Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC’s enforcement guide for unfair methods of competition receives mixed reviews, (Aug 14, 2015)

By John W. Arden, J.D., LL.M.

Yesterday’s issuance of general principles guiding the FTC when deciding to bring stand-alone actions for “unfair methods of competition” has garnered praise from Congressional leaders and questions from other quarters. The “historic” one-page document—entitled “Statement of Enforcement Principles”—came in response to calls from practitioners, and even some commissioners, for guidance on when the FTC will invoke its authority to bring unfair methods of competition charges under Section 5 of the FTC Act that do not amount to traditional antitrust violations.

The FTC’s first-ever guidance on the unfairness issue did not identify the specific type of conduct the agency would pursue under its Section 5 authority, pointing out that “Congress chose not to define the specific acts and practices that constitute unfair methods of competition in violation of Section 5, recognizing that application of the statute would need to evolve with the changing markets and business practices.” The agency will continue to apply the statute on a “flexible case-by-case basis, subject to judicial review.” In deciding to challenge an act or practice as an unfair method of competition, the Commission will adhere to three principles: (1) the agency will be guided by the public policy underlying the antitrust laws, namely the promotion of consumer welfare; (2) the act or practice will be evaluated under a framework similar to the rule of reason, such that the act or practice must cause or be likely to cause harm to competition or the competitive process, taking into account any efficiencies and business justifications; and (3) the act or practice is less likely to be challenged as an unfair method of competition if enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm caused by the act or practice.

The general principles apparently satisfied Commissioner Joshua D. Wright, who had called for guidance in the area and dissented in some high-profile stand-alone cases brought by the FTC. Wright voted in support of the Statement of Enforcement Principles, unlike his Republican colleague, Commissioner Maureen K. Ohlhausen. She wrote in her dissent that the statement provided no meaningful guidance to those subject to FTC jurisdiction.

Congressional leaders on both sides of the aisle praised the issuance of the guidance. U.S. Representative Bob Goodlatte (R-Va.), Chairman of the House Judiciary Committee, and Tom Marino (R-Pa.), Chairman of the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, called the statement “a good first step” in response to the Committee’s calls for guidance. “However, we will vigilantly monitor the manner in which the FTC applies its guidance and evaluate whether additional action is necessary to ensure that the FTC administers our antitrust laws in a transparent, stable, fair, and predictable manner and that it does not exceed its statutory authority.”

U.S. Senator Richard Blumenthal (D-Conn.) also supported the statement. “This strong bipartisan set of principles establishes rules of the road to stop bad actors from stifling competition and stiffing consumers—a historic step in the Commission’s 100-year history,” he said in a news release. “Spurred and strengthened by this agreement on the span and scope of so-called unfairness authority, the FTC should pursue and fight anti-competitive misconduct even more vigorously.”

However, Kurt E. Anderson, writing in the National Law Review (“FTC New Guidance on Unfair Competition”), had problems with the brevity of the document. “Without further guidance on how the FTC construes exactly what additional acts and practices are outlawed by Section 5 of the FTC Act, but not prohibited under other law, it is very difficult (and possibly impossible) for businesses to adjust their conduct to ensure they are in compliance with applicable law (at least in the view of the FTC).” His only hope was that “the FTC will provide more guidance as to the types of things it believes are intended to be covered by the FTC Act which are not otherwise covered by other federal law.”

The Truth on the Market blog called the issuance of the guideline a “significant victory for Commissioner Joshua Wright,” but noted that the statement contained no safe harbor from enforcement for any demonstrated cognizable efficiencies, as Commissioner Wright had initially proposed. In an August 13 post, Geoffrey Manne writes that “by invoking antitrust principles, the rule and reason and competitive analysis, the Statement incorporates by reference 125 years of antitrust law and economics.” The statement itself “need not go into excessive detail when, with only a few words, it brings modern antitrust jurisprudence embodied in cases like Trinko, Leegin, and Brooke Group into [unfair competition] law.” Manne also observes that the statement commits the FTC to a regime that reduces its discretion.

News: Antitrust FederalTradeCommissionNews