Should Section 5 Guidelines Focus on Economic Efficiency or Consumer Choice?

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Robert Lande, May 13, 2014

Commissioner Wright is right that it would be desirable for the Commission to issue Section 5 antitrust guidelines. This article will demonstrate, however, that the best way to formulate Section 5 guidelines is to focus them on the goal of protecting consumer choice, rather than to embrace Commissioner Wright’s proposal to neuter the FTC Act by confining it in an economic efficiency straightjacket. Only if Section 5 guidelines were formulated appropriately would they improve consumer welfare during the Commission’s second century.

When Congress enacted the FTC Act it intended this law to be more expansive than the Sherman Act. Even though the Sherman Act was law, Congress decided that additional legislation was needed. The FTC Act’s legislative history makes it clear that Section 5 was intended to prohibit not only every violation of the Sherman Act, but also (i) incipient violations of this law, (ii) conduct violating the spirit of the Sherman Act, and (iii) conduct violating recognized standards of business behavior. The Supreme Court has explicitly adopted this interpretation of the nature of the FTC Act, as Commissioner Wright observed.

However, the Supreme Court case law verifying Congress’ intent is relatively old. There is no guarantee today’s more conservative Court would interpret Section 5 in the same expansive manner. If the Commission were to attempt to articulate…

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