The line between fair and unfair competition

Blog Post
Sources suggest that members of the Federal Trade Commission may soon reach bipartisan agreement on what constitutes “unfair competition.”

Never before in its century-long history has the FTC issued formal guidelines to police companies that compete unfairly. Specifically at issue is Section 5 of the FTC Act, which deems “unfair methods of competition in or affecting commerce” to be illegal.

For years, many have argued that, without formal FTC guidelines, it is difficult for businesses and regulators to know when a company crosses the line between fair and unfair competition. Many in that camp believe that definitive guidance from the FTC will prevent overreach by regulators, while spurring the economy by encouraging less adventurous business owners to engage in productive commercial activities that they otherwise would have avoided for fear of breaking the law. In the other camp are those concerned that definitive guidelines will curtail the government’s ability to effect timely enforcement measures as markets and business practices evolve, and presumably certain guidelines become inapposite or obsolete.

Unknown at this time are specifics on what the guidelines might entail. But rumor has it that the guidelines, if issued, will emphasize consumer protection, while attempting to reconcile the FTC’s powers to police unfairness with traditional anti-trust laws that prevent anticompetitive behavior.
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