Misinformation

 

Author Definition

 

Definition

Misinformation is defined as false or inaccurate information that may or may not be meant to intentionally mislead. It differs from propaganda in that it always refers to something which is not true. Disinformation can be viewed as a subset of misinformation that is deliberately intended to mislead. There have been longstanding concerns in antitrust regarding the provision of disinformation meant to affect the structure of the marketplace. More recently, some antitrust observers have raised concerns that lax antitrust enforcement can lead to the provision of misinformation.

 

Commentary

Antitrust is typically considered a remedy for market failures associated with market power. Market failures associated with distortions of information generally come under the rubric of various consumer protection statutes. However, at times, the provision of misinformation, particularly misinformation which is deliberately intended to mislead, also known as disinformation, has been found to conflict with antitrust and competition law statutes. More recently, in addition to concerns that disinformation can hinder the competitive process, some observers have raised concerns that market power and a lack of competition may lead to the marketplace providing information that is distorted. These observers contend that such situations should also be a matter for antitrust enforcement.

Averitt and Lande (1997) provide a taxonomy for distinguishing when disinformation comes under the rubric of consumer protection and when it constitutes an antitrust violation. When the manipulation of information interferes with the ability of consumers to choose effectively among options available in the marketplace, consumer protection laws are implicated. Provisions of disinformation that affect the structure of the marketplace itself should be analyzed under the rubric of antitrust.

The provision of disinformation as it relates to hindering the competitive process can raise concerns in a number of contexts. Thus, violations have been found when the disinformation is provided on a unilateral as well as a coordinated basis. Disinformation can be a violation when it is provided to competitors, customers and other market participants, such as regulatory agencies, standard-setting organizations (SSOs) and market intermediaries. It can apply to the active provision of disinformation, but can also include actions to withhold or thwart the provision of useful or timely information.

Many prominent cases involve misrepresentations to regulatory agencies, especially misrepresentations meant to obtain or extend the life of intellectual property protections. In the United States, in addition to violating the patent statutes, in Walker Process (1965) the Supreme Court held enforcement of a patent through knowing and willful fraud may also constitute a monopolization offense (Arquit (1990)). Hence, the provision of disinformation on a unilateral basis can constitute an antitrust violation. The Hoffman-LaRoche matter (2018) decided by the European Court of Justice involved findings that two pharmaceutical companies disseminated misleading safety claims on a coordinated basis for the purpose of allocating markets. Further, the disinformation was directed not only at the drug safety regulator, but also toward physicians and consumers.

As noted above, the withholding of relevant information can be seen as an antitrust violation. A number of matters pertaining to the practices of various professional associations fall into this category. These cases generally involved coordinated actions to interfere with the flow of information to consumers or various market intermediaries. For example, in Detroit Auto Dealers’ Association matter (1985), the USFTC found that a group of more than ninety auto dealers agreed to keep their showrooms closed on Saturdays and on three weekday evenings. The restrictions on shopping times made it more difficult for consumers to compare prices, quality, variety, and features of cars. This had the indirect effect of diminishing price competition in the market.

Another area involving the provision of disinformation concern standard setting organizations (SSOs). The Rambus matter, investigated by both the USFTC and European Commission, is an example. This matter involved unilateral action regarding the withholding of relevant information for yet to be adopted technologies from competitors. Rambus, a developer of chip technologies took part in an SSO engaged in the development of a type of computer memory named “dynamic random access memory” (DRAM). Rambus was accused of hiding from other SSO participants that it owned some blocking patents needed to practice the new standard. After that standard was adopted, Rambus left the organization and filed infringement actions. Rambus was able to obtain high royalties by licensing the blocking patents. The FTC contended this deception was an exclusionary action that amounted to unlawful monopolization. The DC circuit court rejected the FTC’s claims, based, in part, on the argument that there was insufficient evidence the SSO would have adopted a different standard but for Rambus’ actions. European regulators focused on the high royalties Rambus was able to charge in finding an abuse of dominance.

More recently, some commentators have argued that a lack of competition can lead to the provision of misinformation. These observers argue that such concerns should fall under the purview of antitrust. Many of these contentions pertain to concerns over the power held by the so-called “tech giants,” especially various social media platforms. For example, Hubbard (2017) contends Facebook’s market power incentivizes it to disseminate fake news articles because this increases users’ time on-site, thereby allowing it to sell more ads. Hubbard argues if Facebook faced more competition there would be greater financial consequences for providing such misinformation.

Others have raised both factual and theoretical questions regarding these contentions. For example, Sacher & Yun (2019) note that more competition (perhaps through “breaking up” the tech giants) could increase rather than ameliorate any such putative problems. Consider the dissemination of fake news on social media sites. In addition to a fake news article, a consumer has an array of options—other choices may include legitimate news articles, other activities on the social media site or within the internet more broadly, or even activities off the internet. Assuming the consumer chooses to engage with the fake news article means the fake news item was better at gaining the reader’s attention relative to the alternatives. Given that the very essence of media competition is to gain the consumer’s attention, increased competition may very well lead to more fake news dissemination, not less. Such reasoning would appear to hold regarding other arguments that a lack of competition can lead to the dissemination of misinformation, such as contentions that a lack of competition facilitates the ability of various online shopping entities to “manipulate” customers and get them to purchase things they otherwise wouldn’t buy.

In sum, while a finding of an antitrust offense, as in any other context, is a fact specific endeavor, the theoretical basis for the contention that the provision of disinformation can adversely affect the competitive process appears sound. Such concerns have formed the basis for antitrust enforcement actions in a number of contexts, although they have been rejected by adjudicators on a factual basis in some instances. In contrast, the contention that a lack of competition can lead to the provision of misinformation generally, and whether this should be of antitrust concern, is currently subject to greater debate.

 

Bibliography

Kevin Arquit, Patent Abuse and the Antitrust Laws, 59 Antitrust Law Journal 739 (1990).

Neil Averitt & Robert Lande, Consumer Sovereignty: A United Theory of Antitrust and Consumer Protection Law, 65 Antitrust Law Journal 713 (1997).

Sally Hubbard (January 10, 2017), Why Fake News is an Antitrust Problem, Forbes.com.

Seth B. Sacher & John M. Yun, Fake News is Not an Antitrust Problem, CPI ANTITRUST CHRON. (Dec. 2017).

Seth B. Sacher & John M. Yun, Twelve Fallacies of the “Neo-Antitrust” Movement, 26 Geo. Mason L. Rev. 1491 (2019).

This article is being reviewed by the Editors of the Dictionary.

Author

  • US Federal Trade Commission (FTC) (Washington)

Quotation

Seth Sacher, Misinformation, Global Dictionary of Competition Law, Concurrences, Art. N° 99939

Visites 235

Publisher Concurrences

Date 1 January 1900

Number of pages 500

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