1 1 FEDERAL TRADE COMMISSION 2 3 4 COMPETITION AND CONSUMER PROTECTION 5 IN THE 21ST CENTURY 6 7 8 9 10 11 12 Friday, September 21, 2018 13 9:00 a.m. 14 15 16 17 Federal Trade Commission 18 400 7th Street, S.W. 19 Washington, D.C. 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 2 1 FEDERAL TRADE COMMISSION 2 I N D E X 3 4 5 ORAL ARGUMENT PAGE 6 Welcome and Introductory Remarks 7 By Commissioner Rebecca Slaughter 6 8 9 Opening Address by Joseph E. Stiglitz 13 10 11 Remarks by William C. Kovacic 36 12 13 Panel 1: The State of U.S. Antitrust Law 53 14 15 Panel 2: The State of Antitrust Law 126 16 17 Panel 3: Monopsony & Buyer Power 204 18 19 Closing Remarks by 20 Commissioner Maureen K. Ohlhausen 272 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3 1 P R O C E E D I N G S 2 - - - - - 3 MS. MUNCK: All right. Good morning, and 4 welcome to the FTC's second session of our hearings on 5 Competition and Consumer Protection in the 21st 6 Century. My name is Suzanne Munck, and I am the Deputy 7 Director of the Office of Policy Planning, and on 8 behalf of the FTC and all of my colleagues, I'd like to 9 welcome everyone who is joining our session in person 10 and via webcast. 11 And I would like to give my special thanks and 12 gratitude to our tremendous panels that we will have 13 today, including Nobel Laureate Professor Joseph 14 Stiglitz, who is one of the probably most esteemed 15 critics of approaches to antitrust in the modern 16 economy; and also our Former Chairman and Former 17 Commissioner, William Kovacic. So thank you very much 18 to everyone who is participating today. We are very 19 grateful for your time. 20 Before we get started, it is my job to run 21 through a few housekeeping announcements. First, if 22 you have your mobile phone with you, please silence it 23 today. We are very grateful for that. 24 Second, if you leave the Constitution Center 25 today for any reason, you'll have to go back through For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 4 1 the security screening again. So please keep that in 2 mind as you're scheduling the time for coffee, et 3 cetera. 4 Most of you have received a lanyard with the 5 FTC event security badge. We recycle those. So if you 6 wouldn't mind giving that back at the end of the day, 7 we would be very grateful. 8 If there is an emergency that occurs that 9 requires you to leave the Constitution Center but 10 remain in the building, follow the instructions 11 provided over the PA. If you have to evacuate the 12 building, an alarm will sound. Everyone should leave 13 the building in an orderly manner through the main 7th 14 Street exit; that's where you entered. After leaving 15 the building, turn left and proceed down 7th Street and 16 across E to the FTC emergency assembly area. You can 17 also just look for me or any other FTC staff and we 18 will make sure to guide you in the right direction. 19 If you notice any suspicious activity today, 20 please alert security. And please be advised that the 21 event is photographed, webcast, and recorded. By 22 participating in this event, you are agreeing that your 23 image and anything you say or submit may be posted 24 indefinitely at ftc.gov or on one of the Commission's 25 publicly available social media sites. For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 5 1 Restrooms are located in the hallway just 2 around the corner. If you need anything, please ask 3 any of the FTC staff; we're happy to help you. And we 4 have a cafeteria onsite that closes at 3:00 p.m. 5 So with that housekeeping, it is now my 6 tremendous pleasure to introduce Commissioner Kelly 7 Slaughter, then to hear from the panelists today. 8 Thank you very much. 9 (Applause.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 6 1 WELCOME AND INTRODUCTORY REMARKS 2 MS. SLAUGHTER: Thank you, Suzanne, and thank 3 you to all of you. It's so nice to be here today. I 4 am pleased and privileged to be opening our second day 5 of hearings on Competition and Consumer Protection in 6 the 21st Century. I have long been interested in how 7 policymakers tackle complicated questions about the 8 challenges and opportunities posed by new technologies. 9 In fact, as an anthropology major, I wrote my 10 college thesis on the first set of congressional 11 hearings on genetic engineering in the early 1980s. I 12 conducted a detailed and sophisticated analysis of the 13 language that members and witnesses used in those 14 hearings and reached a staggering conclusion: everyone 15 came into that exercise with their minds made up. 16 As an anthropology student who had no 17 experience in government at the time, I was shocked by 18 this conclusion, but now, with the benefit of a decade 19 of experience working in Congress under my belt, my 20 insightful deduction feels more like a statement of the 21 staggeringly obvious. 22 I bring up this story because the hearings we 23 are now convening have a similar backdrop to those 24 genetic engineering hearings in the early eighties. 25 Technological innovation has raised serious and For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 7 1 important questions of law and policy, and I can 2 understand why those familiar with the ways of 3 Washington might be suspicious that there is a 4 predetermined outcome or a desire to simply endorse the 5 status quo. 6 However, I believe this moment is different. 7 These hearings are not a project of reaffirming our 8 current policies and practices. To the contrary, they 9 must be a critical rethink of what we do, how we do it, 10 and what we should do differently or better to advance 11 the FTC's mission of protecting consumers and promoting 12 competition. If, at the end of the day, we appear to 13 be merely patting ourselves on the back for a job well 14 done thus far, we will have failed. 15 This is an extremely exciting moment to be at 16 the FTC. Technological innovation is not only 17 affecting our traditional work in both competition and 18 consumer protection, it is blurring the line between 19 our two traditionally distinct missions. As we heard 20 on the first day of these hearings, there is 21 substantial evidence that markets and sectors are 22 becoming increasingly concentrated across the economy. 23 At the same time, they are becoming 24 increasingly technologically dependent. Technology is 25 no longer simply an industry. It is a part of every For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 8 1 industry. As a result, it is relevant in more and more 2 matters before the Commission. 3 Privacy and data security might come to mind 4 first, but the FTC consumer protection staff also grapples 5 with the implications of technology when tackling 6 cryptocurrencies, online marketing, data throttling, 7 tech support scams, thin tech, and even robocalls. 8 On the competition side, we have also long had 9 to keep pace with technological advancement. We are 10 seeing more and more mergers and conduct matters with 11 technology-related issues, such as data collection, 12 intellectual property, and network effects. And as 13 consumers become data commodities themselves, the 14 nature of competition has been evolving as well. 15 What is even more interesting to me is how 16 these questions about competition and consumer 17 protection no longer happen in isolation. Addressing a 18 legal question on one side often has profound 19 implications for the other. Consider a hypothetical 20 merger between two companies which each control 21 substantial consumer data. What are the privacy and 22 security implications of that rollup? Consider also 23 the consequences for consumers when limited competition 24 means there is no meaningful choice about whether to 25 patronize a company that may not prioritize user For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 9 1 privacy. 2 Policy changes on the consumer protection side 3 have competition implications as well. How could 4 effective data portability help facilitate entry and 5 competition while sufficiently protecting privacy? 6 Will new privacy regulations have the unintended 7 consequence of stifling innovation and entrenching 8 incumbents? 9 The FTC is uniquely well positioned to tackle 10 these issues with thoughtful attention to their 11 interplay. Many other jurisdictions have completely 12 different agencies to address privacy, consumer 13 protection, and competition missions. The FTC is 14 somewhat anomalous because these issue sets are all 15 housed under our single umbrella. It is incumbent on us 16 to take advantage of our structure and expertise to meet 17 this economic moment.