Corporate Law Blog

Businesses receive greater clarity on obligations under federal law

For businesses, navigating compliance with federal and state law is not always an easy task. Aside from the sheer amount of regulation, there is also the fact that the law is not always clear about what a business’s obligations really are.

Take, for example, the Federal Trade Commission Act of 1914, which was established to protect consumers from unfair trade practices on the part of corporations. Section 5 of that law prohibits “unfair methods of competition in or affecting commerce,” and the Federal Trade Commission relies on this provision from time to time to hold companies liable for antitrust violations not covered by other laws. The problem with the provision has been that it doesn’t specific exactly what constitutes “unfair methods of competition.”

Last week, the Federal Trade Commission issued policy guidelines specifying when the commission will take action under Section 5 of the law. The guidelines will hopefully address the longstanding concern about the risk of government overreach in connection with the provision. Hopefully the guidelines will provide businesses with greater clarity on how they can avoid liability under the law. One of the marks of a good law, of course, is that it is clearly written so that the public is on notice about their obligations.

As we’ve mentioned before, it is important for businesses to have solid compliance programs to make sure they are meeting their legal obligations and limiting their liabilities. Setting up a solid compliance program is obviously a much easier task when a company is clear about the requirements of the law, and experienced counsel can be an important asset in this regard.