Intel, the FTC, and the State of Antitrust Law

Occasionally, an antitrust complaint comes along that is just a ripping good read, perhaps even for a non-lawyer.  The Federal Trade Commission’s recent complaint against Intel is just such a one.  It depicts a litany of strong-arm tactics and deception that the FTC claims has frustrated the ability of Intel’s few competitors to bring faster, cheaper microprocessors to consumers.

But what is most interesting to me as a lawyer is not what the FTC has alleged Intel did, but why it has claimed that conduct is illegal.  For the FTC has not just challenged Intel’s conduct under the main monopoly statute, Section 2 of the Sherman Act, under which private suits and actions by the Department of Justice are also brought, but also under a special unfair competition statute, Section 5 of the FTC Act, that is only available in actions by the FTC.

Unfair competition under Section 5 of the FTC Act is ostensibly broader than monopolization under Sherman Act, though the FTC has had limited success in the past enforcing it against conduct that was not also an antitrust violation.  Since those setbacks, however, courts have limited the scope of the antitrust laws on both economic and prudential grounds.  “The result,” according to a statement by FTC Chairman Leibowitz and Commissioner Rosch, “is that some conduct harmful to consumers may be given a “free pass” under antitrust jurisprudence . . . .”

A separate statement by Commissioner Rosch identifies several examples of how courts have curtailed antitrust enforcement against conduct that may be harmful to consumers:

  • Courts frequently admonish that the antitrust laws protect competition, not competitors.  But in a highly concentrated market, harm to competitors may itself harm competition.
  • Courts are often reluctant to condemn practices that decrease innovation without necessarily raising prices.  But decreased innovation can harm consumer welfare every bit as much as monopoly pricing.
  • Many courts have disparaged as “mere monopoly broth” claims based on a course of conduct whose constituent elements do not each themselves amount to antitrust violations.  But acts that by themselves may be innocuous may have consequences in conjunction that are greater than the sum of their individual effects.
  • Some cases have suggested that a monopolist’s intent is not relevant to the legality of its conduct.  But what the monopolist hoped to achieve may be a very good indicator both of the likely consequences of its actions, and of the plausibility of its justifications for undertaking them.

In bringing unfair competition as well as monopolization claims against Intel, the FTC is setting up a test of its enforcement authority against harmful conduct that the lately-diminished antitrust laws may not reach.  As an advocate of vigorous antitrust enforcement, I am not sure if I am more heartened by the FTC’s broad assertion of its mandate than I am discouraged at its acknowledgment that the state of the antitrust laws may have made that assertion necessary.

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