By Maurice E. Stucke

Competition authorities are increasingly concerned about the anticompetitive effects of deception. In December 2009, for example, the U.S. Federal Trade Commission (FTC) alleged that Intel maintained its dominance in the worldwide microprocessor markets by, among other things, engaging in a decade-long campaign of deceit. This followed the European Commission imposing a $1.06 billion fine, Intel’s $1.25 billion antitrust settlement with its competitor, and the state of New York’s antitrust complaint. Among the various alleged deceptive practices, Intel misrepresented industry benchmarks to favorably reflect the performance of its central processing units relative to its competitors’ products, and it pressured independent software vendors to label their products as compatible with Intel and not to similarly label the names or logos of a competitor’s products, even though these products were compatible.

A key issue is how the antitrust agencies and federal courts will evaluate a monopolist’s deception. The courts frequently address whether a monopolist’s deception violates the federal competition laws. But when it comes to the legal standards to determine what is permissible or impermissible for a monopolist under Section 2 of the Sherman Act, courts have yet to arrive at a workable legal standard that yields predictable results. The courts employ different legal standards to evaluate a monopolist’s deception involving advertising and product disparagement, vaporware, standard-setting organizations, and other conduct. Even for false advertising, the legal standards differ. Some courts, for example, readily condemn a monopolist’s deceptive advertising. Others presume that deceptive advertising has a de minimis effect on competition. One court opined that deceptive advertising never violates the antitrust laws.

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Recommended Citation
Maurice E. Stucke, How Do (and Should) Competition Authorities Treat a Dominant Firm’s Deception, 63 SMU L. Rev. 1069 (2010)