Abuse of Economic Dependence - The Centre for European Policy ...

How to Rectify the Gap 85
An argument can be made that the Commission by rectifying this gap,
will have much wider discretion in the investigations that it initiates and
that may cause firms to be less resilient in their product development. We
should echo Leary’s (ex-FTC Commissioner) argument 24 in relation to
section 5 of the FTC Act, which as abovementioned addresses the anticompetitive
conduct that cannot be addressed by the Sherman Act. 25 Leary
(2008) notes that section 5 should not be employed simply as ‘an easier
path that might lead to more short-term victories’.
In this respect we should also emphasize Commissioner’s Leibowitz
arguments as regards the applicability of section 5. He argues that the
FTC’s ‘powers to restrict unfair methods of competition, consistent with
Congressional intent, should only extend to those anti-competitive schemes
or practices that harm consumers. It should not be enough for the
Commission to show just that a firm acted inconsistently with normally
acceptable business behavior, because Congress did not create the
Commission to be a national nanny or to mediate between firms that can
generally protect themselves where consumers are not at risk. At the same
time, however, the Commission should not be tied to the more technical
definitions of consumer harm that limit applications of the Sherman Act
when we are looking at pure Section 5 violations. ’26
Apparently, and correctly, the FTC is curtailing its discretion of applying
Section 5 of the FTC Act and applies it to those anti-competitive schemes
or practices that harm consumers. The Commission is likely to adopt a
similar discretion and will not ‘disproportionately’ apply Article 82 to the
conduct of non-dominant undertakings. The Commission has already
‘proved’ the ‘careful’ approach towards the applicability of the new ECMR
on anti-competitive mergers. Although concerns on the Commission’s wider
discretion had been raised prior to its adoption, the Commission four years
after the new ECMR has not ‘disproportionately’ applied the new ECMR.
Rather the new ECMR (and the new test which does not depend on dominance)
has significantly improved the Commission’s accuracy and efficiency
in merger assessment.
Importantly the concern of expansive discretion of the Commission relates
to a possible mitigation in the innovation in which firms would be involved
in, for fear of being found to have adopted an anti-competitive conduct.
Higher innovation by firms may lead to higher quality products and thus
enhance consumer welfare. Whether the anti-competitive conduct, eg price
24 T Leary, ‘The Search for Consensus on the Revival of Section 5’, FTC Workshop on
Section 5, 17 October 2008, www.ftc.gov.
25 Thus, section 5 addresses a gap identical to the gap in the application of Article 82 that
cannot be addressed by the Commission.
26 J Leibowitz, ‘Tales from the Crypt’, FTC Workshop on Section 5, 17 October 2008,
www.ftc.gov.