The Brief Life of the Section 2 Report and the Uncertain Future of Bundled Discounts

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Daniel Crane, Jul 13, 2009

The death of the Section 2 report is a real shame. Many staff members at both agencies and many outsiders (myself included) put a significant amount of work into the hearings and the report. Contrary to the suggestion in the FTC’s dissenting statement, I saw no evidence that the hearings were stacked against more interventionist perspectives on Section 2. That certainly was not the case at the bundled discount hearings at which I testified. To the contrary, my general impression was that the hearings were constructive and made substantial progress toward agreement on some basic principles. Certainly, they lacked the rancor that characterized the release of the report. One of the important lessons coming out of the Section 2 report debacle is institutional. Despite the current rapprochement between the FTC and Antitrust Division, the skirmishing over the report left a sour taste in many mouths and may have been detrimental to the collective influence of the antitrust agencies. To be sure, if we are going to have a two-agency system (which I’m not sure we should—more on this in my upcoming book on the institutional structure of antitrust), including one agency that is supposed to be independent from the executive, legislative, and judicial branches, then we should expect constructive disagreement between the agencies. However, when both agencies jointly expend the resources to hold hearings on a subject, it is a major disappointment that they cannot find any common ground for a report even if it has to be somewhat watered down. And, yes, I would have preferred a watered down joint report that would have had at least some instructional value to courts and legislators than a strong report by one agency that is almost entirely neutralized by a sharp dissent from the other. The article is an adaption of a posting originally presented in a Section 2 Symposium on the blog site, Truth on the Market, available online at TruthOnTheMarket.