Section 5 of the FTC Act as a Competition Statute

The Event

The Federal Trade Commission will hold a public workshop on October 17, 2008, in Washington, D.C., to explore the scope of the prohibition of “unfair methods of competition” in Section 5 of the FTC Act, 15 U.S.C. § 45. The workshop will consider the appropriate scope of Section 5 in light of legal precedent, economic learning, and changing business practices in a global and hi-tech economy.

The Commission seeks the views of the legal, academic, and business communities on the issues to be explored at the workshop. In its Federal Register notice the agency set out a list of specific questions on which it is particularly seeking comments. A link to that notice can be found below. The agency will consider any comments received as it prepares for the workshop.

Prior to the event the Commission will publish a more detailed agenda on this website. The workshop will be transcribed; the transcript will be placed on the public record; and any written comments received will also be placed on the public record.

Background of the Issue

When Congress created the FTC in 1914, it empowered the agency to prevent “unfair methods of competition” through Section 5 of the FTC Act, 15 U.S.C. § 45. Under Section 5, the Commission may condemn conduct that violates the Sherman Act, 15 U.S.C. § 1-7. But based on its review of the FTC Act’s legislative history, the Supreme Court stated in Sperry & Hutchinson that Section 5 also reaches beyond violations of the Sherman Act to include broader categories of conduct.

The precise reach of Section 5 and its relationship to other antitrust statutes has long been a matter of debate. The Supreme Court observed in Indiana Federation of Dentists that the “standard of ‘unfairness’ under the FTC Act is, by necessity, an elusive one, encompassing not only practices that violate the Sherman Act and the other antitrust laws but also practices that the Commission determines are against public policy for other reasons.” In the early 1980s, however, lower courts were critical of efforts by the FTC to enforce a reading of Section 5 that captured conduct falling outside the Sherman Act. In striking down the FTC’s orders, the Second Circuit in its “Ethyl” decision expressed concern that the Commission’s theory of liability failed “to discriminate between normally acceptable business behavior and conduct that is unreasonable or unacceptable.”

The great majority of FTC non-merger cases enforce the Sherman Act. Beginning in the early 1990s, however, the Commission reached a number of consent agreements in matters involving invitations to collude; practices that facilitate collusion or collusion-like results in the absence of an agreement; and misconduct relating to standard setting. Because the complaints in these matters did not allege all the elements of a Sherman Act violation, the Commission’s theory of liability rested on a broader reach of Section 5. As consents, none of these matters have been reviewed by a court.

The workshop will examine three general subject areas: (1) the history of Section 5, including Congress’s enactment, the FTC’s enforcement, and the courts’ response; (2) the range of possible interpretations of Section 5; and (3) examples of business conduct that may be unfair methods of competition addressable by Section 5. The Commission particularly seeks the input of the business community in preparing this last topic.

Specific questions of particular interest were identified in the Federal Register notice announcing the workshop, which can be found in the list of links below.
 

PRE-REGISTRATION

The event is free and open to the public. All attendees will be required to display a current driver's license or other valid form of photo identification. The Conference Center is accessible to people with disabilities. If you need an accommodation related to a disability, please call Ossie Neal, (202) 326-2358.

Pre-registration for this workshop is not necessary, but is encouraged, so that we may better plan for the event.

To pre-register, email your name and affiliation to section5workshop@ftc.gov.

NOTE: When you pre-register, we will collect your name, affiliation, and your email address. This information will be used to estimate how many people will attend. We may use your email address to contact you with information about the workshop.
 

FTC PRIVACY POLICY

Under the Freedom of Information Act (“FOIA”) or other laws, we may be required to disclose to outside organizations the information you provide when you pre-register. The Commission will consider all timely and responsive public comments, whether filed in paper or electronic form, and as a matter of discretion, we make every effort to remove home contact information for individuals from the public comments before posting them on the FTC website.

The FTC Act and other laws we administer permit the collection of your pre-registration contact information and the comments you file to consider and use in this proceeding as appropriate. For additional information, including routine uses permitted by the Privacy Act, see the Commission’s comprehensive Privacy Policy.

FOR FURTHER INFORMATION CONTACT:

Neil Averitt
Office of Policy and Coordination,
Bureau of Competition,
600 Pennsylvania Avenue, N.W.,
Washington, D.C. 20580
Phone: 202-326-2885
or e-mail, Section5Workshop@ftc.gov