The Wisdom of Using the “Unfair Method of Competition” Prong of Section 5

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Nov 12, 2008

The basic question I am addressing concerns the wisdom of using the “unfair method of competition” prong of Section 5 of the Federal Trade Commission Act to prohibit conduct that does not violate the Sherman Act or the other antitrust statues (the Clayton Act and the Robinson-Patman Act, all of which are collectively referred to herein as the “antitrust laws”). I will address that question as a policy matter. I do not address the question whether Section 5 can, as a matter of law, properly be construed to give the Federal Trade Commission (“Commission”) the authority to prohibit such conduct. Even though the statute can be so construed, the Commission must still resolve the policy question whether it is wise to do so. In the first place, Section 5 was enacted more than 90 years ago, long before the current understanding of the requirements of sound competition policy. Moreover, the Commission has, and does and should use, discretion not to press its authority to the limit by bringing all of the cases that it has statutory authority to bring. Thus, the issue whether Section 5 should be used to prohibit conduct that does not violate the antitrust laws is properly addressed as a policy question.

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