Competition Corner by Alden Abbott - the Europeans are coming for our IP... again.
Issue #16
It's been a busy month for all of us here at the Mercatus Center as we push back against bureaucrats’ and legislators’ latest attempted onslaughts against the competitive economy and its ability to deliver benefits for American consumers.
My colleagues Satya Marar, Christine McDaniel and I recently co-authored comments to the European Commission on its ill-advised proposal to give EU bureaucrats greater top-down influence in setting royalty rates for the use of Standard Essential Patents (SEPs). This move is sure to harm inventors and disincentivize investment in research and development of cutting-edge technologies, while conferring on bad actors greater leverage to infringe property rights.
Christine and I also recently provided our comments to the U.S. International Trade Commission on why compromising the intellectual property of American firms through the global TRIPS waiver on Covid-19 vaccine patents is unnecessary to help the world’s poor access to medicine, and is counterproductive in preparing to fight against the pathogens and pandemics of the future.
We also released my colleague Greg Werden’s working paper on unfair methods of competition under the FTC Act, and a policy brief critiquing the Federal government’s attempted blanket ban on noncompete agreements that I co-authored with Mercatus colleague Liya Palagashvili.
Public Interest Comments
The European Commission's Draft "Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents" is Unnecessary and Harmful
Alden Abbott, Satya Marar & Christine McDaniel, 23 May 2023
My colleagues and I made four points in our comments to the European Commission on its unprecedented proposal to regulate royalty rates on SEPs: (1) the proposal tackles a licensing regime for which there is scant evidence of a problem; (2) moreover, it would curtail incentives to invest in innovation and harm consumers, while undermining the international competitiveness of European economies; (3) it tasks the EU Intellectual Property Office with a task it is not equipped to perform adequately; and (4) it punishes European inventors to the benefit of the EU’s geopolitical rivals, and, in particular, China.
Alden Abbott & Christine McDaniel, 5 May 2023
Christine and I provided evidence to the U.S. International Trade Commission on the potential harms to current and future lifesaving medical innovations that are posed by the unnecessary proposal to waive IP rights for the purported goal of fostering access to Covid-19 medicines in developing nations.
Policy Briefs & Working Papers
The Problem with a Federal Ban on Noncompete Agreements
Alden Abbott & Liya Palagashvili, 23 May 2023
The Biden administration’s concerns over the purported harms caused by noncompete agreements have prompted the Federal Trade Commission (FTC) to propose a rule that would impose a blanket ban on these clauses. This proposal is plagued by significant legal and economic issues. Liya and I instead argue for a targeted approach requiring employers to inform prospective employees about these clauses prior to finalizing employment offers. This approach is likely to pass statutory cost-benefit requirements and represents sound economic policy.
Unfair Methods of Competition under Section 5 of the Federal Trade Commission Act: What Is the Intelligible Principle?
Gregory J. Werden, 10 May 2023
This working paper analyzes what members of Congress meant by the “intelligible principle” that they intended courts to apply when defining the conduct that the FTC is allowed to target and police under Section 5 of the FTC Act’s prohibition on unfair methods of competition. It examines how today’s courts would likely interpret the prohibition, and critiques the FTC’s 2022 policy statement on the prohibition.
Articles
UK Blocking of Microsoft-Activision Merger Is Anticompetitive and Anti-innovation | Truth on the Market
Alden Abbott, 4 May 2023
Last month, the United Kingdom’s Competition & Markets Authority (CMA) blocked Microsoft’s proposed vertical acquisition of video-game developer and publisher Activision Blizzard. In doing so, it made speculative and tenuous claims that the merger would impose future harm to cloud-based gaming in the UK. I instead argue that the transaction is far more likely to enhance dynamic competition in existing console-based gaming markets that would benefit gamers and game makers alike.
Four Horsemen of the Bureaucratic Apocalypse Come for AI | Truth on the Market
Alden Abbott, 28 April 2023
In this commentary, I assess the joint statement on illegal activities perpetuated through automated systems and artificial intelligence (AI) issued jointly by the FTC, the Department of Justice (DoJ), the Consumer Financial Protection bureau and the Equal Employment Opportunity Commission (EEOC). I contend that the statement signals the administration’s plan to effectuate de facto bureaucratic control over AI’s development through ill-advised litigation and regulatory interference abetted by overly expansive interpretations of existing law. This plan, if implemented, would be likely to hamper innovation and the development of cutting edge emerging technologies, while reducing the United States’ competitive advantage in AI relative to rival economies like China.
Podcast Appearance
Talking Trade, Energy, and the Environment | Heritage Foundation's "Power Hour Special"
Alden Abbott & Shanker Singham, 11 May 2023
I was pleased to appear alongside international trade expert Shanker Singham on the Heritage Foundation’s “Power Hour Special” to discuss our new book, Trade, Competition, and Domestic Regulatory Policy: Trade Liberalization, Competitive Markets and Property Rights Protection. Shanker and I also canvass how energy trade benefits American consumers and industries while improving rather than undermining environmental outcomes. We also touch upon policies to counter anticompetitive market distortions that adversely affect the terms of trade with China, among other major jurisdictions.