The government should not be constrained by market assumptions, such as that resources are limited because of efficient allocation.
That's not a "market assumption", it's plain old reality: resources are finite, so you need priorities. If a cop pulls someone over for speeding, then sees an armed robbery in progress, or a paramedic is treating someone's sprained ankle then a bystander has a heart attack, do you want them to stick to what they were doing and reject the notion of priorities as being a "market assumption"? I'd rather they focus their efforts on the higher priority, because that gives the best outcomes.
In this case, the FTC had more pressing enforcement jobs, like telemarketing scams, the fight with cellphone companies over ripoff premium services ... they felt putting their resources there made more sense than fighting Google over the order of search results, and I'm not at all sure they were wrong about that.
By coincidence, I was discussing law enforcement priorities at work on Friday (we teach computer forensics for law enforcement, among other things); unlike the world of CSI, real law enforcement doesn't go spending days testing out an obscure theory, or digging into every possible detail of each case: they do enough work on a case to pass it to the next stage, then get on with the next case. No "market" - there just aren't an unlimited number of hours in each forensic caseworker's day.