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FTC Competition Chief Defends Stand-Alone Section 5 Use in Unfair Competition Cases

In a blog post last Friday, Debbie Feinstein, Director of Competition at the Federal Trade Commission (FTC), defended the agency’s use of FTC Act Section 5 to target unfair methods of competition outside the scope of the Sherman and Clayton Acts. While the use of Section 5 in consumer protection cases has long been established, many, including U.S. Congress members and FTC Commissioners, have urged the FTC in recent years to issue clearer guidelines on how Section 5 will be used to target conduct related to unfair methods of competition.  Feinstein suggested that those interested in the FTC’s future use of Section 5 “should look at what the Commission has done and the reason it gave for acting to stop the behavior. . . . The touchstone of every stand-alone Section 5 claim . . . is likely or actual harm to competition or the competitive process.” Feinstein pointed specifically to invitation to collude cases as a prime example of the type of conduct prosecuted...

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Patent Enforcement Protected by First Amendment?

After receiving a draft complaint and a stipulated order from the Federal Trade Commission (FTC) banning its allegedly deceptive letters to infringers of its scanning technology, MPHJ Technology Investments LLC (MPHJ) filed suit against the FTC in the Western District of Texas, alleging violations of the First Amendment.  The complaint alleged that the FTC’s investigation prevented MPHJ from its government-granted right to enforce its patent, a form of free speech under the Bill of Rights.  On March 28, 2014, the FTC filed a motion to dismiss the complaint, and MPHJ filed its response on April 18, 2014. The FTC argued in its motion to dismiss that the controversy was not ripe for suit because there had been no final agency action, that MPHJ was not immune from suit because patent enforcement activity is not protected by the First Amendment and that the FTC is not looking to prevent MPHJ from sending letters, only looking to prevent the deceptive statements...

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FTC Commissioners Disagree on Section 5 Authority

Section 5 of the Federal Trade Commission (FTC) Act confers broad enforcement powers on the Commission to prohibit “unfair methods of competition.”  In her February 13, 2014 keynote address to the Competition Law & Economics Symposium at George Mason law school, FTC Chairwoman Edith Ramirez argued that it would be a mistake for the Commission to circumscribe its authority by issuing guidelines for Section 5 enforcement.  While Chairwoman Ramirez “do[es] not object to guidance in theory,” she believes any guidance should be descriptive rather than prescriptive. Other commissioners, however, have strongly backed providing companies with a clearer set of rules.  Commissioner Maureen K. Olhausen has said that she would refuse to support any Section 5 enforcement actions until the FTC establishes guidelines, while Commissioner Joshua D. Wright has already proposed such guidelines. Section 5 may confer broader powers than the Sherman Act and Clayton Act in...

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Republicans Press FTC to Establish a Clear Standard for Section 5

In a letter to the Federal Trade Commission (FTC) on Wednesday, October 23, eight GOP lawmakers from both the House and the Senate called on the FTC to publish clear guidance on Section 5 of the FTC Act. Section 5 grants the Commission broad authority to regulate “unfair methods of competition” beyond the scope of the Sherman Act and Clayton Act.  In FTC v. Sperry & Hutchinson Co., 405 U.S. 233 (1972), the Supreme Court opined that the FTC was authorized to consider public values beyond the letter or spirit of the antitrust laws when enforcing Section 5.  Then, during the 1980s, courts began rejecting the FTC’s attempts to bring Section 5 actions, out of concern that the agency had failed to put forth adequate standards.  More recently, the FTC has used Section 5 in various agency actions to target invitations to collude and breaches of standard-setting commitments, but no cases have been affirmed by the courts. In their letter, the legislators warned...

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FTC Commissioner Wright’s Policy Statement Proposes Section 5 Limitations

by Michelle Lowery On June 19, 2013, Commissioner Joshua Wright of the Federal Trade Commission (FTC) proposed a Policy Statement on the FTC’s enforcement authority under Section 5 of the FTC Act, which prohibits unfair methods of competition.  According to Commissioner Wright, the intent of his proposed Policy Statement is to initiate a discussion on the appropriate parameters of the FTC’s authority under Section 5.  Commissioner Wright expects that the proposed Policy Statement will end years of ambiguous Section 5 enforcement by articulating a clear standard of what types of conduct constitute an unfair method of competition.  The Policy Statement defines an unfair method of competition as “an act or practice that (1) harms or is likely to harm competition significantly and that (2) lacks cognizable efficiencies.”  Commissioner Wright explained that the definition as a whole allows the Commission to reach conduct...

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FTC Issues Preliminary Privacy Report, Seeks Comment from Stakeholders

by Heather Egan Sussman and Carla A. R. Hine The U.S. Federal Trade Commission’s recently proposed framework for offline and online businesses and policymakers may have a significant impact on entities that collect, maintain and use consumer data.  The deadline for public comment is January 31, 2011. To read the full article, please visit: http://www.mwe.com/info/news/ots1210e.htm.  

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