The U.S. Federal Trade Commission released long-awaited guidance Thursday on a section of business antitrust law that bars unfair competition — a topic that has received significant attention in the healthcare sector.
The FTC's policy statement outlines the basic principles the commission will use when deciding whether to go after businesses for unfair competition under Section 5 of the 1914 FTC Act, which says "unfair methods of competition in or affecting commerce" are illegal. In the more than 100 years since the FTC Act was enacted, the FTC has never formally defined what it means for a business to compete unfairly, according to the Wall Street Journal.
Below are the three new principles the FTC outlined:
1. The commission will be guided by the public policy underlying the antitrust laws, namely, the promotion of consumer welfare;
2. The act or practice will be evaluated under a framework similar to the rule of reason, that is, an act or practice challenged by the commission must cause, or be likely to cause, harm to competition or the competitive process, taking into account any associated cognizable efficiencies and business justifications; and
3. The commission is less likely to challenge an act or practice as an unfair method of competition on a standalone basis if enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm arising from the act or practice.
FTC Chairwoman Edith Ramirez said the guidance "does not signal any change in course." Instead, it "makes explicit what has been evident to close observers of FTC enforcement actions over the past few decades," she said.
The guidance was approved in a bipartisan 4-1 vote. Republican Commissioner Maureen Ohlhausen voted against the policy.
"Arming the FTC staff with this sweeping new policy statement is likely to embolden them to explore the limits of unfair methods of competition," Ms. Ohlhausen said in a statement.
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