Unfair Methods of Competition after the 2015 Commission Statement

Joshua D. Wright & Angela Diveley, George Mason Law & Economics Research Paper No. 15-39

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On August 13, 2015, the Federal Trade Commission issued a statement describing the standard the agency applies when enforcing its “standalone” unfair methods of competition authority pursuant to Section 5 of the Federal Trade Commission Act (the “Section 5 Statement”) – a development 101 years in the making. The Section 5 Statement provides the Commission with an important tool to fulfill its purpose of contributing meaningfully to US competition law and policy. Whereas the Commission’s standalone Section 5 authority provided the agency with potentially unbounded authority to prohibit any conduct the majority of the Commission deemed unpalatable – the Section 5 Statement clarifies that it views this authority as limited to economic welfare as understood under the Sherman and Clayton Acts. The Commission’s commitment to analyzing conduct under Section 5 as it would under the traditional antitrust laws provides practitioners with the ability to counsel clients as to the contours of Section 5. Furthermore, the Section 5 Statement articulates a relationship between Section 5 and the traditional antitrust laws, as the Commission acknowledges it should refrain from exercising its Section 5 authority where the traditional antitrust laws are sufficient to address the conduct. We intend this article to provide insight from our perspective, as individuals involved in the creation of the Statement, and with the hopes that it will prove useful to those seeking to understand it and how it will and should be applied by courts and agencies.

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