Federal Antitrust Enforcement in the United States - ABA YLD 101 Practice Series

By Jessica M. Hoke

The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) share jurisdiction over enforcement of the United States’ federal antitrust laws.  This article discusses the FTC’s and the DOJ’s organizational structures, as well as the antitrust laws they enforce and the procedural options available to enforce these laws.

Organizational Structure
The FTC is an independent agency composed of five Commissioners appointed by the President and confirmed by the Senate.  The Commissioners are appointed for staggered seven-year terms and no more than three Commissioners can be members of the same political party.  The President chooses a chairman from among the five Commissioners.  The Commissioners’ terms do not necessarily coincide with or terminate when a new President is inaugurated.  See Federal Trade Commission Act, 15 U.S.C. § 41 et seq.  The FTC is divided into three main bureaus: the Bureau of Competition; the Bureau of Consumer Protection; and the Bureau of Economics.  In addition, the FTC has other offices that are separate from these three bureaus and serve the entire agency ( e.g., General Counsel, Policy Planning, Secretary, Executive Director). 

The Assistant Attorney General for Antitrust, appointed by the President and confirmed by the Senate, is in charge of DOJ’s Antitrust Division.  The Antitrust Division is divided into five branches: Economic Analysis, International Enforcement, Criminal Enforcement, Regulatory Matters, and Civil Enforcement.  Similar to the FTC, the Antitrust Division has other offices that serve the entire Division ( e.g., Special Counsel, Executive Office, Appellate, Legal Policy).
Substantive Standards of Antitrust Enforcement

  • Collusion Cases
    • The DOJ brings collusion cases under Section 1 of the Sherman Act, which prohibits any unreasonable “contract, combination or conspiracy in restraint of trade.” 15 U.S.C. §1.
    • The FTC does not directly enforce the Sherman Act.  Rather, the FTC enforces collusion cases under Section 5 of the FTC Act, which bans “unfair methods of competition.” 15 U.S.C. §45.  Courts have held that the FTC Act prohibits conduct that would violate Section 1 of the Sherman Act. See FTC v. Brown Shoe Co., Inc., 384 U.S. 316, 321 (1966).
  • Monopolization Cases
    • The DOJ enforces monopolization cases under Section 2 of the Sherman Act, which prohibits “monopolization, attempted monopolization or conspiracy or combination to monopolize.” 15 U.S.C. §2.
    • The FTC enforces monopolization cases through the FTC Act’s ban against “unfair methods of competition.” 15 U.S.C. §45.  Courts have held that this language covers conduct that would violate Section 2 of the Sherman Act. Fashion Originators’ Guild, Inc. v. FTC, 312 U.S. 457, 463-64 (1941).
  • Merger Enforcement Under the Clayton Act
    • Both the FTC and the DOJ enforce Section 7 of the Clayton Act, which prohibits mergers and acquisitions where the effect “may be substantially to lessen competition or tend to create a monopoly.” 15 U.S.C. §18.  When an agency wants to investigate a merger, the merger is “cleared” to either the FTC or DOJ for review.  The clearance process takes into account each agencies’ relevant expertise in the product market in question to determine which agency will review the proposed merger or acquisition.  The clearance process also is used to determine which agency will investigate nonmerger cases.
    • The FTC and the DOJ recently released an updated version of the Horizontal Merger Guidelines, which explains how the agencies evaluate the competitive effects of a proposed merger. ( www.ftc.gov/os/2010/08/100819hmg.pdf).
  • Unfair Methods of Competition Under Section 5 of the FTC Act
    • In FTC v. Brown Shoe Co., Inc., 384 U.S. 316, 322 (1966), the U.S. Supreme Court stated that “it is clear that the Federal Trade Commission Act was designed to supplement and bolster the Sherman Act and the Clayton Act to stop in their incipiency acts and practices which, when full blown, would violate those Acts as well as to condemn as ‘unfair methods of competition’ existing violations of them.” The FTC has used its Section 5 authority to investigate “invitation to collude” cases.  For example, the FTC investigated U-Haul’s unilateral attempt to enter into a collusive agreement on truck rental prices, even though the attempt itself would not likely violate the Sherman Act.  See In the Matter of U-Haul Int’l, Inc. and AMERCO, Docket No. C-4294 (June 9, 2010).

Antitrust Enforcement Procedure

  • Only the FTC has access to administrative litigation.
    • The FTC may file its complaints either in the federal district court or before an Administrative Law Judge (ALJ).  Only the FTC can file complaints before an ALJ.  Administrative procedures are governed by Section 5(b) of the FTC Act and are similar to a formal proceeding before a federal court.  Parties may appeal ALJ decisions to the full Commission.  Commission decisions are then appealable to any Circuit Court of Appeals where the act or practice occurred or where the respondent company resides or does business. 15 U.S.C. §45(c).
    • Unlike the FTC, the DOJ can only file its antitrust complaints in federal district court.  Like most cases filed in district court, the parties may appeal to the relevant Circuit.
  • Only the DOJ has jurisdiction over criminal antitrust violations.
    • Although both the FTC and the DOJ have a number of civil remedies available under the antitrust laws, including consent decrees and injunctive relief, only the DOJ, under the Sherman Act, can impose criminal penalties.  These criminal penalties are generally reserved for conduct that is a clear and intentional violation, such as blatant price-fixing or bid-rigging.   See U.S. v. Northwest Airlines, LLC, CR-10-204 (D.D.C. July 30, 2010) (where Northwest Airlines, LLC agreed to pay a $38 million criminal fine for its role in a conspiracy to fix prices in the air transportation industry). The FTC can refer evidence of criminal antitrust violations to the DOJ for its  review.

Although there are two antitrust enforcement agencies in the United States with similar enforcement jurisdiction, it is important to understand both the similarities and differences between the agencies.  As explained above, the key differences involve the FTC’s Section 5 jurisdiction and access to administrative litigation, and DOJ’s criminal antitrust authority. 

Additional resources to help understand the FTC and DOJ include the FTC’s Administrative Staff Manuals ( http://ftc.gov/foia/adminstaffmanuals.shtm), DOJ’s Antitrust Division Manual ( www.justice.gov/atr/public/divisionmanual/index.html), and the American Bar Association Section of Antitrust Law’s “FTC Practice and Procedure Manual” ( www.abanet.org/abastore/index.cfm?section=main&fm=Product.AddToCart&pid=5030505).


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About the Author

Jessica M. Hoke is an Attorney Advisor in the FTC’s Office of Policy Planning.  The views stated herein are the author’s own and do not represent the views of the Federal Trade Commission or any Commissioner.

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