FTC Signals Intent to Pursue Monetary Equitable Remedies More Aggressively
A recent Federal Trade Commission (“FTC”) announcement indicates that the FTC intends to be more aggressive in pursuing monetary equitable remedies, such as disgorgement of ill-gotten gains and restitution to victims, when challenging, in federal court, companies’ alleged anti-competitive conduct.
On July 31, 2012, the FTC announced that it is withdrawing its July 25, 2003 Policy Statement on Monetary Equitable Remedies in Competition Cases. In that 2003 Policy Statement, the FTC had stated that “in general” it would continue to rely primarily on “prospective remedies” such as structural or behavioral relief (i.e., asset divestitures or conduct prohibitions), and seek monetary equitable remedies such as disgorgement and restitution in “exceptional cases.” The 2003 Policy Statement enumerated three factors the FTC would generally consider in seeking monetary relief: “(1) whether the underlying violation is ‘clear’; (2) whether there is a reasonable basis to calculate the remedial payment; and (3) whether remedies in other civil or criminal litigation are likely to accomplish fully the purposes of the antitrust laws.” July 31, 2012 Statement of the Commission, p. 1.
In its July 31st announcement, the FTC stated its belief that the 2003 Policy Statement “has chilled the [FTC’s] pursuit of monetary remedies in the years since the statement’s issuance,” and noted that the FTC has only pursued monetary equitable remedies in two cases since the statement was issued. Id., p. 2. The FTC stated that the “clarity” factor has been misread to mean that monetary remedies should not be pursued in cases of first impression, and that the “other litigation” factor could be misread to require the FTC to prove the insufficiency of other actions to obtain monetary relief. The FTC stated that both misinterpretations were too restrictive and suggested a heightened standard that was not appropriate. The FTC noted that its minimal pursuit of monetary remedies has come “[a]t a time when Supreme Court jurisprudence has increased burdens on plaintiffs, and legal thinking has begun to encourage greater seeking of disgorgement.” Id.
Therefore, the FTC is withdrawing the 2003 Policy Statement and will rely upon existing case law in exercising its discretion to seek monetary equitable remedies. The FTC stated that “disgorgement and restitution can be effective remedies in competition matters, both to deprive wrongdoers of unjust enrichment and to restore their victims to the positions they would have occupied but for the illegal behavior. Because the ordinary purpose and effect of anticompetitive conduct is to enrich wrongdoers at the expense of consumers, competition cases may often be appropriate candidates for monetary equitable relief.” Id., p. 1.
Thus, it appears likely that the FTC will begin seeking monetary equitable relief, such as disgorgement and restitution, more often in the cases it brings in federal court to enforce the nation’s competition laws (i.e., the Hart-Scott-Rodino Act, FTC Act and the Clayton Act).