Abstract

http://ssrn.com/abstract=2350452
 


 



The Perils of Excessive Discretion: The Elusive Meaning of Unfairness in Section 5 of the FTC Act


James C. Cooper


George Mason University School of Law - Law & Economics Center

February 25, 2014

George Mason Law & Economics Research Paper No. 13-61

Abstract:     
Section 5 of the Federal Trade Commission (FTC) Act gives the FTC an undefined mandate to prosecute "unfair methods of competition." For nearly 100 years, the Commission has searched tirelessly for the meaning of this amorphous concept. Since 1992, the FTC has continued to define Section 5 through a series of consent decrees. Absent any external constraint, the FTC appears to have broad discretion to define the reach of Section 5 beyond the Sherman Act. This discretion causes uncertainty, which is likely to deter beneficial conduct. It also creates incentives to divert resources from productive to redistributional purposes. The recent FTC investigation of Google illustrates the FTC’s discretion to define the reach of Section 5. This paper suggests that the FTC issue a binding statement making Section 5 coterminous with the Sherman Act or limiting Section 5 to conduct that clearly harms consumers through adverse effects on competition, and that would not otherwise fall under the antitrust laws.

Number of Pages in PDF File: 46

Keywords: antitrust, competition policy, markets, industrial organization, Section 5, Federal Trade Commission, administrative law, law & economics, public choice, Google, standard essential patents

JEL Classification: K21, K23, L51, H10

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Date posted: November 12, 2013 ; Last revised: February 26, 2014

Suggested Citation

Cooper, James C., The Perils of Excessive Discretion: The Elusive Meaning of Unfairness in Section 5 of the FTC Act (February 25, 2014). George Mason Law & Economics Research Paper No. 13-61. Available at SSRN: http://ssrn.com/abstract=2350452 or http://dx.doi.org/10.2139/ssrn.2350452

Contact Information

James C. Cooper (Contact Author)
George Mason University School of Law - Law & Economics Center ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-9582 (Phone)

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