FTC misses mark with new 'unfair methods of competition' statement

[Commentary] In addition to having co-enforcement authority of the nation's antitrust laws with the Department of Justice, the Federal Trade Commission is charged with administering its own eponymous statute, the Federal Trade Commission Act. Among other requirements, Section 5 of the FTC Act declares that any "unfair methods of competition in or effecting commerce" to be unlawful. Significantly, Congress deliberately chose not to define the specific acts and practices that constitute "unfair methods of competition" (UMC), opting instead to delegate this task to the FTC to apply the statute on a flexible case-by-case basis as facts evolve. Surprisingly, over the last several years, the FTC has provided little guidance on how it views the UMC standard.

To remedy this shortcoming, at the urging of just-departed FTC Commissioner Joshua Wright, this August the FTC reversed course and issued a "Statement of Enforcement Principles Regarding 'Unfair Methods of Competition' Under Section 5 of the FTC Act". Rather than remedy the guidance deficit by providing detailed analysis, however, the UMC statement is rather perfunctory. My recommendation is that before we go too far down the road and the omelet is too hard to unscramble, prudence would dictate that we go back to the drawing board. Indeed, in light of the admitted vagaries of the statute and the FTC’s increasing oversight over major sectors of the economy (particularly the technology sector), the American public deserve a well-reasoned and cohesive approach to Section 5’s unfair methods of competition standard, not a bullet-point press release filled with cliches.

[Spiwak is the president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies]