Thursday, March 26, 2009
Posted by D. Daniel Sokol
Robert H. Lande of the University of Baltimore Law School suggests Revitalizing Section 5 of the FTC Using 'Consumer Choice' Analysis.
ABSTRACT: This paper makes two points. First, Section 5 of the FTC Act, properly construed, is indeed significantly broader and more encompassing than the Sherman Act or Clayton Act. Section 5 violations include incipient violations of the other antitrust laws, and also violations of their policy or spirit.
Second, the best - and probably the only - way to interpret Section 5 in an expansive manner is to do so in a way that also is relatively definite, predictable, principled and clearly bounded. This best can be done if Section 5 is articulated using the consumer choice framework. Without the discipline and constraints provided by this framework, the FTC Act risks becoming unduly standardless. Unless the Commission uses the choice framework, any attempt to construe Section 5 that goes beyond the other antitrust laws risks being viewed as giving undue discretion to the Commission, and for this reason probably will not be permitted by reviewing courts.
The paper also presents three illustrations of how this could make a beneficial difference in practice: situations similar to the N Data case, invitations to collude, and incipient tying and exclusive dealing violations.