Maurice Stucke, Sep 16, 2013
Federal Trade Commissioner Joshua Wright recently proposed a new legal standard to evaluate “unfair methods of competition” under Section 5 of the Federal Trade Commission (“FTC”) Act, 15 U.S.C. § 45(a) (2012). The FTC must prove that the act or practice (1) harms or is likely to harm competition, significantly and (2) lacks cognizable efficiencies. The FTC currently prosecutes both traditional antitrust offenses and other conduct under Section 5’s unfair methods of competition clause. Under Wright’s proposal, the FTC would still apply the well-forged antitrust case law to orthodox Sherman and Clayton Act violations, but use his proposed standard for any remaining standalone violations of Section 5. Wright proposes that his standard be applied only to unfair methods of conduct, for which no “wellâ€forged case law under the traditional federal antitrust laws exists.” Where that boundary lies, as this Essay discusses, is a far more difficult question.
First, I agree with Wright that it is often difficult for courts and agencies to ramble through the wilds of economic theory to identify the conduct’s net competitive consequences. The Supreme Court once recognized its shortcomings in making such trade-offs. More recently the dissent in Leeginand Actavis criticized the rule of reason. Indeed, Congress’s dissatisfaction with the Court’s rule of reason motivated Section 5.
Second, I welcome Wright’s efforts to bring competition law closer to the r…