Wednesday, October 7, 2009
Toward an Expansive Reading of FTC Act § 5: Beyond the Sherman Act and an Ex Post Model of Enforcement
Posted by D. Daniel Sokol
ABSTRACT: This paper is an edited and lightly footnoted version of Remarks made at a session convened during the American Antitrust Institute’s most recent annual conference. The session was entitled “Can FTC Section 5 and E.U. Article 82 Converge?” The paper distinguishes between the “domestic question” of whether FTC Section 5 should be interpreted to go beyond Sherman Act Section 2, and the “cosmopolitan question” of whether convergence with Article 82 is desirable and achievable. The paper focuses on the domestic question; to the extent an expansive use of Section 5 would foster convergence, that would be a side benefit. The paper asserts three propositions: First, there is a strong and undisputed historical basis for the view that the FTCA is something different in kind from both the Sherman and Clayton Acts. Second, in this light, the FTC’s institutional character is properly understood as a competition commission to investigate, report, advise against, and if necessary stop practices deemed unfair methods of competition, ex ante, in their incipiency. The FTC is not an antitrust enforcement agency like the DOJ Antitrust Division. Third, federal court decisions beginning in the 1960s unanimously support the view that the FTC Section 5 and its enforcement by the Commission legitimately serve competition policy understood more broadly than antitrust law, i.e., than the Sherman Act. In sum, the FTC has a long-standing Congressional mandate and judicial invitation to be bold, to push past the antitrust laws, to investigate and stop in their incipiency “unfair methods of competition.” The Commission should be an innovator and investigator rather than an enforcer; it should spend significant resources working at the cutting edge of economic theory and legal doctrine. The FTC mission, properly understood, is to engage in research and development of competition policy at the forefront of changing commercial circumstances.