The Federal Trade Commission may soon define more clearly what constitutes unfair competition. Healthcare players would welcome the clarity in a nebulous area of antitrust law, experts say, but it's not likely to change the FTC's enforcement approach.
The commissioners are nearing a bipartisan agreement on principles for going after companies engaged in unfair competition, the Wall Street Journal reported this week citing unnamed sources.
Federal law says that “unfair methods of competition in or affecting commerce” are illegal, but the FTC has never formally issued guidelines describing what kinds of conduct violate that provision. A number of Republicans have argued that the lack of guidance leaves businesses vulnerable to enforcement actions for things they didn't know were illegal. Others, however, counter that it's best for the FTC to have flexible powers of enforcement to deal with new and changing business practices.
An FTC spokeswoman declined to comment on the matter Wednesday.
But Richard Feinstein, a former director of the FTC's Bureau of Competition, said he expects any guidance from the FTC to be brief and general.
“I don't think it's necessarily going to increase the quantity of cases, and I don't think it suggests any particular industry is going to be singled out,” said Feinstein, now a partner at Boies, Schiller and Flexner in Washington, D.C.
The section of the law at issue is now used in situations that don't specifically violate antitrust laws but are nevertheless deemed out of bounds. Feinstein said the law has most frequently been applied in situations involving invitations to collude, such as when one party proposes to a competitor that they both raise prices, but the competitor doesn't agree. Because there's no agreement, there's no price-fixing violation.
Robert Leibenluft, a former head of the healthcare division within the FTC's Bureau of Competition, said he suspects that whatever agreement is reached will be narrowly defined, especially if it's voted out unanimously.
“In any sector of the economy, including healthcare, it's not likely to expand what is subject to FTC review,” said Leibenluft, now a partner at Hogan Lovells in Washington, D.C.
That's partly because commissioners have long had trouble agreeing on principles surrounding unfair competition, even as they've faced pressure from Republicans to issue specific guidance. In 2008, FTC leaders indicated they hoped to craft a policy statement, but that never happened.
“It was difficult to find a consensus with respect to the specifics,” said Feinstein, who led the FTC's Bureau of Competition from 2009 to 2013.
Republican members of the House Judiciary Committee wrote a letter to FTC Chairwoman Edith Ramirez in 2013 saying that the lack of guidance has created uncertainty that “acts as a deterrent to innovation and creativity, which are critical drivers of the American economy and are vitally important in today's challenging economic environment.”
Ramirez, however, has sided with those who say the ambiguity allows the FTC to adapt its enforcement policies as business practices change. “While I do not object to guidance in theory, I am less interested in prescribing our future enforcement actions than in describing the broad enforcement principles revealed in our recent precedent,” she said in a 2014 speech.
But the provision has been used only rarely in recent years and most of the cases were resolved with consent orders, leaving little case law as guidance.
Charles Johnson, a partner at Holland and Knight in Atlanta who focuses on public policy and complex business disputes, said an agreement could be a positive development for healthcare and other businesses.
“It would provide certainty,” Johnson said. “What people in the business world abhor is uncertainty, and if there's certainty people can adjust their conduct to it.”
