Most of our readers have heard, at some point, of the Federal Trade Commission, which is an independent agency of the federal government charged with promoting consumer protection and preventing antitrust violations among businesses. Under Section 5 of the Federal Trade Commission Act, the agency is given the authority to investigate and prevent unfair or deceptive acts or practice in commerce.
One of the points of debate about Section 5 of the Federal Trade Commission Act is exactly what conduct is prohibited. Unfair competition, it has been argued, is not sufficiently defined under the law such that businesses are able to know with a reasonable degree of certainty that they are in compliance with the law.
The Federal Trade Commission is expected to announce a new policy statement this week that would clarify what conduct is prohibited under the law as it relates to unfair competition. Not everybody feels that the clarification is necessary, and some argue that businesses are making a bigger deal than they need to about the unfair competition provision. Part of the reason for this, it is argued, is that the unfair competition provision is not often used to pursue enforcement actions.
Still, the clarification will not only force the Federal Trade Commission to be more specific about the cases it will pursue, but will also allow businesses to engage in more effective compliance efforts. This, of course, is very important, since companies cannot effectively avoid liabilities if they are not clear about their legal obligations.