FTC Policy Statement on the Scope of Unfair Methods of Competition – A Broad But Vague Warning

On November 10, 2022, the Federal Trade Commission issued its “Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act.” The Statement replaces prior guidance on the subject that was rescinded by the FTC on July 1, 2021[1] and “supersedes all prior FTC policy statements and advisory guidance on the scope and meaning of unfair methods of competition under Section 5 of the FTC Act.”

The Statement describes “the key principles of general applicability concerning whether conduct is an unfair method of competition.” It also states that it “makes clear that Section 5 reaches beyond the Sherman and Clayton Acts to encompass various types of unfair conduct that tend to negatively affect competitive conditions.”

The Statement asserts that, in enacting Section 5, Congress’s objective was to create a new prohibition broader than, and different from, the Sherman and Clayton Acts. The “key function” of the FTC in applying the provision is “to identify unfair forms of competition.”

According to the Statement, Congress made it clear that unfair methods of competition need not require a showing of current anticompetitive harm or anticompetitive intent. Rather, Congress wanted the FTC to stop monopolies in their “incipiency.”

In addition, Congress created the FTC as an “expert body” charged with “elucidating the meaning of Section 5.” As such, its determinations as to what constitutes an unfair method of competition are entitled to “great weight.”

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