Reflections on Section 5 of the FTC Act & the FTC’s Case Against Intel

Daniel Crane, Feb 28, 2010

The Federal Trade Commission’s (“FTC’s”) unprecedented enforcement action against Intel raises profound issues concerning the scope of the FTC’s powers to give a construction to Section 5 of the FTC Act that goes beyond the substantive reach of the Sherman Act. While I have urged the FTC to assert such independence from the Sherman Act, this is the wrong case to make a break. Indeed, if anything, Intel poses a risk of seriously setting back the development of an independent Section 5 power by provoking a hostile appellate court to rebuke the FTC’s effort and cabin the FTC’s powers in future matters better suited to an independent Section 5.

The essential flaw in the Commission’s assertion of an independent Section 5 in Intel is that there is little or no connection between the Commission’s comparative institutional advantages over Article III courts and this case. The Commission should not make a break for Section 5 independence until it finds a case in which it can explain what facts about that particular case—and not about antitrust cases in general—justify judicial deference. Otherwise, the Commission runs the risk that courts will interpret its plea for deference as a request to be excused from the rule of law. There is a very real risk that courts will view Intel as an effort to achieve carte blanche permission for the Commission to run an antitrust program divorced from the strictures of the Sherman Act. Courts are unlikely to react sympathetically to such a perceived request.

This article’s structure is as follows: Part II sounds a sympathetic note for the Commission’s project of developing an independent Section 5, but also some general notes of caution about the enterprise. It also responds to Commissioner Rosch’s arguments for why application of an independent Section 5 is warranted as to Intel. Part III articulates six principles for sound development of an independent Section 5, and argues that the Intel action violates each of them. Finally, Part IV suggests a strategy for turning Intel into a victory for the Commission’s long-run enforcement powers, even while ceding this particular case on its facts. Part V concludes.