FTC Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act

For the first time in its 100-year history, the Federal Trade Commission laid out the guidelines it follows when deciding to go after a company for attempting to stifle competition. The FTC has issued a Statement of Enforcement Principles that describes the underlying antitrust principles that guide the FTC’s application of its statutory authority to take action against “unfair methods of competition” prohibited by Section 5 of the FTC Act but not necessarily by the Sherman or Clayton Act. The agency will use its authority to protect consumers and evaluate "commercial practices by focusing on harm to competition or the competitive process," FTC Chairwoman Edith Ramirez said. The FTC is less likely to use its authority if enforcement of traditional antitrust laws, such as the Sherman or Clayton Act, is "sufficient to address the competitive concern" she said. The statement explains that, consistent with FTC precedent, the FTC will adhere to the following principles when deciding whether to use its standalone authority under Section 5 of the FTC Act to challenge unfair methods of competition:

• The FTC 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 FTC must cause, or be likely to cause, harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justifications
• The FTC 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.

The Commission vote to approve the Statement of Enforcement Principles was 4-1, with Commissioner Maureen K. Ohlhausen voting no.