5/13. Carl Shapiro, Deputy Assistant Attorney General for Economics at the Department of Justice's (DOJ) Antitrust Division gave a speech to the American Bar Association titled "Competition Policy in Distressed Industries".

Shapiro is an economics professor on leave from the University of California at Berkeley. He is also the senior official at the Antitrust Division with the most confidence in economic analysis as the basis for antitrust policy. He argued in this speech that neoclassical economic analysis should continue to be applied by antitrust regulators in the context of distressed industries, such as in the financial sector.

However, he added a caveat for exclusionary behavior involving "innovative new products and services".

This caveat, combined with DOJ's announcement on May 11, 2009, that it has withdrawn the DOJ's single firm conduct report, and the DOJ's and Federal Trade Commission's (FTC) reaction to the European Commission's announcement last week that it will fine Intel one billion euros, suggest that successful technology based companies, including those that have developed new technologies and business models, and created new markets, have reason to be concerned about future hostile DOJ actions.

Shapiro began with the statement that "the crisis in the financial sector primarily reflects a failure of government regulation, not any underlying failure in the ability of well-regulated competitive markets to serve consumers and promote economic growth". He added that "While the current crisis has caused many to lose faith in the market, that is not at all my reaction. As an industrial organization economist who has devoted much of his research career to studying the interaction between government and business, I regret to say that the recent problems in the financial sector do not fundamentally surprise me."

"Nor does the current crisis call into question the basic utility of neoclassical microeconomics for understanding how firms behave and how markets perform", said Shapiro. "In particular, notwithstanding great advances in the field of behavioral economics, I have seen nothing in the past year that would cause me to depart from the tried and true working assumption in antitrust economics that for-profit firms generally seek to maximize profits and that this quest usually benefits the public in a myriad of ways. Adam Smith's teaching in this respect remains as valid as ever."

But, he added that "this does not by any means imply profit-maximizing firms are always acting in the public interest, Adam Smith's famous invisible hand notwithstanding. Indeed, much of industrial organization economics involves the study of markets in which firms have market power, where Adam Smith understood full well that business interests often depart from those of the public."

He elaborated that unlike other areas of government regulation, "Competition policy primarily addresses the problem of market power." He continued that "While antitrust analysis needs to take account of all applicable regulations, it unabashedly embraces the virtues of competition as a method of allocating resources, given those regulations. The current crisis provides no basis for wavering from this core principle."

He did not reference other antitrust regulators. For example, the Federal Communications Commission (FCC), which conducts antitrust merger reviews for some of the transactions that involve FCC licenses. In some transactions, its primary purpose is to obtaining policy objectives wholly unrelated to competition.

Also, Shapiro's general statements regarding neoclassical economics may not be shared with enthusiasm by Varney and the recently named Assistant Attorneys General other than Shapiro.

Shapiro's speech focused on distressed industries. The information technology (IT) and communications sectors are not distressed.

Moreover, Shapiro added a few comments at the end of his speech that may suggest that the DOJ will not rely upon neoclassical economic theory when it comes to IT companies. He stated that "today's smaller, newer firms may have the strongest incentives to disrupt the status quo. They also may offer innovative new products and services, so long as they can gain a presence in the market and grow large enough to reach minimum viable scale."

He continued that "new and innovative firms may be especially susceptible during a recession to exclusionary tactics by dominant firms. Under the leadership of Assistant Attorney General Christine Varney, the Antitrust Division will vigilantly enforce the antitrust laws to prevent monopolists from maintaining their monopoly power by engaging in predatory or exclusionary behavior".

A footnote to the speech contains a notable statement: "market power can itself result from imperfect information".

Shapiro added in another footnote that "I am grateful to Wayne Dunham and Ken Heyer for their assistance in preparing this speech. I have greatly benefited from discussions of these issues over the years with Jonathan Baker, Joe Farrell, Bill Kovacic, and Steve Salop." Dunham and Heyer are DOJ economists. Baker is a law professor at American University. Farrell is a UC Berkeley colleague of Shapiro now working as chief economist at the FTC. Kovacic is an FTC Commissioner. Salop is a law professor at Georgetown University.

5/14. The Federal Trade Commission (FTC) announced in a May 14 release that it has dismissed the administrative complaint in the Rambus matter. See also, Order of May 12, 2009.

Richard Feinstein, Director of the FTC's Bureau of Competition, stated in this release that "While we remain disappointed by the decision of the Court of Appeals, we of course respect the Court’s opinion and will move forward ... The standard-setting issues that were at the heart of this case remain important, both as a matter of antitrust policy, and in order to protect consumers, and we will remain vigilant in this area."

The Supreme Court denied the FTC's petition for writ of certiorari earlier this year.

This is an antitrust matter regarding Rambus's participation in the JEDEC standards setting process (which set technical standards for a form of computer memory known as synchronous dynamic random access memory or SDRAM) and subsequent assertion of patent rights.

For select TLJ coverage, see:

• story titled "FTC Files Administrative Complaint Against Rambus" in TLJ Daily E-Mail Alert No. 455, June 20, 2002
• story titled "FTC Holds That Rambus Unlawfully Monopolized Markets" in TLJ Daily E-Mail Alert No. 1,427, August 8, 2006.
• story titled "Court of Appeals Rules in Rambus v. FTC" in TLJ Daily E-Mail Alert No. 1,752, April 23, 2008.
• story titled "Supreme Court Denies Cert in Rambus Case" in TLJ Daily E-Mail Alert No. 1,903, February 24, 2009.

See also, FTC web page with hyperlinks to pleadings.

5/14. Federal Communications Commission (FCC) Chairman Michael Copps gave a vaguely worded speech [PDF] in Washington DC at an event titled "Free Press Summitt: Changing Media". He discussed journalism, media, information, reform, and Shakespeare's Hamlet. Copps argued that "we need more regulation" of online speech.

Copps (at right) stated that "In communications, will ``old media´´ stalwarts like newspapers and broadcasting simply disappear -- or will they adapt and survive? How about journalism? Will anyone figure out a business model to support in-depth, investigative journalism -- or must we develop something completely new, perhaps based on philanthropy, non-profit models or public media?"

He also said that "A democracy runs on information. Information is how we make intelligent decisions about our future and how we hold the powerful accountable. Deprive citizens of relevant, accurate, and timely information and you deprive them of their ability to govern themselves."

Copps argued that there are problems with journalism that must be addressed by reform. He identified several causes, including "mindless deregulation", a "tsunami of consolidation", "hyper-commercialism", and the advent of the internet and bloggers.

He argued that "we may be losing journalism. Some blame the Internet and bloggers, and that’s certainly a part of the story. But the problems started way before that. All that consolidation and mindless deregulation, rather than reviving the news business, condemned us to less real news, less serious political coverage, less diversity of opinion, less minority and female ownership, less investigative journalism and fewer jobs for journalists." (Emphasis in original.)

He added that "The Fairness Doctrine is long gone and it’s not coming back".

But, he did advocate some avenues for reform. He said that "we still need to get serious about defining broadcasters’ public interest obligations and reinvigorating our license renewal process."

He also said that he has supported network neutrality, and "will be working for a Fifth Principle of Non-discrimination to be one of the first fruits of our reconstituted FCC." He argued that policy should "make sure that the sins visited upon old media are not permitted to deny the promise of new media."

He also called for unspecified new regulation of online speech. He said that "Certainly we need more regulation".

"Historically, government regulation has been based on some sort of licensing relationship or statutory directive", said Copps.

"But how does that apply to the online world, where websites not only are not licensed, but they may not even be in the United States? And what if the new media fail to provide the things we care about—the things we need? How do we advance those interests in ways that are effective and respectful of constitutional and jurisdictional boundaries? How do we accomplish our goals as a free society while making sure we don’t impinge the potential of these open and dynamic new technologies?" (Emphasis in original.)

Copps did not describe how he proposes to regulate online speech.

Copps also discussed Shakespeare's play titled "Hamlet". Copps stated, "But if we focus too much on the questions it can leave us paralyzed. Just ask Prince Hamlet. We need to act thoughtfully, yes; but we need to act -- and I mean act while the tide runs in our direction. Shakespeare again -- I think he said something about taking the tide at its flood or else being bound in shallows and misery." (Emphasis in original.)

TLJ Comment. Hamlet was a reformer. He saw an illegitimate and corrupt government, and sought to replace its leaders, and reform its activities. He hesitated, but finally acted. When he did, he killed the prime minister, killed the king, killed others, and precipitated the deaths of still more. Meanwhile, a foreign warlord, and his "list of lawless resolutes" (Act I, Scene 1), marched in and took over the country. Hamlet accomplished nothing. (This same could be said of Brutus in Shakespeare's Julius Caesar.)

But, Hamlet died with journalism on his mind. His dying words included "report me and my cause aright", "tell my story", and "I cannot live to hear the news ..." (Act V, Scene 2).

Perhaps Copps merely sought to prompt would be reformers to press the federal government to change. It is less likely that he also intended that his audience grasp Shakespeare's message. That is, those who attempt to reform an existing order often fail, and sometimes, like Hamlet and Brutus, tragically and dramatically. Moreover, their failed efforts sometimes have unintended consequences, such as providing openings for opportunistic third parties.

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This issue contains the following items:
 • DOJ's Shapiro Discusses Antitrust Policy
 • FTC Dismisses Rambus Complaint
 • Copps Discusses Journalism and Regulation

The House will meet at 12:30 PM for morning hour debate, and at 2:00 PM for legislative business. Votes postponed until 6:30 PM. The House will consider numerous non-technology related items under suspension of the rules. See, Rep. Hoyer's schedule for week of May 18.

The Senate will meet at 2:00 PM for morning business.

9:30 AM - 5:30 PM. The Copyright Office (CO) and the U.S. Patent and Trademark Office (USPTO) will hold a hearing regarding facilitating access to copyrighted works for blind or disabled people. See, notice in the Federal Register, March 26, 2009, Vol. 74, No. 57, at Pages 13268-13270. Location: Montpelier Room, Library of Congress, James Madison Building, 6th Floor, 101 Independence Ave., SE.

5:00 PM. Deadline to submit applications to the National Telecommunications and Information Administration (NTIA) regarding certain digital television Distributed Transmission System (DTS) projects. See, original notice in the Federal Register, October 20, 2008, Vol. 73, No. 203, at Pages 62258-62259; further notice in the Federal Register, December 9, 2008, Vol. 73, No. 237, at Page 74709; and the FCC's DTS Report and Order [56 pages in PDF], adopted on November 3, 2008, and released on November 7, 2008, FCC 08-256 in MB Docket No. 05-312.

5:00 PM. Extended deadline to submit applications to the National Telecommunications and Information Administration (NTIA) for the Public Telecommunications Facilities Program (PTFP) replacement digital television translator projects. See, notice in the Federal Register, January 30, 2009, Vol. 74, No. 19, at Pages 5643-5644.

Day one of a two day conference hosted by the National Institute of Standards and Technology (NIST) and other government agencies titled "Safeguarding Health Information: Building Assurance through HIPAA Security". See, notice. Location: NIST, Building 101/Green Auditorium, 100 Bureau Drive, Gaithersburg, Maryland.

Extended deadline to submit applications to the Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) for grants under the Public Telecommunications Facilities Program (PTFP). The Omnibus Appropriations Act, 2009, Public Law No. 111-8, appropriated $18 Million for the PTFP. See, notice in the Federal Register, April 8, 2009, Vol. 74, No. 66, at Page 15943.

The House will meet at 10:30 AM for morning hour debate, and at 12:00 NOON for legislative business.  The agenda for the week includes consideration of HR 1676 [LOC | WW], the "Prevent All Cigarette Trafficking Act of 2009" or "PACT Act". See, Rep. Hoyer's schedule for week of May 18.

10:00 AM. The Senate Judiciary Committee's (SJC) Subcommittee on Administrative Oversight and the Courts will hold a hearing titled "Leveling the Playing Field and Protecting Americans: Holding Foreign Manufacturers Accountable". Location: Room 226, Dirksen Building.

10:30 AM. The Federal Trade Commission's (FTC) Bureau of Economics (BOE) will host a seminar by Luke Froeb (Vanderbilt University) on his paper titled "An Equilibrium Analysis of Antitrust as a Solution to the Problem of Patent Hold-Up". He is an economist, and a former Director of the FTC's BOE. Location: FTC, Conference Room A, New Jersey Ave. Building.

11:00 AM. The Senate Commerce Committee (SCC) will hold a hearing on pending nominations, including Lawrence Strickling to be head of the National Telecommunications and Information Administration (NTIA), Aneesh Chopra to be Chief Technology Officer in the Office of Science and Technology Policy (OSTP), and Rebecca Blank to be the Department of Commerce's Under Secretary for Economic Affairs. See, notice. Location: Room 253, Russell Building.

CANCELLED. 2:00 - 3:30 PM. The Department of Justice's (DOJ) Antitrust Division will host a seminar conducted by Luke Froeb (Vanderbilt University) on his paper titled "An Equilibrium Analysis of Antitrust as a Solution to the Problem of Patent Hold-Up". To request permission to attend, contact Patrick Greenlee at 202-307-3745 or atr dot eag at usdoj dot gov. Location: Bicentennial Building, 600 E St., NW.

2:30 PM. The Senate Judiciary Committee (SJC) will hold a hearing titled "The Discount Pricing Consumer Protection Act: Do We Need to Restore the Ban on Vertical Price Fixing?". Sen. Herb Kohl (D-WI) will preside. See, notice and June 28, 2007, opinion [55 pages in PDF] of the Supreme Court (SCUS) in Leegin Creative Leather Products v. PSKS, an antitrust case regarding minimum resale price maintenance by manufacturers and intermediate distributors. It impacts the marketing of some consumer IT and electronic products. See also, story titled "SCUS Holds That All Vertical Price Restraints Are Subject to Rule of Reason" in TLJ Daily E-Mail Alert No. 1,603, June 28, 2007. Location: Room 226, Dirksen Building.

Day two of a two day conference hosted by the National Institute of Standards and Technology (NIST) and other government agencies titled "Safeguarding Health Information: Building Assurance through HIPAA Security". See, notice. Location: NIST, Building 101/Green Auditorium, 100 Bureau Drive, Gaithersburg, Maryland.

The House will meet at 10:00 AM for legislative business. The agenda for the week includes consideration of H 1676 [LOC | WW], the "Prevent All Cigarette Trafficking Act of 2009" or "PACT Act". See, Rep. Hoyer's schedule for week of May 18.

9:30 AM. The Senate Homeland Security and Government Affairs Committee (SHSGAC) will meet to consider several pending nominations, including Cass Sunstein (to be head of the OMB's Office of Information and Regulatory Affairs) and David Heyman (to be Assistant Secretary at the DHS). See, notice [PDF]. Location: Room 342, Dirksen Building.

10:00 AM. The House Judiciary Committee (HJC) will hold a hearing on the Federal Bureau of Investigation (FBI). The HJC will webcast this event. See, notice. Location: Room 2141, Rayburn Building.

10:00 AM. The Securities and Exchange Commission (SEC) will hold a meeting to consider changes to the federal proxy rules to facilitate director nominations by shareholders. See, notice. Location: SEC, Auditorium (Room L-002).

12:00 NOON - 2:00 PM. The DC Bar Association will host a brown bag lunch titled "Standards & Patents: Living with Contradictions". The speaker will be Donald Purcell. He will discuss the DC Circuit's April 22, 2008, opinion [24 pages in PDF] in Rambus. v. FTC, 522 F.3d 456, the Federal Circuit's December 1, 2008, opinion [40 pages in PDF] in Qualcomm v.  Broadcom, 548 F.3d 1004, and the 3rd Circuit's September 4, 2007, opinion [39 pages in PDF] in Broadcom v. Qualcomm, 501 F.3d 297. See also, story titled "Supreme Court Denies Cert in Rambus Case" in TLJ Daily Alert No. 1,903, February 24, 2009; story titled "Court of Appeals Rules in Rambus v. FTC" in TLJ Daily E-Mail Alert No. 1,752, April 23, 2008; story titled "Federal Circuit Affirms in Qualcomm v. Broadcom" in TLJ Daily E-Mail Alert No. 1,865, December 2, 2008; and story titled "3rd Circuit Rules that Deception of SDO Can Give Rise to Claims for Violation of Sherman Act" in TLJ Daily E-Mail Alert No. 1,635, September 7, 2007. The price to attend ranges from $10 to $20. See, notice. The DC Bar Association has a history of excluding persons from its events. For more information, call 202-626-3463. Location: D.C. Bar Conference Center, B-1 Level, 1250 H St., NW.

1:00 PM. The President's Economic Recovery Advisory Board will hold its first meeting. See, notice in the Federal Register, May 5, 2009, Vol. 74, No. 85, at Pages 20779-20780. Location: White House, 1600 Pennsylvania Ave.,  NW.

2:00 PM. The House Appropriations Committee's (HAC) Subcommittee on Financial Services will hold a hearing on appropriations for the Office of Management and Budget (OMB). The HAC will webcast this event. Location: Room 2359, Rayburn Building.

TIME? The U.S.-China Economic and Security Review Commission will hold a meeting titled "China in Asia, with particular focus on Pakistan, and the former Soviet Republics in Asia: Economic and security issues and implications for the United States". Location: Room __, Dirksen Building, Capitol Hill.

6:00 - 8:15 PM. The Federal Communications Bar Association (FCBA) will host an event titled "Hot Topics in FCC Enforcement". The first panel is titled "Current FCC Enforcement Topics: Indecency, Payola, the Omnibus CPNI NAL and Other Substantive FCC Enforcement Initiatives". The speakers will be Tom Davidson (Akin Gump), John Fiorini (Wiley Rein), and Jon Frankel (Bingham McCutchen). The second panel is titled "Important FCC Enforcement Procedural Issues for Practitioners: Consent Decree Negotiations, Tolling Agreements, Escrow Agreements, and Statute of Limitations Issues and Interpretations". The speakers will be Kathryn Berthot (Chief of the FCC's Enforcement Bureau's Spectrum Enforcement Division), Mace Rosenstein (Covington & Burling), and Irene Flannery (FCC's EB's Investigations and Hearings Division). The price to attend ranges from $25 to $150. Location: Bingham McCutchen, 2020 K St., NW.

Extended target date in the U.S. International Trade Commission's (USITC) Section 337 proceeding titled "In the Matter of Certain Semiconductor Chips With Minimized Chip Package Size and Products Containing Same" and numbered 337-TA-605. See, notice in the Federal Register, April 1, 2009, Vol. 74, No. 61, at Pages 14820-14821.

Deadline to submit certain initial comments to the Federal Communications Commission (FCC) in response to its supplemental Notice of Inquiry [22 pages in PDF] regarding its preparation of a video competition report for the years ending June 30, 2007, June 30, 2008, and June 20, 2009. This deadline pertains to comments regarding 2007 and 2008. See, notice in the Federal Register, April 27, 2009, Vol. 74, No. 79, at Pages 19085-19091. See also, story titled "FCC Resumes Its Statutory Obligation to Study Video Competition" in TLJ Daily E-Mail Alert No. 1,886, January 21, 2009, and story titled "FCC Releases Amended NOI on Annual Video Competition Reports" in TLJ Daily E-Mail Alert No. 1924, April 11, 2009.

The House will meet at 10:00 AM for legislative business. See, Rep. Hoyer's schedule for week of May 18.

8:00 AM. The Federal Aviation Administration's (FAA) Commercial Space Transportation Advisory Committee will meet. See, notice in the Federal Register, April 13, 2009, Vol. 74, No. 69, at Page 16914. Location: FAA Headquarters Building, Bessie Coleman Conference Center, 2nd floor, 800 Independence Ave., SW.

10:00 AM. The Senate Judiciary Committee (SJC) may hold an executive business meeting. The agenda again includes consideration of S 417 [LOC | WW], the "States Secret Protection Act", and HR 985 [LOC | WW] and S 448 [LOC | WW], both titled the "Free Flow of Information Act of 2009". See, stories titled "Senate Judiciary Committee to Consider State Secrets Bill" and "9th Circuit Rules in State Secrets Case" in TLJ Daily E-Mail Alert No. 1,933, April 29, 2009. The agenda also includes consideration of the nominations of David Hamilton to be a Judge of the U.S. Court of Appeals (6thCir), Andre Davis to be a Judge of the U.S. Court of Appeals (4thCir), and Thomas Perez to be Assistant Attorney General in charge of the Civil Rights Division. The SJC rarely follows its published agendas. The SJC will webcast this event. See, notice. Location: Room 226, Dirksen Building.

10:00 AM. The Senate Finance Committee (SFC) will hold a hearing titled "The U.S. - Panama Trade Promotion Agreement". See, notice. Location: Room 215, Dirksen Building.

2:30 PM. The Federal Trade Commission's (FTC) Bureau of Economics (BOE) will host a seminar by Chris Knittel (UC Davis). He is an economist, and co-author of the paper [76 pages in PDF] titled "Estimation of Random Coefficient Demand Models: Challenges, Difficulties and Warnings". Location: FTC Conference Center, 601 New Jersey Ave., NW.

The House will meet at 9:00 AM for legislative business. See, Rep. Hoyer's schedule for week of May 18..

Memorial Day. See, Office of Personnel Management's (OPM) list of 2009 federal holidays.

The House will not meet the week of May 25-29.

The Senate will not meet the week of May 25-29. See, Senate calendar.