Andrea Agathoklis Murino, Wilson Sonsini Goodrich & Rosati*
Still just a few months into his tenure, Federal Trade Commissioner Joshua Wright made good on his early promise to move Section 5 of the Federal Trade Commission Act into the public dialogue. N1 On June 19, 2013, Wright released a “Proposed Policy Statement Regarding Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act,” together with an accompanying explanatory speech. Some two months after announcing his intention (about which I wrote here), the proposal calls for the FTC to “recast its unfair methods of competition authority with an eye toward regulatory humility in order to effectively target plainly anticompetitive conduct” by clarifying the standards and limits the FTC will employ in the context of Section 5. Wright’s call to arms is necessary, he says, because the failure to articulate clear standards by which Section 5 will be prosecuted creates uncertainty for the business community and consumers, and risks the Commission’s credibility as an expert body and future steward of Section 5.
Importantly, Wright’s proposal is not merely an intellectual think piece. Rather, Wright provides for a specific definition of conduct that will violate Section 5, as well as concrete examples. There is no doubt in his mind (or in the mind of this observer), that Section 5 was intended to condemn conduct beyond that which the Sherman or Clayton Acts capture. But he finds that without a precise definition, the Commission’s ability to consistently apply Section 5, and the ability of businesses and consumers to meaningfully predict whether their conduct could be found violative of Section 5, is virtually impossible. Thus, he proposes defining “an unfair method of competition [as] an act or practice that (1) harms or is likely to harm competition significantly and (2) lacks cognizable efficiencies.” Continue reading “Commissioner Wright Moves to Advance Discussion on FTC Act Section 5”