By Kelly A. Briganti, Editorial Director, G2 Intelligence
While experts have not proclaimed it an overwhelmingly helpful resource, the Federal Trade Commission (FTC) released a Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act (Statement). The Statement issued earlier this month sets forth three principles addressing how the FTC enforces Section 5 of the FTC Act prohibiting unfair competition. The FTC explains that Section 5 takes FTC’s enforcement reach beyond violations of the Sherman and Clayton Acts to encompass activities “that contravene the spirit of the antitrust laws and those that, if allowed to mature or complete, could violate the Sherman or Clayton Act.” (Emphasis added).
The Sherman and Clayton Acts are antitrust laws that prohibit activity that restrains trade and address potential for such restraint posed by monopolies, exclusive contracts, mergers and acquisitions and certain contracting arrangements.
The FTC notes that Congress left it to the commission, “an expert administrative body,” to interpret and apply Section 5 on a “case-by-case basis” so that enforcement could “evolve with changing markets and business practices.” The Statement expresses three principles that will guide FTC enforcement of the unfair competition prohibition in Section 5:
- Public policy to protect consumer welfare
- A rule of reason analysis applies, considering whether the activity will “cause, or likely to cause, harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justifications.”
- A violation is “less likely” to be found if the Sherman or Clayton Act “is sufficient to address the competitive harm.”
While the FTC asserted that the principles “are ones on which there is broad consensus” Commissioner Maureen K. Ohlhausen issued a dissenting statement objecting to the issuance of “this policy statement in this manner”—claiming it is “too abbreviated in substance and process” and “provides more questions than answers.” (Emphasis in original) Ohlhausen also criticized the lack of public input from stakeholders.