Section 5 of FTC Act on Collision Course With Existing Antitrust Law

While antitrust practitioners are familiar with the Federal Trade Commission, most people are not familiar with the specific provisions of the Federal Trade Commission Act. More importantly, most people are not familiar with Section 5 of the FTC Act and the potential constraint it poses to corporate conduct. Historically, Section 5 of the FTC Act has been used in conjunction with existing federal antitrust laws, often as an attempted gap filler but never reaching further than the arms of those laws. However, there is currently a movement within the FTC to use the broad language of Section 5 to pursue corporate conduct that does not violate the federal antitrust laws. In order to understand the possible ramifications of using Section 5 to pursue such corporate conduct, it is important to understand the purpose of the FTC and the FTC Act itself.

The FTC is an independent agency that reports to Congress on its actions. The Federal Trade Commission was created in 1914, with the purpose of busting up trusts. While originally the FTC’s authority was limited to anti-competitive practices, over time, Congress broadened the authority of the FTC. In 1938, Congress extended the FTC’s authority to cover any “unfair and deceptive acts or practices,” thus beginning the FTC’s role as an enforcer of the consumer protection laws. Today, the FTC is the only federal agency with civil jurisdiction over both consumer protection and competition issues.