Conduct-Specific Tests? How the FTC Can Reframe the Section 5 Debate
Amanda Reeves, Feb 28, 2010
Over the last few years, the Federal Trade Commission (“FTC”) has awakened Section 5’s “unfair methods of competition” prong from its slumber and ignited a debate about when, if ever, it is proper to use Section 5 to reach conduct beyond the Sherman Act’s four corners. Complicating matters is the dearth of federal court guidance on the issue. It has been a quarter of a century since any federal court has opined on Section 5’s scope and nearly 40 years since the Supreme Court last chimed in. Consequently, discussions about Section 5’s reach often sound as if they are occurring in a doctrinal vacuum with proponents of Section 5 relying on the statute’s legislative history; opponents arguing that, as a policy matter, there should rarely be a need to resort to Section 5; and those in the middle trying to achieve consensus on limiting principles.
While the Supreme Court has said nothing during this period about Section 5, it has been vocal about its views on antitrust common law more generally, asserting that antitrust rules need to be administrable and predictable. That emphasis has undoubtedly spurred the important search for limiting principles, but the identification of those principles should only be part of the Section 5 doctrinal equation. If and when the Commission provides the federal courts with an opportunity to revisit Section 5, the Commission is most likely to succeed if it persuades the courts that it has applied Section 5 in a predictable fashion. The Commission can do so if it pleads conduct-specific theories of liability (as opposed to just an “unfair method of competition”) and, in consent orders and opinions, identifies conduct-specific tests that govern those theories of liability.