Resources

Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

U.S. FTC offers first-ever guidance on ‘unfair competition’

NEW YORK (Reuters) – The U.S. Federal Trade Commission on Thursday released unprecedented guidance on a section of business antitrust law that bars “unfair competition,” but stopped well short of offering the level of detail long sought by businesses.

Stressing that its enforcement practices would not change, the agency said it would be guided by consumer welfare concerns in applying the law.

The guidance “does not signal any change of course” but makes explicit principles already widely used in antitrust law, FTC Chairwoman Edith Ramirez said in prepared remarks.

A Republican FTC commissioner criticized the statement, saying it raised more questions than it answered.

Section 5 of 1914 Federal Trade Commission Act authorizes the FTC to combat “unfair methods of competition,” but the meaning of that has never been precisely spelled out. The guidance marks the first attempt to do that.

“It would be nearly impossible to describe in advance all of the conduct that may threaten competition or the competitive process,” Ramirez said.

She said the commission would use Section 5 to target practices likely to harm competition, though it would be “less likely” to use it against practices covered by other antitrust laws, such as the Sherman or Clayton acts.

“The lack of specificity here is disappointing, but it’s presumably a result of compromise,” said Lisl Dunlop, an antitrust lawyer at Manatt, Phelps & Phillips.

The guidance was approved in a bipartisan 4-1 vote.

Republican Commissioner Maureen Ohlhausen, who voted against the statement, said it was too open-ended.

“Arming the FTC staff with this sweeping new policy statement is likely to embolden them to explore the limits of unfair methods of competition,” Ohlhausen said in a statement.

U.S. Senator Richard Blumenthal, a Democrat, said in a statement that the guidance was an “historic step” and should allow the FTC to pursue anti-competitive conduct more vigorously.

Section 5 was written to empower the FTC to pursue activities not covered by other federal antitrust laws.

Republicans in Congress and business groups have long urged the FTC to clarify what constitutes “unfair competition,” saying the agency should not prosecute conduct without laying out detailed guidelines.

Democratic Commissioner Julie Brill said it is significant that the commission rejected calls to limit Section 5’s use.

“We made clear that the approach we have been taking over the past 5 to 10 years is the approach we are going to be using going forward,” she said.