Federal Trade Commission issues official statement on “Unfair Methods of Competition”

August 13, 2015

Recently, the Federal Trade Commission (“FTC”) issued an official statement about the enforcement principles for policing “Unfair Methods of Competition.” 15 U.S.C. §45(a)(1) declares “unfair methods of competition in or affecting commerce” to be unlawful. The FTC’s statement was the first of its kind on the subject from the FTC and was largely a result of the fact that Congress did not specifically define what constitutes “Unfair Methods of Competition.” The statement attempts to establish guidelines for the FTC’s exercise of authority under 15 U.S.C. §45(a)(1) and states that:

-the Commission will be guided by the public policy underlying the antitrust laws, namely, the promotion of consumer welfare;
-the act or practice will be evaluated under a framework similar to the rule of reason, that is, an act or practice challenged by the Commission must cause, or be likely to cause, harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justifications; and
-the Commission is less likely to challenge an act or practice as an unfair method of competition on a standalone basis if enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm arising from the act or practice.[1]

This statement affects small and large businesses alike because the FTC has authority to pursue businesses for violation of 15 U.S.C. §45(a)(1). The guidelines attempt to provide guidance on whether a particular practice may result in a FTC lawsuit against a business. However, the guidelines are vague, do not materially change the existing law, and leave open what specific acts and practices will be covered. The only Commissioner to vote against the statement, Commissioner Maureen K. Ohlhausen, states that the statement “ultimately provides more questions than answers” and “includes no examples of either lawful or unlawful conduct.”[2] Please contact our office if you have any questions regarding the information in this article.