FTC Commissioner Wright Proposes Policy Regarding Standalone FTC Act Section 5 Claims

In remarks made to the New York State Bar Association (NYSBA) Antitrust Law Section’s executive committee on June 19, 2013, Joshua D. Wright, a commissioner of the Federal Trade Commission (FTC), proposed a policy setting out the FTC’s authority to prosecute “unfair methods of competition” as standalone violations under Section 5 of the FTC Act. In his remarks to the NYSBA, Commissioner Wright said an official FTC policy would provide businesses with clarity and predictability about the scope of Section 5.

Commissioner Wright’s proposed policy defines an unfair method of competition as “an act or practice that (1) harms or is likely to harm competition significantly and that (2) lacks cognizable efficiencies.” This definition is intended to permit Section 5 claims for conduct not otherwise condemned by the Clayton Act or Sherman Act. The Commissioner stated that the proposed definition would implicate, for example, “the use by a firm of unfair methods of competition to acquire market power that does not yet rise to the level of monopoly power necessary for a violation of the Sherman Act, yet harms competition.” The definition was also described as potentially encompassing an “invitation to collude” by a firm where no agreement among competitors was ultimately reached. Efficiencies would be assessed under the standards that the FTC and Department of Justice have set out in their joint Horizontal Merger Guidelines .

During his remarks to the NYSBA, Commissioner Wright said that the intent of his proposal was to spark a debate among private and government practitioners that ultimately results in the FTC issuing an official policy on the scope of Section 5.

Full text of Commissioner Wright’s remarks can be found at http://ftc.gov/speeches/wright/130619section5recast.pdf , and the proposed policy statement is available at http://ftc.gov/speeches/wright/130619umcpolicystatement.pdf .

Kaj Rozga

Kaj Rozga