Cracks appear in FTC's armour

When the Federal Trade Commission announced its broad swipe against Intel last year, it served as an alarm bell to companies across the US that the consumer protection watchdog had entered a new and far more aggressive enforcement era. As it hails its settlement with the chipmaker as a big victory for consumers, it is far from clear whether the Washington regulator ends its tussle with Intel looking as robust as it hoped to appear.

In Washington legal circles, the FTC's showdown with Intel was a test case. It represented the first time in decades that the commission used its legal authority to stop conduct that it believed showed "unfair methods of competition" - which is a violation of Section 5 of the FTC Act. The FTC has said companies should welcome use of Section 5 in some cases because, unlike violations of traditional anti-trust law, it does not allow companies found guilty of violations in private litigation to be liable to treble damages. Anti-trust attorneys, many of whom decline to be named because of active cases before the FTC, have scoffed at the commission's use of the authority, which they claim is overly vague. They also say there is too little guidance offered by the FTC on how it plans to use the authority in the future. Privately, many doubt whether the FTC could successfully litigate a Section 5 case in court given how extensively it has been struck down in the past. By settling the Intel case, the FTC has left unanswered many of the lingering questions over how its statutory authority, which is far more expansive than traditional anti-trust authority, may be used in future cases.