In spite of Barack Obama’s tepid vow to reduce the burden of government regulation, Federal Trade Commission Chairman Jon Leibowitz — who manages to remain in power even though his term expired four months ago — has vowed an aggressive expansion of his agency’s control over the US economy. Leibowitz told Bloomberg News that he is intentionally suing businesses so he can obtain precedential court rulings to affirm FTC aggression:
Leibowitz said yesterday he wants the courts to validate his view that a key part of the law that created the FTC gives it authority to go after companies that engage in a broad range of antitrust violations.
“We would like to see it tested by appellate courts because we think the legislation, the plain language of the legislation, makes it crystal clear that our jurisdiction goes beyond the antitrust laws,” he said in an interview with Bloomberg News.
The FTC set up a legal showdown when it sued Intel, claiming the world’s largest chipmaker used threats and retaliation to block customers from buying competitors’ products. While Intel and some business groups and antitrust lawyers said the FTC was overstepping its bounds, the settlement avoided a court-approved precedent.
[ ... ]
Santa Clara, California-based Intel settled the FTC case in August by agreeing not to use threats, retaliation or exclusive deals to block customers from buying competitors’ products.
The FTC in the case invoked what is known as Section 5 of the law that established the agency in 1914 to go beyond what is specifically banned by other federal antitrust statutes. U.S. courts since the mid-1970s generally have limited what is illegally anticompetitive under those laws.
[ ... ]
On health care, Leibowitz said the FTC is making controlling costs a higher priority. The agency is targeting deals in which brand-name drugmakers pay generic manufacturers to stay out of the market, resulting in higher prices, he said. It also is looking at the effect that hospital mergers have on health-care costs, he said.
Leibowitz said legislation opposed by the pharmaceutical industry to restrict agreement between generic and brand-name manufacturers has a “very good chance” of winning congressional approval. The Senate last year blocked the measure, which has been passed in the House.
All this means is that antitrust lawyers — Leibowitz’s real constituency — will continue to get richer as businesses struggle to survive and serve the market. We can look forward to new layers of FTC price controls, restrictions on technology R&D, and an increase in patent litigation (as Leibowitz wants to ban settlements).
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9 Responses
The FTC wants to assert authority by itself that would allow it to regulate the entire US economy, but I’m afraid I don’t see such a power grab as being fuelled by antitrust lawyers specifically. Rather, it seems a piece of the liberal agenda to use the federal government to check public companies that the Bush administration’s Sarbanes-Oxley ‘reforms’ tended to remove from state regulation and to protect by raising barriers to entry.
Libertarians who object to this would do well to consider actively promoting forms of business organization that do not embed as much moral hazard and invite as much government oversight as limited liability corporations.
TT
That’s interesting; I never thought of Big Pharma paying the makers of generics to stay out of the market, driving up prices (assuming it’s true). Since part of the anti-IP case is the freeing-up of generics so that drug prices can come down, what would be the libertarian position on a corporation who pays competitors to keep out of the market, so that they can maintain artificially high prices even on items which no longer have patent protection?
If it produces wealth, the state will want to take it away. We can patch for the state’s excuses for doing so but the only way to destroy the behavior is to remove the state itself.
I don’t see the problem with it. The payoff required to keep the generic companies off the market is always greater than whatever the companies perceive as the potential profit in entering the market themselves. If the big pharma companies can afford to pay them off without it cutting too much into their own profits, then there wouldn’t be much gain in the generics entering the market anyway.
The ultimate cap on market price is the customer’s willingness to pay, and no businessman can escape THAT box, no matter how strong of a “monopoly” they hold.
Just to clarify: These settlements don’t keep generics off the market. They merely delay entry until a specified date.
Ah, that does change things quite a bit IMHO. Thank you for the clarification.
Leibowitz’s wife is Ruth Marcus, all-powerful editor at the Washington Post (and the biggest big government shill around town).
Meanwhile, FTC and FCC and state utility commissions continue to prevent out-breaks of competition.
That’s not just the best asnrwe. It’s the bestest answer!