Adam Smith once wrote, 'Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.'
FILE - The Federal Trade Commission building in Washington is pictured on Jan. 28, 2015. The Federal Trade Commission is proposing a new rule that would prevent employers from imposing noncompete clauses on their workers.dam Smith once wrote,"Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.
Smith’s insight that an economy’s purpose is to serve consumers seems self-evident—but not to today’s Federal Trade Commission . In three antitrust cases and a change in policy direction, the agency seems to be losing interest in consumers’ preferences. In the cases, the FTC appears to be decreasing its reliance on consumers’ choices in its decisions on whether a firm has market power. Generally, the FTC and the Department of Justice look to consumers for guidance on whether a business could exploit them. More specifically, when the agencies have been suspicious that a firm possesses market power, they study whether consumers would switch to a rival product if the firm in question were to act like a monopolist.
The FTC apparently is moving away from this consumer-centric approach. In the three antitrust cases, the agency has discounted what customers really do and has argued that a firm faces competition only if rivals’ products have technical and pricing specifications that are nearly identical to those of the investigated firm. This is like saying that Mercedes and Tesla are not in competition because each carmaker’s engineering is unique.
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