On August 13, 2015, the Federal Trade Commission (FTC) released a Statement of Enforcement Principles for “Unfair Methods of Competition” claims brought under Section 5 of the FTC Act. Section 5 empowers the FTC to challenge conduct constituting either unfair methods of competition, or unfair or deceptive acts or practices that impact commerce as unlawful violations, 15 U.S.C. § 45(a). This marks the first time that the FTC has provided guidance on the overarching principles behind its enforcement of the unfair methods of competition prong of the statute – “Section 5’s ban on unfair methods of competition encompasses not only those acts and practices that violate the Sherman or Clayton Act but also those that contravene the spirit of the antitrust laws and those that, if allowed to mature or complete, could violate the Sherman or Clayton Act.”
The statement identifies three core principles that the FTC uses for deciding whether to challenge an act or practice as an unfair method of competition: (1) the FTC will adhere to the overarching public policy underpinnings of the antitrust laws for promoting consumer welfare, (2) the FTC will analyze unfair methods of competition under a framework similar to the antitrust rule of reason, and (3) the FTC is “less likely” to challenge an act or practice under Section 5 on a stand-alone basis if the competitive harm arising from the conduct can be sufficiently addressed under the Sherman or the Clayton Act. Chairwoman Edith Ramirez remarked in an August 13, 2015 address that the antitrust rule of reason framework discussed in the statement includes utilizing the quick-look approach when appropriate, such as for challenging invitations to collude.
Commissioner Maureen Ohlhausen issued a dissenting statement identifying the guidance as being “too abbreviated in substance and process” and ultimately providing “more questions than answers.” Commissioner Ohlhausen asserted that “[a]rming the FTC staff with this sweeping new policy statement is likely to embolden them to explore the limits of UMC in conduct and merger investigations. The majority is also likely to pursue new UMC enforcement, else why bother to put out a statement with so little internal deliberation and no provision for public input? I fear that this will ultimately lead to more, not less, uncertainty and burdens for the business community.” The FTC has used Section 5 unfair methods of competition claims to secure legal settlements with Intel Corp in 2010 and Google Inc. in 2013, requiring the companies to change their business practices to resolve unfair competition allegations. However, as former FTC Chairman William Kovacic recently stated, the FTC has not successfully litigated a Section 5 unfair competition case since the late 1960s.
The statement is consistent with recent agency practice for enforcing the unfair methods of competition prong. While the statement illuminates the typical outer contours of Section 5, it does not provide significant additional guidance or alter the FTC’s existing approach or jurisprudence.