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The Federal Trade Commission Act of 1914 didn’t just create a new agency. It created new law for that agency to enforce. The heart of that law is Section 5, which provides that ‘unfair methods of competition in or affecting commerce’ are ‘hereby declared unlawful’. In passing this law, Congress also tasked the FTC with identifying the range of methods of competition that qualify as unfair, since lawmakers recognized they could not specify them all prospectively.

This is a straightforward reading of the statute, and yet it is somewhat controversial. There is a school of thought that considers Section 5’s prohibition of unfair methods of competition to be almost a dead letter. According to this view, Section 5 should be read merely as extending Sherman Act enforcement authority to the FTC. Even though the statute outlaws a clearly distinct category of conduct, it is argued that ‘unfair methods of competition’ should be defined by reference to Sherman ‘rule of reason’ case law.


Antitrust and Trade Regulation | Economic History | Law