Journal Article

UNFAIR METHODS OF COMPETITION UNDER SECTION 5 OF THE FTC ACT: WHAT IS THE INTELLIGIBLE PRINCIPLE?

Werden, Gregory J

2024

Overview

INTRODUCTION The Federal Trade Commission (FTC) Act1 and the Clayton Act2 supplemented the Sherman Act.3 The FTC Act added a new enforcer and a new prohibition-on \"unfair methods of competition\" (the UMC prohibition).4 Members of Congress appreciated that the Constitution did not permit the delegation of legislative power to a commission5 and acted on the belief that the indefinite UMC prohibition would pass constitutional muster and usefully guide both the FTC and the courts. The Suprème Court's adoption of a rule of reason was condemned for judicial activism and for robbing the Sherman Act of certainty and potency.13 Corrective legislation was introduced within days.14 Senator Robert M. La Follette (R-Wis.) recruited Louis D. Brandeis to draft legislation establishing a rebuttable presumption of unreasonableness for certain practices.15 Senator Francis G. Newlands (D-Nev.) proposed creation of an \"administrative tribunal like the Interstate Commerce Commission, charged with powers over interstate trade. \"31 Incumbent William Howard Taft unsuccessfully defended the status quo.32 The Senate Committee on Interstate Commerce completed the inquiry pursuant to Resolution 98 with a February 1913 report by Senator Albert B. Cummins (R-Iowa).33 The \"Cummins report\" found it \"inconceivable that in a country governed by a written Constitution and statute law the courts can be permitted to test each restraint of trade by the economic Standard which the individual members of the court may happen to approve. In Rublee's telling decades later, Brandeis surprisingly lent his support at the meeting, and Wilson was sold.49 Rublee later wrote that he had used the term \"unfair competition\" in craft-ing a new prohibition because he thought it had \"a recognized meaning in the terminology of anti-trust law,\" in that it had been used in several bills along the lines of the Clayton Act and in \"various decrees\" in Sherman Act cases.50 Rublee also noted that the Suprème Court had described Standard Oil's \"local price cutting at the points where necessary to suppress competition\" as one of

• Publisher: American Bar Association
• Subject: Brandeis, Louis D (1856-1941) / Clayton Antitrust Act 1914-US / Competition / Congressional committees / Efficiency / Interstate commerce / Legislation / Restraint of trade / Tribunals & commissions / Wilson, Woodrow (1856-1924)