On July 31 the FTC voted to withdraw its 2003 Policy Statement on Monetary Remedies in Competition Cases. Commissioner Ohlhausen issued her first dissent since joining the Commission, and points out the folly and the danger in the Commission’s withdrawal of its Policy Statement.
The Commission supports its action by citing “legal thinking” in favor of heightened monetary penalties and the Policy Statement’s role in dissuading the Commission from following this thinking:
It has been our experience that the Policy Statement has chilled the pursuit of monetary remedies in the years since the statement’s issuance. At a time when Supreme Court jurisprudence has increased burdens on plaintiffs, and legal thinking has begun to encourage greater seeking of disgorgement, the FTC has sought monetary equitable remedies in only two competition cases since we issued the Policy Statement in 2003.
In this case, “legal thinking” apparently amounts to a single 2009 article by Einer Elhague. But it turns out Einer doesn’t represent the entire current of legal thinking on this issue. As it happens, Josh Wright and Judge Ginsburg looked at the evidence in 2010 and found no evidence of increased deterrence (of price fixing) from larger fines:
If the best way to deter price-fixing is to increase fines, then we should expect the number of cartel cases to decrease as fines increase. At this point, however, we do not have any evidence that a still-higher corporate fine would deter price-fixing more effectively. It may simply be that corporate fines are misdirected, so that increasing the severity of sanctions along this margin is at best irrelevant and might counter-productively impose costs upon consumers in the form of higher prices as firms pass on increased monitoring and compliance expenditures. Continue reading →
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