Wednesday, April 30, 2003

FTC boss can see clearly now

For all their anti-capitalism bluster, the Federal Trade Commission does seem to like some large businesses, such as LensCrafters. In formal comments to the Tennessee legislature, FTC Chairman Timothy Muris urged legislators to reject proposed restrictions on commercial optometrists in the Volunteer State. The proposed bill, according to Muris, regulates without providing any tangible consumer benefits:

Senate Bill 855 begins with the statement that optometrists "shall be free from any influences that would interfere with their exercise of professional judgment," and that "optometrists shall not be associated with any person or persons in any manner which might degrade or reduce the quality of visual care received by the citizens of this state."

The next section then states: "A manufacturer, wholesaler, or retailer of ophthalmic materials who leases space to an optometrist shall not, directly or indirectly, control or attempt to control the professional judgment, manner of practice, or practice of an optometrist."

* * *

These restrictions would apply to all manufacturers or sellers of ophthalmic materials who lease space to optometrists, thus limiting the relations between optometrists and the optical store in which some may choose to practice.

Muris correctly recognizes that this bill would interfere in the private, voluntary relationship between optometrists and the commercial retailers they work for. On this ground alone, the bill should be rejected as contrary to the principles of individual rights and capitalism. But Muris, of course, is not a capitalist, thus his arguments against the bill are rooted in consumerist thought:

Restraints on competition from optical chains may make consumers better off if such restrictions improve the quality of eye care or lead to other consumer benefits that would not be produced by firms operating in a competitive marketplace. Senate Bill 855 would create net benefits for consumers if the value to consumers of any improvement in the quality of eye care attributable to the Bill is greater than the harm imposed on consumers by the reduction in competition. We respectfully urge the Tennessee legislature to weigh the impact on competition of the prohibitions in Senate Bill 855 against any benefits that the Bill's restrictions might create for consumers.

Muris goes on to cite “empirical evidence” gathered by the FTC which shows the proposed bill’s restrictions are pragmatically unnecessary. In other words, it’s okay on principle to violate private contract rights, but only if you can produce some data which demonstrates some potential “benefit” to consumers.

The “empirical evidence” argument is a hallmark of Muris’ FTC leadership. Superficially, it sounds appealing, as it seems to emphasize the importance of data in assessing antitrust claims. But in reality, the FTC usually treats “empirical evidence” as a series of random concretes which have no underlying concept to tie them all together. For example, in merger review cases, the FTC often manipulates “empirical evidence” to create market definitions that are not supported by objective facts. This happened last year when the FTC went after MSC.Corporation, arguing the software company monopolized a market which consisted entirely of MSC’s own product. The FTC ignored industry analysts—and even MSC competitors—who argued the actual market definition included a number of products arbitrarily excluded by the FTC’s so-called “empirical evidence.”

Indeed, I’m willing to bet that given the FTC’s data on optometry, I could fashion an “empirical evidence” argument in support of the Tennessee legislation. As the old adage goes, there are lies, damned lies, and statistics.

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