Don't count on shift in FTC antitrust stance - Federal Trade Commission - Washington Report - column

Don't Count on Shift in FTC Antitrust Stance

A few weeks ago Washington woke to the news that Federal Trade Commission antitrusters had issued a complaint charging Japanese video game giant Nintendo with enforcing an illegal resale price maintenance scheme.

There's some disagreement about the significance of this development, but experts agree that it could mean either: A. Washington antitrust officials have come to their senses; B. The real FTC Bureau of Competition has been kidnapped and replaced with look-alikes; C. Hell just froze over.

I'm split between B and C.

This much does seem clear, however. After a decade of looking the other way while manufacturers dictated artificially high resale prices for their products, FTC antitrusters have finally taken one small step for competition.

Indeed, the Nintendo action is the first attack on anti-discounter and anti-consumer resale price fixing by any federal antitrust enforcement agency since the (gasp!) Carter administration!

Before we award FTC the retail competition medal of honor, however, let's put the agency's action in perspective.

First of all, the commission's investigation of Nintendo was not launched due to any sudden concern for the rights of discount retailers or their customers. Rather the agency's probe was prompted by pressure from Capitol Hill. Congress had investigated the company over a year ago, and they put the heat on the FTC to follow up.

More importantly, perhaps, the FTC's investigation ran parallel to a simultaneous and even more rigorous probe by state officials. And by the time federal antitrusters publicly challenged the maker's resale price fixing activities, state law enforcement officials were already closing in for the kill.

Moreover, FTCers effectively let Nintendo off with a warning and a promise not to do it again, but state antitrusters nailed the firm for stiff monetary fines.

Under the settlement agreement between the manufacturer and the Attorneys General of Maryland and New York, Nintendo will have to pay nearly $5 million in penalties to the states, plus as much as $25 million to consumers who were overcharged for video game consoles.

To be sure, state enforcers praised the FTC for finally resuming enforcement of the laws against resale price fixing.

But does the Nintendo action really signal a substantive shift in antitrust enforcement direction in Washington? Don't count on it yet. If there has been an abrupt reversal in RPM enforcement policy, it hasn't yet been articulated by FTC topsiders. And there's no sign at all that the commission's sister antitrusters at the Justice Department are even thinking about enforcing the law against resale price maintenance.

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