The U.S. Federal Trade Commission has voted to scrap a 2015 policy statement that limited its ability to bring enforcement actions over anticompetitive conduct.
The guidance required the commission to follow the “consumer welfare” standard in deciding whether to sue companies for “unfair methods of competition” under Section 5 of the FTC Act.
The FTC’s 3-2 vote on Thursday to revoke the guidance “will give the FTC more leeway to pursue competition claims that may not fall squarely within the two existing antitrust statutes: the Sherman Act and the Clayton Act,” according to CNBC.
“In practice, the 2015 statement has doubled down on the agency’s longstanding failure to investigate and pursue unfair methods of competition,” said Lina Khan, a progressive antitrust scholar who took over as FTC chair two weeks ago.
She also said that withdrawing the guidance was “only the start of our efforts to clarify the meaning of Section 5 and apply it to today’s market.”
U.S. courts use the consumer welfare standard to determine whether targeted conduct and mergers harm customers, namely by increasing prices. The standard “can be less relevant in digital markets, which often offer free products or discounted prices subsidized by other parts of the business,” CNBC said.
The guidance was approved on a 4-1 vote in August 2015. The FTC’s authority under Section 5 is separate from and is seen as broader than the Sherman and Clayton acts that provide the cause of action in most U.S. antitrust enforcement.
Thursday’s vote “could have significant implications on antitrust cases in the tech industry and elsewhere,” CNBC reported, noting that the FTC must decide within the month whether to move forward with an antitrust lawsuit against Facebook after a judge dismissed its initial complaint.
Rather than amend the complaint, the agency could choose to bring the case before an administrative law judge under Section 5.
Democratic Commissioner Rohit Chopra said revoking the guidance would help the FTC “move past this period of perceived powerlessness,” but the two Republican commissioners objected.