Congress passed the 1914 Federal Trade Commission Act, which established the agency, because it was dissatisfied with the enforcement of the Sherman Act, the original antitrust statute. Section 5 of the FTC Act bans “unfair methods of competition” and instructs the agency to enforce that prohibition.
In 2015, the FTC issued a statement declaring that it would apply Section 5 using the Sherman Act “rule of reason” test, which restricted the agency’s oversight to a narrower set of circumstances. The Nov. 10 policy statement from the FTC restores the agency’s use of Section 5 and makes it easier for the agency to challenge an array of what it sees as anticompetitive behavior in the market. The FTC vote to approve the policy statement was 3-1.
The FTC’s use of the law would make it easier to challenge conduct that, under other federal laws, might not be illegal on its face, The Wall Street Journal reported. The FTC’s statement explaining the change says it wouldn’t need to show that conduct harmed other market participants or consumers, but that it “has a tendency to generate negative consequences.”
“When Congress created the FTC, it clearly commanded us to crack down on unfair methods of competition,” FTC Chair Lina M. Khan said in an agency news release. “Enforcers have to use discretion, but that doesn’t give us the right to ignore a central part of our mandate. Today’s policy statement reactivates Section 5 and puts us on track to faithfully enforce the law as Congress designed.”
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