According to the FTC: “The basic consumer protection statute enforced by the Commission is Section 5(a) of the FTC Act, which provides that “unfair or deceptive acts or practices in or affecting commerce … are … declared unlawful.” (15 U.S.C. Sec. 45(a)(1)). Safe Web amended Sec. 5(a) “unfair or deceptive acts or practices” to include such acts or practices involving foreign commerce that cause or are likely to cause reasonably foreseeable injury within the United States or involve material conduct occurring within the United States.”
Given that view and the FTC’s traditionally robust enforcement activities in areas of false, deceptive or misleading advertising, it is not surprising that most advertising, marketing and promotional professionals are familiar with section 5.
However, of lesser fame are pronouncements by the FTC in what is “unfair” competition – another segment of the authority vested in the Federal Trade Commission by section 5 of the FTC Act. This is the lesser-known part of section 5 that gives the FTC the authority to take action when it determines that “unfair methods of competition in or affecting commerce” may be deemed illegal – essentially an antitrust concept.
For the first time, the FTC, this past Thursday (August 13, 2015) released a single page “Statement of Enforcement Principles Regarding ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act“. Perhaps indicative of the challenges and internal discussions among the regulators themselves, the principles are short and, to many, appear to be a re-statement of what has already been the enforcement practices of the FTC in recent years concerning this provision of the Act.
The Commission announced it will follow three basic principles. In short, enforcement will be considered: (1) Using the same underlying principles that guide antitrust law – protection of consumer welfare; (2) if the practice causes, or is likely to cause, harm to competition or the competitive process, without any counter-balancing justification; and (3) if enforcement under the Sherman or Clayton Act is insufficient and independent action is considered necessary.
If you want to know more or have questions, please contact me or any Reed Smith attorney with whom you work.