NoCal Dems Urge FTC to Reconsider Using Section 5 Against Google

Say it would be an unwarranted expansion of its authority

By John Eggerton -- Broadcasting & Cable, 11/19/2012 3:23:54 PM

A pair of Democratic House members who represent Silicon Valley are concerned that the Federal Trade Commission is trying to stretch its antitrust powers in a way that is "unwarranted, unwise and likely to have negative implications for our nation's economy." They "strongly urged" the FTC to reconsider using Section 5 Authority.

Reps. Anna Eshoo, ranking member of the House Communications Subcommittee, and Zoe Lofgren, a member of the Judiciary Committee, are concerned that the FTC, in investigating Google over antitrust concerns, will use its Section 5 authority over unfair methods of competition if it cannot justify action under its enforcement of Section 2 of the Sherman Antitrust Act.

They were reacting to reports the FTC might take that route in a decision on Google's search and advertising businesses that is widely expected to be announced soon, with some reports that Google has already been put on notice by the FTC that it needs to make some changes or face an antitrust suit.

The legislators suggested that if the FTC were basing that on Section 5 authority it would be a massive expansion of FTC jurisdiction.

"Expanding the FTC's Section 5 power to include antitrust matters could lead to overbroad authority that amplifies uncertainty and stifles growth," they wrote. "These effects may be most acutely felt among online services, a crucial engine of job creation, where technological advancement and small business innovation are rapid."

But the FTC on its website advertises that it uses both sections in antitrust cases.

"In executing its antitrust law enforcement responsibilities, the Commission relies upon both Section 5 of the FTC Act -- which prohibits unfair methods of competition -- and a number of other antitrust statutes...[A]lthough the Commission cannot directly enforce the Sherman Act, it can prohibit -- as unfair methods of competition -- practices that violate Section 2 of the Sherman Act because they constitute monopolization of, an attempt to monopolize, or a conspiracy to monopolize a particular market."

The Dems' letter followed one last week from Republican House members also cautioning regulatory humility when it came to expanding Section 5. Those legislators did not mention Google by name, but it was clear they were responding to the same concerns.