FTC Chairman Defends Google Settlement, Section 5 Authority to Senate Antitrust Subcommittee

Will the FTC’s handling of the Google settlement affect the way it regulates going forward, asked Subcommittee Ranking Member Mike Lee, R-Utah. Accepting voluntary commitments rather than a consent order on claims that the company biases in favor of its own products in its search results “may represent a break from decades of commission practice,” he said. “I worry a little bit about the precedent that that decision might set.” Lee also said he was concerned that the agency will not be able to enforce the settlement if Google violates its voluntary agreements.

"What transpired in the Google matter does not change the practices of the commission,” Ramirez responded. Though she shares Lee’s concerns “that voluntary commitments will create confusion,” Ramirez said the decision “should not be considered a precedent.” Ramirez said she expects that Google will fulfill its commitments to the agency, and “the agency will take appropriate action if Google does not.”

Patent assertion entities (PAEs) “could potentially have a negative effect on competition and consumer welfare,” Subcommittee Chairman Amy Klobuchar, D-Minn., said, asking what the agency is doing to examine how these so-called patent trolls affect competition. “We do feel this is an area that warrants additional study,” Ramirez said, pointing to last year’s workshop on the topic, which was held with the Department of Justice. Ramirez said the agency is examining whether PAEs help small companies enforce their intellectual property rights “or whether this ends up being a tax on innovation."

Klobuchar asked Ramirez about technologies involving standard essential patents that are prevented from coming to the market through injunctions, especially at the International Trade Commission. “Standardizations of technology and essential patents have been critical to the development” of high-tech markets, she said. “Injunctive relief generally … has the ability to deter innovation and competition and investment in standard compliant products,” regardless of where those injunctions take place, Ramirez said. Companies make agreements to license standard essential patented technologies on fair, reasonable and non-discriminatory terms, and “any effort to renege on that commitment raises these risks” for companies seeking to license those patents and use those standardized technologies, she said.

Lee asked Ramirez to define the unfair business practices that the FTC is authorized to prosecute under Section 5 of the FTC Act. Without guidance from the FTC, businesses, and therefore consumers, face “additional and unnecessary costs,” he said. While the FTC should provide “clear enforcement criteria where they can,” authority to prosecute unfair business practices is “an area that is difficult to specify precisely what the outer bounds are,” Ramirez said. Despite what critics of the agency -- including Republican sitting Commissioners Maureen Ohlhausen and Joshua Wright -- have said, “I think that the agency has been using its Section 5 authority very rigorously and very judiciously,” she said.