FTC Issues Guidance on Unfair Competition - Broadcasting & Cable

FTC Issues Guidance on Unfair Competition

Consumer welfare is paramount; Ohlhausen underwhelmed
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The Federal Trade Commission has released new guidance on how it views its authority to take action against unfair methods of competition under Sec. 5 of the FTC Act that may not be covered by antitrust laws, or what it called acts and practices "that contravene the spirit of the antitrust laws and those that if allowed to mature or complete, could violate the Sherman or Clayton Act. "

The vote was 4-1, with Republican Maureen Ohlhausen dissenting from what she called an "exceedingly brief, highly general" statement.

In the six-paragraph advisory, the majority of the commissioners said that when deciding whether to challenge an act or practice, they were guided by the following:

•"The Commission will be guided by the public policy underlying the antitrust laws, namely, the promotion of consumer welfare;

•"[T]he act or practice will be evaluated under a framework similar to the rule of reason, that is, an act or practice challenged by the Commission must cause, or be likely to cause, harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justifications; and

•"[T]he Commission is less likely to challenge an act or practice as an unfair method of competition on a standalone basis if enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm a rising from the act or practice."

Ohlhausen was underwhelmed. In her dissenting statement, she suggested the guidance was too "abbreviated," did not include examples to help industry figure out what the commission was talking about, should have been put out for public comment, and raised more questions than it answered, which clearly worked against it as guidance. 

She said that the FTC had been rebuffed the last time it tried to reach "well beyond" the settled principles of antitrust law. She also notes that, rather than "substantial harm" to competition, the test is far looser, seemingly allowing for vast expansion of Sec. 5 authority.

She said she thought the guidance should have included:

"(1) a substantial harm requirement; (2) a disproportionate harm test; (3) a stricter standard for pursuing conduct already addressed by the antitrust laws; (4) a commitment to minimize FTC-DOJ conflict [the two divvy up Hart-Scott-Rodino antitrust reviews]; (5) reliance on robust economic evidence on the practice at issue and exploration of available non-enforcement tools prior to taking any enforcement action; and (6) a commitment generally to avoid pursuing the same conduct as both an unfair method of competition and an unfair or deceptive act or practice."

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