FTC Issues Statement on “Unfair Methods of Competition” Prohibited by Section 5 of the FTC Act

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On August 13, 2015, the Federal Trade Commission (FTC) issued its “Statement of Enforcement Principles” (the “Statement”) regarding how it would interpret Section 5 of the FTC Act (Section 5), a statute that prohibits, among other things “[u]nfair methods of competition.” Although the FTC has issued a number of policy statements regarding the consumer protection aspects of Section 5, the Statement is the first time in the statute’s 100-year history that the FTC has issued guidance regarding the antitrust aspects of Section 5.

Section 5 prohibits “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.” Typically, the FTC brings competition enforcement actions pursuant to Section 5, as well as the Sherman or Clayton acts, and rarely acts pursuant to Section 5 authority alone. When drafting the statute, Congress did not define specific acts or practices that would be prohibited by Section 5, and therefore there has been considerable uncertainty regarding the scope of the FTC’s Section 5 authority.

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