The Issues
During the 2008 presidential campaign, Obama reiterated repeatedly that President George W. Bush’s lax oversight of mergers and other anti-trust issues caused an undue burden on consumers and has partially, led to the current financial turmoil. Bush’s Justice Department took most of the flak since the FTC’s stance on anti-trust cases has strengthened in recent years.
Liebowitz takes over as head of the commission as Obama’s Justice Department plans to even more aggressively increase its anti-trust activities. Bush FTC head, William Kovacic, will continue in his duties as a FTC commissioner.
Mortgage Lending Oversight
In March 2009, Congress passed a $410 billion ‘omnibus’ spending package. In it, Chairman of the Senate Commerce, Science and Transportation Committee John D. Rockefeller IV (D-W.V.) and Sen. Byron L. Dorgan (D-N.D.) pushed to authorize the FTC to ban certain predatory lending practices that helped lead to the mortgage market crisis.
“With the U.S. economy in deep recession, ‘we have to step up our vigilance on predatory practices in the financial services area’ because ‘there are a lot of American consumers that are hurting,’” said Leibowitz to Bloomberg News. He also contended that lenders should immediately return money taken illegally if they haven’t already done so. “If you are taking money away illegally from consumers you ought to give it back,” said Leibowitz.
Leibowitz has not announced specifics on how the FTC will ban predatory lending practices, or what tactics will be banned, but they’re expected soon.
Generic Drugs
One case that Leibowitz took on early in his tenure as a FTC commissioner was that of “pay-for-delay” deals that are struck between pharmaceutical companies and generic drug producers. Generic drugs are a cheap form of the original that manufacturers can create after 20 years have passed since the original developer first filed a patent. After 20 years, anyone can manufacture, market and distribute an identical version of the drug. Once multiple options hit the market, the price of the drug often drops.
Pharmaceutical companies have an incentive to delay generic drug companies from selling a duplicate version of a drug in order to keep competition out of the market. Often, in order to stop the production of a generic drug, a pharmaceutical company will sue the competing generic drug company. Sometimes the pharmaceutical company strikes a deal with the generic drug company, which would pay the generic company to not distribute the drug for a period of years. This “pay-for-delay” practice irked Leibowitz. He has led an effort within the FTC to ban these side deals, which he feels violates anti-competition rules.
“These settlements do deny consumers potential access to potentially major savings,'' said Leibowitz. “By settling with all generic applicants, a brand firm ensures that consumers never have a chance to see those savings.”
In 2007, Liebowitz’s work nearly paid off when Kohl, his former employer, and Sen. Patrick Leahy (D-Vt.) introduced the “Preserve Access to Affordable Generics” act that would have limited these agreements between pharmaceutical companies and generic drug-makers. Leibowitz and the FTC threw their support behind the bill, but it didn’t become law because the congressional session ended before it came up for a vote.
Advertising
Another cause Leibowitz has focused on since joining the FTC pertains to advertising. In 2006, his attention swayed toward “pretexting” — the use of a false scenario to obtain an individual’s personal information. Pretexting can provide valuable material for advertisers, as well as others who might have more insidious reasons for using such data.
The tactic gained infamy in September 2006 when it became public that private investigators for Hewlett-Packard (HP) were using pretexting to obtain knowledge about board members and journalists. It’s now illegal, but Liebowitz and the FTC had already begun investigating 30 data-broker companies suspected of using pretexting in February 2006, months before the HP incident became public.
Leibowitz has also called for stricter controls on online advertising. Advertising companies have continued to use more sophisticated ways of monitoring people’s activities on the Internet, and then serving up targeted advertising. “When you're surfing the Internet, you never know who is peering over your shoulder or how many marketers are watching,” said Liebowitz. ''People should have dominion over their computers. The current 'don't ask, don't tell' in online tracking and profiling has to end.''
Liebowitz has called for more expansive policies that would limit advertisers’ ability to monitor people’s Internet habits.
