Scope of Remarks & Disclaimer

1. The FTC’s Role as an Advocate for Competition and Consumers: Some Suggested Principles for Regulating in a Time of Change Andrew I. GavilDirector, Office of Policy PlanningFederal Trade CommissionIATR/AGTA 2013 ConferenceSeptember 24, 2013, St. Louis, Missouri

2. Scope of Remarks & Disclaimer • Scope: • Competition Advocacy at the FTC • Transportation Apps in Context – The New Economy • Transportation Regulation in Focus • Disclaimer: • The views expressed are my own and do not necessarily reflect the views of the FTC or any Commissioner

3. Part I Competition Advocacy at the FTC – A Core Component of Our Mission

4. The FTC’s Dual Mission • Competition: • “Unfair methods of competition” • Consumer Protection: • “Unfair or deceptive acts or practices” • Tools: Enforcement, Study, & Advocacy

5. Benefits of Competition • Price • Quality • Variety • Service • Innovation • New products • New business models Key: Nimble and responsive to consumers

6. How Can Competition be Undermined? Collusion Exclusion Protect dominant market position by harming rivals Not competition on the merits Imposing barriers and costs to entry/expansion • Coordination displaces competition IncumbentDominant Firm(s) Non-dominant Rival Firm(s) Firm A Firm B Consumers Consumers

7. Advocacy Mission • Share Expertise with Policymakers and the Public: • Benefits of competition • Harms from restrictions on competition • Other consequences for consumers • Discourage use of legislation or regulation to undermine competition The FTC as an Advocate Support and promote competition and consumer protection principles. Federal Agencies Regulators State & Local Gov’ts Private Standards

8. Forms of Advocacy Formal Informal Consultations with legislators or regulators Staff-to-staff consultation Input on draft laws or regulations • Letters, comments, testimony • By specific invitation • Open public comment period • Amicus Briefs • Reports & Policy Papers • Conferences and Workshops

9. FTC Advocacy: Examples • ≈ 20-25 Advocacy Letters and Amicus Briefs Per Year • Recent Areas of Interest: • Health care & health care professionals • Intellectual property • Electricity regulation • Consumer privacy & identity theft • Attorney advertising • Financial regulation • And yes… Motor vehicle transportation • In 2012-13 -- CO PUC; Anchorage, Alaska; District of Columbia

10. “Capture Theory” • “Those that are the best organized and most affected by regulation spend the most money attempting to promote their own interest through legislation and sympathetic regulators.” Regulators Regulated Consumers?

11. An Old Challenge for Regulators • 17thcentury London • “Transport on the Thames constituted a vested interest of great concern to the watermen . . . and … each successive improvement in locomotion and transport has had to face opposition from the representatives of established but threatened conditions.” • Source: Edwin A. Pratt, A History of Inland Transport and Communication in England 58-63 (1912); see also Jacob Goldstein, The 17th Century Version of the Fight Over Uber, NPR (June 12, 2013)

12. Part II Taxi Apps in Context:The New Economy

13. The New Economy – Bigger Than a Town Car

15. Mobile Smartphone Sales Source: www.mobilestatistics.com

16. The Spread of Apps Not My Typo Source: www.mobilestatistics.com

17. Which Side of History Would You Like to Be On?

18. Part III Transportation Regulation in Focus

19. FTC’s Long-Standing Interest in Transportation Regulation & Innovation • 1984Staff Report on Taxicab Regulation • Enforcement actions – Minneapolis; New Orleans • 2008 OECD Submission • 2013 CO PUC, Anchorage, DC advocacies • Broader interest in innovation, technologies, new methods of business… • E-commerce, Internet search, & advertising • Innovation competition • Mobile platforms

20. The Goals of Our Transportation Advocacies Promote & Encourage Discourage Protecting & entrenching current competitors and business models Raising the cost of new entry and creating impediments to new sources of competition Inhibiting market responsiveness to consumer preferences • Regulations that support and facilitate healthy competition • Sensitivity to the competitive harms of some regulations • Regulations that redress real harms to consumers • E.g., Safety, security, transparency, honesty • BUT are no greater than necessary

21. Some Closing Thoughts

22. The Only Constant is Change “Taxis; sedans; limos” – Old School? Motor Vehicle Transportation Servicesin 2020?

23. Resistance to Change: Another Old Story • 1622, Ferryman & Poet John Taylor: • “An Errant Thief” “[C]oaches…and Flanders mares, Do rob us of our shares, our wares, our fares ; Against the ground we stand and knock our heeles, Whilst all our profit runs away on wheeles. . . .”

24. Words That Warrant Concern for IATR Members Lysine Conspiracy of 1990s Current Chatter in the Transportation Industry “It will take all of us working together to eliminate this threat.” New competitors “want you and your family on food stamps and welfare” “It’s not a question of being consumer friendly.” • “Our competitors are our • friends. Our customers are the enemy.” Invitation to Collude NOT about the public interest.

25. The Temptation to Collude • “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” • Adam Smith, The Wealth of Nations (1776) • Trade groups and professional associations can accomplish much that is good…but can also be an opportunity for mischief….

26. Regulatory Responses to Changing Times Bangers Shape- Shifters

27. Some Resources • FTC, Competition Counts, How Consumers Win When Businesses Compete, http://www.ftc.gov/bc/edu/pubs/consumer/general/zgen01.pdf • FTC, Transportation Advocacies, http://ftc.gov/opp/advocacy_subject.shtm#trtg • FTC, .com Disclosures, How to Make Effective Disclosures in Digital Advertising (2013), http://www.ftc.gov/os/2013/03/130312dotcomdisclosures.pdf • FTC, Mobile App Developers: Start with Security, http://www.business.ftc.gov/documents/bus83-mobile-app-developers-start-security • Tara Isa Koslov, Competition Advocacy at the Federal Trade Commission: Recent Developments Build on Past Successes, CPI Antirust Chronicle (Aug. 2012 (1)) • Maureen K. Ohlhausen, Identifying, Challenging, and Assigning Political Responsibility for State Regulation Restricting Competition, 2 Competition Policy International 151 (2006)

28. Contact Information Andrew I. Gavil Director, Office of Policy Planning Federal Trade Commission 600 Pennsylvania Avenue, N.W. Washington, D.C. 20580 (202) 326-3620; agavil@ftc.gov