Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Commissioner Ohlhausen weighs in on standalone Section 5 enforcement, (Jul 26, 2013)

By Jeffrey May, J.D.

FTC Commissioner Maureen K. Ohlhausen offered some “guiding and limiting principles” for standalone FTC Act, Section 5 enforcement in a speech to the U.S. Chamber of Commerce in Washington, D.C. yesterday. In remarks, entitled “Section 5: Principles of Navigation,” Ohlhausen set out to provide a framework for defining the parameters of the FTC’s unfair methods of competition (UMC) enforcement authority under Section 5, separate from the agency's authority to enforce the antitrust laws. She also suggested how the agency should prioritize its competition efforts.

Ohlhausen expressed her hope that the agency will issue a policy statement on Section 5 UMC enforcement. Fellow Republican commissioner Joshua D. Wright issued his proposed policy statement on standalone Section 5 enforcement in June.

Until the Commission takes action, Ohlhausen has offered principles that will dictate her votes on standalone Section 5 cases presented to the Commission. According to Ohlhausen, the FTC's UMC enforcement authority should be limited to cases where:

1. there is substantial harm to competition(with a substantiality requirement mirroring the one used in unfair acts or practices claims);

2. there is no procompetitive justification for the challenged conduct or where such conduct in harm to competition that is disproportionate to its benefits;

3. conflict with other institutions, including most notably the Department of Justice, can be avoided or minimized;

4. the enforcement is grounded in robust economic evidence regarding the anticompetitive effects of the challenged conduct;

5. an attempt has been made to use non-enforcement tools to address the perceived competitive problem prior to using UMC; and

6. the agency has provided clear guidance and has minimized the potential for uncertainty in the UMC area.

Ohlhausen believes that the Commission's UMC enforcement authority “ought to extend only a very limited amount beyond the antitrust laws.” She recommended that “the Commission focus primarily on improving the implementation of the antitrust laws rather than trying to expand its UMC authority.”

Whether to bring a particular enforcement action would depend on whether the facts presented satisfied the proposed UMC factors, according to Ohlhausen. However, the commissioner noted that naked invitations to collude (when consistent with enforcement under the antitrust laws) and exchanges of price and other competitively sensitive information among competitors would likely fall within the agency's UMC authority. Business torts that may threaten harm to competition might also rise to the level of UMC violation.

Ohlhausen also addressed the use of standalone Section 5 enforcement authority in the standard-setting context. She reiterated her opposition to the imposition of Section 5 liability on an owner of a standard-essential patent merely for enforcing its patent rights in the courts or at the International Trade Commission without evidence of other anticompetitive conduct.

News: Antitrust FederalTradeCommissionNews