Comments to the FTC on Whether to Rescind Its 2015 Policy Statement on ‘Unfair Methods of Competition’

Aurelien Portuese July 1, 2021
July 1, 2021

The Federal Trade Commission held an open meeting on July 1, 2021, at which it called for public comments on whether to rescind its 2015 policy statement of enforcement principles guiding the application of its authority to take action against “unfair methods of competition” prohibited by Section 5 of the FTC Act.

The Information Technology and Innovation Foundation (ITIF) submitted the following statement from Aurelien Portuese, director of ITIF’s Schumpeter Project on Competition Policy for the Innovation Economy:

The FTC’s intent to rescind the 2015 Section 5 policy statement is understandable, as we agree with then-Commissioner Maureen K. Ohlhausen that the policy statement did not provide meaningful guidance.

However, current advocacy for rulemaking under Section 5 does not provide necessary clarification and constitutes the application of the precautionary principle to antitrust: Ex-ante rules would prohibit some conduct that is pro-competitive and would undermine needed disruptive innovation.

The aversion of antitrust through adjudication represents a regrettable attempt to undermine the rule of reason in favor of rules of per se illegality. With no justification and with a reversed burden of proof, precautionary antitrust toward innovation would further develop through rulemaking.

The FTC has a mandate to determine unfair methods of competition, but the rapidly changing nature of today’s markets should not lead to the FTC adopting precautionary ex-ante rules. The FTC must preserve the dynamic process of creative destruction, not preemptively inhibit it.