FTC Releases Guidelines Regarding Unfair Methods of Competition08.20.15
On August 13, 2015, the FTC released its Statement of Enforcement Principles Regarding Unfair Methods of Competition Under the FTC Act. The Statement was passed by a 4-1 vote and represents the first formal guidelines regarding the FTC’s Section 5 enforcement power to prohibit unfair methods of competition. The FTC has never issued formal guidelines describing what types of actions constitute unfair competition despite not violating other federal antitrust laws such as the Sherman Act (which prohibits contracts, combinations or conspiracies in restraint of trade and monopolization or attempts to monopolize) and the Clayton Act (which prohibits certain forms of price discrimination, exclusive dealings and mergers and acquisitions where the effect may substantially lessen competition). The Statement affirms that Section 5 of the FTC Act is aligned with the other antitrust laws.
The Commission set forth three principles related to challenging unfair methods of competition based solely on Section 5:
- The FTC’s application of Section 5 is aligned with the other antitrust laws, which are guided by the goal of consumer welfare and informed by economic analysis;
- The FTC will rely on the accumulated knowledge and experience embedded within the rule of reason framework (balancing competitive harm with resulting efficiencies), while retaining the flexibility to apply its authority in a manner similar to the case-by-case development of the other antitrust laws; and
- The FTC will continue to rely, when sufficient and appropriate, on the Sherman Act and the Clayton Act as the primary enforcement tools for protecting competition and promoting consumer welfare and is therefore less likely to challenge an act as unfair competition on a stand-alone basis if enforcement of such other Acts is sufficient to address the competitive harm.
No public comment has been sought on the Statement, and Commissioner Maureen Ohlhausen’s dissenting statement criticized the lack of public comment, opining that the Statement provides more questions than answers and represents an embrace of an unbounded approach. Commissioner Ohlhausen went on to criticize the Statement for failing to discuss existing case law or including examples of lawful or unlawful conduct to provide practical guidance. She also noted that the Statement does not include the requirement of a substantial harm to competition.