Unfair Methods of Competition Under Section 5 of the FTC Act: Does the U.S. Need Rules “Above and Beyond Antitrust?”

This article is part of a Chronicle. See more from this Chronicle

Sep 24, 2009

It is often asserted that the prohibition on “unfair methods of competition” contained in Section 5 of the Federal Trade Commission Act provides the FTC with flexibility to attack competitive conduct that is proper when examined under the federal antitrust laws. Although the FTC brought some early cases relying on this expansive view of Section 5, aggressive efforts to apply Section 5 during the late 1970’s and early 1980’s were consistently rejected by the courts. Although these courts acknowledged the FTC’s broad authority in concept, they faulted the FTC for failing to define the improper conduct according to acceptable criteria. Following these unsuccessful cases the FTC’s enthusiasm for extending Section 5 beyond established antitrust-law boundaries appeared to wane. With recent changes in leadership taking hold at the FTC and throughout the federal government, there are renewed calls for efforts to extend Section 5 to additional forms of competitive conduct beyond the limits of established antitrust law. The FTC is being invited from within and without to use Section 5 to attack diverse categories of conduct otherwise outside the scope of antitrust law. These range from “invitations to collude,” to policing commitments made by members of standard-setting organizations, to conforming U.S. rules on single-firm conduct to European standards.

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