Major Public Interest, Labor, and Environmental Groups Urge FTC to Respond to Open Markets’ Exclusive Dealing Petition
Groups reject silence from FTC about their joint petition for rule-making
WASHINGTON – The Open Markets Institute, along with 36 public advocacy organizations and six scholars, sent the Federal Trade Commission a letter today requesting a status update on their joint petition for rule-making to ban exclusionary contracts.
The group first submitted its petition for rule-making more than three months ago, on July 21, but has not received any response or even an acknowledgement of receipt.
As outlined in the letter, the petition calls on the FTC to use its unfair methods of competition rule-making authority to prohibit exclusionary contracting by monopolists and other dominant firms. Monopolists and other dominant firms use exclusionary contracts to inhibit the entry and success of new or small firms by restricting their ability to obtain a sufficient foothold in the market.
A ban would stop powerful corporations from blocking competition and perpetuating their power over customers, distributors, suppliers, and workers. It would build on lawsuits like the one the Justice Department filed last week against Google and would strengthen fair competition in the marketplace overall.
“While the commission has challenged exclusionary contracts through lawsuits and deserves credit for that work, such litigation is not a long-term solution. These antitrust cases are cumbersome, expensive, and take years to resolve,” said Sandeep Vaheesan, legal director at Open Markets Institute. “We’ve been playing this game of whack-a-mole with monopolists for far too long. The FTC has the authority to fix this dysfunctional system and to establish clear rules of fair competition, including by banning exclusionary contracts by dominant corporations.”
The organizations and scholars have joined the petition from across a broad span of spheres including public advocacy, environmental justice, racial justice, labor, right to repair, and more.
“Google’s use of exclusionary agreements has allowed the company to become a singularly dominant search engine, feeding into a vicious cycle by which it gains more power to shut out competition and stifle innovation to the detriment of Black people,” said Rashad Robinson, president of Color Of Change. “Google buys power by paying for default search engine status, leaving Black consumers with fewer choices and exposing Black communities to privacy vulnerabilities as the company continues to collect astronomical amounts of user data. Color Of Change stands with Open Markets Institute and petition signatories in demanding the Federal Trade Commission swiftly enact a rule to stop companies like Google from using exclusionary contracts, which have for decades fueled the unfettered growth of corporate giants and enabled their continued abuse of power.”
"Kickbacks are just one way that these companies maintain their stranglehold on the industry. As they amass power and profit, they are literally writing the rules of the game — destroying our climate, putting small farmers out of business, and exploiting workers,” said Navina Khanna, executive director of the HEAL (Health, Environment, Agriculture, Environment) Food Alliance. “The high rates of COVID-19 infections that food workers are experiencing today are just one symptom of a rigged system designed to benefit corporations while leaving communities and the environment at risk."
"When consumer choice for repair is limited by the manufacturer, it drives up repair costs and increases the likelihood the device won't be repaired at all, but rather replaced,” said Nathan Proctor, director of the Campaign for the Right to Repair, U.S. PIRG. “Exclusive deals around access to parts and necessary service materials are at the center of these predatory, repair-restricting schemes."
"Manufacturers routinely abuse contracts to force lock-in to their service networks, harming consumers and reducing market choice,” said Kyle Wiens, founder of iFixit.
Most of the practical limitations on repair are based on exclusionary and anti-competitive contracts,” said Gay Gordon-Byrne, executive director of Repair.org. “Authorized repair technicians must sign exclusive agreements in order to acquire parts and service materials, and consumers are prevented from making their own repairs because manufacturers will not sell parts and service materials to any party other than the authorized technician.”
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