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13 February 2020
Until recently, the Federal Trade Commission's (FTC's) ability to seek monetary equitable remedies (particularly disgorgement and restitution) for alleged antitrust violations went virtually unchallenged. The FTC brought few antitrust cases in the years following the enactment of Section 13(b) of the FTC Act in 1973 and formalised its conservative approach in its 2003 Policy Statement on Monetary Equitable Remedies in Competition Cases. However, in 2012 the FTC withdrew its 2003 policy statement, asserting that it had created "an overly restrictive view of the Commission's options for equitable remedies" and that the FTC no longer believed that disgorgement and restitution "should apply only in 'exceptional cases'".(1) Subsequently, there was a sharp increase in the number of antitrust cases in which the FTC sought monetary equitable remedies for completed, not ongoing or imminent anti-competitive conduct.
This trend may have ended. Shire, the most recent appellate case that interprets the FTC's monetary equitable remedies under Section 13(b), provides a bright line test that prevents the FTC from seeking monetary equitable remedies for anti-competitive conduct that is neither ongoing nor about to occur.
In Shire,(2) the Third Circuit held that the express language and statutory history of Section 13(b) limit the FTC's use thereof to anti-competitive conduct that "is violating, or is about to violate" the law. The court held that Section 13(b) authorises the FTC to file suit in the federal district courts in certain circumstances,(3) and concluded that the express language of the statute "does not permit the FTC to bring a claim based on long-past conduct without some evidence that the defendant 'is' committing or 'is about to' commit another violation".(4)
Shire leaves open many questions about the FTC's ability to seek monetary equitable remedies in antitrust cases pursuant to Section 13(b). One question concerns cases in which the effects of the allegedly anti-competitive act are ongoing but the conduct itself is not. However, it stands to reason that in cases brought after the effects of the allegedly anti-competitive conduct have ended, Shire would presumably prevent the FTC from seeking monetary equitable remedies. The question of whether ongoing effects from a completed action would affect monetary equitable remedies also arises in the context of mergers and consumer protection cases brought by the FTC.
Shire's limitation on the FTC's authority to seek monetary equitable remedies for alleged anti-competitive conduct to situations where the defendant is or is about to violate the antitrust laws is fully consistent with the rationale and express language of Section 13(b). It remains to be seen whether other circuit courts will follow Shire and how it will be applied in cases where completed conduct but ongoing harm is alleged. Shire may be viewed as weakening one of the FTC's most important remedial powers and deterrents to anti-competitive conduct. If it is indeed Congress's intention to allow the FTC to seek monetary equitable remedies for past antitrust conduct, and if Shire is followed by other courts, the remedy is to amend Section 13(b).
For further information on this topic please contact Gerald A Stein at Norton Rose Fulbright by telephone (+1 212 318 3000) or email (firstname.lastname@example.org). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.
An earlier version of this article was first published in the Fall 2019 American Bar Association Antitrust Magazine in December 2019.
(1) Statement of the FTC regarding the withdrawal of its Policy Statement on Monetary Equitable Remedies in Competition Cases (31 July 2012), available here.
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