization, even when consumers lost as a group. Nor is the practice as widespread as the debate suggests: A 2018 European Commission study of 160 online retailers found personalized price differences in just 6% of tests, with a median pricing difference below 1.6%.
Moreover… Disclosure has costs. Requiring sellers to explain each tailored price could discourage discounts for price-sensitive customers, while evidence that such explanations change shopping decisions is weak. A price tag tells a shopper what they can pay. It says nothing about what anyone else pays.
Price discrimination means charging different buyers different prices for the same product for reasons other than cost. Student discounts, matinee tickets, airline fares, and grocery coupons are familiar examples. Personalized pricing uses data about an individual to estimate what that person will pay.
Its effects depend on the market. Richard Schmalensee and Lars Stole explain that a monopolist’s price discrimination can raise total welfare only if it increases sales. Models by Jacques-François Thisse and Xavier Vives show that, among competing firms, it can drive down both prices and profits. As Daniel J. Gilman puts it, “The welfare effect of price discrimination is known to be ambiguous and thus a matter of empirical measurement.”
The alternative matters, too. John M. Yun argues that, in the absence of personalized pricing, sellers would usually use another form of price discrimination, rather than charge everyone the same price.
Three studies cited in the FTC’s personalized-pricing guidance find mixed effects. It should be noted, however, that none tests personalized posted prices for everyday shoppers in a U.S. retail store.
In a ZipRecruiter experiment, Jean-Pierre Dubé and Sanjog Misra estimate that personalization could have raised profits by 86% over the firm’s actual pricing. Optimizing a single price would have raised profits by 55%; personalization added 19% over that optimized price. About three in five potential customers would receive a lower offer. But the study examines a hiring platform with a single seller, not competing retailers.
Benjamin Reed Shiller estimates that prices based on browsing histories could have raised Netflix’s 2006 profits by 12.99%. Yet “most consumers receive lower prices when prices are personalized, and hence the majority are slightly better off.” His results are based on a simulation of personalized pricing because at the time of his study Netflix did not engage in personalized pricing.
Nicholas Buchholz and his co-authors find that 62.5% of riders on Liftago, a Prague taxi platform, gain from personalization. Riders least sensitive to price and wait times bear most of the losses. Total consumer surplus falls by a further 2.25% compared with platform-set uniform pricing.
These settings reveal real tradeoffs, but they do not establish what personalized pricing would do in a competitive U.S. retail market or support a presumption that personalization harms consumers.
Competition can change who gains from personalized pricing. Andrew Rhodes and Jidong Zhou find that when all consumers already buy a product and all firms personalize, consumers gain as a group while industry profits fall. If uniform pricing leaves some buyers out, personalization can bring them in even as total consumer surplus falls. Brian C. Albrecht finds that when competing firms have the same complete information, competition can push prices for contested buyers down to the cost of serving them.
More data does not automatically mean more harm. Dubé and Misra find that “allowing the firm to target on more granular data can be good for consumer surplus.” Ginger Zhe Jin, Liad Wagman, and Mengyi Zhong call the tradeoffs “complex.” Their review identifies the greatest risk as when one firm has much more data than its rivals.
Many sellers leave money on the table rather than vary prices. Alberto Cavallo found no evidence that large U.S. retailers varied online prices by a shopper’s location or browsing history. Stefano DellaVigna and Matthew Gentzkow found that most large U.S. food, drug, and general-merchandise chains charged nearly uniform prices across stores. The median chain gave up about $16 million a year in profit by doing so.
A price tag tells a shopper what they can pay, not what everyone else pays. Yet the FTC’s deception theory assumes shoppers expect the same price for all and treats silence about personalization as misleading. The International Center for Law & Economics (ICLE) argues that this goes too far. In International Harvester (1984), the FTC distinguished a misleading “half-truth” from a “pure omission,” a subject on which the seller “has simply said nothing.” Pure omissions generally are not deceptive.
Unfairness requires proof of substantial injury that consumers cannot reasonably avoid and that benefits to consumers or competition do not outweigh. ICLE says the FTC’s hypothetical examples never apply that test. In FTC v. Corpay (2026), the 11th U.S. Circuit Court of Appeals upheld an unfairness finding over undisclosed fleet-card fees based on survey evidence, internal documents, and customer complaints.
A typical supermarket stocks more than 31,000 products, Gilman notes. Explaining how it sets every tailored price would be impractical and could lead sellers to drop targeted discounts. The explanations might do little for shoppers: An OECD study found no significant effect of pricing disclosures on purchasing decisions in experiments in Dublin, Ireland and Santiago, Chile.
Petra Persson shows how firms can bury useful information in a flood of disclosures, a risk Frank Easterbrook and Daniel Fischel identified decades ago. Disclosure rules can also change what sellers offer. Allison Nicoletti and Christina Zhu found lower approval rates for loans covered by federal mortgage-disclosure rules. ICLE has made a similar point about uniform-pricing mandates for grocery suppliers: They discourage discounts.
For more on this issue, see “ICLE Comments on the FTC’s Personalized Pricing Proposed Enforcement Policy Statement.”
Written Testimonies & Filings Executive Summary The International Center for Law & Economics (ICLE) welcomes the Committee’s request for information on reforming the Federal Trade Commission (FTC). Congress should . . .
The International Center for Law & Economics (ICLE) welcomes the Committee’s request for information on reforming the Federal Trade Commission (FTC). Congress should make the FTC a more reliable source of economic knowledge and constrain the discretion through which uncertain theories become costly investigations, settlements, or rules.[1] The Commission’s success should be measured by improvements in consumer welfare—considering price, output, innovation, and product quality—rather than the number of cases it brings or the reach of its regulatory ambitions.[2]
The biggest opportunity for reform is strengthening the FTC’s research, information, and competition-advocacy functions, which can reduce the uncertainty that complicates competition and consumer-protection policy. The most defensible structural option would maintain the FTC’s enforcement authority at the FTC while requiring contested cases to proceed in federal court. A more expansive reform might instead confine the Commission to research and advocacy and move coercive enforcement to the Department of Justice (DOJ), which could potentially come at the cost of transition burdens and risks to the Commission’s consumer-protection expertise.
Beyond strengthening the agency’s research and competition-advocacy activities, we suggest Congress consider the following targeted reforms:
Recent judicial decisions make these issues timely, but much of the necessary work concerns ordinary agency practice. Congress can establish durable requirements for evidence, process, and accountability while using oversight to press for changes the Commission can make under its present authority.
Competition policy must distinguish conduct that harms consumers from conduct that fosters competition through lower prices, higher quality, greater innovation, or other benefits. Consumer protection faces similar challenge. Restrictions on information, advertising, data use, or product design can remove benefits as well as risks. Policy must weigh the costs of mistaken intervention, the costs of leaving harmful conduct unaddressed, and the limits of the institutions making those judgments.[3]
The FTC can help supply the evidence those judgments require across diverse competition and consumer protection issues. Section 6 of the FTC Act authorizes the agency to gather and report market information. The Commission’s Office of Policy Planning and, especially, its Bureau of Economics have produced valuable “policy R&D.” That work has guided enforcement and served as a source of information and analysis to federal and state legislators.[4] Congress should give that work clearer priority, supported by economists, statisticians, technologists, and relevant industry experts.[5]
A stronger research program should examine how markets work before recommending changes. It should study entry, innovation, business practices, and consumer decision-making, then assess whether past merger remedies, rules, and enforcement programs achieved their stated purposes. Retrospective studies should examine mistaken predictions and ineffective interventions alongside any successes. Examples of such work by FTC staff are numerous. We recommend building on those capabilities through process reforms and focused congressional support. The Commission should choose research questions for their policy value, rather than solely to support pending cases, and publish findings even when they do not support its enforcement positions.
Licensing restrictions, certificate-of-need requirements, and other government-created barriers can protect incumbents at consumers’ expense. Where antitrust immunity shields conduct from enforcement, research and advocacy may be the most effective response.[6] ICLE’s recent comments to the FTC and DOJ explain why examining public restraints should remain one of the agency’s top responsibilities.[7]
International engagement should follow the same evidence-based approach. The FTC should explain the consumer benefits of competition and innovation, assess the costs of foreign restrictions, and resist general presumptions with weak support in the economic literature. A firm’s size or a rival’s disadvantage, for example, does not by itself establish harm to competition and consumers. Public statements of enforcement policy should identify the economic and legal basis for each position.[8]
The Commission should also invite outside economists and other qualified researchers to test competing explanations using the information it collects. Where statutory confidentiality limits disclosure, controlled access, confidentiality undertakings, and review of proposed publications may permit independent analysis while safeguarding competitively sensitive information. Public reports should disclose methods and limitations, and disclose enough underlying evidence or data for others to assess their conclusions. Compulsory information requests still need a defined question and a proportionate scope. Calling an inquiry research does not eliminate its costs.[9]
Congress should assess staffing and funding against the work to be done. It should require reporting on the quality and use of research; the results of retrospectives, investigations, and other studies; and the duration and closure of investigations, alongside enforcement activity. More investigations or larger monetary recoveries do not, by themselves, demonstrate that an agency uses its resources well.
Trump v. Slaughter invalidated the FTC’s for-cause removal protection in light of its executive functions and overruled Humphrey’s Executor to the extent anything of that decision had survived intervening cases.[10] It left open, however, whether Congress should consolidate enforcement or redesign the Commission. Nor did the decision erase the possible value of bipartisan membership, multidisciplinary expertise,[11] and deliberation, all of which remain compatible with presidential removal.
As we see it, Congress has two defensible options. It could retain the FTC’s enforcement role while moving contested adjudication to federal court, or, as part of a broader reform, it could instead limit the Commission to research and advocacy and leave coercive enforcement to the Department of Justice (DOJ).
A redesigned Commission would not automatically insulate it against presidential removal—among other things, its power to compel information, e.g., would likely require its own constitutional analysis. And, under any design, procedural safeguards for investigations, rulemaking, and remedies should apply to whichever agency exercises enforcement authority. Their value does not depend on which party controls the executive branch.
The most palatable option would strengthen the FTC’s research and advocacy functions while retaining its competition and consumer-protection enforcement. As Section III explains, contested cases would proceed in federal district court. Such independent judicial determination of liability in the first instance would constrain enforcement discretion, diminishing some of the concerns arising out of the supposed reduction of agency independence after Trump v. Slaughter.
Transferring enforcement to the DOJ would impose costs that the administrative simplicity of consolidation might not offset. The DOJ’s antitrust work closely overlaps with the FTC’s competition mission, but experience litigating FTC civil-penalty referrals[12] does not establish that moving the FTC’s broader consumer-protection program would preserve its expertise or improve outcomes.
And transferring competition enforcement alone would undermine an important institutional advantage of the FTC: its capacity to assess competition and consumer-protection questions through shared economic analysis and a common decision-making process.[13] Restrictions on advertising, data use, or product design, for example, may address consumer harms while also raising entry costs, limiting discounts, or discouraging innovation. Conversely, enforcement against deception can improve consumers’ ability to compare competing offers. Keeping the two functions together increases the likelihood these sorts of effects will be considered, and it holds the same decisionmakers responsible for the consequences of both enforcement programs. Section 5(n) reflects this connection by requiring unfairness analysis to account for countervailing benefits to consumers or competition.[14] That said, the FTC’s use of economic analysis in consumer-protection enforcement has been uneven, and Congress should strengthen the economic review that makes this combination valuable.[15]
A more expansive reform could limit a multimember FTC to market studies, economic analysis, retrospective evaluation, reporting, and domestic and international competition advocacy. Coercive civil enforcement would move to DOJ. The Commission would neither adjudicate cases nor issue substantive rules. The case for this model rests on the value of a dedicated research institution whose judgments are separate from the incentives to initiate and defend enforcement actions. Transparent research methods, publication of internal disagreements, and a defined mission would protect its professional independence, consistent with the Constitution’s separation of powers.
On the other hand, separating research from enforcement could weaken both. And the DOJ already conducts research and engages in competition advocacy.[16] Congress would therefore need to specify how the Commission’s findings would inform enforcement by the DOJ and other enforcers. It would also need to address several organizational matters such as referrals, cross-border cooperation, personnel, and statutory remedies.[17] Nevertheless, Congress should compare the relative merits of each agency’s competing institutional design and consider whether greater specialization would be beneficial.
Congress should require contested liability under the FTC Act and merger challenges to be decided in federal district court, whether enforcement remains at the FTC or moves to the DOJ. Ordinary FTC civil-penalty actions under Sections 5(l) and 5(m) already proceed there.[18] The change would extend court adjudication to contested liability and prospective orders.
Many procedural objections to FTC enforcement arise from Part 3 adjudication, in which the Commission both authorizes a complaint and later decides its merits. The concerns grew in 2023, when the Commission replaced administrative law judge (ALJ) initial decisions—which could become final without Commission review—with recommended decisions that receive automatic Commission review.[19] Federal-court litigation would also eliminate some differences in the burdens antitrust defendants face based solely on whether the interagency “clearance process” assigns a case to the FTC or the DOJ’s Antitrust Division.
Axon allows certain constitutional challenges to reach district court without awaiting the administrative process; it did not invalidate Part III adjudication.[20] Jarkesy addresses the jury right for the Securities and Exchange Commission’s securities-fraud civil penalties, not necessarily every form of agency adjudication.[21] But Congress could step in to mandate such a shift.
The FTC has begun seeking permanent merger injunctions in federal court without a parallel administrative case, as its August announcement concerning Henkel explains.[22] Congress should consider codifying that approach. An expert agency can supply evidence and analysis without deciding the merits of a complaint it authorized.
Expertise should rest on sound analysis, rather than the identity of the decisionmaker. If the FTC retains enforcement, any retained administrative process for resolving cases should be confined to voluntary settlements, with clear terms and a stated factual and legal basis. If Congress replaces the underlying adjudicative process, it should also revise provisions that condition later remedies on a final administrative order. A change of forum should neither eliminate a remedy nor create duplicate proceedings.
For mergers, reform should give parties a predictable path from a preliminary-injunction ruling to a final decision on the merits without successive or duplicative proceedings. Harmonizing FTC and DOJ procedures makes sense where it removes differences without an economic or policy justification. But a preliminary ruling should not stand in for a final merits decision, and a faster procedure should preserve the opportunity to test the evidence.[23]
The cost of answering extensive compulsory demands can induce settlement even when the underlying legal theory is doubtful. Congress should require each demand to state its purpose, connect requested material to that purpose, and justify its scope in light of the likely evidentiary value and compliance burden. Major demands and material expansions should receive documented economic review and approval by an accountable official.[24]
Recipients need a prompt, practical way to obtain independent review of contested demands. That review should consider the number of custodians, time periods, duplication, and the cost of producing data in the requested form. Industrywide research demands need the same discipline, including a public explanation of the study question and the expected use of the information. The Commission should approve the actual scope of each study rather than rely on a broad standing authorization.
Congress should also consider requiring timely closing notices and periodic written explanations for continuing an investigation. We propose that, say, six months without substantive written communication trigger closure or a reasoned, time-limited extension, with documented exceptions where notice would compromise a legitimate investigation. Such a rule would end the indefinite uncertainty of inactive inquiries without hampering fraud investigations.[25]
Penalty-offense notices , which warn recipients that specified conduct may carry civil penalties, require particular care. Section 5(m)(1)(B) already requires a qualifying determination other than a consent order and actual knowledge that the conduct is unlawful. It also provides additional court review for a defendant who was not a party to the earlier proceeding.[26] Congress should require each notice to identify the precise adjudicated practice and explain its relevance, while preserving a meaningful opportunity to contest whether the recipient’s conduct falls within that determination.
Complaints should allege facts supporting the applicable statutory elements, rather than merely label conduct unfair, deceptive, or anticompetitive. An unfairness theory must explain the injury caused or likely to be caused, why it is substantial, why consumers could not reasonably avoid it, and why countervailing benefits do not outweigh it. A deception theory must identify the misleading representation, omission, or practice and its materiality. A competition theory must explain the competitive harm and account for relevant efficiencies.
Congress should eliminate reliance on Section 6(g) of the FTC Act as a source of general substantive competition-rulemaking authority.[27] It should also consider replacing the FTC’s general authority to issue consumer-protection rules under Section 18 with specific legislative authorizations that define the practice, objective, and limits of each delegation. Implementing a defined congressional policy—as the Commission does under the Fairness to Contact Lens Consumers Act and the Children’s Online Privacy Protection Act—differs from deciding what conduct to prohibit across the economy under an open-ended unfairness standard. Existing subject-specific mandates and rules would require express transition provisions.
The noncompete litigation shows why Congress should settle the scope of Section 6(g). In Ryan, a Texas district court held that the provision grants procedural, rather than substantive, rulemaking authority and set aside the noncompete rule. A Florida district court preliminarily enjoined the rule on major-questions grounds without deciding the Section 6(g) question. A Pennsylvania district court declined to enjoin it, finding that the Commission likely had authority to issue substantive competition rules. The Commission later dismissed its appeals, leaving the Section 6(g) question without an appellate resolution. Congress should define that authority and reduce the prospect of renewed rulemaking and litigation under a future Commission.[28]
In Custom Communications, the 8th U.S. Circuit Court of Appeals vacated the amended negative-option rule because the Commission failed to prepare the preliminary regulatory analysis Section 22 requires when a rule has an estimated annual effect on the national economy of $100 million or more.[29] In National Automobile Dealers Association, the 5th U.S. Circuit Court of Appeals vacated the CARS rule because the Commission skipped the advance notice of proposed rulemaking required by its rules of practice.[30] In February 2026, the FTC removed the noncompete and CARS rules and restored the prior negative-option provisions to conform to the court decisions.[31] These results support clearer grants of authority and enforceable procedural discipline. They do not, however, establish that every consumer-protection rule is unlawful.
Congress has twice tightened the Commission’s consumer-protection rulemaking. The 1975 Magnuson-Moss amendments subjected Section 18 rules to procedures beyond those required by the Administrative Procedure Act, including an informal hearing and substantial-evidence review.[32] In response to the rulemaking that followed, Congress added further procedural and oversight requirements in 1980. In 1994, it codified limits of unfairness in Section 5(n). Those limits, however, do not apply to unfair methods of competition.[33] Reading Section 6(g) to authorize substantive competition rules would let the Commission issue them without those safeguards.
Where Congress authorizes rulemaking, it should preserve meaningful opportunities to test disputed evidence and require analysis early enough to inform the choice. Section 22 already calls for preliminary and final analyses. It permits judicial review of a complete failure to prepare them while limiting review of their adequacy.[34] Reform should address those provisions directly. Congress should consider making the agency’s threshold determinations and its treatment of significant contrary evidence reviewable. It should also require a supplementary preliminary analysis and a meaningful opportunity to comment when new information materially changes a rule’s expected effects.[35]
Rulemaking analysis should identify the specific injury, a credible baseline, likely benefits and costs, effects on entry and innovation, and less restrictive alternatives. Large projected transfers between groups should not be mistaken for net social gains, and uncertain estimates should disclose their assumptions. The Commission’s 2022 advance notice on commercial surveillance and data security treated privacy, data security, advertising, and algorithmic decision-making as a single subject, although each involves different practices, evidence, and potential remedies.[36] It gave little attention to the limits of the Commission’s authority or to the benefits consumers receive from data-supported services. The proceeding remains at the preregulatory stage, with no proposed rule issued.[37]
Congress should also consider requiring retrospective review of major rules against their stated objectives. Revising or withdrawing an unsuccessful rule would demonstrate analytical discipline. Procedural requirements serve a purpose when they improve decisions, rather than generate paperwork that supplies no useful information.
AMG Capital foreclosed restitution and disgorgement under Section 13(b), but left the FTC’s other monetary remedies intact.[38] Section 19 authorizes consumer redress for qualifying rule violations. It also provides a separate route for conduct covered by a final cease-and-desist order that a reasonable person would have known was dishonest or fraudulent.[39] Sections 5(l) and 5(m) authorize civil penalties under specified conditions.[40] Congress should assess any proposed expansion against those remaining authorities and evidence of cases they cannot adequately address. It should not assume that restoring the former Section 13(b) practice is necessary.
We oppose restoring open-ended monetary authority for novel or contestable theories. If demonstrated gaps in existing remedies justify a new direct route to redress, Congress should confine it to clearly defined fraud, require a causal connection to consumer injury, specify how to measure compensable loss, set a limitations period, and require adjudication in federal court. Restitution, disgorgement, and civil penalties serve different purposes and should not be treated as interchangeable. Prompt relief against fraud can benefit consumers, but broader financial exposure also increases pressure to settle before the agency proves unlawful conduct.[41]
Congress should consider shorter terms and periodic reassessment review for non-fraud consent orders. We recommend an eight-year presumptive term, with review in year five. Longer restrictions should require a case-specific explanation of continuing risk and likely benefits. Existing modification authority places the burden on respondents to seek relief. Scheduled review would instead require the agency to reassess whether restrictions remain justified as technology, markets, and law change.[42]
Orders should specify the required conduct and maintain a demonstrable connection between the violation and the remedy. Broader restrictions may be justified for deliberate or repeated fraud, but ordinary cases should not become occasions to regulate unrelated future conduct. In LabMD, the court vacated an insufficiently specific order while assuming unfairness for purposes of its analysis. It did not hold that the FTC lacks all data-security authority. Settlements bind their respondents: They cannot establish obligations for everyone else.[43]
Congress should consider giving the Bureau of Economics a formal, independent role before the Commission approves major investigative demands, complaints, consent orders, rules, and significant policy statements. Review should fit the decision and test the theory of harm, the evidence, alternative explanations, and the expected costs of intervention and nonintervention. Economists should be able to communicate directly with commissioners. Their review role should inform decisions without, for example, requiring elaborate quantification in every straightforward fraud matter.[44]
For public actions, a separate economic assessment should explain the analysis and any material disagreement, subject to confidentiality protections. The Commission should explain any departure from that assessment. Published reasoning would let Congress and outside researchers evaluate the agency’s decisions while leaving responsibility for them with the Commission.
The consumer welfare standard should govern competition enforcement, including standalone claims under Section 5’s unfair-methods-of-competition provision. Commissioner Mark R. Meador’s Sept. 14 call for renewed standalone Section 5 enforcement makes substantive limits especially important.[45] Congress should require evidence connecting challenged conduct to harm to the competitive process and consumers, including effects on output, quality, innovation, and price. Harm to a rival, concentration, or firm size cannot substitute for that showing. The FTC can address prospective harm without treating a theoretical possibility as sufficient evidence to intervene.[46]
The FTC’s 2022 policy statement on unfair methods of competition[47] marks a distinct and expansive departure from precedent and prior agency practice.[48] We recommend that the Commission withdraw it and, in due course, publish guidance tied to competitive effects, cognizable efficiencies, and administrable legal limits.
The FTC and DOJ should also revise merger guidance to reflect evidence on entry, efficiencies, and relationships between firms at different levels of a supply chain. The guidance should identify transactions that ordinarily present little competitive concern. Stability does not justify retaining poorly supported presumptions. Congress should demand the supporting analysis without legislating particular concentration thresholds.[49]
Congress should consider codifying the core deception requirements: a material representation, omission, or practice likely to mislead consumers acting reasonably in the circumstances, with a meaningful ability to rebut presumptions of materiality.[50] A consumer’s mistaken expectation alone should not create an unlimited duty for businesses to explain their operations without evidence of a misleading practice. Unfairness has a distinct statutory test: conduct must cause or be likely to cause substantial injury that consumers cannot reasonably avoid and that countervailing benefits to consumers or competition do not outweigh.[51] These limits should constrain enforcement even when the conduct at issue is unpopular or unfamiliar.[52]
The proposed personalized-pricing statement illustrates the current risks.[53] A seller’s false claim about a price may be deceptive, but consumer expectations of uniform pricing alone do not establish a duty to disclose personalization, its basis, and the types of data used. Such a duty may reduce available discounts with little, if any, countervailing benefit.[54] The agency should establish the allegedly misleading implication and its materiality, then assess whether disclosure would improve consumer decisions. Research into consumer understanding, the prevalence of deceptive pricing, and the effects of disclosure should precede a general enforcement presumption.[55]
Data-security enforcement likewise requires more than identifying a breach and prescribing better security after the fact. The agency should connect the alleged deficiency to the statutory injury and explain why the demanded precautions were reasonable under the circumstances. Clear findings and specific remedies can encourage useful precautions; vague obligations to maintain a comprehensive program can leave firms uncertain about what compliance requires.[56]
These examples also show the risks of regulating through guidance and settlements. A firm may adopt disclosures recommended in a policy statement or security measures required by another company’s settlement to avoid an expensive investigation, even where the Commission has not established that the law requires them. Agency expectations can thus become practical compliance standards without a determination that the underlying conduct is unlawful.[57] As Geoffrey A. Manne warned, “the FTC’s processes have enabled it to operate with essentially unbounded discretion in developing the doctrine by which its three high level standards [the Unfairness, Deception, and UMC Policy Statements] are applied in real-world cases.”[58] To reduce that risk, guidance, reports, and settlements should distinguish legal obligations from recommended practices. Significant guidance should receive public comment and proportionate economic assessment while remaining nonbinding. Congress should ensure that enforcement rests on a demonstrated violation of governing law, not merely a departure from guidance or another firm’s settlement.
Congress should strengthen the FTC’s capacity to produce useful evidence while placing targeted limits on discretion that permits weakly supported interventions. That calls for sustained research and advocacy, independent economic scrutiny, court adjudication of contested cases, proportionate investigations, and remedies that remain justified over time.
[1] See generally Legislative Hearing on 17 FTC Bills Before the Subcomm. on Com., Mfg. & Trade of the H. Comm. on Energy & Com., 114th Cong. 3 (2016) (prepared statement of Geoffrey A. Manne, Exec. Dir., Int’l Ctr. for L. & Econ.), http://docs.house.gov/meetings/IF/IF17/20160524/104976/HHRG-114-IF17-Wstate-ManneG-20160524.pdf [hereinafter Manne Testimony].
[2] See Int’l Ctr. for L. & Econ. & TechFreedom, Consumer Protection & Competition Regulation in a High-Tech World: Discussing the Future of the Federal Trade Commission 1–2, 10–12 (Dec. 2013), http://docs.techfreedom.org/FTC_Tech_Reform_Report.pdf; Berin Szóka & Geoffrey A. Manne, The Federal Trade Commission: Restoring Congressional Oversight of the Second National Legislature ii–iii, 38–64 (May 2016), http://docs.house.gov/meetings/IF/IF17/20160524/104976/HHRG-114-IF17-Wstate-ManneG-20160524-SD004.pdf [hereinafter 2016 Report].
[3] See Int’l Ctr. for L. & Econ., Antitrust Principles and Evidence-Based Antitrust Under the Consumer Welfare Standard 1–3 (2018) (comments submitted for the FTC Hearings on Competition and Consumer Protection in the 21st Century); Int’l Ctr. for L. & Econ., The Current Landscape of Competition and Consumer Protection Law and Policy 1–2 (2018) (comments submitted for the FTC Hearings on Competition and Consumer Protection in the 21st Century).
[4] See William E. Kovacic, The Federal Trade Commission at 100: Into Our Second Century (2009), https://www.ftc.gov/sites/default/files/documents/public_statements/federal-trade-commission-100-our-second-century/ftc100rpt.pdf; see also Paul A. Pautler, FTC Bureau of Econ., A History of the FTC’s Bureau of Economics (2015), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2657330.
[5] See Daniel J. Gilman, Back to the Future (of Competition Research and Advocacy), Truth on the Mkt. (Apr. 25, 2025), https://truthonthemarket.com/2025/04/25/back-to-the-future-of-competition-research-and-advocacy. See also Marc Winerman, The Origins of the FTC: Concentration, Cooperation, Control, and Competition, 71 Antitrust L.J. 1, 4–5, 79–82, 138–41 (2003) (explaining that the House passed a bill creating an investigatory commission before adopting a prosecutorial approach).
[6] See James C. Cooper, Paul A. Pautler & Todd J. Zywicki, Theory and Practice of Competition Advocacy at the FTC, 72 Antitrust L.J. 1091, 1092 (2005); Maureen K. Ohlhausen, Identifying, Challenging, and Assigning Political Responsibility for State Regulation Restricting Competition, 2 Comp. Pol’y Int’l. 151 (2006).
[7] See Eric Fruits, Daniel Gilman, Ben Sperry, Kristian Stout & Mario Zúñiga, ICLE Comments to FTC and DOJ on Anticompetitive Regulations 7–9 (May 27, 2025), https://laweconcenter.org/resources/icle-comments-to-ftc-and-doj-on-anticompetitive-regulations; see also 2016 Report, supra note 2, at 87–90.
[8] See 2016 Report, supra note 2, at 89–90.
[9] See id. at 53–63.
[10] Trump v. Slaughter, No. 25-332, slip op. at 25–28 (U.S. June 29, 2026).
[11] Appointments to the Commission are, of course, the prerogative of the president, subject to the advice and consent of the Senate. While we cannot gainsay the utility of relevant legal expertise on the Commission, we note the historical paucity of appointees with graduate-level training in economics (in total, four: James C. Miller III (1981–85), George W. Douglas (1982–85), Dennis Yao (1991–94), and Joshua D. Wright (2013–15)).
[12] Under 15 U.S.C. § 56(a)(1).
[13] See Kovacic, supra note 4.
[14] 15 U.S.C. § 45(n).
[15] See infra, Section VI.
[16] See U.S. Dep’t of Just., Expert Analysis Group Papers, https://www.justice.gov/atr/expert-analysis-group-papers (last visited Sept. 28, 2026); U.S. Dep’t of Just., Competition Advocacy Papers, https://www.justice.gov/atr/competition-advocacy-papers (last visited Sept. 28, 2026).
[17] See Alden Abbott, Why Trump May Consolidate Federal Antitrust Enforcement, Truth on the Mkt. (Dec. 2, 2024), https://truthonthemarket.com/2024/12/02/why-trump-may-consolidate-federal-antitrust-enforcement (discussing consolidation of antitrust enforcement while retaining the FTC’s consumer protection role).
[18] 15 U.S.C. § 45(l)–(m).
[19] FTC Rules of Practice, 88 Fed. Reg. 42,872 (July 5, 2023) (codified at 16 C.F.R. pts. 0–4).
[20] Axon Enter., Inc. v. FTC, 598 U.S. 175, 191–96 (2023).
[21] SEC v. Jarkesy, 603 U.S. 109, 120–27, 140 (2024).
[22] See Fed. Trade Comm’n, Statement on FTC Win Blocking Loctite, Liquid Nails Construction Adhesive Merger (Aug. 17, 2026), https://www.ftc.gov/news-events/news/press-releases/2026/08/statement-ftc-win-blocking-loctite-liquid-nails-construction-adhesive-merger. (announcing the FTC’s “new approach” of seeking permanent injunctions to block anticompetitive mergers in federal court without continuing administrative proceedings).
[23] See 2016 Report, supra note 2, at 82–85.
[24] See id. at at 38–52.
[25] See 2016 Report, supra note 2, at 78–80. The six-month trigger is a proposed design choice, not a description of existing law or an empirically established optimum.
[26] 15 U.S.C. § 45(m)(1)(B), (2).
[27] See, e.g., Maureen K. Ohlhausen & James F. Rill, Pushing the Limits? A Primer on FTC Competition Rulemaking, Truth on the Mkt. (July 7, 2022), https://truthonthemarket.com/2022/07/07/pushing-the-limits-a-primer-on-ftc-competition-rulemaking.
[28] Ryan, LLC v. FTC, 746 F. Supp. 3d 369, 389–90 (N.D. Tex. 2024); Props. of the Villages, Inc. v. FTC, No. 5:24-cv-316-TJC-PRL, 2024 WL 3870380 (M.D. Fla. Aug. 15, 2024); ATS Tree Servs., LLC v. FTC, No. 24-1743, 2024 WL 3511630 (E.D. Pa. July 23, 2024).
[29] Custom Commc’ns, Inc. v. FTC, 142 F.4th 1060, 1070–72, 1074–75 (8th Cir. 2025).
[30] Nat’l Auto. Dealers Ass’n v. FTC, 127 F.4th 549 (5th Cir. 2025).
[31] Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule to Conform These Rules to Federal Court Decisions, 91 Fed. Reg. 6507, 6508–09 (Feb. 12, 2026). Although the Dodd-Frank Act permitted the CARS rule through ordinary notice-and-comment procedures, the court held that the Commission’s rules of practice required advance notice.
[32] Magnuson-Moss Warranty—Federal Trade Commission Improvement Act, Pub. L. No. 93-637, 88 Stat. 2183 (1975).
[33] Federal Trade Commission Improvements Act of 1980, Pub. L. No. 96-252, 94 Stat. 374 (1980); Federal Trade Commission Act Amendments of 1994, Pub. L. No. 103-312, 108 Stat. 1691 (1994); 15 U.S.C. §§ 45(n), 57a.
[34] 15 U.S.C. § 57b-3(a)–(c).
[35] Custom Commc’ns, 142 F.4th at 1070–75.
[36] Trade Regulation Rule on Commercial Surveillance and Data Security, 87 Fed. Reg. 51,273 (Aug. 22, 2022).
[37] See Int’l Ctr. for L. & Econ., Comments on Trade Regulation Rule on Commercial Surveillance and Data Security (Docket No. FTC-2022-0053, Nov. 21, 2022), https://laweconcenter.org/wp-content/uploads/2022/11/ICLE-Commercial-Surveilance-ANPR-Comments-v4.pdf; see also Int’l Ctr. for L. & Econ., Toward a Proper Understanding of Consumer Privacy and Its Regulation 1–3 (May 31, 2019), https://laweconcenter.org/wp-content/uploads/2019/07/Toward-a-Proper-Understanding-of-Consumer-Privacy-and-Its-Regulation-FTC-Hearings-ICLE-Comment-10.pdf; Int’l Ctr. for L. & Econ., Privacy, Antitrust, and the Economic Approach to the Regulation of Consumer Data 1–3 (2018), https://laweconcenter.org/resources/icle-comments-the-regulation-of-consumer-data.
[38] AMG Cap. Mgmt., LLC v. FTC, No. 19-508, slip op. at 1, 7–10, 14–15 (U.S. Apr. 22, 2021).
[39] 15 U.S.C. §§ 57b(a)–(b).
[40]
15 U.S.C. §§ 45(l)–(m).
[41] See 2016 Report, note 2, at 68–74. See also Alden Abbott, A Consumer-Welfare-Centric Reform Agenda for the Federal Trade Commission, Truth on the Mkt. (Dec. 14, 2023), https://truthonthemarket.com/2023/12/14/a-consumer-welfare-centric-reform-agenda-for-the-federal-trade-commission (proposing limited monetary relief for fraud).
[42] See 2016 Report, supra note 2, at 75–77; Joshua D. Wright, Statement Before the Subcomm. on Com., Mfg. & Trade of the H. Comm. on Energy & Com., Legislative Hearing on 17 FTC Bills 10–12 (May 24, 2016), https://docs.house.gov/meetings/if/if17/20160524/104976/hhrg-114-if17-wstate-wrightj-20160524.pdf; 15 U.S.C. § 45(b). The eight-year term and five-year review are design choices drawn from the 2016 Report. Wright favors shorter terms but leaves their length open.
[43] LabMD, Inc. v. FTC, 894 F.3d 1221, 1231, 1235–37 (11th Cir. 2018).
[44] See Wright, supra note 30, at 5–10; 2016 Report, supra note 2, at 48–64; Geoffrey A. Manne, Bringing Antitrust’s Economic and Institutional Limits to the FTC’s Consumer Protection Authority 3, CPI Antitrust Chron. (May 2014).
[45] Mark R. Meador, Comm’r, Fed. Trade Comm’n, The Model, Mission, and Future of the Federal Trade Commission (Sept. 14, 2026), https://www.ftc.gov/system/files/ftc_gov/pdf/Meador-The-Model-The-Mission-FTC.pdf.
[46] See Int’l Ctr. for L. & Econ., The Continued Viability and Flexibility of the Consumer Welfare Standard, and the Weakness of Its Alternatives 12–13 (Dec. 31, 2018), https://laweconcenter.org/resources/icle-comments-the-consumer-welfare-standard-and-the-role-of-presumptions.
[47] Fed. Trade Comm’n, Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act 8–12 (Nov. 10, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/p221202sec5enforcementpolicystatement_002.pdf.
[48] See, e.g., Daniel J. Gilman & Gus Hurwitz, The FTC’s UMC Policy Statement: Untethered from Consumer Welfare and the Rule of Reason (ICLE Issue Brief, Nov. 16, 2022), https://laweconcenter.org/wp-content/uploads/2022/11/FTC-UMC-Policy-Statement.pdf.
[49] See Int’l Ctr. for L. & Econ., Comments of the International Center for Law & Economics on the FTC & DOJ Draft Merger Guidelines (Sept. 18, 2023), https://downloads.regulations.gov/FTC-2023-0043-1555/attachment_1.pdf; see also Brian Albrecht, The FTC Shouldn’t Turn Back the Clock on Merger Analysis, Truth on the Mkt. (Feb. 19, 2025), https://truthonthemarket.com/2025/02/19/the-ftc-shouldnt-turn-back-the-clock-on-merger-analysis.
[50] See Fed. Trade Comm’n, Policy Statement on Deception, 103 F.T.C. 174, 175–76, 182–83 (1984) (appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)).
[51] 15 U.S.C. § 45(n).
[52] See 2016 Report, supra note 2, at 21–27.
[53] Fed. Trade Comm’n, Federal Trade Commission’s Proposed Enforcement Policy Statement Regarding Personalized Pricing 4–6 (Aug. 19, 2026), https://www.ftc.gov/system/files/ftc_gov/pdf/p034101-ftc-enforcement-policy-statement-re-personalized-pricing-proposed-for-public-comment.pdf.
[54] See Int’l Ctr. for L. & Econ, Comments on the Proposed Enforcement Policy Statement Regarding Personalized Pricing (Sep. 25, 2026), https://laweconcenter.org/resources/icle-comments-on-the-ftcs-personalized-pricing-proposed-enforcement-policy-statement.
[55] Id.
[56] See Int’l Ctr. for L. & Econ., The FTC’s Flawed Data Security Enforcement Program and Suggestions for Reform 1, 5 (May 31, 2019), https://laweconcenter.org/wp-content/uploads/2019/07/The-FTC%E2%80%99s-Flawed-Data-Security-Enforcement-Program-and-Suggestions-for-Reform-FTC-hearings-ICLE-Comment-8.pdf.
[57] See 2016 Report, supra note 2, at 4–5, 14; see also id.
[58] See Manne Testimony, supra note 1, at 3.
TOTM Suppose a retailer charges $10 for a service. One customer values it at $11 and buys it. Another values it at $8 and walks away. . . .
Suppose a retailer charges $10 for a service. One customer values it at $11 and buys it. Another values it at $8 and walks away. The retailer sends the second customer a $3 coupon. She pays $7, gets something worth $8 to her, and the retailer makes a sale it otherwise would have missed. The customers paid different prices, but without the coupon, the likely outcome was one $10 sale—not two $7 sales.
That missing sale matters to the Federal Trade Commission’s (FTC) proposed enforcement policy statement on personalized pricing. The FTC acknowledges that Congress has not authorized a blanket ban on personalized pricing and that the practice’s effects remain unclear. Yet when consumers reasonably expect prices to stay the same regardless of their personal data, the proposal says sellers should disclose that a price is personalized, why, and what types of data they used. The FTC says failing to do so is likely unfair or deceptive.
The FTC has reason to worry about sellers who invent discounts, break promises about data use, or tack on charges buyers never agreed to. But its proposal goes further, casting suspicion on price differences that sellers do not explain. That risks overlooking both the sales that tailored offers make possible and the trial and error through which sellers discover what customers will buy. It also assumes that the agency can decide which pricing practices need an explanation despite its own limited knowledge and political incentives.
Truth on the Market readers have already seen important objections to the proposal. Alden Abbott explains why a consumer’s expectation alone cannot establish deception. Daniel J. Gilman asks whether the economic research cited by the FTC supports its claims. This post asks what happens to the market processes that generate prices once the government starts supervising them—and how officials might use that authority.
Austrian economics, with its focus on how buyers and sellers discover opportunities through exchange, and Public Choice theory, which examines the incentives facing government officials, point toward a narrower policy. The FTC should pursue proven lies and consumer injuries under existing law. But it must also leave room for sellers to test prices, and not turn ordinary price search into a presumptive violation merely because software makes the search more precise.
Scholarship (Affiliate) Abstract Generative artificial intelligence has brought renewed urgency to the question whether using copyrighted works to train large language models constitutes fair use. A 2025 . . .
Generative artificial intelligence has brought renewed urgency to the question whether using copyrighted works to train large language models constitutes fair use. A 2025 U.S. Copyright Office Report and dicta in Kadrey v. Meta Platforms proposed a broad theory of “market dilution”: even when particular outputs are not substantially similar to works in the training data, their aggregate competition may reduce sales of human-authored works. Bartz v. Anthropic rejected that form of generalized competition as a cognizable copyright injury. This Article argues that neither the infringing status of an output nor a bare causal connection between training and lost demand resolves the fourth-factor inquiry. Courts should instead ask what feature of the challenged use caused the asserted loss. Market harm is cognizable when it is attributable to protected expression or invasion of a market copyright law reserves to the owner. It is not cognizable when demand is lost solely because follow-on works compete through genre, style at a high level of abstraction, facts, functional information, or other material copyright leaves free. Scale may magnify an injury after a protected market has been identified, but it cannot create an entitlement in an otherwise unprotected basis of competition. This source-of-harm rule preserves conventional claims involving memorization, regurgitation, substantial similarity, direct substitution, and properly defined licensing markets while preventing factor four from becoming a general right against technologically intensified competition.
Read the full piece at SSRN.
Regulatory Comments I. Introduction and Summary of Recommendations The International Center for Law & Economics (ICLE) is a nonprofit, nonpartisan research center based in Portland, Oregon. In comments to the Federal Trade...
The International Center for Law & Economics (ICLE) is a nonprofit, nonpartisan research center based in Portland, Oregon. In comments to the Federal Trade Commission (FTC) in 2014,[1] 2018–19,[2] and 2022,[3] and to the Canadian Competition Bureau in 2025[4] and 2026,[5] we have explained why price differences that expand output and lower prices for price-sensitive consumers should not be deemed presumptively harmful. We have made the same point in work on the Kroger/Albertsons merger,[6] state grocery-pricing laws,[7] food-delivery fees,[8] and the FTC’s proposed enforcement policy statement on personalized pricing (Proposed Statement).[9]
The Proposed Statement says that, where consumers reasonably expect prices not to vary with their personal data, a seller that personalizes prices should disclose that fact, the basis for the personalization, and the types of data used.[10] Omitting any of the three is “likely to constitute an unfair or deceptive act or practice in violation of Section 5.”[11] Yet the same document reports that “the effects of personalized pricing on consumers are unclear.”[12]
The Commission thus proposes to presume unlawful a practice whose prevalence it does not know and whose effects, by its own account, could benefit or harm consumers. Section 5(n) requires the Commission to weigh the costs of enforcement mistakes in unfairness matters,[13] and a presumption can substitute for evidence only where theory predicts a high probability of harm.[14] Where theory predicts mixed effects, a presumption turns the agency’s uncertainty into the regulated firm’s liability.
The two possible errors also impose different costs. A seller that drops targeted discounts to avoid a disclosure dispute takes those discounts from the consumers who would have received them, and market forces may not restore them.[15] A seller that personalizes prices without disclosure, in a market where consumers can compare offers, faces rivals that can discount to win its customers. Disclosure mandates produce the first kind of loss nearly as readily as prohibitions do: A mandate raises the cost of the conduct it covers relative to conduct it does not, and firms may respond by changing what they do rather than by becoming transparent about it.[16] The Proposed Statement moves from “unclear” effects to “likely” illegality without weighing these errors.
The FTC’s deception policy recognizes that omissions can mislead consumers. But a consumer’s belief alone cannot establish that a seller conveyed a misleading message. The Proposed Statement’s second deception theory finds deception when a consumer “reasonably believes” a price is static or widely offered and the seller “fails to disclose” that it is personalized.[17] This assumption is unsubstantiated. A displayed price tells a buyer what she may pay; standing alone, it does not say what everyone else pays. The Commission’s International Harvester decision declines to treat such “pure omissions” as deceptive.[18]
Unfairness requires substantial injury that consumers cannot reasonably avoid and that countervailing benefits do not outweigh. The 11th U.S. Circuit Court of Appeals called those conditions “mandatory” in FTC v. Corpay Inc.[19] The Proposed Statement applies none of them to its seven hypothetical examples. Having called the practice’s effects “unclear,” the Commission cannot simply conclude that it is nevertheless “injurious in its net effects.”[20]
The Proposed Statement cites six economic works for the claim that “the more sophisticated personalized pricing practices become, the less likely consumers are to benefit.”[21] None tests disclosure, and none supports the claim as stated. Where the papers find consumer losses, they trace them to market structure, a seller’s pricing power, or unequal access to data among rivals. In each of the three empirical studies, most consumers pay less; in two, the market grows.[22]
The Proposed Statement also assumes that the benefits of personalization may “be realized without concealing” it.[23] But a notice that lets buyers avoid a higher price changes the prices a seller can profitably offer. A seller forced to discount either for everyone or for no one will discount less. The Commission has not examined how its proposed notice would change prices.
The notice’s second and third elements compound the problem. They require a seller to explain how it set a price—more information than consumers generally care about or use, and more than International Harvester contemplates for mandatory disclosure.[24]
The Proposed Statement improves on the 2022 advance notice of proposed rulemaking that preceded it.[25] It acknowledges that Congress has not authorized the Commission to prohibit personalized pricing,[26] drops the term “surveillance pricing,”[27] and proceeds through guidance, as we urged.[28] But useful guidance would explain how the Commission will assess materiality, injury, countervailing benefits, and reasonable avoidability in the cases it describes. The Proposed Statement announces a conclusion instead.
A document that tells every seller what to disclose also operates as a disclosure rule, whatever its disclaimer of legal effect.[29] Firms will plan as though it binds them, without the protections of Section 18 rulemaking.[30]
The Commission should withdraw the Proposed Statement and proceed case by case, as Corpay shows it can. If the Commission nonetheless issues a statement, it should preserve the concessions the proposal already makes and adopt the six revisions laid out in Part VII:
Only after resolving these legal and evidentiary questions should the Commission test which of the avoidance steps it describes that a notice would enable consumers to take, just as it tested its mortgage disclosures.[31] It should separately assess how sellers would change their prices in response.
Finally, any prescription of a disclosure’s wording, placement, or format constitutes a rule, which requires Section 18 rulemaking procedures.
The Proposed Statement makes four concessions that any final statement should retain. First, Congress has not authorized the Commission to prohibit personalized pricing outright. Second, personalized pricing “is a long-established norm in some markets,” including car sales, residential real estate, and markets where buyers and sellers negotiate.[32] Third, prices vary for reasons unrelated to personalization, including local supply and demand, regional taxes, and the individualized risk assessments used in insurance and credit. Fourth, real-world personalization is imperfect. An analysis that takes these concessions seriously must account for competition and the limits of consumer data and pricing tools.
Ample evidence that personalized pricing generally harms consumers might make those circumstances less consequential. The studies the Commission cites provide no such evidence. They report mixed effects on consumer welfare and show that the circumstances often determine the outcome.
The Commission begins its economic account with a monopoly benchmark, then concedes that the benchmark does not describe most markets. Perfect personalized pricing “without business competition would allow a monopolist to capture the entire consumer surplus.”[33] But the Commission immediately acknowledges that “real-world personalized pricing would be less than perfect in its ability to identify consumers and determine their willingness to pay and, in the vast majority of circumstances, would have to contend with competitive pressures that limit pricing power.”[34] That is the Statement’s most significant concession: In actual markets, imperfect information and competition may limit or eliminate the harm predicted by the monopoly benchmark. Without empirical findings about particular markets, the Commission’s case rests heavily on what six economic studies say about consumer harm under realistic conditions. As discussed below, those studies do not support many of the Statement’s claims or proposals.
Personalized prices can intensify competition by letting a seller compete for a rival’s customers without cutting prices for all its existing buyers. Under uniform pricing, a seller must extend a price cut meant to attract new customers to buyers who would have paid the old price. That makes price cuts more costly and less likely. Targeted offers avoid that cost, and rivals can respond with targeted offers of their own, multiplying the potential benefits.
The literature on price discrimination—charging different buyers different prices—supports this dynamic, although its effects depend on the market. Thisse and Vives show that it can lower prices and profits in a duopoly market with two differentiated sellers.[35] Corts shows why the result depends on how firms rank customer groups and the groups’ relative importance.[36] In his model, price discrimination can lower prices in every segment or raise them in every segment. A calculation based on a monopolist cannot, however, predict what happens when competing sellers can respond. As the antitrust literature puts it, price discrimination “implies neither that a market is not performing ‘competitively’ nor that it would perform more ‘competitively’ without price discrimination.”[37]
Imperfect data and competing offers limit a seller’s ability to personalize prices and the effects it can plausibly achieve. Data are noisy and often dated, and sellers estimate pricing models from samples rather than individual buyers. A consumer who can buy elsewhere—or decline to buy—will not pay more than a purchase is worth compared with her best alternative. Better data can improve a seller’s estimate and change the prices it can profitably charge, but the result remains an estimate.
In some markets, prices must depend on personal information. As then-Commissioner Ferguson observed:
This practice is ancient and commonplace for many products and services. The prices of insurance policies or of credit, for example, necessarily turn on a consumer’s personal details because the price must reflect the risk of providing the good or service to the consumer.[38]
The Commission also concedes that it does not know how widely sellers use personalized pricing.[39] The available evidence suggests limited use in the markets studied. A 2018 European Commission mystery-shopping study of 160 e-commerce sites in eight member states found personalized price differences in only 6% of tests. The median difference was less than 1.6%.[40]
Alberto Cavallo found no evidence that large U.S. multichannel retailers varied online prices with a shopper’s location or browsing history. He attributed that restraint to retailers’ fear of “antagonizing their customers.”[41] Stefano DellaVigna and Matthew Gentzkow found that most large U.S. food, drug, and mass-merchandise chains charged nearly uniform prices across stores despite substantial differences in local demographics and competition. The median chain forwent about $16 million a year in profit by doing so.[42]
Customers’ reactions already constrain a practice that firms forgo despite its potential returns. That restraint does not make enforcement unnecessary in every case, but it raises questions about what a general presumption would accomplish and what it would cost to apply one to the discounts that make up much of the practice.
The Proposed Statement cites six works in support of its three economic claims: Personalized pricing is likely to increase business profits; it benefits some customers while harming others; and more “sophisticated” practices are less likely to benefit consumers.[43] The Commission does not claim that personalized pricing has no benefits, causes net harm, or is prevalent. Its first two claims are accurate as far as they go, but leave out consequential findings. The cited literature does not support the third.
The six studies differ in what they can establish. Three are empirical studies but compare the observed setting with modeled pricing alternatives. Jean-Pierre Dubé and Sanjog Misra conduct field experiments on a business-to-business hiring platform and model the seller as a monopolist. Benjamin Reed Shiller estimates what personalization might have done for Netflix’s DVD-by-mail service in 2006, when the company had some pricing power but did not personalize prices. Nicholas Buchholz and coauthors model a Prague-based taxi-hailing platform whose drivers bid in an auction that does not rely on personalized data.
Two other papers are theoretical models without empirical data: Andrew Rhodes and Jidong Zhou’s model of competing firms in an oligopoly setting, and Rosa-Branca Esteves and Francisco Carballo-Cruz’s unpublished model of entry over two periods. The sixth work, by Ginger Zhe Jin, Liad Wagman, and Mengyi Zhong, summarizes the literature without adding a model or data of its own.
None empirically studies personalized pricing in a consumer retail market like those in the Proposed Statement’s examples. None tests the proposed disclosures, and none of the three empirical studies measures what happens when competitors respond.[44]
The Appendix to these comments includes a table that summarizes each paper’s setting and findings, how the Commission uses it, and how well it supports the Commission’s claims. Briefly, with respect to the claims, the studies show the following:
Assessing welfare also requires separating new sales from the redistribution of gains on sales that would have occurred anyway. A higher price on a purchase that still occurs transfers surplus from buyer to seller. A discount that induces an additional purchase that would not otherwise have occurred can create gains from trade. At the same time, price discrimination can also reduce welfare if it allocates a fixed supply to buyers who value it less. The traditional monopoly analysis developed by Robinson, Schmalensee, and Varian and surveyed by Stole weighs the effect on output against this allocation effect. Under its assumptions, output must increase for total welfare to rise. But neither higher output nor higher total welfare establishes that consumers collectively benefit.[45]
The three empirical studies the Commission cites estimate profit gains from personalization, but none evaluates how rival sellers would respond. Rivals could offer deeper discounts, retain customers who would otherwise switch, or both, reducing the estimated gains.
The studies model some customer responses, but none measures how competing sellers would respond. Dubé and Misra expressly exclude a competitive response from other platforms.[53] In the abstract, that dynamic should uniformly reduce the estimated effects. The distinction matters for Liftago. Buchholz and coauthors note that Prague’s regulatory setting is “different from most U.S. cities in which there is nearly free driver entry into the ride-hail market with firms such as Uber and Lyft.”[54] Where drivers can switch easily between competing platforms, a rival’s better offer would limit how much profit a platform could shift from drivers to itself.
The size of that competitive effect is uncertain, but its direction is clear: It would reduce the platform’s estimated profit gain. The papers therefore show that personalization can increase profits in the settings they model, while leaving the effect of competitive responses unanswered. In the limit case, competition could reduce any expected profit increase to zero. Indeed, although the Commission does not cite it for this point, Andrew Rhodes and Jidong Zhou model a market in which, when the market is fully covered, personalized pricing by all firms reduces industry profit.[55]
As the Commission acknowledges, the cited papers find that some consumers gain from personalized pricing while others lose. None of the three empirical studies, however, examines an ordinary retail buyer looking at a posted price in a U.S. store—the kind of buyer the Proposed Statement would affect.
The Commission also omits a finding common to all three studies: Most consumers gain surplus—the value they receive beyond what they pay—or receive lower price offers. In Buchholz et al., 62.5% of consumers gain surplus, while losses fall chiefly on riders least sensitive to price and waiting time.[56] Dubé and Misra estimate that roughly three-fifths of potential customers would receive a lower offer under personalization than under the profit-maximizing uniform price.[57] Shiller finds that “most consumers receive lower prices when prices are personalized, and hence the majority are slightly better off.”[58]
Rhodes and Zhou’s theoretical model shows why the broader result depends on the market and on which competitors have access to data.[59] When the market is fully covered— all potential consumers buy at the prevailing uniform price—and all firms personalize, industry profits fall and consumers collectively gain relative to uniform pricing. That result cuts against the Proposed Statement’s implicit presumption of consumer harm.
The result can reverse when the uniform price excludes some consumers. Personalization then brings more buyers into the market, but firms may collect enough from existing buyers to raise industry profits and reduce aggregate consumer surplus. In the authors’ numerical examples, industry profits begin to rise when uniform pricing excludes roughly 10%–20% of consumers. Aggregate consumer surplus begins to fall when it excludes roughly 20%–30%. Those thresholds depend on costs and the number of firms, while the model holds firms’ information fixed at a perfect level.[60] The remedies the authors consider—data sharing or restrictions on firms with more data—address situations in which only some firms can personalize. Neither is a consumer-disclosure remedy.
The benchmark also matters when interpreting the empirical studies. In Buchholz et al., replacing Liftago’s actual driver auctions with a single price set by the platform would cut consumer surplus by 33% and increase the share of riders who walk away from 37% to 53%.[61] But loss comes from replacing driver competition with centralized pricing. Moving from centralized uniform pricing to centralized personalized pricing reduces consumer surplus by a further 2.25%. Thus, the vast majority of the consumer-surplus loss comes from the platform taking control of pricing, rather than using consumer data.[62]
Dubé and Misra find a find a similar distinction. Moving ZipRecruiter from its actual uniform price of $99 to a profit-maximizing uniform price of $327 would raise profits by 55% and halve the share of prospective customers who buy, from 25% to 12%. Again, this entails no personalization. The paper measures the consumer-surplus effects of personalization against that $327 price rather than against $99, because they expect a maturing firm to charge the optimal uniform price even without personalization. Against that benchmark, theoretically optimal personalized pricing reduces total consumer surplus by 25%. The $499-capped personalization ZipRecruiter implemented reduces it by 2.04% while increasing profits by more than 8%.[63]
Personalization matters in both studies, but their headline changes cannot all be attributed to it. In Buchholz et al., personalization accounts for a small fraction of the consumer-surplus loss. In Dubé and Misra, the implemented policy reduces consumer surplus by about 2% against a uniform-price benchmark that itself halves the share of prospective customers who buy.
The studies’ most important finding is that personalized pricing affects consumers differently. In Rhodes and Zhou’s model, when the prevailing uniform price excludes some buyers, personalization both lowers aggregate consumer surplus and brings previously priced-out consumers into the market.[64] The studies find that the net effect of personalized pricing can sometimes be a reduction in aggregate consumer surplus.[65] They also find that personalization can expand access, that most consumers in the settings studied gain or receive lower offers, and that the beneficiaries tend to be more sensitive to price.[66] The Commission acknowledges that personalized pricing produces winners and losers, but it does not explain what follows from that dichotomy.
The FTC’s Unfairness Policy Statement treats a practice as unfair only if it is “injurious in its net effects.”[67] But the Proposed Statement does not claim that personalized pricing lowers aggregate consumer welfare. Instead, it points to particular consumers who pay more. That raises a question about distribution—who gains and who loses—that the cited studies help answer.
In Buchholz et al., losses fall chiefly on riders least sensitive to both price and waiting time, a profile unlike that of a passenger in an emergency. In Dubé and Misra’s study, larger employers hiring full-time workers with benefits tend to pay more, while smaller firms hiring part-time staff are most likely to gain. In Shiller’s study, subscribers whose browsing histories predict the highest willingness to pay face higher prices.[68] These findings do not support the impression left by the Statement’s examples that those paying more are the consumers least able to choose otherwise.
Section 5(n) also requires the Commission to weigh any “substantial injury to consumers” against “countervailing benefits to consumers or to competition.”[69] In the studies cited, however, the measured losses are small. Against a uniform-price benchmark, the estimated consumer-surplus losses are 0.5% in Shiller and 2.25% in Buchholz et al. For the capped personalization ZipRecruiter implemented, Dubé and Misra estimate a 2.04% loss against the optimal uniform price, although their estimate for uncapped personalization is much larger: 25% against that benchmark.[70]
Whether those numbers suggest substantial injury or not, they are static, partial-equilibrium sums with equal dollar weights. They do not show who gains or loses, and they value new participation only by the estimated surplus of each additional buyer. A measure that also considers distribution may reach a different result and the sign can even reverse. Dubé and Misra find that under inequality-averse welfare measures, personalization is preferred to uniform pricing “because the allocative benefits outweigh the decline in total surplus,” and that those benefits accrue mainly to smaller firms.[71]
Similarly, the assessment of benefits “to competition” permitted by Section 5(n) contemplates a separate calculation from the static consumer-effect balancing, one that includes the dynamic consequences of a larger market (e.g., entry, scale, investment, spillovers), not just consumer surplus.[72] Market size and access may, in fact, be more important than the consumer-surplus sign. Output expansion is antitrust law’s own measure of competitive benefit,[73] and traditional monopoly analysis treats output growth as necessary, though not sufficient, for price discrimination to increase total welfare.[74] Two of the three empirical studies find that personalization expands participation: About 7% more requests result in a ride in Buchholz et al., and about 3% more households subscribe in Shiller.[75]
The Proposed Statement instead treats a measured aggregate loss as presumptive injury without accounting for the majority who gain, the consumers newly able to buy, or the benefits of market expansion. That applies a welfare criterion the Statement has not explained or defended and does not complete the balancing Section 5(n) requires.
The Proposed Statement’s cited authorities do not establish that “the more sophisticated personalized pricing practices become, the less likely consumers are to benefit.”[76]
The Commission cites Dubé and Misra to suggest that the effects on consumers depend on the data available to a seller—and, implicitly, that more data means less consumer welfare.[77] The study finds a more complicated relationship. The pages the Commission cites give an example in which more detailed data raise consumer surplus and conclude that “increasing the granularity of the consumer data available to a firm can increase consumer surplus and even reduce deadweight loss.”[78] The authors report “a nonmonotonic relationship between the granularity of data and consumer surplus under personalization.”[79] In other words, more detailed data do not consistently help or harm consumers.
Across 62 potential personalization schemes, the authors find that “allowing the firm to target on more granular data can be good for consumer surplus,” that “granularity per se does not harm consumers,” and that “granting the firm access to more information is not per se worse for the consumer, as it can lead to segmentation schemes that allocate more surplus to the consumer.”[80] They warn that “overregulation of the types of data that firms can use for personalized pricing purposes could exacerbate rather than offset some of the harm to consumers.”[81] All 62 schemes do lower total consumer surplus relative to the optimal uniform price, but the size of that loss does not move consistently with the granularity of the data.[82] That finding undercuts the Statement’s general claim about sophistication.
The Commission cites Rhodes and Zhou for the finding that “when only some companies in a market can personalize prices, consumers can be worse off than when either all or no companies do so.”[83] That summary is accurate, but it does not support the sophistication claim. The harm in the model comes from unequal access to personalized data across firms, not from increasingly detailed data.[84] Indeed, the finding cannot depend on the amount or sophistication of the data, because the model gives every personalizing firm perfect information about each consumer. The authors leave the effects of differing amounts of information for future work.[85]
Buchholz and coauthors provide the Commission’s best evidence for its sophistication claim, and it is thin. The paper finds that, relative to a uniform price set by the platform, personalizing prices based only on riders’ sensitivity to waiting time leaves aggregate consumer surplus unchanged. Adding their sensitivity to price lowers it by 2.25%.[86] Yet nearly all of the consumer loss comes from the platform taking control of pricing. Replacing driver auctions with a uniform platform price costs riders a third of their surplus. The platform’s other pricing policies, from a menu using no rider data to full personalization, differ by less than four percentage points.[87] As the authors put it, “the losses in consumer surplus from personalized pricing are mostly due to the platform’s ability to centralize pricing and not its knowledge of consumer preferences.”[88]
Adding information thus has either no effect or a small negative effect on aggregate consumer surplus in the settings Buchholz and coauthors model. It also brings important benefits: 62.5% of riders are better off, the average fare falls, and about 7% more requests result in a ride. Indeed, the authors reach the opposite conclusion from the Commission’s about total welfare: “Conditional on the platform exercising this pricing power, the more information the platform incorporates into its pricing policy, the larger the overall welfare gains.”[89] Meanwhile, higher fares fall on the riders least sensitive to price.[90] The paper primarily demonstrates that a dominant platform with unconstrained pricing power can take surplus from its least elastic customers. That is much stronger support for the Commission’s market-power admission than for its sophistication claim.
Jin, Wagman, and Zhong’s literature review likewise does not establish the Commission’s general claim.[91] First, it is a literature review with no original model or data; it summarizes and assesses other economists’ work and is not independent evidence. Second, the authors warn that “as a firm with market power collects extremely fine-grained personal data, it can approach this limit case and potentially hurt all consumers.”[92] The claim is confined to the market-power setting, and the paper’s next sentence adds that “the concern about first-degree price discrimination can be mitigated by market competition.”[93]
Even where the paper claims that “access to finer-grained consumer information” allows a firm to “selectively undercut its rivals’ customer base,”[94] its support for the Statement’s sophistication claim is limited. As the paper notes, the result is a function of “raising switching costs for targeted consumers and creating data asymmetry among firms and consumers.”[95] Asymmetry can arise at any level of sophistication (although presumably more sophisticated data in some firms’ hands makes asymmetry more likely).
The review’s conclusion emphasizes the conditions the Proposed Statement overlooks. It says that “in competitive markets where multiple firms have access to consumer data, personalized pricing can intensify competition and benefit consumers,” and that greater pricing sophistication holds “the potential for both significant consumer benefits and serious market failures.”[96] Even where a firm has market power, “the consumer benefits can exceed the costs in net, depending on the market and product specifics.”[97] The authors’ first policy recommendation addresses the Statement’s central defect: “Regulatory frameworks should focus on market structure and competitive dynamics rather than treating all forms of personalized pricing equally.”[98]
The remaining paper the Commission cites for its sophistication claim, Esteves and Carballo-Cruz’s theoretical duopoly model, attributes harm to the asymmetry of access to data, not the sophistication of the data used. Consumer harm arises when an incumbent’s exclusive data prevent a rival from entering, leaving the incumbent as a monopolist.[99] When entry does occur, aggregate consumer surplus is highest if both firms personalize, lower if only the incumbent does, and lowest if neither does.[100] In other words, consumers collectively benefit as more firms personalize.[101] The authors conclude that, when entry costs are low, “price discrimination intensifies competition and overall consumer surplus is above its non-discrimination counterpart.”[102] In those markets, they find “there are no reasons to block price discrimination.”[103]
Other research confirms that more information can raise or lower consumer surplus, under both competition and monopoly. Mark Armstrong and John Vickers show that data identifying captive buyers, who consider only one seller, let firms charge those buyers more while competing harder for buyers who compare offers. Under the paper’s demand conditions, discrimination harms consumers collectively when the firms are sufficiently similar and can benefit them when the firms are sufficiently asymmetric.[104] In Brian C. Albrecht’s model, complete information available to all firms can maximize aggregate consumer surplus even though sellers charge loyal buyers the full value of the product: Competition drives prices for contested buyers down to the cost of serving them.[105] Dirk Bergemann and coauthors show that perfect price discrimination leaves consumers with zero surplus, their worst feasible outcome. But they also identify partial market segmentations that leave consumers better off than uniform monopoly pricing would.[106]
Different information and different market conditions determine whether greater sophistication harms or helps consumers. Better estimates of willingness to pay, the ability to identify a rival’s customers, and wider access to the same data can affect prices and welfare differently. Buchholz and coauthors find one refinement that slightly lowers consumer surplus and another that leaves it unchanged. The competitive models identify conditions under which more informative or more widely available data benefit consumers.
Evidence that personalization can sometimes benefit consumers is not, by itself, an objection to disclosure; nor is disclosure obviously an answer to firms’ variable ability to harm consumers with personalized pricing. The studies compare pricing policies and access to information; the Proposed Statement concerns what sellers tell buyers. The Commission has yet to ask how its proposed notices would affect consumer choices, firms’ access to data, their incentives to change prices, and the resulting gains and losses.
There is, however, no basis for the Proposed Statement’s broad, unqualified claim about sophistication. A final statement should withdraw the claim or identify when more detailed information can harm consumers. The relevant conditions would include the extent of competition, the amount and distribution of data, differences among firms’ ability to personalize, and the ease of entry.[107] The Commission must also specify the pricing benchmark against which it measures harm and separately assess how disclosure would change consumer choices and seller prices.
The Proposed Statement advances two theories of deception. Under the first, retailers “may deceive consumers in violation of Section 5 when they represent, expressly or by implication, that a price is static or widely offered when in fact it is personalized.”[108] That theory follows settled deception law by asking what the seller’s express or implied representations conveyed.
Under the second, retailers “may similarly deceive consumers when a consumer reasonably believes that a price for a good or service is static or widely offered, and the merchant fails to disclose that the price is in fact personalized.”[109] This theory rests on a consumer’s expectation without identifying what, if anything, in the seller’s presentation conveyed that prices were uniform.
A price tag makes a narrow, useful offer: A buyer may purchase an item at the displayed price. Standing alone, it does not say that every other buyer sees the same price at the same moment. Whether a seller’s broader presentation conveys that message depends on how consumers understand it, and that understanding can differ across markets.
U.S. shoppers already encounter many forms of price variation: clipped, downloaded, and register-generated coupons; loyalty-card prices posted beside shelf prices; student, senior, and military discounts; airline fares that change between search and booking; retention offers available only when a subscriber tries to cancel; and negotiated prices for cars, homes, and professional services. Prices for insurance and credit products, as the Commission itself says, “necessarily vary from purchaser to purchaser.”[110]
The Commission acknowledges that personalized pricing is established in some markets. In others, it infers that consumers reasonably expect “that the price they see for a product or service is the same price that any other consumer at the same place and time would see.”[111] But the absence of established personalization does not show that consumers read a displayed price as a promise of uniform treatment. In a store with a loyalty program, that expectation is already false, and loyalty-card holders know it. The Commission might call a loyalty price “widely offered,” but that answer concedes the point: Consumers may expect to see the terms of a price without expecting everyone to pay the same amount.
The Proposed Statement also leaves the expectation undefined. How many consumers must hold it, and how consistently?[112] A new customer may expect something different from a customer placing his 100th order. Expectations can change as pricing practices change. In a 2015 report on differential pricing, the Council of Economic Advisers said disclosure rules “should be based on a comparison of the compliance costs and the expected benefits from increased transparency.” It predicted that buyers “may come to expect personalized pricing in specific online settings, just as they do offline.”[113] A trigger based on current expectations risks freezing a norm that, as the Commission notes, varies by market. It also gives sellers little guidance when they set prices.
The Commission can still bring a deception case when a seller’s presentation conveys a uniform-price claim and the evidence establishes that claim. The Deception Policy Statement says the Commission “will often be able to determine meaning through an examination of the representation itself.” In other situations, it “will require extrinsic evidence that reasonable consumers reach the implied claims,” such as copy tests, surveys, or consumer testimony.[114] An alleged implied promise of uniform pricing calls for that evidence. The policy’s presumptions of materiality—for express claims, intended implied claims, and information about central product characteristics such as cost—apply only after the Commission identifies a claim or omission likely to mislead. They do not establish that a price display conveys a promise of uniformity.[115]
The FTC’s deception test has three elements: A representation, omission, or practice must be likely to mislead; the Commission assesses it from the perspective of a consumer acting reasonably in the circumstances; and it must be material, meaning likely to affect the consumer’s conduct or decision.[116]
An omission can satisfy the first element only when the context gives the silence a misleading meaning. In International Harvester, the Commission distinguished a half-truth—“where a seller fails to disclose qualifying information necessary to prevent one of his affirmative statements from creating a misleading impression”—from a “pure omission,” or “a subject upon which the seller has simply said nothing, in circumstances that do not give any particular meaning to his silence.”[117]
The Commission explained that it “does not treat pure omissions as deceptive.” Otherwise, deception would expand “virtually beyond limits” because “[i]ndividual consumers may have erroneous preconceptions about issues as diverse as the entire range of human error.” Moreover, deception law provides no cost-benefit analysis of the disclosure that a finding would compel.[118] The Commission therefore held that a manufacturer’s failure to disclose a fuel-system hazard was unfair, but not deceptive, allowing “a cost-benefit analysis” before ordering disclosure.[119] The Proposed Statement’s second theory treats exactly such a preconception as a representation.
International Harvester recognized an exception when silence occurs “under circumstances that constitute an implied but false representation.” That can include “ordinary consumer expectations as to the irreducible minimum performance standards of a particular class of good,” such as the expectation that a car can reach highway speed.[120] The Proposed Statement’s second theory appears to invoke that category. But the category is defined by an expectation that virtually every buyer of the class of goods holds and that the seller knows its product does not fulfill. The Commission has acknowledged that personalized pricing is well established in some markets. Expectations of uniform pricing therefore vary by market and consumer. The Statement turns an expectation it has not identified into a representation it need not prove.
If a consumer’s mistaken preconception is enough to create a duty to speak, a duty to speak, sellers must anticipate every consequential misunderstanding a buyer might hold. Sellers cannot survey that set of assumptions, and enforcers cannot define it in advance.[121]
The Proposed Statement’s citation to P. Lorillard Co. v. FTC, introduced with a “cf.” signal, does not establish a general duty to disclose the fact, basis, or data sources behind personalized pricing.[122] Lorillard promoted Old Gold cigarettes as lowest in nicotine, tar, and resin while selectively invoking a Reader’s Digest test. Read as a whole, the test found the differences among brands practically insignificant and did not support a claim that any brand was less harmful. The court therefore found that Lorillard’s own partial affirmative statements created a misleading net impression. The problem “was not that it did not print all that the Reader’s Digest article said, but that it printed a small part thereof in such a way as to create an entirely false and misleading impression.”[123]
Lorillard did not hold that silence alone is deceptive or that firms must disclose everything consumers might consider relevant. The other case cited in the same footnote, FTC v. Standard Education Society, concerned salespeople who falsely told prospects that a set of books was free and that its regular price exceeded the offered price—affirmative statements the Commission found false.[124]
The Proposed Statement grounds materiality in steps an informed consumer might take to avoid a personalized price. Consumers unaware of personalization “cannot take steps to avoid the higher prices that may result from it, such as using a virtual private network or private browsing functionality, choosing a different retailer whose prices are static or widely offered, rather than personalized, or simply declining to complete the transaction.”[125]
A virtual private network masks the address a server uses to infer location, but does nothing about personalization keyed to a logged-in account, a loyalty number, or a stored payment card—the personalization the Commission’s model disclosure describes as a price derived “from data about that consumer’s previous purchases from the same retailer through the same login account.”[126] Private browsing can clear cookies after a session, but it leaves purchase history held by the seller intact. A consumer would need to know which other retailers use uniform prices before switching to one; a notice from the current seller does not supply that information. And a consumer can decline any purchase at a price she considers too high, personalized or otherwise.
Materiality then depends on something narrower than the Commission claims: Would learning that a price was personalized cause consumers to shop elsewhere or delay buying? The Commission can test that proposition but has not done so. Nor does a presumption that information about cost is material resolve the issue. Materiality is the third element of deception; a presumption about it cannot establish the first—an act or practice likely to mislead.
FTC v. Colgate-Palmolive Co. does not establish a general duty to disclose personalized pricing.[127] The passage the Commission cites says a seller deceives consumers by falsely claiming that a product usually sells at an inflated price and is now available at a special discount.[128] The Court offered that example by analogy. The case itself concerned a television commercial that presented an undisclosed mock-up as an actual product demonstration.
Even so, the discount example turns on an affirmative false claim. The seller represents that the higher reference price is genuine and the lower price is a bargain. The Court used it to show that a false claim can be material even when buyers receive a product worth what they paid. It did not hold that a seller must disclose every fact that influenced its price.
A retailer that advertises “$40, marked down from $80” makes a false claim if the item did not ordinarily sell for $80. A retailer that simply lists an item for $40 makes no comparable claim about a discount, price uniformity, or its pricing method. The Proposed Statement initially respects that distinction by tying possible liability to an express or implied representation that a personalized price is static or widely offered. Its second theory drops the requirement by treating a consumer’s belief as sufficient without a seller-created representation. Colgate-Palmolive does not support turning a rule against false price claims into a general duty to disclose personalized pricing.
Section 5(n) limits the Commission’s authority rather than listing factors for it to balance. It provides that the Commission “shall have no authority” to declare a practice unfair “unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.”[129] As the 11th U.S. Circuit Court of Appeals explained in Corpay, “[a]s ‘unless’ conveys, the three factors that follow it are mandatory for a finding that a practice is ‘unfair.’”[130]
The Proposed Statement, however, casts each requirement as a possibility: Injury “may be” substantial, consumers “may not” be able to avoid it, and benefits “may also” be realized another way. It then presents seven hypothetical examples without applying the statutory requirements to any of them.
The Proposed Statement closes with seven hypothetical examples of personalized pricing that, “without adequate disclosure,” would raise Section 5 concerns. A food-delivery service quotes a higher price to a customer it believes cannot leave home. A grocery chain charges more for milk to a household with several children. A hotel charges more to a traveler it believes is attending a funeral. A rideshare service charges more to a rider with no competing apps installed, and more again to one headed to a medical facility during an apparent emergency. A retailer charges a recent crime victim more for a security camera and raises its website price for a shopper standing in its parking lot.[131]
The examples differ sharply on whether a consumer can avoid the higher price. The shopper in the parking lot can check the shelf price at little cost. A rider without a competing app may be able to download one, though that takes time and effort. Indeed, the example’s surcharge depends on the seller’s belief that the rider is less likely to switch. By contrast, a passenger headed to an emergency room may have no practical chance to compare fares. The Proposed Statement groups these situations together despite their differences on the very question Section 5(n)’s avoidability requirement asks.
A finding of substantial injury also needs a comparison price—the price the seller would have charged but for personalization. The Proposed Statement supplies neither that price nor a method for finding it. The comparison is not necessarily the lowest price offered to anyone, but the price the seller would have set had it not personalized. It might be a uniform price or a price based on different customer information. Data that could support a surcharge for a household could, for example, also support a family discount. The grocery example does not say which outcome would occur.
A defined comparison price would also distinguish a loss in total consumer surplus from a redistribution of gains among consumers. Higher prices injure the buyers who pay them. If personalization also lowers prices for others, those buyers gain. Section 5(n) then requires the Commission to weigh the injury against benefits to consumers or competition. It cannot do so without estimating who gains, who loses, and by how much.
The statute requires a finding that injury is “not outweighed by countervailing benefits to consumers or to competition.”[132] Yet the Commission says the effects of personalized pricing on consumers are unclear.[133] Instead of estimating those effects, the Proposed Statement assumes that “[a]ny benefits to consumers or competition from personalized pricing may also be realized without concealing the fact and nature of the personalized pricing.”[134] Whether sellers would keep personalizing under a disclosure requirement, and which benefits would survive, is a question about how firms respond to compliance costs. The Commission should test those responses using its Section 6(b) record.
The FTC’s Unfairness Policy Statement adds two constraints absent from the proposal. The Commission “is not concerned with trivial or merely speculative harms,” and “[e]motional impact and other more subjective types of harm . . . will not ordinarily make a practice unfair.”[135] It also “will not find that a practice unfairly injures consumers unless it is injurious in its net effects.”[136] The Proposed Statement cannot establish net injury while describing the practice’s effects as “unclear.” To the extent it relies on consumers’ reported sense that personalized pricing is unfair, it relies on the kind of subjective harm that the Unfairness Policy Statement and the legislative history of Section 5(n) exclude.[137]
The Commission also identifies three ways consumers might avoid a higher price. It says they may lack the tools to “modify their behavior to avoid triggering higher prices, dispute or correct inaccurate information collected about them that is leading to higher prices, or avoid the collection of that data in the first place.”[138] A notice might help consumers compare offers or limit data collection without explaining every feature of a seller’s pricing model. Disputing an error, though, requires knowing which information the seller used. Limiting collection requires knowing where the information came from. Categories such as “purchase history” or “location” answer neither question.
This does not mean the Commission should demand a more detailed notice. It means the avoidability analysis cannot depend on steps the prescribed notice would not enable. A final statement should identify which steps the notice would make possible and confine its analysis to them.
The proposal’s unfairness theory turns on concealment: Consumers may be unable to avoid a higher price “if the fact or nature of personalization of the price has been concealed by the retailer.”[139] Consider the rider headed to a medical facility during an apparent emergency. Telling him that the fare reflects data suggesting an emergency removes the concealment but leaves both his circumstances and the surcharge intact. The same problem applies to a hotel guest believed to be attending a funeral. Both examples depend on the possibility that some personalized prices are unfair even when fully disclosed—a question the Commission expressly sets aside.[140]
FTC v. Corpay Inc. shows what an unfairness case supported by evidence can look like. The 11th U.S. Circuit Court of Appeals upheld summary judgment for the Commission on a claim that Corpay charged fleet-card customers fees it had not disclosed.[141] The record showed what customers were told and what the company knew about their confusion. A telephone survey by the Commission’s expert found that Corpay told only 7.02% of affected customers about all the fees before charging them. The survey also measured advance notice for each fee.
Internal emails and complaints showed that sales staff omitted the fees. Corpay kept its terms and conditions offline for three years and instructed employees not to send electronic copies. Eight internal surveys from 2016 through 2020 showed that its fees confused and surprised customers. Corpay’s expert testified that customers bought no less fuel after a fee was disclosed. The court found that testimony did not answer the evidence that Corpay had failed to disclose the fees in the first place.
None of the Proposed Statement’s seven examples supplies comparable evidence about what consumers were told, what sellers knew, or how many consumers could have avoided the charge.
The Commission invokes the Fair Credit Reporting Act (FCRA) to support a duty under Section 5 to disclose the reasons for a personalized price. It says the FCRA requires notice “not only when an adverse action is based on a consumer report (for example, the charging of a higher price), but also of the specific basis for that adverse action.”[142] Section 1681m(a) does not require that explanation. The Proposed Statement’s own footnote describes the provision more accurately: It requires an adverse-action notice and tells consumers how to obtain a free copy of their report “so they can identify and dispute any inaccuracies.”[143]
The notice must identify the adverse action; provide any credit score used, along with the key factors that adversely affected the score; identify the consumer reporting agency; and explain the right to a free report and to dispute its contents. The key factors explain the score, not the creditor’s decision. FCRA also requires “a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken.”[144]
The reason-giving duty the Commission describes comes from the Equal Credit Opportunity Act (ECOA), which it does not cite. ECOA entitles an applicant subject to adverse action to a statement of reasons, which suffices “only if it contains the specific reasons for the adverse action taken.”[145] Even there, a creditor may discharge the obligation by notifying the applicant of the right to request those reasons, rather than volunteering them.[146] The duty applies to specified credit decisions, including a denial or revocation, a change to the terms of an existing arrangement, or a refusal to grant credit on substantially the terms requested.[147]
FCRA’s other notice provisions are equally specific. If a lender uses a consumer report to offer credit “on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers,” Section 1681m(h) requires a risk-based pricing notice. That notice identifies the report’s role in setting the terms, the reporting agency, and the right to a free copy and contact information for obtaining it. If the lender used a credit score, the notice must also provide the score and specified accompanying information, including the factors that adversely affected it.[148]
FCRA does require disclosure of “the nature of the information” behind certain decisions based on information from someone other than a consumer reporting agency, including a denial of credit or an increase in its charge. But the duty arises only after a consumer makes a written request within 60 days.[149] Disclosure to a consumer who asks differs from a notice on every displayed price.
Congress enacted these targeted requirements. That suggests Section 5 did not already compel them across markets. The same point applies to the state insurance provisions the Commission cites: Each reflects a legislative or regulatory decision to require notice in a particular market.[150]
Section 5(n) allows the Commission to consider established public policies as evidence, but says “[s]uch public policy considerations may not serve as a primary basis for such determination.”[151] The Proposed Statement quotes that limit in footnote 21, then relies on FCRA and state insurance law as its only statutory support for a disclosure duty.[152] The FTC’s Unfairness Policy Statement says public policy most often supplies “additional evidence on the degree of consumer injury.” When the Commission relies on it heavily, the policy should be “widely shared, and not the isolated decision of a single state or a single court.”[153] Two state insurance statutes, one state insurance regulation, and a credit statute with narrower requirements do not establish the general duty the Proposed Statement proposes.
The Proposed Statement leaves unclear how much detail a personalized-pricing notice must provide. It calls for disclosure of personalization, its basis, and the types of data used.[154] Its example of an adequate notice describes a price “based on a consumer’s estimated willingness to pay derived from data about that consumer’s previous purchases from the same retailer through the same login account.”[155] That explanation identifies the purpose and source of the data without revealing the full pricing model.
If the Commission retains these three elements instead of adopting a safe harbor, it should clarify what satisfies them when prices depend on several data sources. That clarification should, however, stop at what a notice must convey. If the Commission goes on to mandate the format of the disclosure—its wording, placement, or presentation—the document ceases to be a statement of enforcement policy and becomes a disclosure rule, one that would require the procedures of Section 18 rulemaking.
Disclosing what a consumer will pay differs from explaining how the seller arrived at the price. Clear final prices, honest reference prices, and understandable loyalty terms help consumers compare offers.[156] The Proposed Statement’s second and third elements instead ask sellers to describe their pricing methods and the data they use.
In International Harvester, the Commission advised that “[i]n most cases it is appropriate to limit mandatory disclosure to those core aspects of a transaction that virtually all consumers would consider essential to an informed decision.”[157] Price clearly meets that threshold. Whether the model behind the price does is far less clear. Even a 2014 White House report drew this line, calling it “implausible for consumers to be presented with the full parameters of the data and algorithms shaping their online and offline experience.”[158] The Council of Economic Advisers’ 2015 follow-up described a narrower option: a rule “requiring disclosure that prices or search results may vary across users.” It said such a rule “should be based on a comparison of the compliance costs and the expected benefits from increased transparency.”[159]
Petra Persson models how a firm can satisfy a disclosure mandate while defeating its purpose. The firm complies, then sends “an increasing swarm of irrelevant cues” that obscures the required information and leaves readers worse off.[160] Her model formalizes a prediction Frank H. Easterbrook and Daniel R. Fischel made in 1984: Firms “may cease disclosing some category of useful information and switch to some obfuscatory (but complying) information.”[161] Persson also shows how a firm told to disclose information in an easy-to-understand format can complicate its product until that requirement no longer helps.[162] She concludes that “simple disclosure rules can be completely impotent and have no impact on social welfare.”[163]
At the same time, the consumer who must read what the firm produces bears a cost of her own. Mandated disclosures “provide diminishing returns and increasing costs,” while “[o]ptimal disclosure is not maximal disclosure.” Yet commentators often “take for granted that increased disclosure is beneficial—and cheap.”[164] Additional information can “corrode[] the decision-making value of information” by forcing consumers to separate what matters from what does not.[165] The consumers least equipped to do that may be the very people a mandate aims to help.[166]
The Proposed Statement’s second and third disclosure elements ask a shopper at checkout to do exactly that. A notice saying a price reflects “estimated willingness to pay derived from data about that consumer’s previous purchases” describes a process.[167] It does not tell the shopper what she would pay elsewhere or what action to take. Nor would a better-drafted paragraph solve the broader problem. A single disclosure prescribed for every seller and market replaces judgments tailored to particular transactions with “a blunt ex ante standard of disclosure.” As Geoffrey A. Manne observes, “[t]here is no reason to believe that the costs imposed by the blanket standard, although different in nature, are any smaller in magnitude” than the costs it displaces.[168] The Commission should instead ask whether each added element improves consumers’ decisions sufficiently to justify its costs in attention and changes to sellers’ behavior. The Proposed Statement does not ask that question.[169]
The Organization for Economic Co-operation and Development (OECD) accordingly advises governments to “limit the prescriptiveness and extensiveness” of mandated disclosures to what is necessary. It also warns of an accumulation problem: Disclosures that seem defensible one by one can overwhelm consumers in combination. Quoting Omri Ben-Shahar and Carl Schneider—“[o]ne disclosure by itself may seem trivial, but en masse disclosures are overwhelming”—the OECD warns that “even a well-designed personalised pricing disclosure may be easily overlooked in the presence of a relatively more salient health warning.”[170]
Accumulation is a problem even at this Commission. The Rule on Unfair or Deceptive Fees governs how sellers display total prices for live-event ticketing and short-term lodging.[171] In March and April 2026, the Commission sought comment on rules for rental-housing fees[172] and for fees in online food and grocery delivery.[173] While each of those disclosures is confined to its market, a personalization notice would not be. It would apply to every seller that personalizes, joining the fee disclosure the Commission already requires, along with the privacy notices, cookie banners, and terms that already compete for the same checkout screen. The consumer’s attention to that screen does not grow with the number of notices on it.
Research by Lisa Robinson, Kip Viscusi, and Richard Zeckhauser suggests that generic warnings can weaken the force of warnings about serious risks. They found that 69% of surveyed consumers thought a generic Proposition 65 cancer warning on breakfast cereal conveyed a risk as great as a cigarette warning from 1966. “Taking cigarettes as the benchmark for wolves,” they write, “the Proposition 65 warnings are largely about puppies.”[174] A notice on every personalized price would likewise attach the same signal to a loyalty discount and to the emergency rideshare surcharge in the Commission’s example. The OECD’s review of online disclosures adds that consumers “might mistake, for example, neutral information for a warning, focus their attention unduly on disclosed information, rather than other product characteristics,” or react to it emotionally.[175]
Howard Beales and Todd J. Zywicki similarly warn that “disclosures may misdirect attention, if they imply that consumers should pay attention to information that has no real significance for them.”[176] A personalization notice could do just that for a shopper receiving a discount.
Anna Priester and coauthors, whom the Commission cites in support of disclosure, asked participants to imagine buying a digital movie and rate the fairness of the price they were told they received. Individually personalized prices drew lower fairness ratings than prices set for customer groups, though the difference was marginal in both studies.[177] Every participant was told the pricing rule, so the researchers did not test the effect of disclosing it. Their study therefore measures reactions to a described practice, not whether a notice helps consumers understand a price or act on it.
Finally, the academic case for algorithmic-pricing transparency is narrower than the Proposed Statement suggests. Oren Bar-Gill, Cass R. Sunstein, and Inbal Talgam-Cohen tie harm to algorithms that exploit consumers’ misperceptions. They describe pricing based on preferences and wealth as causing “limited harm,” and a disclosure that a seller charges wealthier consumers more as revealing a “(not particularly alarming) fact.”[178]
The OECD two personalized-pricing notices. Working for its Committee on Consumer Policy, Ireland’s Economic and Social Research Institute recruited 210 participants in Dublin and 210 in Santiago, Chile. Each completed eight purchase tasks on simulated retail sites. Some saw no notice. Others saw a statement that “[w]e used your personal data in calculating this/these price(s) for you.” A stronger version added that the price “may be higher or lower than for other customers.” The stronger notice increased stated awareness among Irish participants after they received a definition of personalized pricing, but awareness remained low. The study “failed to provide evidence of a significant impact of the disclosures on participants’ purchasing behaviour.”[179] Between 62% and 94% of Irish participants and between 85% and 96% of Chilean participants did not recall seeing a notice.[180] The authors concluded: “Neither disclosure was effective in protecting participants from paying more than they needed to.”[181]
While interesting, the experiment has two important limits. First, prices varied randomly rather than according to personal data, a limitation the authors identify themselves.[182] At the same time, 66% of Dublin participants and 51% of Santiago participants said personalized pricing should not be allowed.[183] The absence of a significant effect on purchases therefore does not show that participants approved of the practice. Second, results from simulated sites in two cities need testing before they can support a U.S. retail policy. The notices were prominent and repeated—likely more so than a notice at checkout[184]—yet most participants did not recall seeing them.[185]
Willem H. van Boom and coauthors tested how notice wording affected stated purchase intentions. They first studied 426 Dutch university students choosing among hotel rooms, then repeated the experiment with 186 U.S. participants recruited online.[186] Notices suggesting that personalization served the buyer’s interests—because the price might be lower than others paid or was “appropriate”—raised stated purchase intentions. In the U.S. study, the effect operated entirely through participants’ belief that the practice served their self-interest.[187] Notices also tended to raise stated purchase intentions compared with no notice.[188] It should be noted in this regard that, under the Proposed Statement, sellers would draft their own notices and choose the wording. The van Boom study suggests that wording, rather than disclosure alone, can shape consumers’ responses.
Allison Nicoletti and Christina Zhu studied roughly 22 million loan applications after the Truth in Lending Act–Real Estate Settlement Procedures Act (TILA-RESPA) Integrated Disclosure rule took effect. They compared covered mortgages with exempt open-end loans, which let borrowers draw credit repeatedly. Borrowers became more likely to withdraw covered applications or leave them incomplete, a result the authors interpret as consistent with lower information-processing costs. Approval rates also fell by about 5 percentage points. Compliance costs and frictions in selling loans to investors reduced credit availability.[189] The authors draw no conclusion about net welfare and call their findings “primarily descriptive.”[190]
Calorie labels can change purchasing behavior, although their average effect is small. A 2025 Cochrane review by Natasha Clarke and coauthors finds strong evidence of a small reduction in calories selected or purchased. The evidence on calories actually consumed is less certain.[191] Pasquale E. Rummo and coauthors found 24.7 fewer calories purchased per transaction across 2,329 Taco Bell restaurants. Most restaurants subject to labeling were in California. For restaurants outside California, the pooled estimate showed no statistically significant change over the three- to 24-month follow-up.[192]
These studies offer a narrower lesson than the Proposed Statement draws. Calorie labels are brief. Mortgage forms span several pages, but they use standardized fields and quantities that borrowers can compare when choosing a loan. A notice that prices may vary with personal data could be brief and standardized. An explanation of how a seller set a price may be longer and harder to standardize. It also gives consumers no alternative price to compare at the moment of purchase.
None of these studies establishes how consumers would use the Commission’s proposed notice at a U.S. retail checkout. The Commission should first resolve the legal and evidentiary questions discussed above and define the scope of any disclosure duty. If it proceeds, it should conduct or commission consumer testing comparable to its mortgage-disclosure research.[193] The tests should ask whether consumers understand the notice, can use it to compare offers, and make different purchasing decisions. Testing could inform a safe harbor or an eventual Section 18 rule. The Commission must separately assess how disclosure would change sellers’ prices and consumer welfare.
The Commission cannot assume that personalized pricing’s benefits would survive its proposed disclosure requirement.[194] If a notice helps consumers avoid higher prices, sellers may lower those prices, raise discounted prices, change how they make offers, or narrow eligibility for discounts. The Commission must assess the resulting gains and losses across consumers before concluding that disclosure would preserve the benefits.
The Proposed Statement assumes that “[a]ny benefits to consumers or competition from personalized pricing may also be realized without concealing the fact and nature of the personalized pricing.”[195] That assumption treats sellers’ conduct as fixed and the notice as a costless addition. But it is a mistake to “treat regulated behavior as static” when regulation makes some conduct more expensive.[196] As Geoffrey A. Manne explains, “[d]isclosure regulation makes some forms of behavior more expensive relative to others. Rational actors will respond by shifting some conduct into the comparatively cheaper outlets. And these alternative behaviors may actually be less beneficial than the regulated, deterred behavior.”[197]
The size of that shift depends on how closely other practices can substitute for personalized pricing.[198] Sellers have many alternatives to an individualized discount that requires a three-part notice and may still invite enforcement scrutiny.[199] They can charge everyone one higher price, vary prices by location or time of day, offer coupons through intermediaries, or use bundles and loyalty tiers. They can also let consumers choose among offers. Buchholz and his coauthors describe one example: pricing based on a rider’s expected wait time rather than purchase history.[200] These alternatives may preserve some gains from personalization, but they may miss consumers who would have received a targeted discount. The losses will be hard to observe. The Commission may see fewer personalized prices without seeing the discounts that sellers stopped offering.[201] And the benefits cannot be assumed: “It is insufficient either to ignore unanticipated consequences or to presume that the only relevant effects will be the salutary, intended ones.”[202]
Price discrimination also depends on limits to buyers’ ability to obtain another buyer’s lower price. If a notice lets a buyer qualify for a discount at a cost below the price difference, the seller must account for that possibility when setting both prices. It may lower the higher price or raise the discounted price until seeking the discount is no longer worthwhile. Consumers need not actually change their behavior for this constraint to affect prices. An assessment that holds prices fixed would miss these effects.[203]
Where disclosure helps consumers in these models, it does so because sellers change their behavior. Xi Li and Krista J. Li find that making it cheaper for consumers to manipulate the data used in pricing can reduce consumer surplus.[204] In their model, sellers raise prices for buyers with low willingness to pay, while other buyers incur costs to obtain discounts. Disclosing the scope of data collection, by contrast, weakly increases consumer surplus in the same model. Sellers collect less data, consumers spend less effort manipulating it, and prices fall for buyers with low willingness to pay.
Consumers’ information choices can also change the offers competing firms make. S. Nageeb Ali, Greg Lewis, and Shoshana Vasserman study buyers who choose which verifiable information to reveal to each seller.[205] A buyer can obtain a lower offer from a rival by revealing information to that rival while withholding it from a preferred seller. Under the model’s demand assumptions, the authors construct an equilibrium in which every consumer type benefits relative to a market without personalization. Competition for the buyer drives those gains. A notice alone may give consumers no comparable control over their information. To apply this result, the Commission must identify what its notice would enable consumers to do and how competing sellers would respond.
Consumers who currently receive lower personalized prices could lose out if disclosure prompts sellers to withdraw those offers. Dubé and Misra estimate that roughly three-fifths of potential business customers would receive lower offers under personalization than under a profit-maximizing uniform price.[206] Those customers’ potential losses belong in the analysis. Whether the discounts would disappear depends on whether they would remain profitable after consumers respond to the notice.
Evidence on geographic pricing shows that a move toward common prices can affect consumers unequally. DellaVigna and Gentzkow find that food-store prices near the 10th percentile of demand elasticity within a chain are only 0.4% higher than prices near the 90th percentile. A model with common marginal costs predicts a difference of about 17%.[207] Their calibration also suggests that uniform pricing raises prices at stores serving the lowest-income decile by roughly 10% relative to stores serving the highest-income decile, compared with flexible pricing. The authors caution that competitive responses, including entry and exit, could change those results.[208] That caution reinforces the need to account for consumers who benefit from existing price differences.
Rules that push sellers toward uniform prices offer another warning. When sellers must extend a discount to everyone or no one, they may discount less. The Antitrust Modernization Commission reached that conclusion about the Robinson-Patman Act, which has exposed sellers to litigation over price differences and pushed them toward rigid uniform pricing.[209] The FTC has likewise alleged that Amazon’s “anti-discounting” tactics, “[b]y taming price cutters into price followers,” suppress price competition and deprive shoppers of lower prices.[210] Competition can produce individualized discounts, and a disclosure regime that raises the cost or legal risk of offering them weakens sellers’ incentives to do so. Research on pay transparency points to a similar risk: when individualized terms become visible, firms may narrow the differences and offer fewer favorable terms.[211]
The effect of personalization on consumers depends on how firms compete for different buyers. If a notice changes which customers a seller can attract with a discount, rivals may change their offers in response. The welfare comparison must therefore account for prices across competing sellers, rather than treating the avoidance of one seller’s higher price as the entire consumer benefit.
The Commission needs evidence on these pricing responses before concluding that disclosure would preserve the benefits of personalization. Its January 2025 interim staff perspective reports initial findings from the Section 6(b) study and acknowledges limits on their representativeness and on conclusions about effects.[212] Further aggregated evidence should show which consumers receive higher and lower prices, what the proposed notice would enable them to do, and how sellers would adjust their offers. The Commission should compare gains and losses across consumers under the resulting prices.
The Proposed Statement concedes that personalized pricing’s effects on consumers are unclear. The literature and evidence do not support its broader inferences, and the Commission has not done the analysis needed to justify the proposed policy. The Commission should withdraw it. If it proceeds, we urge it to adopt the following recommendations:
Qualify the third economic claim and develop the evidence. Withdraw the claim that more sophisticated personalization is less likely to benefit consumers, or identify the conditions under which more detailed consumer information can cause harm. Build on the Section 6(b) release with aggregated evidence on pricing, consumer welfare, and disclosure’s likely effects. Once the Commission has addressed the evidentiary and legal concerns and clarified what it proposes to require, it should test whether consumers can use the notice to compare offers, correct information, or avoid higher prices. It should separately assess how sellers would change their prices and which consumers would gain or lose.
Clarify what a displayed price display conveys. State affirmatively that a displayed price, standing alone, does not represent that every consumer sees the same price at the same time. Whether a seller’s broader presentation conveys that claim depends on evidence from the market in which it appears.
Ground deception claims in established law. Strike the Proposed Statement’s second theory of deception, which finds that a seller deceives consumers whenever they “reasonably believe” a price is static or widely offered and the seller does not disclose personalization. Retain the first theory, which requires a seller’s express or implied representation. A false claim that a price is uniform or generally available can violate Section 5 if the Commission proves each element of the Deception Policy Statement’s three-part test. Where the claim is implied, the Commission should use extrinsic evidence to establish what consumers understood.
Provide a disclosure safe harbor. Replace the requirement to disclose the basis of personalization and the types of data used with a safe harbor: A clear and conspicuous statement that prices may vary based on customer data defeats a claim of implied uniformity. This would tell sellers how to avoid implying that prices are uniform without requiring an explanation of how they set each price.
Identify practices the Commission does not presume unlawful. Name individualized discounts, coupons, loyalty pricing, retention offers, and negotiated prices as practices the Commission does not regard as presumptively unlawful. That clarification would reduce the risk that uncertainty deters beneficial discounts. The protection should exclude cases where a seller inflates a nominal public price merely to present every individualized price as a discount. The public price must be offered in good faith to a meaningful number of consumers for a meaningful period. Within that limit, a personalized price no higher than the price generally offered at the same time should be safe.[213]
Analyze the examples or present them as questions. For each of the seven hypotheticals, the Commission should identify the relevant alternative price, explain the substantial injury and whether consumers can reasonably avoid it, and assess gains and losses across consumers and any countervailing benefits to competition. Otherwise, it should identify the examples as questions for further study. Corpay illustrates the evidence an unfairness claim requires: a customer survey, internal surveys and emails, complaint data, and evidence of what customers were told about each fee. The Commission also supported its deception claims with the advertisements and internal documents.[214]
The Proposed Statement relies on six works to summarize the economics of personalized pricing.[215] This table identifies each paper’s methodology, the claim the Commission cites it to support, its relevant findings—including those the Commission omits—and whether it supports the Commission’s claim.
Page references are to the cited works; note numbers (n.8–n.13) are the Proposed Statement’s. Quotations from the Statement are at 3–4.
[1] Berin Szoka, Tom Struble, Geoffrey A. Manne & Ben Sperry, Comments of TechFreedom & the International Center for Law & Economics in Response to Big Data: A Tool for Inclusion or Exclusion? 11–12 (FTC Project No. P145406, 2014), https://www.laweconcenter.org/resources/comments-response-ftc-workshop-big-data-tool-inclusion-exclusion (“tailoring prices more closely to an individual’s willingness to pay means that more transactions will take place than otherwise would have, with more consumers having access to the product and more consumers’ desires being satisfied. And price differentiation generally means that the poor pay less, not more, for the same goods.”).
[2] Dirk Auer, Justin (Gus) Hurwitz, Geoffrey A. Manne, Julian Morris & Kristian Stout, Privacy, Antitrust, and the Economic Approach to the Regulation of Consumer Data 5–7 (ICLE Comment 4, FTC Hearings on Competition & Consumer Protection in the 21st Century, Project No. P181201, 2018), https://laweconcenter.org/resources/icle-comments-the-regulation-of-consumer-data; Int’l Ctr. for Law & Econ., The Weakness of Interventionist Claims: Summary Comments on the FTC Hearings on Competition & Consumer Protection in the 21st Century 10, 139–40 (2019), https://laweconcenter.org/resources/icle-comments-ftc-hearings-on-competition-consumer-protection-in-the-21st-century-summary (“there are many cases where personalized pricing reduces deadweight loss and increases access to a product or service for those with a lower willingness-to-pay”).
[3] Geoffrey A. Manne, Daniel Gilman & Kristian Stout, Comments of the International Center for Law & Economics: FTC Advance Notice of Proposed Rulemaking, Trade Regulation Rule on Commercial Surveillance and Data Security (Docket No. FTC-2022-0053, R111004, Nov. 21, 2022), https://laweconcenter.org/wp-content/uploads/2022/11/ICLE-Commercial-Surveilance-ANPR-Comments-v4.pdf.
[4] Geoffrey A. Manne et al., Comments on Canadian Competition Bureau Discussion Paper on Algorithmic Pricing and Competition (Int’l Ctr. for Law & Econ., Aug. 4, 2025), https://laweconcenter.org/wp-content/uploads/2025/08/Canada-Algorithmic-pricing-and-competition-1.pdf.
[5] Ian Adams, Eric Fruits & Brian Albrecht, ICLE Comments to Competition Bureau Canada on Examining the Food Supply Chain 9–12, 27 (Int’l Ctr. for Law & Econ. 2026), https://laweconcenter.org/resources/icle-comments-to-competition-bureau-canada-on-examining-the-food-supply-chain.
[6] Brian C. Albrecht et al., Food-Retail Competition, Antitrust Law, and the Kroger/Albertsons Merger (Int’l Ctr. for Law & Econ., White Paper No. 2023-10-17, 2023), https://laweconcenter.org/wp-content/uploads/2023/10/Kroger-Albertsons-Merger-Full-Paper.pdf.
[7] Eric Fruits, The Waterbed Effect and the Price of ‘Pricing Fairness’ (Int’l Ctr. for Law & Econ., Issue Brief No. 2026-03-17, 2026), https://laweconcenter.org/wp-content/uploads/2026/03/Grocery-Pricing-Legislation-2026.pdf.
[8] Eric Fruits, Too Much on the Menu: Disclosure Overload and Crowding Out in Food-Delivery Regulation (Int’l Ctr. for Law & Econ., Issue Brief No. 2026-08-21, Aug. 21, 2026), https://laweconcenter.org/wp-content/uploads/2026/08/Delivery-Pricing-Literature-Review-v3-2026.pdf; Brian C. Albrecht et al., Comments of the International Center for Law & Economics: Rule on Unfair or Deceptive Fees in Online Food Delivery Services (FTC Project No. P267101, May 18, 2026) [hereinafter Online Food Delivery Comments], https://laweconcenter.org/wp-content/uploads/2026/05/FTC-Delivery-Fees-2026.pdf.
[9] See Daniel J. Gilman, Fine Print for Every Price: The FTC’s One-Size-Fits-All Guidance, Truth on the Mkt. (Aug. 28, 2026),https://truthonthemarket.com/2026/08/28/fine-print-for-every-price-the-ftcs-one-size-fits-all-guidance; Alden Abbott, Your Price May Vary: The FTC’s Personalized-Pricing Puzzle, Truth on the Mkt. (Sept. 2, 2026), https://truthonthemarket.com/2026/09/02/your-price-may-vary-the-ftcs-personalized-pricing-puzzle.
[10] Fed. Trade Comm’n, Proposed Enforcement Policy Statement Regarding Personalized Pricing, Docket No. FTC-2026-1057, Doc. No. FTC-2026-1057-0001 (Aug. 19, 2026), https://downloads.regulations.gov/FTC-2026-1057-0001/content.pdf [hereinafter Proposed Statement].
[11] Id. at 1.
[12] Id. at 3.
[13] See Geoffrey A. Manne, Bringing Antitrust’s Economic and Institutional Limits to the FTC’s Consumer Protection Authority 12–13 (Int’l Ctr. for Law & Econ. 2014), https://www.laweconcenter.org/resources/bringing-antitrusts-economic-institutional-limits-ftcs-consumer-protection-authority (explaining that Section 5(n)’s requirements “serve to impose an error cost approach on unfairness questions, limiting both the likelihood and harm of erroneous over-enforcement”).
[14] See Geoffrey A. Manne, Error Costs in Digital Markets, in The GAI Report on the Digital Economy 33, 48 (2020), https://laweconcenter.org/resources/error-costs-in-digital-markets (“Rebuttable presumptions are sometimes employed as a cost-saving substitute for direct evidence when economic theory predicts a relatively high probability of competitive harm.”).
[15] See Adams, Fruits & Albrecht, supra note 5, at 2 (“If enforcement condemns lawful discounting, loyalty pricing, or algorithm-driven responses to market conditions, firms may abandon those practices across their operations to avoid liability. Market forces cannot readily restore the lost benefits.”).
[16] See Geoffrey A. Manne, The Hydraulic Theory of Disclosure Regulation and Other Costs of Disclosure, 58 Ala. L. Rev. 473, 477, 485–86 (2007) [hereinafter Manne, Hydraulic Theory] (“Disclosure regulation makes some forms of behavior more expensive relative to others. Rational actors will respond by shifting some conduct into the comparatively cheaper outlets. And these alternative behaviors may actually be less beneficial than the regulated, deterred behavior.”).
[17] Proposed Statement, supra note 10, at 5.
[18] Int’l Harvester Co., 104 F.T.C. 949, 1059 (1984).
[19] 15 U.S.C. § 45(n) (2024); FTC v. Corpay, Inc., 164 F.4th 807, 840 (11th Cir. 2026) (“As ‘unless’ conveys, the three factors that follow it are mandatory for a finding that a practice is ‘unfair.’”).
[20] FTC Policy Statement on Unfairness, 104 F.T.C. 1070, 1073 (1984) (appended to Int’l Harvester Co., 104 F.T.C. 949 (1984)).
[21] Proposed Statement, supra note 10, at 4 & n.13.
[22] See infra Part II.C and the Appendix.
[23] Proposed Statement, supra note 10, at 6.
[24] Int’l Harvester, 104 F.T.C. at 1062.
[25] Trade Regulation Rule on Commercial Surveillance and Data Security, 87 Fed. Reg. 51,273, 51,293 (Aug. 22, 2022) (advance notice of proposed rulemaking) (dissenting statement of Commissioner Noah Joshua Phillips); id. at 51,298 (dissenting statement of Commissioner Christine S. Wilson).
[26] Proposed Statement, supra note 10, at 4.
[27] See Gilman, supra note 9.
[28] Manne, Gilman & Stout, supra note 3, at 15, 47 (urging the Commission to explain how its Section 5 authority applies to data practices and noting that “[s]uch guidance would, of necessity, account for the assessment of countervailing benefits too”); Berin Szóka & Geoffrey A. Manne, The Federal Trade Commission: Restoring Congressional Oversight of the Second National Legislature 67 (Int’l Ctr. for Law & Econ. 2016), https://laweconcenter.org/resources/wstate-manneg-20160524-sd004 (arguing that guidance should explain how the Commission will measure “concepts like materiality, weighing injury with benefits, and measuring reasonable avoidability”).
[29] Proposed Statement, supra note 10, at 8.
[30] See Brief of Amici Curiae International Center for Law & Economics and TechFreedom in Support of Petitioner at 26–27, LabMD, Inc. v. FTC, No. 16-16270 (11th Cir. 2017), https://laweconcenter.org/resources/amicus-brief-icle-techfreedom-labmd-inc-v-federal-trade (arguing that treating informal guidance as the source of “legally enforceable duties” creates a “de facto rulemaking[]” that bypasses Section 18’s safeguards).
[31] See James M. Lacko & Janis K. Pappalardo, Fed. Trade Comm’n Bureau of Econ., Improving Consumer Mortgage Disclosures: An Empirical Assessment of Current and Prototype Disclosure Forms ES-1 (2007), https://www.ftc.gov/sites/default/files/documents/reports/improving-consumer-mortgage-disclosures-empirical-assessment-current-and-prototype-disclosure-forms/p025505mortgagedisclosurereport.pdf.
[32] Proposed Statement, supra note 10, at 1; see also id. at 3–4.
[33] Id. at 3 (emphasis added).
[34] Id. at 4.
[35] See Lars A. Stole, Price Discrimination and Competition, in 3 Handbook of Industrial Organization 2221, 2239–43 (Mark Armstrong & Robert Porter eds., 2007) (reviewing the models of Thisse & Vives and of Corts).
[36] Id.
[37] James C. Cooper, Luke Froeb, Daniel P. O’Brien & Steven Tschantz, Does Price Discrimination Intensify Competition? Implications for Antitrust, 72 Antitrust L.J. 327, 342 (2005).
[38] Andrew N. Ferguson, Comm’r, Fed. Trade Comm’n, Concurring Statement, Surveillance Pricing Intermediaries 1 (Matter No. P246202, July 23, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/surveillance-pricing-6b-ferguson-concurrence.pdf.
[39] Proposed Statement, supra note 10, at 3. In January 2025, Commission staff described its summary of the Section 6(b) responses as preliminary and disclaimed any assessment of illegal conduct. Fed. Trade Comm’n, FTC Surveillance Pricing 6(b) Study: Research Summaries—A Staff Perspective 2 (Jan. 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/p246202_surveillancepricing6bstudy_researchsummaries_redacted.pdf [hereinafter Research Summaries] (“The format of this work aims to highlight initial observations . . . . This document does not reflect or suggest any assessment as to whether anyone has engaged in illegal conduct.”).
[40] Competition & Mkts. Auth., Pricing Algorithms: Economic Working Paper on the Use of Algorithms to Facilitate Collusion and Personalised Pricing ¶ 7.14, at 38 (CMA94, 2018) (describing the European Commission’s 2018 mystery shopping study of 160 e-commerce websites in eight member states: “Price differences were only observed in 6% of tests, and the median price difference observed was less than 1.6%.”); see also Competition & Mkts. Auth., The Commercial Use of Consumer Data ¶¶ 3.69–3.70, at 92 (CMA38, 2015) (“we did not receive a clear indication of examples where price discrimination using consumer data was being used to the likely detriment of consumers”; “Firms may be wary of damaging their reputation or brand value by being seen to do this.”).
[41] Alberto Cavallo, Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers, 107 Am. Econ. Rev. 283, 295 (2017).
[42] Stefano DellaVigna & Matthew Gentzkow, Uniform Pricing in U.S. Retail Chains, 134 Q.J. Econ. 2011, 2011 (2019).
[43] Proposed Statement, supra note 10, at 3–4 nn.8, 11–13.
[44] The paper the Commission relies on most, citing it for each of its economic claims, models the seller as a monopolist and states that it “do[es] not consider the impact of personalized pricing in a competitive market.” Jean-Pierre Dubé & Sanjog Misra, Personalized Pricing and Consumer Welfare, 131 J. Pol. Econ. 131, 180 (2023).
[45] See Stole, supra note 35, at 2231–32 & n.19.
[46] Benjamin Reed Shiller, Approximating Purchase Propensities and Reservation Prices from Broad Consumer Tracking, 61 Int’l Econ. Rev. 847, 861 (2020).
[47] Id. at 862 tbl.4.
[48] Id. at 867.
[49] Dubé & Misra, supra note 44, at 157–58.
[50] Id. at 134–35.
[51] Nicholas Buchholz et al., Personalized Pricing and the Value of Time: Evidence from Auctioned Cab Rides, 93 Econometrica 929, 930, 934 (2025).
[52] Id. at 952–53 & tbl.VII.
[53] Dubé & Misra, supra note 44, at 159 (“we also do not expect any competitive response from other platforms”).
[54] Buchholz et al., supra note 51, at 934.
[55] Andrew Rhodes & Jidong Zhou, Personalized Pricing and Competition, 114 Am. Econ. Rev. 2141, 2152 (2024) (stating in Proposition 1 that, where the market is fully covered, “relative to uniform pricing, personalized pricing harms firms and benefits consumers in aggregate”).
[56] Buchholz et al., supra note 51, at 954.
[57] Dubé & Misra, supra note 44, at 167.
[58] Shiller, supra note 46, at 862.
[59] Rhodes & Zhou, supra note 55, at 2152–53, 2162–63; see also Proposed Statement, supra note 10, at 4 n.13.
[60] Rhodes & Zhou, supra note 55, at 2157 & n.23 (thresholds); id. at 2163, 2165 (remedies).
[61] Buchholz et al., supra note 51, at 952.
[62] Id. at 952–53 & tbl.VII.
[63] Dubé & Misra, supra note 44, at 157, 165–67 & tbl.8. Every personalized price exceeds the uninformative $99 status quo, ranging from $126 to $6,292. A comparison with $99 thus shows every buyer paying more. The authors use the optimal uniform price “as our base case, not $99, since the former reflects the textbook inverse-elasticity-rule pricing that would be predicted for a maturing company.” Id. at 158, 165.
[64] Rhodes & Zhou, supra note 55, at 2144 n.7, 2155 (“With partial market coverage, personalized pricing increases welfare by expanding demand, but it boosts profit so much that in aggregate consumers suffer from it.”).
[65] Against a uniform price, consumer surplus falls 0.50% in Shiller and 2.25% in Buchholz et al. Shiller, supra note 46, at 861 tbl.3; Buchholz et al., supra note 51, at 953 tbl.VII. Dubé and Misra estimate a 25% decline against the optimal uniform price, even though most potential customers would receive lower price offers. Dubé & Misra, supra note 44, at 166–67. In Buchholz et al., adding price sensitivity to personalization based on wait sensitivity alone also lowers consumer surplus, but only slightly. Buchholz et al., supra note 51, at 953 tbl.VII.
[66] Buchholz et al., supra note 51, at 953 tbl.VII, 954–55 & fig.5 (the inside-option share rises 7.28% relative to uniform pricing; 62.5% of consumers gain; the most price- and wait-sensitive riders gain most); Dubé & Misra, supra note 44, at 167, 171–72 (63% of personalized prices fall below the optimal uniform price; smaller firms with part-time staff are most likely to benefit); Shiller, supra note 46, at 861 tbl.3, 862 (subscribers rise 3.12%; “most consumers receive lower prices when prices are personalized, and hence the majority are slightly better off”); see also Rhodes & Zhou, supra note 55, at 2153, 2155 (under partial coverage, personalized pricing “expands total demand and strictly increases total welfare”).
[67] FTC Policy Statement on Unfairness, supra note 20, at 1073.
[68] See Buchholz et al., supra note 51, at 954–55; Dubé & Misra, supra note 44, at 172; Shiller, supra note 46, at 862, 867.
[69] 15 U.S.C. § 45(n) (2024).
[70] Shiller, supra note 46, at 861 tbl.3; Buchholz et al., supra note 51, at 953 tbl.VII; Dubé & Misra, supra note 44, at 166–67 & tbl.8. Dubé and Misra compare personalized prices capped at $499 with the optimal uniform price of $327. Uncapped personalization reduces total consumer surplus by 25% against that benchmark. Capped personalization reduces it by 11.45% against the $249 uniform price ZipRecruiter later adopted. Id. at 166 tbl.8, 167.
[71] Dubé & Misra, supra note 44, at 167, 179.
[72] The Unfairness Policy Statement lists “reduced incentives to innovation and capital formation” among the costs of a remedy that must be considered. FTC Policy Statement on Unfairness, supra note 20, at 1073–74.
[73] See, e.g., Ohio v. American Express Co., 585 U.S. 529 (2018).
[74] See Stole, supra note 35, at 2231–32 & n.19.
[75] Buchholz et al., supra note 51, at 953 tbl.VII; Shiller, supra note 46, at 861 tbl.3. Buchholz et al. note that increased platform use need not mean an equal increase in total travel because their model’s outside option includes taking “another form of transportation.” Buchholz et al., supra note 51, at 939. The relevant question is how pricing affects users’ decisions to book trips on the platform; the distance traveled matters less to that question.
[76] Proposed Statement, supra note 10, at 4 & n.13.
[77] Id.
[78] Dubé & Misra, supra note 44, at 142–43.
[79] Id. at 131 (emphasis added).
[80] Id. at 171–72.
[81] Id. at 180.
[82] Id. at 136, 172.
[83] Proposed Statement, supra note 10, at 4 n.13.
[84] Rhodes & Zhou, supra note 55, at 2163 (“[A]symmetry in information and timing allows the firms to better segment the market, increasing industry profit. Consequently, consumer surplus ends up being lowest in the mixed regime.”).
[85] Id. at 2142 (“We focus on the limit case of personalized pricing, i.e., first-degree price discrimination, where firms can perfectly infer individual consumers’ preferences”); id. at 2162 n.30 (“it would also be interesting to consider other information structures and investigate how the impact of price discrimination changes with the amount of information that firms have access to”).
[86] Buchholz et al., supra note 51, at 953 tbl.VII.
[87] Id. at 952–53 & tbl.VII.
[88] Id. at 953.
[89] Id. at 932.
[90] Id. at 953 tbl.VII, 954–55 & fig.5.
[91] Ginger Zhe Jin, Liad Wagman & Mengyi Zhong, Surveillance Pricing: A Cautionary Summary of Potential Harms and Solutions, CPI Antitrust Chron., July 2025, at 4.
[92] Id. (emphasis added).
[93] Id.
[94] Id. at 5.
[95] Id. (citing Rhodes & Zhou, supra note 55).
[96] Id. at 9 (emphasis added).
[97] Id.
[98] Id.
[99] Rosa-Branca Esteves & Francisco Carballo-Cruz, Access to Data for Personalized Pricing: Can It Raise Entry Barriers and Abuse of Dominance Concerns? 10, 15, 18 (NIPE Working Paper No. 05/2021, Mar. 2021). The Proposed Statement misdates the paper by four years. See Proposed Statement, supra note 10, at 4 n.13 (citing the paper as “NIPE Working Papers, NIPE, Universidade do Minho (May 2025)”).
[100] Esteves & Carballo-Cruz, supra note 99, at 14 tbl.1.
[101] Id. at 15 (“conditional on entry, consumer surplus is in fact maximized when both firms are able to use data for personalized prices”).
[102] Id. at 1.
[103] Id.
[104] Mark Armstrong & John Vickers, Discriminating Against Captive Customers, 1 Am. Econ. Rev.: Insights 257, 257–58, 263 (2019).
[105] Brian C. Albrecht, Price Competition and the Use of Consumer Data 1–2 (working paper, June 12, 2026), https://briancalbrecht.com/albrecht_price_competition_consumer_data.pdf.
[106] Dirk Bergemann, Benjamin Brooks & Stephen Morris, The Limits of Price Discrimination, 105 Am. Econ. Rev. 921, 921–23 (2015).
[107] See Rhodes & Zhou, supra note 55, at 2164; Esteves & Carballo-Cruz, supra note 99, at 1, 17–18.
[108] Proposed Statement, supra note 10, at 5.
[109] Id.
[110] Proposed Statement, supra note 10, at 3; see also id. at 1 (personalized pricing is “a long-established norm in some markets”).
[111] Id. at 1.
[112] Gilman, supra note 9 (“How many consumers must hold that expectation? How consistently? Must a clear majority share it?”); see also Albrecht et al., Online Food Delivery Comments, supra note 8, at 7 (“A first-time user’s expectations differ materially from those of a customer placing a hundredth order.”).
[113] Council of Econ. Advisers, Big Data and Differential Pricing 17 (2015).
[114] FTC Policy Statement on Deception, 103 F.T.C. 174, 176 & n.8 (1984) (appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)).
[115] FTC Policy Statement on Deception, supra note 114, at 182; Int’l Harvester, 104 F.T.C. at 1057; see also Geoffrey A. Manne, R. Ben Sperry & Berin Szoka, In the Matter of Nomi Technologies, Inc.: The Dark Side of the FTC’s Latest Feel-Good Case 5, 10–11 (ICLE White Paper 2015-1, 2015), https://laweconcenter.org/resources/nomi-white-paper (objecting to the Commission’s treatment of the absence of an in-store notice as an implied representation and observing that “for an implied promise to be deemed material (and thus deceptive) under the DPS, the FTC must adduce some proof: either that it was, in fact, intended, or that it was, in fact, material”).
[116] FTC Policy Statement on Deception, supra note 114, at 175–76.
[117] Int’l Harvester, 104 F.T.C. at 1057, 1059.
[118] Id. at 1059–60.
[119] Id. at 1063–64, 1070.
[120] Id. at 1058 & n.29; see also id. at 1062 (limiting mandatory disclosure “to those core aspects of a transaction that virtually all consumers would consider essential to an informed decision”).
[121] See Int’l Harvester, 104 F.T.C. at 1060 (“Since the seller will have no way of knowing in advance which disclosure is important to any particular consumer, he will have to make complete disclosures to all.”).
[122] Proposed Statement, supra note 10, at 6 n.24 (quoting P. Lorillard Co. v. FTC, 186 F.2d 52, 58 (4th Cir. 1950)) (“to tell less than the whole truth is a well-known method of deception”).
[123] P. Lorillard Co. v. FTC, 186 F.2d 52, 58 (4th Cir. 1950) (“The fault with this advertising was not that it did not print all that the Reader’s Digest article said, but that it printed a small part thereof in such a way as to create an entirely false and misleading impression, not only as to what was said in the article, but also as to the quality of the company’s cigarettes.”). The Commission itself cites Lorillard as a half-truth case, not a silence case. Int’l Harvester Co., 104 F.T.C. at 1057 & n.25.
[124] FTC v. Standard Educ. Soc’y, 302 U.S. 112, 114–16 (1937) (salespeople represented that a set of books was free, that the prospect had been specially selected, and that the regular price exceeded the offered price; the Commission found each representation false).
[125] Proposed Statement, supra note 10, at 5.
[126] Proposed Statement, supra note 10, at 7.
[127] FTC v. Colgate-Palmolive Co., 380 U.S. 374, 387 (1965).
[128] Proposed Statement, supra note 10, at 5 n.19 (quoting Colgate-Palmolive, 380 U.S. at 387).
[129] 15 U.S.C. § 45(n) (2024) (emphasis added).
[130] Corpay, 164 F.4th at 840 (“As ‘unless’ conveys, the three factors that follow it are mandatory for a finding that a practice is ‘unfair.’”); see also Proposed Statement, supra note 10, at 5 n.17 (citing Corpay, 164 F.4th at 839).
[131] Proposed Statement, supra note 10, at 7–8.
[132] 15 U.S.C. § 45(n) (2024).
[133] Proposed Statement, supra note 10, at 3.
[134] Id. at 6.
[135] FTC Policy Statement on Unfairness, supra note 20, at 1073.
[136] Id. at 1073.
[137] See Proposed Statement, supra note 10, at 6 n.24 (citing Priester et al. and Xia et al. on consumers’ perceptions of fairness); Geoffrey A. Manne & Kristian Stout, Comments of the International Center for Law & Economics, Informational Injury Workshop 40–41 (FTC Project No. P175413, 2017), https://laweconcenter.org/resources/comments-international-center-law-economics-matter-informational-injury-workshop-ftc (quoting the legislative history of Section 5(n): “Emotional impact and more subjective types of harm alone are not intended to make an injury unfair.”).
[138] Proposed Statement, supra note 10, at 6.
[139] Id. at 6.
[140] Id. at 6 n.20.
[141] Corpay, 164 F.4th at 825–27, 838–42.
[142] Proposed Statement, supra note 10, at 6.
[143] Proposed Statement, supra note 10, at 6 n.22.
[144] 15 U.S.C. § 1681m(a)(1)–(4) (2024); see id. § 1681g(f)(1)(C) (key factors). The quoted statement appears in § 1681m(a)(3)(B).
[145] 15 U.S.C. § 1691(d)(2)–(3) (2024).
[146] 15 U.S.C. § 1691(d)(2)(B) (2024).
[147] 15 U.S.C. § 1691(d)(6) (2024).
[148] 15 U.S.C. §§ 1681m(h)(1), (h)(5), 1681g(f)(1)(B)–(E) (2024).
[149] 15 U.S.C. § 1681m(b)(1) (2024).
[150] Proposed Statement, supra note 10, at 6 n.23 (citing Cal. Ins. Code §§ 791.02, 791.10; Va. Code Ann. § 38.2-602; Wash. Admin. Code ch. 284-30A).
[151] 15 U.S.C. § 45(n) (2024).
[152] Proposed Statement, supra note 10, at 6 n.21.
[153] FTC Policy Statement on Unfairness, supra note 20, at 1075–76.
[154] Proposed Statement, supra note 10, at 6.
[155] Proposed Statement, supra note 10, at 7.
[156] Adams, Fruits & Albrecht, supra note 5, at 27 (“retailers should clearly disclose final prices and truthfully present discounts and reference prices”); Albrecht et al., Online Food Delivery Comments, supra note 8, at 7–8, 12.
[157] Int’l Harvester, 104 F.T.C. at 1062 (adding that “virtually any piece of information may be useful to some consumers,” and that a disclosure duty grounded in unfairness requires “a full cost-benefit analysis, in which we weigh the consumer benefits of disclosure against their likely costs”).
[158] Exec. Office of the President, Big Data: Seizing Opportunities, Preserving Values 65 (2014).
[159] Council of Econ. Advisers, supra note 113, at 17.
[160] Petra Persson, Attention Manipulation and Information Overload, 2 Behav. Pub. Pol’y 78, 96–97 (2018).
[161] Frank H. Easterbrook & Daniel R. Fischel, Mandatory Disclosure and the Protection of Investors, 70 Va. L. Rev. 669, 709 (1984).
[162] Persson, supra note 160, at 101.
[163] Id. at 97. Both results come from a formal model, illustrated with examples rather than tested against market data. They show that the seller responses Persson describes are available to any firm subject to a disclosure mandate, but they do not show how often firms use them.
[164] Manne, Hydraulic Theory, supra note 16, at 480–81 (“As this Article suggests, however, mandatory disclosure has important and ill-considered consequences; it is not merely regulatory ‘chicken soup.’”).
[165] Id. at 506.
[166] Id. at 506–07 (“It is precisely individual shareholders who are not in a position to evaluate complex information regarding, for example, executive pay packages. But it is also precisely these individuals at whom mandatory disclosures are directed.”).
[167] Proposed Statement, supra note 10, at 7.
[168] Manne, Hydraulic Theory, supra note 16, at 510–11.
[169] Like other agencies before it. See id. at 497 (“Unfortunately, the SEC does not appear to consider the relevant, marginal question. . . . The broad-brushed nature of federal regulation effectively precludes a firm-by-firm marginal analysis.”); see also id. at 491 (“Regulators are limited in their ability to predict the effects of their regulations . . . . Even well-intended regulation is bound to have unintended consequences . . . .”).
[170] OECD, Enhancing Online Disclosure Effectiveness 14, 31 (OECD Digital Econ. Papers No. 335, 2022) (quoting Omri Ben-Shahar & Carl E. Schneider, The Failure of Mandated Disclosure, 159 U. Pa. L. Rev. 647, 686 (2011)).
[171] See Trade Regulation Rule on Unfair or Deceptive Fees, 90 Fed. Reg. 2066, 2066 (Jan. 10, 2025) (codified at 16 C.F.R. pt. 464).
[172] See Rule on Unfair or Deceptive Rental Housing Fee Practices, 91 Fed. Reg. 12,325 (Mar. 13, 2026) (advance notice of proposed rulemaking).
[173] See Proposed Statement, supra note 10, at 1 n.1.
[174] Lisa Robinson, Kip Viscusi & Richard Zeckhauser, Efficient Warnings, Not “Wolf or Puppy” Warnings, in The Future of Risk Management 227, 241 (Howard Kunreuther et al. eds., 2019).
[175] OECD, Enhancing Online Disclosure Effectiveness, supra note 170, at 6.
[176] Howard Beales & Todd J. Zywicki, Junkyard Dogs: The Law and Economics of “Junk” Fees, CPI Antitrust Chron., Apr. 2023, at 6, https://laweconcenter.org/resources/junkyard-dogs-the-law-and-economics-of-junk-fees/.
[177] Anna Priester et al., A Special Price Just for You: Effects of Personalized Dynamic Pricing on Consumer Fairness Perceptions, 19 J. Revenue & Pricing Mgmt. 99, 106–08 (2020).
[178] Oren Bar-Gill, Cass R. Sunstein & Inbal Talgam-Cohen, Algorithmic Harm in Consumer Markets, 15 J. Legal Analysis 1, 10, 25 (2023).
[179] OECD, The Effects of Online Disclosure About Personalised Pricing on Consumers 5, 9–13 (OECD Digital Econ. Papers No. 303, 2021).
[180] Id. at 5.
[181] Id. at 27.
[182] Id. at 27.
[183] Id. at 26.
[184] The OECD’s later report emphasizes the prominence and repetition of the tested notices: the disclosures were “succinct, substantial in size, seen repeatedly, and accompanied every single personalised price. OECD, Enhancing Online Disclosure Effectiveness, supra note 170, at 14.
[185] Id.
[186] Willem H. van Boom et al., Consumers Beware: Online Personalized Pricing in Action! How the Framing of a Mandated Discriminatory Pricing Disclosure Influences Intention to Purchase, 33 Soc. Just. Rsch. 331 (2020).
[187] Id. at 335–37.
[188] Id. at 343–45.
[189] Allison Nicoletti & Christina Zhu, Economic Consequences of Transparency Regulation: Evidence from Bank Mortgage Lending, 61 J. Acct. Rsch. 1827, 1846–51 (2023).
[190] Id. at 1832.
[191] Natasha Clarke et al., Calorie (Energy) Labelling for Changing Selection and Consumption of Food or Alcohol, 2025 Cochrane Database of Systematic Reviews, Art. CD014845, at 2, https://doi.org/10.1002/14651858.CD014845.pub2.
[192] Pasquale E. Rummo et al., Menu Labeling and Calories Purchased in Restaurants in a US National Fast Food Chain, 6 JAMA Network Open e2346851, tbl. 3 (2023).
[193] See Lacko & Pappalardo, supra note 31, at ES-1.
[194] Proposed Statement, supra note 10, at 6.
[195] Proposed Statement, supra note 10, at 6.
[196] Manne, Hydraulic Theory, supra note 16, at 476. The article discusses securities regulation, but its account of how regulated actors respond to disclosure mandates applies beyond that setting.
[197] Id. at 477.
[198] Id. at 485 (“[W]here behavior can be altered at a lower cost than the cost of disclosure, disclosure rules will induce behavioral changes rather than increased information flow.”); id. at 486 (“The magnitude of the hydraulic effect will turn primarily on the degree of cross-elasticity (substitutability) between the impeded (more costly) and the freer (less costly) sources of behavior.”).
[199] Proposed Statement, supra note 10, at 6 n.20 (declining “to take any position on whether some personalized pricing practices are unfair even when fully disclosed to consumers”).
[200] Buchholz et al., supra note 51, at 932, 952 (describing ETA-based pricing as “another non-personalized pricing policy” that platforms may adopt “due to consumer backlash,” under which “[w]ait-time pricing may then give consumers incentives to reveal their high wait-time sensitivity by picking a driver with shorter wait time and higher price”).
[201] Manne, Hydraulic Theory, supra note 16, at 477; see also id. at 487 (observing that, under seat-belt laws, a shift in behavior “does not impose the same risk on, say, pedestrians, who now suffer the ill effects of more reckless driving but earn none of the benefit of ‘safer’ accidents”).
[202] Id. at 477–78.
[203] Stole, supra note 35, at 2226 (conditions for discrimination). The price-gap example in the text is a conditional incentive argument, not an estimate of the proposed notice’s effect.
[204] Xi Li & Krista J. Li, Beating the Algorithm: Consumer Manipulation, Personalized Pricing, and Big Data Management, 25 Mfg. & Serv. Operations Mgmt. 36, 36 (2023).
[205] S. Nageeb Ali, Greg Lewis & Shoshana Vasserman, Voluntary Disclosure and Personalized Pricing, 90 Rev. Econ. Stud. 538, 558–60 (2023).
[206] Dubé & Misra, supra note 44, at 167, 171–72.
[207] DellaVigna & Gentzkow, supra note 42, at 2014, 2033.
[208] Id. at 2055–56 & fig.XI. See also Manne, Hydraulic Theory, supra note 16.
[209] See Fruits, Waterbed Effect, supra note 7, at 14–16 (the Robinson-Patman Act’s effect on discounting, the Antitrust Modernization Commission’s 2007 conclusion, and the pay-transparency evidence of Cullen and Pakzad-Hurson); Geoffrey A. Manne, Written Testimony, Reviving Competition, Part 5: Addressing the Effects of Economic Concentration on America’s Food Supply 19–20 (Int’l Ctr. for Law & Econ. 2022), https://laweconcenter.org/resources/testimony-of-geoffrey-a-manne-reviving-competition-part-5-addressing-the-effects-of-economic-concentration-on-americas-food-supply/ (“The RPA effectively imposes wholesale price uniformity on sellers which deters innovation (or, as noted, price reductions) and new entry.”).
[210] Complaint ¶¶ 7, 21–22, 262, FTC v. Amazon.com, Inc., No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023).
[211] See, e.g., Zoë B. Cullen & Bobak Pakzad-Hurson, Equilibrium Effects of Pay Transparency, 91 Econometrica 765, 765 (2023) (finding that state laws protecting workers’ right to inquire about pay were followed by wage declines of about 2%, because employers “credibly refuse to pay high wages to any one worker to avoid costly renegotiations with others”).
[212] Fed. Trade Comm’n, Research Summaries, supra note 39, at 1–2, 10.
[213] See Abbott, supra note 9.
[214] Corpay, 164 F.4th at 838–42 (unfairness count proved through a customer survey, eight internal surveys, internal emails, complaint data, and evidence of what customers were told about the fees); see also id. at 825–27 (record evidence on what customers were told).
[215] Proposed Statement, supra note 10, at 3–4 nn.8, 11–13.
Regulatory Comments I appreciate the opportunity to comment on the FTC’s Proposed Enforcement Policy Statement Regarding Personalized Pricing (“Proposed Policy”).[1] This comment offers my own views as . . .
I appreciate the opportunity to comment on the FTC’s Proposed Enforcement Policy Statement Regarding Personalized Pricing (“Proposed Policy”).[1] This comment offers my own views as a long-time student of and practitioner in the FTC’s consumer protection mission.[2]
The comment begins with a brief overview of personalized pricing and the issues it raises as a form of price discrimination in Section I. Section II then argues that when there are competing sellers, consumers can easily avoid any injury from personalized pricing by the simple expedient of searching for another price. Section III argues that the Commission’s premise that consumers generally expect one price for all customers is unsubstantiated. Consumers are well aware that different consumers pay different prices in ordinary purchase situations. Section IV considers discounts based on personal information. It argues that such practices benefit consumers, and that the Commission should create a safe harbor to avoid requiring disclosures for personalized discounts. Section V argues that disclosure is an inappropriate remedy for the problems the Commission seeks to address and should, in any event, be tested before it is required.
Some critics of the information economy have become concerned about personalized pricing, in which businesses use consumer-specific information to set different prices for different consumers. By definition, charging different prices for different consumers (assuming costs are the same) is price discrimination. The economics literature has long been clear that price discrimination can be either welfare increasing or welfare reducing, depending on the circumstances.[3] Whether a given instance of price discrimination is good or bad for consumers is thus an empirical question. Nevertheless, many scholars have argued that common forms of retail price discrimination lead to increased output and enhanced consumer welfare.[4]
As the Proposed Policy notes, “the extent to which businesses currently use personalized pricing is not well understood, and the effects of personalized pricing on consumers are unclear.”[5] Instead, the discussion is driven by concern about a wide variety of hypothetical business practices which are not known to have actually occurred, and which may never occur.
The hypothetical scenario that has attracted the most attention is the possibility that a monopolist could charge each individual consumer the maximum amount that consumer would be willing to pay, thus extracting all consumer surplus. Although a theoretically interesting polar case, such personalized pricing is not possible in practice: Statistical uncertainty remains. Even the best models cannot predict with certainty, and data, even in the physical sciences and especially in economics, are subject to measurement errors. Dubé and Misra show by example that, even in a monopoly model that incorporates statistical uncertainty, a database that allows different prices for different consumers may increase both profits and consumer surplus.[6] In their careful experimental study, personalized pricing never extracted more than 30% of consumer surplus that would result from uniform pricing, whereas “true perfect price discrimination … would extract all consumer surplus.”[7] Moreover, in their experiment, more than 60% of consumers received a lower price with personalized pricing. Why such a pricing outcome might warrant consumer protection enforcement is hardly obvious.
More important than the limitations of personalized pricing in the monopoly context is the fact that most industries are not monopolies. When there are competitors, the same tools and data that allow a monopolist to charge more to consumers who are more willing to pay also enable competitors to identify the consumers who are most overcharged and compete for their business through lower prices. Firms can also offer discounts to consumers who prefer their rival’s product, again pressuring the rival to lower price.[8] These uses of information-based pricing offer clear consumer benefits.
Empirical questions that underlie a public policy deserve empirical answers rather than adopting a policy that assumes an answer. The impact of price discrimination on consumer welfare is just such a question, as economists have recognized for decades. Empirical answers about the effects of personalized pricing as a method of price discrimination are, at present, lacking. Whether a particular implementation of personalized pricing benefits consumers or harms them should be central to the Commission’s enforcement decisions. Under the Proposed Policy, the Commission does not appear to ask that key factual question in deciding to bring a case.
The specific “personalized pricing” scenarios the Proposed Policy identifies as requiring disclosure highlight the important role of competition as a constraint. Marketing delivery services to those who are unable to leave home, milk to people with several children, hotels to people who need to travel, or home security to crime victims are examples that appear to be competitive markets. Information identifying these consumers makes competition, including offering a lower price, more likely, not less. Similarly, in the Commission’s example of a consumer standing in the store who is shown a higher price online, the consumer can buy the item off the shelf. Moreover, a competitor using the same information to offer online discounts to consumers who are in its rival’s stores would seem to produce clear consumer benefits. As discussed in the next section, consumers can easily avoid injury in such circumstances.
The most troubling of the Commission’s scenarios is the rideshare company charging a premium price for a consumer in dire need of transportation, particularly if the consumer has no reasonable alternatives. Here, however, the problem is more akin to duress, rather than a failure to disclose personalized pricing. The common law of contract has long policed closely related situations. For example, a seller may refuse to continue performance under a contract without a price higher than previously agreed. In another example, a seller who finds a prospective buyer in a sensitive position with few if any alternatives, raises the price to extraordinary levels. In either circumstance, common law courts scrutinize the contract with extra care and may refuse to enforce it.[9] Most importantly, although this exploitation may constitute a Section 5 violation,[10] the problem is not the failure to disclose. No amount of disclosure about how the price was set will either generate new alternatives or relieve the consumer of the dilemma.
Consumers cannot buy anything without first locating a seller. Although some may purchase from the first seller they find, consumers frequently gather information about the offerings of other sellers to choose the best option. That process of consumer search means that consumers do not come to a particular offering in ignorance. They have some information about prices at other sellers, or perhaps this seller at an earlier time, that provides context for the offered price. Even when a new seller or new product is first encountered, consumers can easily generate a context by searching for other offerings. In the online context that seems to be a primary concern of the proposed personalized pricing policy, the simple expedient of clicking the next link will generate additional information about whether the price is high or low.
Rather than focusing on the injury, the draft statement’s analysis of materiality and avoidability focuses on the process that allegedly generates the injury.[11] It is true that if consumers are unaware of personalized pricing they would not know to take steps like using a VPN or a private browser.[12] But the injury is not the process of setting the price, it is the high price that may result. Consumers can avoid the actual injury with the same simple process they routinely employ to avoid any price they think is high: check another seller. Consumers can therefore reasonably avoid any injury that might result from personalized pricing.
Of course, consumers may decide to purchase without additional search. That decision, however, is based on the perceived benefits and costs of further information gathering. The manner in which the seller determined the price does not affect the search decision. It is likely that consumers who choose not to search will pay a higher price on average, but not searching may nonetheless be a rational choice. In addition to avoiding the costs of search, some consumers prefer familiarity with one seller and will pay for that benefit. Choosing not to search also captures the Commission’s scenario of a rideshare company charging more for a consumer who has only one installed rideshare app. Moreover, installing another app would seem an easy way for a consumer to avoid injury. In any event, disclosure at the point of sale will not convert a non-searcher into a searcher and does nothing to reduce the costs of search.
The presence or absence of personalized pricing has no effect on search behavior in two of the most studied strategies in the economics literature. In a fixed sample size strategy, consumers choose a number of sellers to sample based on the costs of checking another price and the expected benefit of finding a lower price.[13] Personalized pricing does not affect either side of this equation. Another much-studied search strategy is an optimal stopping rule,[14] in which consumers continue to search until they find a price below some specified value. Again, nothing about the presence or absence of personalized pricing would affect this determination or the transaction price that results.
The information that consumers need to make optimal choices is information about the price itself, not how it was determined. As Nobel Laureate Friedrich Hayek observed in his seminal paper The Use of Knowledge in Society, the beauty of the price system is that the price aggregates and summarizes all information about value and cost into a single statistic, one that provides the basis for decisions without exploration of the underlying details.[15] Whatever consumers may expect about how it was determined, that summary remains the same for the particular consumer and the particular proposed transaction. In most circumstances consumers can remain blissfully ignorant of the process by which prices are set and the range of information used to set them.
Charging different prices to different consumers is as old as retailing. Consumers who are more willing to pay for a product or service, or less sensitive to price, are often charged higher prices. Consumer characteristics may serve as a proxy, as is the case with discounts for students or for the elderly. But many traditional price discrimination techniques rely on consumers who care more about price to self-identify, usually by their willingness to jump over some “hurdle” to qualify for a lower price. Rebate offers or discount coupons are common examples: Consumers who are more price sensitive are more willing to clip coupons or jump the hurdles necessary to claim the rebate. As one economics textbook noted, “[i]t is a rare product whose seller does not use the hurdle model of differential pricing.”[16]
Indeed, nothing is more common in the experience of every consumer than the simple fact that prices vary. Different sellers offer the same goods at different prices, in different locations, at different times, and to different consumers. Similar goods that are close substitutes are available at a similar array of prices. The only way for any consumer to know whether a particular price is a good one is to compare it to other prices—to search for a price they are willing to pay.
Even in circumstances most favorable to the Commission’s assertion that consumers have “reasonable expectations” of one price for all, it is highly likely that consumers understand that the transaction price will differ for different consumers. Consider a posted price for an item in a grocery store, arguably an express representation of one price for all. Consumers understand that at checkout some will pay the posted price, but others will pay less because they use a coupon on the purchase (and perhaps different coupons offering different discounts). Still others may receive a different loyalty program discount or take advantage of a volume discount. The range of prices expands even further when we consider competing brands, including store brands that may be functionally identical. Each of these arrangements means that different consumers pay different prices, based on their personal choices and behavior. Such pricing arrangements are ubiquitous in retailing, obvious to consumers, and make clear that the posted price is not “one price for all.”
The Proposed Policy cites evidence that consumers do not understand the nature and extent of data collection and use.[17] It does not follow that they therefore expect “one price for all,” despite their everyday experience to the contrary. Moreover, the Commission recognizes that consumers do expect individualized pricing in some circumstances, but it offers no principled distinction between those instances and others where consumers allegedly expect a single price, and no way for a company to assess what consumers “reasonably expect” in any particular instance.
In any event, consumer expectations about prices and how they are set are a foundation of quicksand for enforcement that actually benefits consumers. The Commission has a sad history of using claims of “deception” to attack discounters and other low-price sellers,[18] spurred on by competitors seeking to suppress competition that benefits consumers. Presumably most consumers who choose to buy “expect” that the price they are paying is a good one. By the logic of the Proposed Policy, however, the failure to disclose that the price is in fact higher than most other offerings in the market would seem to be a deceptive practice. That approach, however, would make the Commission a price regulator, something it clearly is not under its statute.
Although the possible downsides of personalized pricing are at this point largely hypothetical, concrete benefits of information-based pricing abound. Using the same data and techniques as personalized pricing, loyalty programs and discount email marketing are widespread. Industry estimates indicate that millions of consumers are members of loyalty programs, often multiple programs, that offer discounts and other promotional benefits based on the consumer’s history with the seller. Capital One Shopping reports that discounts are the strongest drivers of loyalty program participation.[19] Zoho, a provider of online platforms for loyalty programs, reports that 80% of Americans are members of at least one loyalty program.[20] EMARKETER reports that the average consumer is a member of a surprisingly high 17 loyalty programs,[21] and notes that the best programs tailor offers and content based on the individual member’s preferences and behavior. Email marketing also makes extensive use of consumer information. Capital One reports that 77% of consumers want to receive emails offering discounts, and that personalized promotional emails with discounts are opened 29% more often and clicked 41% more often than those without.[22]
These programs offer clear consumer benefits, reducing the costs of living for American families. They use the same kinds of data, and the same or similar analytical techniques, to determine how large a discount (if any) to offer any individual consumer. Unless the Commission creates a safe harbor for such discounts, the analysis of the proposed policy statement would seem to require exactly the same personalized pricing disclosure that the policy statement contemplates when personalization leads to higher prices. In the Commission’s example of a price for a security system based on knowledge that the consumer was a recent crime victim, the seller would have to disclose that “this price is personalized based on data showing you are a recent crime victim” whether the price was higher or lower than the usual price. When the price is a discount, however, the disclosure offers no benefits whatsoever. Defining “discounts” with enforceable precision is a difficult challenge, but the Commission can clearly state that it does not intend to require disclosure when information is used to offer discounts, and consider whether a given price is in fact a “discount” on a case-by-case basis.
Although the Proposed Policy is based on disclosure rather than a prohibition of personalized pricing, given the well-known fact that any communication can confuse or mislead a significant number of consumers,[23] required disclosure when prices are discounted risks harming consumers. The legal risk, the cost of the disclosure itself, and the risk of consumer misinterpretation of the disclosure will discourage sellers from offering these discounts. The Commission’s past attacks on discounting argue strongly for a safe harbor, rather than reliance on the Commission’s enforcement discretion.
The proposed policy statement would require that firms using personalized pricing “disclose not just that the price is personalized, but also the basis for that personalization and the types of data on which the personalization is based.”[24] In its evaluation of disclosures, the Taskforce on Federal Consumer Financial Law Report noted that “when disclosures are required, it should be with a clear, and articulated, goal in mind.”[25]
The contemplated disclosure fails this test. Is it simply intended to discourage personalized pricing? It will likely have that effect, but, as noted above, that will raise prices to the many beneficiaries of personalized discounts. Is it intended to motivate additional consumer search for a better price? If so, it would seem equally valuable to require any seller to disclose that its price is relatively high, whether personalized or not. Is the goal to encourage consumer use of behaviors and technologies that seek to conceal their information? If so, the disclosure should be at the point at which information is collected, when consumers can act on its message. Disclosure when a price is offered is in the wrong place and at the wrong time.
Rather than facilitating consumer choices, which should be the goal of all required disclosures, the proposed disclosure appears to be a “normative” disclosure – information provided not because consumers are interested, but because policymakers think consumers should take it into account.[26]
Like any disclosure, this one may be misunderstood. The Commission’s own research has shown that additional information can lead to worse consumer decisions, either because it is misunderstood or because consumers assign it more significance than it should have.[27] To ensure that consumers actually benefit from disclosure, the Commission should first test it, and only then consider requiring it.
In most circumstances, personalized pricing is unlikely to harm consumers. There may be harm, and a Section 5 violation, if there are instances in which personalized pricing borders on duress. Disclosure, however, does nothing to address the problem, and leaves a possibly better-informed consumer with the same unpalatable choice.
It is generally easy for consumers to avoid any injury from personalized pricing by the simple expedient of searching for a better price. The Commission’s premise that consumers generally expect one price for all is unsubstantiated. It seems highly likely that most consumers are aware that prices differ from one consumer to another because of coupon use, volume discounts, and loyalty programs. Because personalized discounts offer substantial consumer benefits, the Commission should create a safe harbor making clear that disclosures are not necessary when information is used to offer a discount. Disclosure, particularly untested disclosure, is an inappropriate remedy.
[1] Fed. Trade Comm’n, Proposed Enforcement Policy Statement Regarding Personalized Pricing, Matter No. P034101 (Aug. 19, 2026) [hereinafter “Proposed Policy”], https://www.ftc.gov/system/files/ftc_gov/pdf/p034101-ftc-enforcement-policy-statement-re-personalized-pricing-proposed-for-public-comment.pdf.
[2] I am currently Emeritus Professor of Strategic Management and Public Policy at the George Washington School of Business and a Senior Scholar at the GW Regulatory Studies Center. I was on the staff of the FTC in the Bureau of Economics and in the Bureau of Consumer Protection as an Assistant to the Director, Associate Director, and Acting Deputy Director from 1977 to 1986, and Director of the Bureau of Consumer Protection from 2001-2004. I am grateful to the International Center for Law and Economics for financial support.
[3] See Jean Tirole, The Theory of Industrial Organization 138 (1988) (“The welfare effects of third-degree price discrimination are ambiguous.”).
[4] See 14 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 2340c (2024) (“most price discrimination is socially beneficial in that it produces higher output and thus yields greater consumer benefits than forced nondiscriminatory pricing”); see also Benjamin Klein, Price Discrimination and Market Power, in 2 Issues in Competition Law and Policy 977, *20 (Wayne D. Collins ed., 2008), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1657202 (“[P]rice discrimination can be used and in some circumstances accepted as a legitimate competitive business justification. . . .”).
[5] Proposed Policy, supra note 1, at 3.
[6] See Jean-Pierre Dubé & Sanjog Misra, Personalized Pricing and Consumer Welfare, 131 J. Pol. Econ. 131, 142 tbl. 1 (2023).
[7] Dubé & Misra, supra note 7, at 170. They note that “[e]ven with expanded data collection, it is unlikely that a firm could truly perfectly price discriminate using consumer data.” Id.
[8] See Jacques-François Thisse & Xavier Vives, On the Strategic Choice of Spatial Price Policy, 78 Am. Econ. Rev. 122 (1988).
[9] See, e.g., Restatement (Second) of Contracts §§ 175–76 (Am. L. Inst. 1981). See also Timothy J. Muris, Opportunistic Behavior and the Law of Contracts, 65 Minn. L. Rev. 521 (1981).
[10] The most promising theory is unfairness. There is substantial injury. By hypothesis, there is no alternative, and there are no offsetting benefits of the practice to consumers or competition. See, e.g., Holland Furnace Co. v. FTC, 295 F.2d 302 (7th Cir. 1961) (seller’s servicemen dismantled home furnaces and then refused to reassemble them until the consumers had agreed to buy services or replacement parts).
[11] Materiality is the injury inquiry in the context of deception: Would the consumer have done something differently to avoid the problem? Avoidability is the same question in the context of unfairness: Is there an injury-free alternative the consumer could reasonably have chosen?
[12] The proposed policy also points to correcting information and avoiding information collection in the first place as possible responses. But disclosure of personalization does not create an opportunity for correction, and existing disclosure requirements apply where correction rights exist. As discussed in Section V below, the point of sale is the wrong place for a disclosure aimed at information collection practices.
[13] Stigler examines a fixed sample size strategy in his seminal article on the economics of information. See George J. Stigler, The Economics of Information, 69 J. Pol. Econ. 213 (1961).
[14] See J. McCall, Economics of Information and Job Search, 84 Q.J. Econ. 113 (1970); Martin L. Weitzman, Optimal Search for the Best Alternative, 47 Econometrica 641 (1979).
[15] See Friedrich A. Hayek, The Use of Knowledge in Society, 35 Am. Econ. Rev. 519 (1945). Price conveys information even when the information is not observed directly, even when the information is not disclosed, and even when it may not be “consciously articulable” by any market participant. See Randal K. Quarles, Vice Chair for Supervision, Bd. of Governors of the Fed. Rsrv. Sys., Friedrich Hayek and the Price System Remarks at the Ninth Annual Conference of the William F. Buckley, Jr., Program at Yale 5 (Nov. 1, 2019), https://www.federalreserve.gov/newsevents/speech/files/quarles20191101a.pdf. For a formal model in a slightly different context, see Sanford Grossman, On the Efficiency of Competitive Stock Markets Where Trades Have Diverse Information, 31 J. Fin. 573 (1976).
[16] Robert H. Frank, Microeconomics and Behavior 434 (4th ed. 2006).
[17] See Proposed Policy, supra note 1, at 2–3 & nn. 4, 7.
[18] See Robert Pitofsky, Beyond Nader: Consumer Protection and the Regulation of Advertising, 90 Harv. L. Rev. 661 (1977); Robert Pitofsky, Randal Shaheen & Amy Mudge, Pricing Laws Are No Bargain for Consumers, 18 Antitrust 62 (2004); Timothy J. Muris & Paloma Zepeda, The Benefits, and Potential Costs, of FTC-Style Regulation in Protecting Consumers, 8 Competition L. Int’l 11 (2012).
[19] See Discount Marketing Statistics, Capital One Shopping (last updated June 15, 2026), https://capitaloneshopping.com/research/discount-statistics/.
[20] See 30+ Loyalty Program Statistics Businesses Should Know in 2026, Zoho Thrive (last visited Sept. 22, 2026), https://www.zoho.com/thrive/loyalty-program-software/statistics.html.
[21] See Arielle Feger, Why Loyalty Programs Are Hitting a Growth Ceiling, EMARKETER (July 31, 2026), https://www.emarketer.com/content/why-loyalty-programs-hitting-growth-ceiling.
[22] See Discount Marketing Statistics, supra note 20.
[23] As Karl Popper said, “Always remember that it is impossible to speak in such a way that you cannot be misunderstood: there will always be some who misunderstand you.” Karl Popper, Unended Quest: An Intellectual Autobiography 29 (1976) (emphasis in original). Academic studies of brief communications find that 20 to 30 percent of the audience misunderstand some aspect of the message. Regarding televised messages, see Jacob Jacoby, Wayne D. Hoyer & David A. Sheluga, Miscomprehension of Televised Communications 64 (1980). Regarding print communications, see Jacob Jacoby & Wayne D. Hoyer, The Comprehension and Miscomprehension of Print Communications: An Investigation of Mass Media Magazines (1987). Both studies compare advertisements with excerpts of editorial content designed to be roughly equal in length and find no significant differences in the extent of miscomprehension.
[24] Proposed Policy, supra note 1, at 1.
[25] Consumer Fin. Prot. Bureau, Taskforce on Federal Consumer Financial Law Report vol. I, at 326 (Jan. 2021, amended Jan. 2022) [hereinafter “Taskforce Report”], https://files.consumerfinance.gov/f/documents/cfpb_taskforce-federal-consumer-financial-law_report-volume-1_2022-01_amended.pdf. The CFPB’s Taskforce included four members with vast FTC experience, including me.
[26] See the discussion in the Taskforce Report, id. at 327–28 (noting that disclosures that reduce information costs help consumers achieve their goals but “normative disclosures seek to change their goals.”).
[27] See James M. Lacko & Janis K. Pappalardo, Fed. Trade Comm’n, Bureau of Econ., The Effect of Mortgage Broker Compensation Disclosures on Consumers and Competition: A Controlled Experiment 28–29 (Feb. 2004), https://www.ftc.gov/sites/default/files/documents/reports/effect-mortgage-broker-compensation-disclosures-consumers-and-competition-controlled-experiment/030123mortgagefullrpt.pdf. The experiment tested alternative disclosures on the closing forms required under the Real Estate Settlement Procedures Act, and found that when the broker’s compensation was disclosed, consumers were less likely to select the low-cost mortgage.
Regulatory Comments I. Introduction and Summary The International Center for Law & Economics (‘ICLE’) welcomes the opportunity to respond to the Department for Business and Trade’s (‘DBT’) . . .
The International Center for Law & Economics (‘ICLE’) welcomes the opportunity to respond to the Department for Business and Trade’s (‘DBT’) consultation on Swifter and Simpler Competition Redress, Regulatory Appeals and Competition Enforcement.[1] ICLE is a nonprofit, nonpartisan research centre that promotes rigorous economic analysis in public-policy debates. Its scholars have written extensively on competition enforcement, private litigation, and regulatory design. ICLE has also responded to the government’s Refining Our Competition Regime consultation, the Competition and Markets Authority’s (‘CMA’) merger-efficiencies review, and its proposed first conduct requirements under the Digital Markets, Competition and Consumers Act 2024 (‘DMCC Act’).[2]
ICLE submits these comments by email as a single document rather than through the online survey. Headings identify any specific consultation questions addressed in a section. Paragraph references are to the Consultation unless otherwise indicated.
The Consultation’s three chapters share an ambition to make redress, appeals, and enforcement ‘swifter and simpler’. ICLE supports that aim. Speed and simplicity help when they lower the cost of reaching sound outcomes. They can, however, do harm when they remove safeguards needed to reach those outcomes. We therefore assess each proposal through the error-cost framework that has long guided law & economics analysis of enforcement institutions: Does the reform reduce the expected cost of error, including false positives, false negatives, and enforcement costs?[3]
Our principal conclusions follow.
The government’s diagnosis is broadly right, and most of its remedies point in the right direction. The regime has two linked problems. First, certification has become too easy, leaving funders’ appetite for returns to filter claims that the Competition Appeal Tribunal (‘CAT’) should assess for merit and proportionality. Seconds, even successful claims have returned very little to the consumers in whose name they are brought
ICLE supports codifying an absolute-suitability test with a weighted cost-benefit assessment (Q4–Q6), clarifying class representatives’ obligations through the CAT Rules (Q1–Q3), permitting damages-based agreements subject to disclosure (Q7–Q9), requiring budgets from both sides (Q13–Q14), and introducing settlement offers with automatic costs consequences (Q18–Q20). We oppose two proposals. Requiring the CAT to indicate at certification what funder return would be ‘reasonable’ (Q10) would import rate-of-return regulation into litigation finance. This risks blending into rate-of-return regulation of litigation finance with the associated cost inflation. It would be neither workable nor wise. Allowing the CMA to order redress based on a presumed overcharge (Q22–Q26) would turn an enforcement agency into an administrative damages tribunal without the experience, evidence, or standard of review that role requires.
ICLE supports transferring the CMA’s appellate functions to the CAT (Q44–Q45). Adjudication belongs in a judicial body, and the CMA’s resources are better spent on its primary functions.
That transfer should, however, preserve parties’ right to a meaningful appeal. Applying judicial-review principles ‘taking due account of the merits’ (Q47) would lower the standard that now governs energy appeals and replace water redeterminations with a materially more deferential process. Decisions that set the return on tens of billions of pounds of regulated investment warrant a genuine merits appeal.
Several proposals would sensibly reorganise procedures and institutions. Others would remove statutory safeguards and replace them with CMA guidance. Most notably, omitting Rule 3 (Q65) would allow the official who issued a statement of objections to sit in judgment on it.
The proposals would also withdraw the right to make confidentiality representations (Q67), narrow access to the file (Q75, Q77, Q78), and codify appeal waivers in settlement (Q68). Together, these would weaken checks on an agency whose infringement decisions bind courts in follow-on damages actions. ICLE supports faster competition-law procedures, but notes that procedural fairness protects the parties, lends credibility to enforcement decisions, and makes the UK a more attractive place to do business.
The opt-out regime began in 2015 with three objectives: better redress for victims of anticompetitive conduct, deterrence, and protection for defendants against unmeritorious claims.[4] A decade later, the evidence assembled in the Consultation suggests that the regime is falling short on redress and protection for defendants. It also pursues deterrence in a way that generates large private returns without commensurate public benefit.
The regime has grown rapidly since 2020. Claimants have filed cases with a cumulative estimated value exceeding £130 billion on behalf of some 655 million class members.[5] Claimant budgets routinely exceed £20 million, and defence budgets can be expected to match or exceed them.[6] Funders will not back a claim worth less than roughly £500 million.[7]
Yet in the only case to reach distribution, less than one per cent of the class made a claim. Approximately £216,000 reached consumers, while more than £10 million went to lawyers, funders, and other stakeholders.[8] In the only case to reach a judgment in the claimant’s favour, the Tribunal had to determine what a ‘fair’ commission for access to a digital platform would have been. As ICLE has explained elsewhere, this exercise in administered pricing is unlikely to produce stable or welfare-enhancing results. The judgment is now the subject of an application for permission to appeal.[9]
These outcomes reflect a well-understood divergence between the private and social incentives to litigate.[10] The lawyer or funder who selects and controls a claim captures much of its private return, while society bears the costs of adjudication and any over-deterrence. Research on ‘entrepreneurial litigation’ shows that when those who select claims are paid from the proceeds, they are likely to favour claims that promise returns to themselves over those that benefit the people they represent.[11] Opt-out proceedings sharpen that divergence because class members are dispersed, passive, and often unaware of the claim.
Two features of the UK regime make it especially susceptible to this dynamic. First, since Merricks, certification has been understood as a ‘relative suitability’ test that ‘does not involve a merits test’.[12] Second, because the regime covers only competition law, claimants have pleaded claims ‘not obviously rooted in competition’ as abuses of dominance. In some cases, the Tribunal has observed that the alleged conduct ‘seem[s] not to be competition law infringements at all’.[13]
Together, these features have made the regime increasingly attractive as an asset class for litigation finance rather than a route to redress: a portfolio of large standalone claims certified at a low threshold, whose value to investors depends on a handful settling or succeeding.
We agree with the government that the regime should be neither expanded nor further restricted at this stage.[14] The answer to the ‘dressing up’ problem is to enforce its existing boundaries. At certification, the Tribunal should require a pleaded competition claim with a real prospect of success, rather than accept a competition-law label alone. Cost-benefit analysis should also be undertaken; at the moment, only cost-effectiveness analysis is. This necessarily implies considering the market impact of the claim, including at the certification stage; this omission is the driver of claims which simply incur costs without improving markets (and sometimes harming them). The proposals discussed below would do much to achieve this.
ICLE supports all three proposals in paragraph 29. Together, they would restore the ‘strong process of judicial certification, including a preliminary merits test’ that the government promised when it created the regime and that subsequent case law has eroded.[15]
Intrinsic (absolute) suitability. A relative-suitability test asks whether collective proceedings are preferable to individual proceedings. Because individual claims for small losses are rarely viable, the answer is usually clear, and certification does little to filter claims. An intrinsic test asks whether the claims are fit to be grouped and determined collectively under the Act. It also asks whether collective proceedings offer a reasonable prospect of a just outcome at proportionate cost.[16] Where claimants seek aggregate damages, they must offer a methodology with a realistic prospect of establishing class-wide loss and evidence that the necessary data exist.[17]
Some mature class-action jurisdictions take a similar approach. In the United States, Rule 23 requires a ‘rigorous analysis’ that will ‘frequently … entail some overlap with the merits’.[18] The class plaintiff must also show that damages can be measured on a class-wide basis consistent with its theory of liability.[19]
Greater weight for costs and benefits, including expected take-up. This is, in our view, the Consultation’s most important reform. The error-cost logic is straightforward. Certification imposes immediate and certain costs: defence spending that can match a £20 million claimant budget, years of management distraction, and, critically, settlement pressure largely independent of a claim’s merit.[20] The benefit is uncertain and, on the evidence so far, small: only a fraction of a damages award reaches a fraction of the class.
A test that gives this comparison real weight and counts likely take-up among the benefits would screen out claims most likely to enrich stakeholders while compensating few class members. It would also encourage funders and law firms to design claims and distribution plans around the class rather than headline quantum.
To make the test operational, the CAT Rules should require the proposed class representative (‘PCR’) to file a costed distribution plan and a reasoned estimate of take-up at certification. A projected return to the class disproportionate to projected costs should be a presumptive ground for refusal. The Tribunal’s recent refusal to certify Waterside v Mowi because litigation costs far exceeded the likely benefit and distribution return to consumers shows that the existing Rules permit this reasoning. Codification would make it the norm rather than the exception.[21] Importantly, this should be cost-benefit analysis and not just cost-effectiveness analysis: there should be an assessment of whether the lawsuit will improve market performance, and not just its costs, or this analysis is unduly truncated.
Sufficient evidence for aggregate damages. Aggregate awards make opt-out proceedings viable, but they also make them risky. The Tribunal should distinguish injured from uninjured class members and tie awards to a sound theory of loss so that they reflect the harm class members actually suffered.[22] Rule 79(2)(f) already requires the Tribunal to consider whether claims are suitable for an aggregate award. Under the current approach, though, suitability is only one factor in a broader assessment of ‘all matters it thinks fit’.[23] Suitability for aggregate damages should instead be a condition of certification, supported by credible evidence grounded in the facts of the case.
The government should also address the ‘multiple bites of the cherry’ problem noted in paragraph 61. Repeatedly filing reformulated claims after a refusal imposes costs on defendants and the Tribunal. The Rules should require permission to refile and allow the Tribunal to make payment of the earlier application’s costs a condition of that permission.
The concern that a statutory merits element would generate satellite litigation (¶ 27) is overstated. Parties already contest certification at length. In Evans v Barclays, the Supreme Court held that the weakness of a claim was properly treated as a powerful factor against opt-out certification under Rule 79(3)(a), without requiring a separate merits trial.[24]
ICLE agrees that greater certainty would help in all three areas identified in paragraph 19: funding arrangements, costs specialists, and consultative panels.
The class representative is the only participant in the proceedings whose incentives are meant to align with the class. Yet a funder or law firm typically recruits the representative, who has no financial stake in the outcome and relies on the funder to meet an adverse costs order.[25]
Gutmann v First MTR South Western Trains illustrates the problem. The class representative, a private individual, could not have met costs beyond the £15 million indemnity his funder provided, so the defendants pursued the funder directly.[26] The funder had advanced about £6.58 million of the representative’s own costs—less than half the adverse costs cover it had provided. The solicitors absorbed later budget increases through deferred and contingent fees. When the defendants sought costs above the cap, the funder argued that the lead solicitors should bear the excess. The solicitors, in turn, wrote to the Tribunal to rebut the funder’s account. The representative sat between two parties financing the litigation, each with a contingent interest, without an independent adviser on the dispute. The agency problem identified in the class-action literature is acute.[27]
The Tribunal’s decisions in Riefa and Hammond ask the right questions: Does PCR understand and genuinely negotiate the funding terms? Has the PCR obtained independent costs advice? Is there a way to make informed decisions on settlement?[28]
The CAT Rules should answer those questions, with guidance on what is proportionate for a given claim. Rule 78 should require the PCR to (i) disclose the litigation funding agreement (‘LFA’) to the Tribunal, including provisions on funder control, termination, and payment priority; (ii) confirm that the PCR obtained independent advice on the funding terms; and (iii) explain how the representative will decide questions of settlement and distribution, including through any consultative panel.[29] This would address the concern in paragraph 17 that PCRs might overspend to cover every base. The requirement is informed independence, not a prescribed governance structure.
Damages-based agreements (Q7–Q9). ICLE cautiously supports lifting the prohibition on damages-based agreements (‘DBAs’) in opt-out proceedings. The economic case rests on competition. When third-party funders paid a multiple of their investment are the only source of finance, they gain substantial pricing power over the claims the regime exists to enable.[30] Allowing lawyers to take a share of recoveries would introduce a competing source of capital and—as the experience in Victoria, Australia suggests—may lower funding costs and improve returns to the class.[31] It would also align lawyers’ incentives more closely with the size of the recovery than hourly billing does.
The government identifies credible risks, but certification safeguards can address them. We recommend three: full disclosure of the DBA to the CAT through the Rule 78 process; approval of the percentage at settlement or judgment based on the sum actually distributed, rather than the headline award (see Section II.D); and CAT approval of ‘stacked’ arrangements in which a funder and law firm each take a return from the same recovery, so that the CAT can assess their combined cost to the class.
Funder returns: rate-of-return analysis of damages (Q10–Q12). The proposal in paragraph 52 responds to a genuine problem. Funders do not know what return the CAT will approve at the end of a claim, and that uncertainty raises the cost of capital.[32] But asking the CAT at certification to indicate a reasonable return and payment order would, in substance, regulate the rate of return on litigation finance, albeit reading on damages. It would bring the well-documented problems of that model into the CAT.
Rate-of-return regulation asks a decision-maker to determine in advance what return on invested capital is ‘reasonable’. Decades of utility regulation reveal three recurring problems.[33] First, the decision-maker cannot obtain all the information needed to set the rate correctly. The appropriate return on a funded claim depends on the funder’s cost of capital, how the claim’s risk relates to the rest of its portfolio, and the likelihood of success. The CAT cannot observe those factors at certification.[34]
Second, fixing a return as a multiple of cost, or damages, gives the regulated party an incentive to inflate its cost base or the damages estimate (e.g., by not settling). In litigation, an ‘approved’ multiple on invested capital or damages would reward spending more rather than litigating better. The Consultation’s evidence that claimant budgets have doubled within months of certification (¶ 60) suggests that this dynamic is already present. Third, an early indication would become an anchor for later decisions. The promised discretion to ‘revisit’ the assessment at the end of the claim (¶ 52) could prove illusory in practice.
A better response has three parts. First, funders should obtain certainty from their agreements and efficient operations so that they are competitive providers of finance, rather than advance CAT approval. If the PCR has disclosed the LFA, negotiated it with independent advice, and shown at certification that it preserves the PCR’s independence, the Rules should provide that the CAT will enforce the agreed return absent fraud, undue influence, or a material change in the claim. Second, DBAs and the transparency measures proposed above would discipline returns through competition. Third, the Rules should address returns that rise with the passage of time and thus reward delay past the next step-up date. They could bar recovery from the class of any increase triggered after a reasonable settlement offer of the kind discussed in Section II.D. That would target the incentive to delay without regulating the rate. Indeed, a regulated return on damages would likely discourage settlement and slow down lawsuits (e.g. by going to trial to extract more damages than settlement would give).
ICLE sees the force of the time-value argument for paying funders when the CAT makes an award or approves a settlement (¶ 53; Q11–Q12), but the proposed presumption raises a concern. If the funder receives its entire return from the gross sum before distribution, no participant retains a financial interest in whether the class receives anything. Gutmann shows how little may otherwise reach class members.[35]
We would support a presumption that the funder recovers its capital and costs on award or approval, while the CAT ties payment of the profit element to distribution. The funder could draw any remaining profit from undistributed funds only after the CAT finds that reasonable distribution efforts were made. This would preserve an incentive to design and carry out distribution effectively. The CAT’s residual discretion (Q12) is welcome but should not be the class’s only protection. Indeed, the major problem has been precisely that the claimant class is already too far back in the queue; further demoting their claims is not the answer here.
Budgets and costs conduct (Q13–Q14). ICLE supports requiring both parties to submit budgets after certification and to notify the CAT of material changes. Transparency on both sides reduces surprises when costs are assessed and helps the CAT exercise its powers under Rule 104.[36]
The Rules should not presume that vigorous defence of a claim worth hundreds of millions of pounds is a ‘scorched earth’ tactic (¶ 61). Costs sanctions should apply equally to both sides, turn on objective conduct—such as applications that fail comprehensively, repeated failure to follow directions, or refiling a refused certification application—and follow an assessment of the record. The cost-benefit test at certification offers the strongest discipline on claimant budgets. A realistic prospect that only meritorious claims will be certified offers the strongest discipline on defendant budgets.
Mediation (Q15–Q17). ICLE supports allowing the CAT to order mediation after the parties exchange expert reports and to account for an unreasonable refusal when awarding costs. This would align with the approach now taken under the Civil Procedure Rules.[37] At that point, both sides have enough information to value the claim. Mandatory ADR before filing would add costs without resolving disputes, as the government recognises (¶ 71).
Settlement offers with automatic costs consequences (Q18–Q20). ICLE supports extending a Rule 45-type mechanism to collective proceedings. The current asymmetry is striking. A funded PCR faces little downside from refusing a reasonable defendant offer. A defendant that refuses a Calderbank offer faces, at most, a discretionary costs sanction that, as Kent v Apple shows, may never be imposed.[38] Automatic consequences for both sides would create stronger incentives to settle.
Existing CAT approval under Rule 94 addresses the concern that such a mechanism might put undue pressure on PCRs (Q19). The CAT must find a settlement just and reasonable before approving it, so an offer cannot compel acceptance of a bad settlement.[39] The mechanism should otherwise follow Rule 45, with enough time for acceptance to accommodate CAT approval. The approval process itself (Q21) should develop through experience, with a review once the CAT has considered more settlements.
Distribution and undistributed sums (Q34–Q37). Listing certified claims on the CAT website is sensible and inexpensive. But when fees and returns depend on the gross award, no participant has a financial interest in getting money to the class. Evidence from the mature US regime shows that claims rates in consumer class actions are typically in single digits.[40]
The reforms proposed above would create that interest: counting expected take-up in the certification cost-benefit test, requiring a costed distribution plan, and tying payment of funder profit to distribution. Parties could also agree that undistributed sums revert to the defendant, an option the government rightly leaves to them (¶ 129).
Destination of undistributed damages (Q37). Large undistributed sums may show that the parties overstated the claim’s benefit to the class at certification. The CAT should be able to consider that record in later certification decisions involving the same representatives, funders, or firms.
ICLE also strongly advises against designating the Consumers’ Association (Which?), an active class representative and litigant before the CAT.[41] Directing undistributed damages to an organisation that brings collective proceedings creates a perception—and a real risk—of circularity: more certified claims and less distribution would mean more money for that organisation. US experience with cy pres awards to organisations connected to litigants has drawn scrutiny from the Supreme Court.[42] By contrast, the Access to Justice Foundation may have little connection to competition law, but it has no stake in the regime.
ICLE supports simplifying the Redress Scheme Regulations (Q23),[43] allowing the CMA to accept binding redress undertakings when a business volunteers them in a settlement or commitments decision, and making clear that payments under a redress scheme reduce any subsequent damages claim and count at certification (Q24, Q27). These measures would make voluntary redress easier without displacing the adjudication of loss.
We oppose the two proposals that go further: a statutory presumption of overcharge and a power for the CMA to direct a business to establish a redress scheme (Q22, Q25–Q26).
Presumed overcharge. Damages compensate loss actually suffered. The Organisation for Economic Co-operation and Development (OECD) impact-assessment methodology and meta-studies of historical cartels discussed in paragraph 92 can help estimate the aggregate benefits of enforcement across many cases. The issue is to identify the true overcharge, because correcting the overcharge is how the economic harm of principled cases is addressed. The underlying studies report overcharges ranging from zero to well above 50 per cent, so any single default figure will systematically overcompensate some purchasers and undercompensate others.[44] A presumed overcharge will therefore not achieve optimal deterrence.
The Consultation would also apply the presumption to abuse-of-dominance cases, where ‘overcharge’ is often a poor fit because the alleged harm concerns exclusion rather than price. And because the same agency would find the infringement, impose a penalty, and set the presumed sum, the presumption could operate in practice as a second penalty under another name. It would increase deterrence without improving compensation.[45]
Mandatory redress. The government rejected this power in 2013 for reasons that remain relevant: assessing loss lies outside the CMA’s expertise and would divert resources from investigation and enforcement.[46] The CMA’s role has since expanded considerably, while Chapter 3 of the Consultation proposes to reduce safeguards around its infringement decisions (see Section IV below).
Giving the CMA power to order compensation, subject to a standard of review the Consultation does not specify, would place investigation, prosecution, adjudication, penalties, and damages assessment in one administrative body. ICLE warned against that concentration of functions in its response to the January consultation.[47] It would also sit uneasily with the principle that redress should follow from the merits of a claim rather than regulatory direction. If the government wants more redress in follow-on cases, it should make the collective regime fit for purpose through the certification reforms discussed above
Leniency is the most effective cartel-detection tool available to competition authorities. The decline in Type A applications from an average of 21 a year in 2014–16 to eight a year in 2022–24 is a serious warning sign.[48] The economics are well understood: a firm will report its own conduct only if the expected benefit of immunity exceeds the expected cost of exposure. As private damages exposure has grown, the calculation has shifted against reporting.[49] Immunity from penalties offers little to a firm whose main exposure is civil liability.
ICLE therefore supports extending immunity from civil liability to Type A applicants in principle (Q28), subject to two safeguards (Q29–Q30). First, the government should retain the set-aside for unrecoverable damages proposed in paragraph 108 and define it using the Damages Directive’s model. Under that model, the immunity recipient remains liable when victims cannot obtain full compensation from the other infringers.[50]
Second, immunity should depend on continued cooperation with claimants as well as the CMA. The US model, for example, conditions relief from treble and joint-and-several liability on ‘satisfactory cooperation’ with civil plaintiffs.[51] That would make the immunity recipient a source of evidence for claims against the remaining cartel members and help address the concern about compensation. The objection that the recipient ‘escapes’ liability has less force when its report enables the cartel’s detection and makes redress possible (¶ 103).
ICLE supports transferring the CMA’s appellate functions to the CAT and bringing telecoms price-control disputes within its jurisdiction. Consolidation would give these disputes a judicial forum and reduce duplication. The CAT will need the capacity and sectoral expertise to take on the work. The transfer should also preserve meaningful scrutiny of decisions that shape billions of pounds in infrastructure investment. A genuine merits standard, with power to substitute a decision where the correct answer is clear, would allow the CAT to correct errors without unnecessary remittals.
ICLE supports transferring the CMA’s appellate functions to the CAT, converting the remaining reference functions into appeals, and extending the CAT’s jurisdiction to price-control matters in telecoms appeals.
The current allocation assumes that sectoral regulation is best reviewed by a body with deep experience assessing pricing decisions across sectors. The Competition Commission, and later the CMA, built that expertise through decades of price-control appeals and references. But deciding a dispute between a regulator and a regulated firm is a judicial function. The Consultation itself accepts that a judicial body with the right technical expertise ‘would be equally capable of dealing with these issues’ (¶ 166).[52]
The CAT can acquire that sectoral depth by selecting and, where necessary, supplementing its Ordinary Members (Q46). It would thereby gain independence without sacrificing technical competence. Transfer would also free CMA resources: a single large regulatory appeal can absorb the equivalent of two or three market studies (¶ 167). The CAT already hears appeals from the Office of Communications (Ofcom), the Office of Gas and Electricity Markets (Ofgem), the Payment Systems Regulator (PSR), and the Civil Aviation Authority (CAA). Consolidation would improve consistency and help precedent develop across sectors, as the Penrose report recommended five years ago.[53]
Extending the CAT’s jurisdiction to price-control matters in telecoms appeals (Q45) follows the same logic. The CAT currently hears a telecoms appeal but must refer any price-control element to the CMA, then incorporate the CMA’s conclusions into its judgment (¶ 174).[54] Splitting one appeal between a judicial body and an administrative agency adds procedure, lengthens timetables, and divides the reasoning between institutions with different processes. If the CAT can determine price-control appeals in water and energy, as the Consultation proposes, it can do so in telecoms.
The proposed transfer also bears on the CMA’s independent panel. In March, ICLE argued that the panel should not be abolished without introducing merits-based appellate review at the CAT. The panel provided an independent, quasi-judicial layer of decision-making that helped justify deferential judicial review.[55] The Consultation now cites the panel’s impending abolition as a reason to move regulatory appeals out of the CMA (¶ 169). While that is sound, abolishing the panel does not eliminate the need for the functions it performs. The CAT is the right place for regulatory appeals. For merger and market decisions, the same logic points to merits review at the CAT, which the government has yet to propose.
The government should assess the CAT’s staffing needs before the transfer takes effect. Comparing the expected caseload with the pool of people who have the necessary sectoral and financial expertise, and who are eligible and willing to serve as Ordinary Members, would let the CAT build capacity in advance. Without that assessment, the reform could improve the forum while lengthening the queue—undermining the timeliness gains it seeks.
The Consultation proposes that the CAT decide all regulatory appeals by applying ‘the same principles as would be applied by a court on an application for judicial review, while also taking due account of the merits of the case’. This follows the telecoms model in section 194A of the Communications Act 2003 (¶ 204(a)).[56] For most appeals within scope, it would reduce the intensity of review. Energy licence-modification appeals currently succeed when a decision is wrong on specified grounds, including errors of fact and failure to give appropriate weight to relevant matters. The CMA may substitute its own decision in price-control appeals, while water redeterminations involve a fresh decision on the merits.[57] The proposal would replace those approaches with a review in which the CAT ‘takes [the regulator’s] decision as a starting point’, accords it ‘an appropriate degree of respect’, and asks whether it is ‘materially wrong’ (¶ 202).
The government may argue that the telecoms formula also asks whether a decision is ‘wrong’ (¶ 201), but two differences matter. First, under the existing energy, water, and air regimes, an error of fact, a failure to give appropriate weight to relevant matters, or—in the air regimes—an error in the exercise of discretion can independently justify allowing an appeal. Under section 194A, the CAT considers the merits through the judicial-review grounds of illegality, irrationality, and procedural unfairness. A decision can therefore be wrong without meeting the threshold for intervention.
Second, treating the regulator’s decision as a starting point gives it a degree of deference. An appeal on specified grounds instead requires the reviewing body to form its own view of whether the decision was wrong, giving the regulator’s judgement only the weight the evidence warrants.
Research on regulatory disputes supports that distinction. Despoina Mantzari argues that deference to a regulator’s economic assessment should depend on the relative institutional competence of the regulator and the reviewing body, rather than on the regulator’s expertise alone.[58] The CAT’s own economic and technical expertise supports meaningful scrutiny, even when the regulator’s specialised judgement deserves weight.
ICLE’s concern is with the error costs of a deferential standard. Price controls set the allowed return on tens of billions of pounds of infrastructure investment, and regulatory error runs in both directions. If a regulator sets the cost of capital too low and an appeal cannot correct it, consumers may bear the cost of underinvestment for decades. If it sets the allowed return too high, consumers pay excess returns for a full control period. The Consultation itself acknowledges that the current arrangements ‘can … deter investments in UK markets’ (¶ 199).
From a law & economics perspective, the question is how the review standard allocates the risk of error among regulators, regulated firms, investors, and consumers. A merits standard, combined with the proposed standing for consumer bodies that ICLE supports, would allow errors in either direction to be corrected.
The Consultation’s principal argument for deference is that many elements of a price control, ‘e.g. the cost of capital’, are ‘complex matters requiring the exercise of regulatory judgement with no single right answer’ (¶ 199). That may be true, but a merits appeal can still give the regulator appropriate latitude within a range of defensible values. In the RIIO-2 appeals, the CMA upheld the networks’ challenges to the ‘outperformance wedge’ and, for five of the eight appellants, an innovation uplift unsupported by evidence. It nonetheless dismissed every challenge to the cost of equity.[59]
Fresh redetermination has not simply favoured regulated firms, either. In the PR24 redeterminations, the CMA raised the allowed return from 4.03 to 4.20 per cent but granted the five disputing companies £463 million in additional revenue—17 per cent of the £2.7 billion they sought.[60] A judicial-review standard would do more than respect regulatory judgement: it would leave wrong decisions standing when they fall short of irrationality. The lack of a single right answer strengthens the case for external review because a regulator may struggle to identify its own errors.
The standard also matters to the government’s growth agenda. Water and energy networks must raise substantial private capital over the coming decade, and investors account for the available appellate review when pricing risk. If an erroneous determination of the allowed return can be corrected only when it is ‘materially wrong’ under judicial-review principles, investors may demand a higher risk premium, with consequences for allowed returns and investment.
A merits appeal need not entail unrestricted de novo review. It asks whether the regulator’s decision has evidential support and accords with its statutory duties. It does not require the CAT to take over the regulator’s continuing administrative role. The weight due to a technical assessment will depend on the issue under review.
ICLE therefore recommends a genuine merits appeal set out in statute. A single list of grounds drawn from the existing energy, water, and air regimes should cover error of fact; error of law; failure to consider, or give appropriate weight to, relevant matters; failure to follow the applicable procedure; failure of a modification to achieve its stated effect; and error in the exercise of discretion. The CAT should decide whether the regulator was wrong on those grounds, giving its assessment the weight the evidence warrants.[61] This would largely extend the existing energy standard across sectors. The Consultation offers no evidence that the standard has produced excessive appeals or unmanageable proceedings.
Requiring a notice of appeal to identify whether each ground alleges an error of fact, law, or discretion (Q48) would help focus proceedings, provided a mistaken label does not bar a sound argument. ICLE also agrees with the approach to new evidence (Q49) and cross-examination (Q50) in paragraph 204(c): the CAT should retain discretion under its existing Rules to allow both. Restricting appeals to material available to the regulator could reward opaque reasoning, since an appellant may not know what evidence informed the decision until its publication. The principal barriers the proposals would create (Q52) are thus the review standard and the proposed rule on remedies.
On remedies (Q51), mandatory remittal should not be the default. When the CAT finds an error and the correct answer follows from that finding—for example, a discrete input to a price control—remittal would delay the outcome and invite another appeal. The CAT should be able to substitute its own decision on that point, as the CMA can in energy price-control appeals and as the appeal bodies can in the air and postal regimes (¶ 195).[62] It should remit cases when the regulator needs to exercise fresh judgement in light of the CAT’s findings. Confined in this way, substitution corrects an error without beginning a second round of regulation.
ICLE supports faster enforcement, but the CMA’s decisions must remain reliable when they bind courts in follow-on damages claims. The Rules should keep final decision-makers separate from the team that investigated a case, preserve a meaningful chance to protect confidential information and inspect the evidence, and maintain safeguards when the CMA imposes interim measures. Settlement procedures can be simpler, provided they give parties adequate access to the case against them and clearly define the scope of their admissions.
Rule 3 of the CMA Rules embodies a simple principle: the officials who decide to issue a statement of objections (‘SO’) should not decide whether those objections are well founded.[63] The Consultation proposes removing Rule 3 and letting the CMA set its decision-making model in guidance. One option is an ‘SRO + 2’ model, in which the senior responsible officer (‘SRO’) who issued the SO would make the final decision alongside two colleagues who had not worked on the case (¶ 229).
Basic procedural fairness weighs against this change. Separating investigative and decision-making functions within an enforcement agency is an important safeguard against confirmation bias: the tendency to interpret new evidence as supporting a theory one has already formed.[64] The concern is not misconduct by CMA officials. Any decision-maker can be influenced by a view formed earlier in a case, and institutional rules should account for that risk.
Critics have long challenged the European Commission’s combination of these functions. The European Court of Human Rights has accepted such an arrangement in an administrative competition authority where a court can fully review its decisions on the facts and the law.[65] The UK’s case-decision-group model was a deliberate improvement on the Commission’s approach.
The consumer-protection regime offers no reason to remove Rule 3. It also separates functions, but the CMA sets that safeguard itself and can revise it. The difference concerns where the rule sits—in CMA guidance or in a statutory instrument. It does not diminish the need for separation. Nor does the SRO’s familiarity with the case outweigh the risk of confirmation bias. Two uninvolved colleagues may give undue weight to the views of the officer who led it.
Three considerations make separation especially important. First, infringement decisions under the Competition Act 1998 bind courts in follow-on damages actions,[66] which now include opt-out collective claims worth hundreds of millions of pounds. The reliability of the underlying decision matters more than it did in 2014. Second, although the CAT hears appeals on the merits, [67] an appeal is costly and slow, and a party that settles waives it. For a meaningful share of decisions, internal separation is the only check. Third, moving the safeguard from the Rules to guidance would let the CMA change it after a consultation it controls, without parliamentary scrutiny.
If the government considers Rule 3 too prescriptive, it should retain the core requirement in the Rules: people who took part in the investigation or decided to issue the SO should not make the final infringement or penalty decision. The CMA could set the decision-makers’ composition and procedures in guidance. The same principle should govern settlements (Q66). A party’s admission does not relieve the CMA of its duty to establish an infringement, and someone outside the case team that negotiated the settlement should make that judgement.
Rule 7 (Q67). Rule 7 should be amended, not omitted. The Consultation may be right that the CMA must process too many blanket confidentiality claims that offer no reasons. It should therefore require parties to identify and explain each claim, and allow the CMA to disclose information without further representations when a claim is unreasoned or manifestly unfounded. Parties should retain the right to make representations on substantiated claims. Competition Act 1998 investigations can uncover trade secrets whose disclosure is irreversible. Even well-resourced authorities have failed to protect such information.[68] A chance to be heard before disclosure is a minimal safeguard.
Confidentiality rings (Q71–Q74). ICLE supports a standardised framework that gives economic as well as legal advisers access to confidentiality rings, so parties need not negotiate the arrangements afresh in every case. This is already the case following Practice Direction 2/2026 and the framework there, which amounts to a rebuttable presumption, seems apt. Predictability would benefit both the CMA and the parties it investigates. Civil sanctions for breaches (Q72) are acceptable in principle if they require fault, are proportionate to the breach, and provide a safe harbour for prompt self-reporting. Employer liability should apply to systemic failures, not automatically to every breach (Q73). Extending the framework to mergers and markets (Q74) is sensible if the same safeguards apply.
Access to the file (Q75–Q77). Aligning the Rule 6(2) exceptions with the consumer-enforcement rules would let the CMA withhold ‘routine correspondence’ and documents ‘to the extent that they identify an individual’ (¶ 253).[69] Neither category defines its own limits. In an abuse-of-dominance investigation, correspondence the CMA regards as routine may matter to the defence. Any new exception should be narrow and require a list of withheld documents, so a party can request specific items.
Disapplying Rule 6 altogether in settlement cases (Q77) is more troubling. A settling party admits an infringement that binds courts in follow-on claims and gives up its right of appeal. It should understand the full case file before doing so, rather than see only the documents the CMA chooses to cite. The CMA could offer streamlined access if the party agrees to it. The Rules should not impose it as the default.
Interim measures (Q78). ICLE opposes removing Rules 13(1) and 13(2). Interim measures are the CMA’s most intrusive tool short of a final decision. They impose binding obligations on the basis of a prima facie case, before any finding of infringement.[70] Removing the right to inspect the file could require a business to change its conduct without seeing the evidence said to justify the direction. A targeted rule could address the efficiency concern: give the business access to documents on which the CMA relies, through a confidentiality ring where needed, within a short, fixed period. The safeguard should remain in the Rules rather than move to guidance.
Settlement benefits both sides. It saves CMA resources and gives the settling party a penalty reduction and an earlier end to the investigation. But settlement decisions also affect third parties: they establish binding infringement findings on which follow-on collective claims may rest.
Together, the proposals would allow an infringement decision without an SO (Q69–Q70), full access to the file (Q77), or a right of appeal (Q68). Each proposal reflects existing practice in isolation.[71] In combination, they could produce a decision that no one outside the case team has tested against the full evidence, yet that carries the weight of a binding infringement finding in litigation worth many times the penalty.
ICLE does not object to codifying the agreement not to appeal. The Rules should, however, also make clear that the settling party admits only the facts and infringement set out in the settlement decision, and that follow-on claimants cannot extend that admission. The decision should state that it resulted from a settlement.
When all parties settle before an SO, a summary statement of facts may serve as the section 31 notice if it sets out the CMA’s case with the specificity that section 31 requires and the parties have seen the documents on which it relies. The consumer-enforcement rules should not set the benchmark for this process. The procedural rules should instead reflect the difference between conduct whose illegality is usually clear and conduct whose illegality turns on contested economic analysis.
The Consultation is right to seek swifter, simpler competition redress, regulatory appeals, and enforcement. Several proposals would also improve accuracy: certification that tests claims’ merit and proportionality, settlement offers with meaningful consequences, a judicial forum for regulatory appeals, and standardised confidentiality arrangements. ICLE supports these proposals.
Other proposals would sacrifice accuracy for speed. Regulating the rate of damages, allowing the CMA to order redress based on a presumed overcharge, weakening review of regulatory decisions worth tens of billions of pounds, and removing the separation between investigation and decision-making in Competition Act 1998 cases would concentrate discretion while weakening checks on it. These proposals draw on the DMCC Act’s consumer-enforcement provisions, which address a narrower set of issues and remain largely untested. Their effects should be understood before they become a model for more complex and contested cases.
The reforms most likely to meet the government’s aims will align private incentives with public purposes: claims brought on their merits, funders rewarded when consumers receive compensation, and binding enforcement decisions reached through fair procedures.
[1] Dep’t for Bus. & Trade, Swifter and Simpler Competition Redress, Regulatory Appeals and Competition Enforcement (17 July 2026) [hereinafter Consultation].
[2] Geoffrey A. Manne et al., Refining Our Competition Regime: ICLE Response to the Department for Business and Trade Consultation Published 20 January 2026 (Int’l Ctr. for L. & Econ., 31 March 2026) [hereinafter ICLE Refining Comments]; Dirk Auer, Selcukhan Ünekbas & Mario A. Zúñiga, Comments of the International Center for Law & Economics: UK Competition and Markets Authority Call for Evidence for Merger Efficiencies Review (Int’l Ctr. for L. & Econ., 25 February 2026); Geoffrey A. Manne et al., Comments of the International Center for Law & Economics: The CMA’s Proposed Steering Conduct Requirements for Apple and Google (Int’l Ctr. for L. & Econ., 28 July 2026) [hereinafter ICLE Steering Comments].
[3] See Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1 (1984); Geoffrey A. Manne & Joshua D. Wright, Innovation and the Limits of Antitrust, 6 J. Competition L. & Econ. 153 (2010).
[4] Consultation, supra note 1, ¶ 1.
[5] Id. ¶ 38 (citing CMS, European Class Action Report 2025, at 14, 36 (2025)).
[6] Consultation, supra note 1, ¶ 34.
[7] Id. ¶ 38.
[8] Id. ¶¶ 29, 116 (discussing Gutmann v First MTR South Western Trains Ltd [2025] CAT 72).
[9] Dr Rachael Kent v Apple Inc [2025] CAT 67 (application for permission to appeal pending); see ICLE Steering Comments, supra note 2, at 11 (discussing the Tribunal’s difficulty in determining a fee justified by the value provided).
[10] Steven Shavell, The Fundamental Divergence Between the Private and the Social Motive to Use the Legal System, 26 J. Legal Stud. 575 (1997); see also William M. Landes & Richard A. Posner, The Private Enforcement of Law, 4 J. Legal Stud. 1 (1975).
[11] John C. Coffee, Jr., Understanding the Plaintiff’s Attorney: The Implications of Economic Theory for Private Enforcement of Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669 (1986); Jonathan R. Macey & Geoffrey P. Miller, The Plaintiffs’ Attorney’s Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 U. Chi. L. Rev. 1 (1991); John C. Coffee, Jr., Entrepreneurial Litigation: Its Rise, Fall, and Future (2015).
[12] Merricks v Mastercard Inc [2020] UKSC 51, ¶¶ 59, 70, 74.
[13] Consultation, supra note 1, ¶ 7 (quoting Gormsen v Meta Platforms, Inc [2023] CAT 10, ¶ 30(1)); see also Gutmann v First MTR South Western Trains Ltd [2025] CAT 79 (holding that ‘[c]ompetition law is not a general law of consumer protection’).
[14] Consultation, supra note 1, ¶ 10.
[15] Dep’t for Bus., Innovation & Skills, Private Actions in Competition Law: A Consultation on Options for Reform—Government Response ¶ 5.55 (January 2013) [hereinafter 2013 Government Response]; Consultation, supra note 1, ¶ 21.
[16] Merricks v Mastercard Inc [2020] UKSC 51, ¶¶ 117–119.
[17] Id. ¶¶ 120–123.
[18] Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011).
[19] Comcast Corp. v. Behrend, 569 U.S. 27, 34–35 (2013); see also In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008) (requiring courts to resolve factual disputes relevant to certification, even when they overlap with the merits).
[20] See In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1298–1300 (7th Cir. 1995) (Posner, J.) (describing the ‘intense pressure to settle’ that certification imposes even on defendants with strong defences); Merricks v Mastercard Inc [2020] UKSC 51, ¶¶ 118, 154, https://supremecourt.uk/uploads/uksc_2019_0118_judgment_6dd114686b.pdf (Lord Sales & Lord Leggatt, separate judgment) (noting that collective actions ‘confer substantial legal advantages on claimants and burdens on defendants which are capable of being exploited opportunistically’).
[21] Waterside Class Ltd v Mowi ASA [2026] CAT 32; Consultation, supra note 1, ¶ 29 & n.15; see also Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 79(1)–(2) (UK), https://www.legislation.gov.uk/uksi/2015/1648/article/79.
[22] See Comcast Corp. v. Behrend, 569 U.S. 27, 35–38 (2013).
[23] See Merricks v Mastercard Inc [2020] UKSC 51, ¶ 61 (‘The listed factors are not separate suitability hurdles, each of which the applicant for a CPO must surmount.’), https://supremecourt.uk/uploads/uksc_2019_0118_judgment_6dd114686b.pdf.
[24] Evans v Barclays [2025] UKSC 48.
[25] See Gutmann v First MTR South Western Trains Ltd [2025] CAT 21.
[26] Id.
[27] See Coffee, Understanding the Plaintiff’s Attorney, supra note 11; Macey & Miller, The Plaintiffs’ Attorney’s Role, supra note 11.
[28] Riefa v Apple Inc [2025] CAT 5, ¶¶ 89(5), 95, 114; Hammond v Amazon.com, Inc. [2025] CAT 42, ¶¶ 56, 67(1), 156(1).
[29] Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 78 (UK).
[30] See Jonathan T. Molot, Litigation Finance: A Market Solution to a Procedural Problem, 99 Geo. L.J. 65 (2010).
[31] Consultation, supra note 1, ¶ 42 (citing evidence from Victoria, Australia, after the introduction of group costs orders under s. 33ZDA of the Supreme Court Act 1986 (Vic.)).
[32] Consultation, supra note 1, ¶¶ 46–51 (discussing Merricks v Mastercard Inc [2025] CAT 28, ¶ 188; Gutmann v Apple Inc [2024] CAT 18, ¶ 38; and Gutmann v Apple Inc [2025] EWCA Civ 459, ¶ 78).
[33] See 1 Alfred E. Kahn, The Economics of Regulation: Principles and Institutions ch. 2 (1988); Harvey Averch & Leland L. Johnson, Behavior of the Firm Under Regulatory Constraint, 52 Am. Econ. Rev. 1052 (1962); Jean-Jacques Laffont & Jean Tirole, A Theory of Incentives in Procurement and Regulation (1993).
[34] See Friedrich A. Hayek, The Use of Knowledge in Society, 35 Am. Econ. Rev. 519 (1945).
[35] See Gutmann v First MTR South Western Trains Ltd [2025] CAT 21.
[36] Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 104 (UK).
[37] See Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416; Consultation, supra note 1, ¶¶ 74–76.
[38] Consultation, supra note 1, ¶¶ 78–80.
[39] Competition Appeal Tribunal Rules 2015, SI 2015/1648, r. 94 (UK).
[40] Fed. Trade Comm’n, Consumers and Class Actions: A Retrospective and Analysis of Settlement Campaigns 11–13 (September 2019) (finding a median claims rate of 9 per cent and a weighted mean of 4 per cent across the settlements studied); see also Consultation, supra note 1, ¶ 122 (noting that take-up in North America ‘will not often exceed ~10 per cent’).
[41] Consultation, supra note 1, ¶ 127.
[42] Marek v. Lane, 571 U.S. 1003 (2013) (Roberts, C.J., statement respecting denial of certiorari); Frank v. Gaos, 139 S. Ct. 1041 (2019) (per curiam); Martin H. Redish, Peter Julian & Samantha Zyontz, Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis, 62 Fla. L. Rev. 617 (2010).
[43] Competition Act 1998 (Redress Scheme) Regulations 2015, SI 2015/1587 (UK).
[44] See Oxera, Quantifying Antitrust Damages: Towards Non-Binding Guidance for Courts (December 2009) (study for the European Commission finding wide variation in estimated cartel overcharges); John M. Connor & Robert H. Lande, Cartel Overcharges and Optimal Cartel Fines, in 3 Issues in Competition Law and Policy 2203 (ABA Section of Antitrust Law 2008).
[45] See Wouter P.J. Wils, The Relationship Between Public Antitrust Enforcement and Private Actions for Damages, 32 World Competition 3 (2009).
[46] 2013 Government Response, supra note 15, ¶ 6.36; Consultation, supra note 1, ¶ 89.
[47] ICLE Refining Comments, supra note 2, at 5–8.
[48] Consultation, supra note 1, ¶¶ 103–104; see also Organisation for Economic Co-operation and Development (OECD), The Future of Effective Leniency Programmes: Advancing Detection and Deterrence of Cartels (2023).
[49] See Massimo Motta & Michele Polo, Leniency Programs and Cartel Prosecution, 21 Int’l J. Indus. Org. 347 (2003); Giancarlo Spagnolo, Leniency and Whistleblowers in Antitrust, in Handbook of Antitrust Economics (Paolo Buccirossi ed., 2008).
[50] Directive 2014/104/EU, art. 11(4), 2014 O.J. (L 349) 1.
[51] Antitrust Criminal Penalty Enhancement and Reform Act of 2004, Pub. L. No. 108-237, § 213, 118 Stat. 661, 666–67 (2004).
[52] See OECD, Recommendation of the Council on Transparency and Procedural Fairness in Competition Law Enforcement, OECD/LEGAL/0465 (2021) (calling for review by an impartial, independent adjudicative body).
[53] John Penrose MP, Power to the People: Independent Report on Competition Policy 18 (February 2021); Consultation, supra note 1, ¶¶ 152 n.62, 171.
[54] Communications Act 2003, c. 21, § 193 (UK).
[55] ICLE Refining Comments, supra note 2, at 5–8.
[56] Communications Act 2003, c. 21, § 194A(2) (UK); TalkTalk Telecom Group PLC v Office of Communications [2020] CAT 8, ¶¶ 137–140 (5 March 2020).
[57] Consultation, supra note 1, ¶¶ 192, 195 (table); see Gas Act 1986, c. 44, §§ 23D–23E (UK); Electricity Act 1989, c. 29, §§ 11E–11F (UK).
[58] Despoina Mantzari, Economic Evidence in Regulatory Disputes: Revisiting the Court-Regulatory Agency Relationship in the US and the UK, 36 Oxford J. Legal Stud. 565 (2016).
[59] Competition & Mkts. Auth., Energy Licence Modification Appeals 2021: Summary of Final Determination (28 October 2021) (upholding challenges concerning the outperformance wedge and the innovation-related ongoing-efficiency uplift, while rejecting challenges concerning the cost of equity).
[60] Competition & Mkts. Auth., Water PR24 References: Final Determinations—Summary (10 March 2026) (following an 18 March 2025 reference, raising the allowed return from 4.03 to 4.20 per cent and allowing £463 million in additional revenue, 17 per cent of the £2.7 billion sought).
[61] See Consultation, supra note 1, ¶ 195 (table); Gas Act 1986, c. 44, § 23D(4) (UK); Electricity Act 1989, c. 29, § 11E(4) (UK); Water Industry Act 1991, c. 56, § 12F(4) (UK); Transport Act 2000, c. 38, § 19B (UK); Civil Aviation Act 2012, c. 19, § 26 (UK).
[62] Consultation, supra note 1, ¶ 195 (table) (identifying substitution powers in energy price-control, air traffic and airport licence, and postal price-control appeals); Gas Act 1986, c. 44, § 23E (UK); Postal Services Act 2011, c. 5, § 59 (UK).
[63] Competition Act 1998 (Competition and Markets Authority’s Rules) Order 2014, SI 2014/458, sch., r. 3 (UK), https://www.legislation.gov.uk/uksi/2014/458/pdfs/uksi_20140458_en.pdf.
[64] See Ian S. Forrester, Due Process in EC Competition Cases: A Distinguished Institution with Flawed Procedures, 34 Eur. L. Rev. 817 (2009).
[65] A. Menarini Diagnostics S.r.l. v. Italy, App. No. 43509/08, ¶¶ 57–67 (Eur. Ct. H.R. 27 September 2011).
[66] Competition Act 1998, c. 41, § 58A (UK).
[67] Competition Act 1998, c. 41, sch. 8, ¶ 3 (UK).
[68] See ICLE Refining Comments, supra note 2, at 13–14 (discussing the inadvertent public disclosure of confidential Microsoft materials in the Microsoft/Activision proceedings).
[69] Competition & Mkts. Auth., Direct Consumer Enforcement Rules r. 5 (CMA201, April 2025).
[70] Competition Act 1998, c. 41, § 35 (UK).
[71] Competition & Mkts. Auth., Guidance on the CMA’s Investigation Procedures in Competition Act 1998 Cases ch. 14 (CMA8, December 2024).
