Section 5 of the FTC Act gives the Federal Trade Commission the authority to take action against “unfair methods of competition.” The act was enacted over 100 years ago, and its legislative history indicates that it was left to the FTC to provide specific content to this broad and general language. However, there is still little clarity today regarding what conduct qualifies and does not qualify as an “unfair method of competition” that might subject an actor to enforcement proceedings, litigation, and/or monetary penalties. It is generally agreed that “unfair methods of competition” was intended to cover conduct that would violate the Sherman Act or Clayton Act, as well as some additional conduct. In recent years, the scope of the FTC’s “standalone” Section 5 enforcement authority—addressing conduct that would not necessarily violate the Sherman Act or Clayton Act—has been a volatile topic, with many in the antitrust community calling for the agency to provide formal guidance addressing the boundaries of this authority.
In June 2013, FTC commissioner Joshua Wright issued a proposed policy statement that would have defined the agency’s standalone Section 5 authority as covering acts or practices that harm or will likely harm competition and lack cognizable efficiencies. Since that time, no action was taken by the commission regarding the proposed guidance. In February of this year, at the Baker & Hostetler-sponsored Symposium on Section 5, Wright again called for the commission to adopt formal Section 5 guidelines. He proposed three possible definitions—differing only in their treatment of efficiencies—and announced that he would ask his fellow commissioners to vote on which of the three to adopt. (Recordings of the symposium can be found here.) Continue Reading