Theory and Practice of Competition Advocacy at the Ftc

Abstract

This article was prepared as part of a recent symposium celebrating the Ninetieth Anniversary of the founding of the Federal Trade Commission. In addition, Fall 2004 marks the Thirtieth Anniversary of a pivotal moment in the establishment of the modern advocacy program at the FTC, Chairman Lewis Engman's speech on the economic burden that inefficient transportation regulation policies were imposing on the American economy. Although the FTC has been involved in advocacy activities since its founding, Engman's speech symbolized a new aggressiveness on the part of the FTC in using its expertise to work with other governmental actors at all levels of the political system and in all branches of government to design policies that further competition and consumer choice.

Notwithstanding the beneficial impact that advocacy activities have had on the economy, the fortunes of the advocacy program have waxed and waned over time. In part, these mixed fortunes may reflect a lack of fundamental grounding of advocacy within the core mission of the FTC. The advocacy program, moreover, often has been politically controversial, exposing the Commission to criticism from special interests, Congress, and other governmental actors.

This article explores the theory and practice of competition advocacy, with the goal of explaining why the advocacy program should be recognized as a core element of the Commission's mission. Advocacy can be used in conjunction with many of the FTC's other tools, and in many situations the judicious use of advocacy can provide a low-cost and effective alternative to other enforcement options. The advocacy program is a unique and cost-effective tool for carrying out this mission. Because consumers are disadvantaged in the political arena vis-a-vis industry, they are likely to be unable to stop anticompetitive regulation on their own. Antitrust immunities, moreover, sometimes put anticompetitive regulation beyond the reach of traditional enforcement. By providing a means for the FTC to represent consumers' interests directly in the policy-production mechanism, the advocacy program can overcome these two hurdles and provide protection for consumers at relatively low cost.

Keywords: Public Choice, Rent-Seeking, Antitrust Law & Policy

JEL Classification: K21, K23, H11, H70