The FTC’s Misguided Rationale for the Use of Section 5 in Sherman Act Cases

Geoffrey Manne, Feb 28, 2010

There is a real danger that the Federal Trade Commission (“FTC”) actually believes its stated rationale for bringing its case against Intel under Section 5 of the FTC Act. Frankly, I’d prefer if its arguments were just the callous and disingenuous post hoc rationalizations of a powerful agency, undeterred by effective oversight.But I fear this is not the case. While there may be good reasons for bringing some cases under Section 5, the reasons put forth by Chairman Leibowitz and Commissioner Rosch to explain the decision in Intel’s case reflect a worrisome disregard for the central role of the judiciary in constraining well-meaning-but-overly-confident technocratic enforcement and the fundamental role of error cost analysis in a well-ordered antitrust enforcement regime.

Commissioners Rosch and Leibowitz have been making noise about Section 5 for some time, and I think it likely that they saw the Intel case as the perfect opportunity to put Section 5 to the test—to make some new law that would favor the Commission in cases like this one where it “knows” there is injury but the Sherman Act case law makes prevailing difficult. They have found their case for bolstering the role of Section 5 in FTC enforcement, and Intel, its shareholders, consumers, and competition generally will suffer mightily for their hubris. And, in the end, the Commission may suffer as well.