FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 2/12/2021 | OSCAR NO. 600667 | PUBLIC

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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

OFFICE OF THE ADMINISTRATIVE LAW JUDGES 

In the Matter of 

HEALTH RESEARCH LABORATORIES, LLC, 

a limited liability company, 

DOCKET NO. 9397 

WHOLE BODY SUPPLEMENTS, LLC, 

a limited liability company, and 

KRAMER DUHON, 

individually and as an officer of HEALTH 

RESEARCH LABORATORIES, LLC and 

WHOLE BODY SUPPLEMENTS, LLC 

RESPONDENTS’ MOTION FOR LEAVE TO AMEND 

Pursuant to 16 C.F.R. § 3.12(b)(2), Respondents have elected not to contest the 

material allegations in the Complaint and request leave to amend to enter an Amended 

Answer consistent this election pursuant to 16 C.F.R. § 3.12(b)(2). 

Summary 

The Commission filed this Administrative Complaint alleging that Respondents 

have “disseminated or [have] caused to be disseminated advertising and promotional 

materials”1 for four supplements that the Commission contends were “not substantiated 

at the time the representations were made.”2 Because Respondents ceased all advertising 

and promotion of these supplements more than a year ago and have no intention of 

1 See Complaint, ¶¶ 7, 9, 11 and 13. 

2 See Complaint, ¶¶ 15, 17, 19, and 21. 

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disseminating any advertising or promotional materials for the supplements in the future 

and for the other reasons set forth below, Respondents seek leave to amend under 16 

CRF § 3.12(b)(2) because the Respondents elect not to contest the material allegations of 

fact set forth in the complaint. 

Statement of Facts 

Because Respondents are seeking to simply admit all material allegations in the 

Complaint—as provided by 16 CFR § 3.12(b)(2), the reasons why Respondents seek this 

amendment are likely irrelevant. However, because of the concern that this election to 

not contest the allegations may be misconstrued in the future, Respondents set forth the 

reasons below. 

Respondents have been fighting with the FTC since 2015. Respondents thought 

that the matters were settled in January 2018 when the Respondents agreed to pay the 

FTC $750,000 and agreed to an onerous Consent Judgment signed by United States 

District Judge Jon Levy on January 16, 2018. Not long after the settlement, the FTC 

asserted that Respondents were in violation of the Consent Judgment. With the help of 

legal counsel and other consultants, Respondents tried to convince the FTC otherwise. 

When the efforts at resolution seemed destined to fail, Respondents ceased all marketing 

of the supplements at issue. Despite the complete termination of the complained of acts 

and practices, the FTC filed a Motion for Show Cause (“motion for contempt”) on 

December 17, 2020, seeking $2,737,468 in monetary sanctions. When Judge Levy denied 

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the motion for contempt on August 12, 2020, Respondents again hoped the dispute with 

the FTC had ended. 

On November 13, 2020, the FTC filed its Administrative Complaint. Since filing 

its Part 3 Administrative Complaint, the FTC has served burdensome discovery requests 

and issued 14 subpoenas to virtually every person or entity to whom Respondents have 

conducted business, including Respondents’ former legal counsel. Assuming that anyone 

would want to continue to do business with Respondents after receiving a subpoena from 

the federal government, Respondents do not have the resources to continue to this fight. 

Respondents have additional reasons for seeking to amend their answer to amend 

all of the allegations of fact in the Administrative Complaint. Respondents do not believe 

that the Part 3 administrative process is fair, impartial, or constitutional. As Respondents 

understand the process, the FTC’s Commissioners vote out a complaint that is prosecuted 

by FTC lawyers before an Administrative Law Judge who is paid by the FTC, who 

renders a decision that is appealable to the FTC’s Commissioners on a de novo basis. See 

16 C.F.R. § 3.54. According to one source and a review of post-2015 administrative 

cases, once the FTC Commissioners vote out a complaint, the FTC Commissioners use 

their veto appellate power to ensure that they have a 100 percent success rate. See Ex. 1, 

Joshua D. Wright, Section 5 Revisited: Time for the FTC to Define the Scope of its Unfair 

Competition Authority at 6 (2015) and Ex. 2 (Post-2015 Chart of FTC Cases). In 2015, 

former Commissioner Wright observed: 

The FTC has voted out a number of complaints in administrative 

adjudication that have been tried by the administrative law judges in the 

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past nearly twenty years. In each of those cases, after the administrative 

decision is appealed to the Commission, the Commission has ruled in favor 

of FTC staff and found liability. In other words, in 100 percent of cases 

where administrative law judge ruled in favor of the FTC staff, the 

Commission affirmed liability; and in 100 percent of the cases in which the 

administrative law judge [ ] found no liability, the Commission reversed. 

This is a strong sign of an unhealthy and biased institutional process.

3 

Respondents have additional material reasons for requesting leave to amend the 

Answer, but cannot disclose those reasons at this time without possibly waiving the 

attorney client privilege and work product privilege applicable to the legal services 

performed by Respondents’ former legal counsel. 

Argument and Authorities 

Respondents do not seek to add allegations or defenses to their Answer. On the 

contrary, Respondents request leave to admit the few material allegations that 

Respondents did not admit in the Original Answer. The FTC is not prejudiced by this 

proposed Amended Answer. On the contrary, the FTC is benefitted because it does not 

have to prove any disputed factual allegations. 16 CFR § 3.12(b)(2) provides as follows: 

(2) If allegations of complaint are admitted. If the respondent elects not to 

contest the allegations of fact set forth in the complaint, the answer shall 

consist of a statement that the respondent admits all of the material 

allegations to be true. Such an answer shall constitute a waiver of hearings 

as to the facts alleged in the complaint, and together with the complaint will 

provide a record basis on which the Commission shall issue a final decision 

containing appropriate findings and conclusions and a final order disposing 

of the proceeding. In such an answer, the respondent may, however, reserve 

the right to submit proposed findings of fact and conclusions of law under § 

3.46. 

3 Ex. 2, Joshua D. Wright, Section 5 Revisited: Time for the FTC to Define the Scope of its Unfair 

Competition Authority at 6 (2015). As set forth on the chart attached as Exhibit 3, the FTC’s success rate 

post-2015 has continued. See Ex. 3 (Chart prepared from FTC website). 

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Pursuant to 16 CFR § 3.12(b)(2), Respondents reserve the right to submit proposed 

findings of fact and conclusions of law. A copy of the proposed Amended Answer is 

attached as Exhibit 1. 

Prayer and Conclusion 

For the reasons set forth herein, Respondents have elected not to contest the 

allegations of fact set forth in the Complaint and, to conform the pleadings to this 

election, Respondents respectfully request that the Court grant leave to amend the answer 

in the form attached as Exhibit 1. Respondents request such other and further relief to 

which Respondents may justly be entitled to receive. 

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Dated: February 12, 2021 Respectfully submitted, 

REESE MARKETOS LLP 

By: /s/ Joel W. Reese 

Joel W. Reese 

Texas Bar No. 00788258 

joel.reese@rm-firm.com 

Joshua M. Russ 

Texas Bar No. 24074990 

josh.russ@rm-firm.com 

750 N. Saint Paul St., Suite 600 

Dallas, TX 75201-3201 

Telephone: (214) 382-9810 

Facsimile: (214) 501-0731 

ATTORNEYS FOR RESPONDENTS 

CERTIFICATE OF COMPLIANCE 

Pursuant to Paragraph 4 of the Court’s December 14, 2020 Scheduling Order, the 

undersigned counsel represents that, on February 12, 2021, he attempted to confer by 

email with Complaint Counsel regarding this motion at 11:41 AM CST. Complaint 

Counsel has not yet responded. Considering the nature of the motion (admitting all 

material facts), Respondents assume that Complaint Counsel does not oppose the relief.

 /s/ Joel W. Reese 

Joel W. Reese 

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CERTIFICATE OF SERVICE 

I hereby certify that on February 12, 2021, I filed the foregoing document 

electronically using the FTC’s E-Filing system, which will send notification to: 

April J. Tabor The Honorable D. Michael Chappell 

Acting Secretary Administrative Law Judge 

Federal Trade Commission Federal Trade Commission 

600 Pennsylvania Ave., NW, Rm. H-113 600 Pennsylvania Ave., NW, Rm. H-110 

Washington, DC 20580 Washington, DC 20580 

ElectronicFilings@ftc.gov 

Elizabeth Averill 

eaverill@ftc.gov 

Jonathan Cohen 

jcohen2@ftc.gov 

COMPLAINT COUNSEL 

/s/ Joel W. Reese 

Joel W. Reese 

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FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 2/12/2021 | OSCAR NO. 600667 | PUBLIC

Exhibit 1 

PUBLIC
FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 2/12/2021 | OSCAR NO. 600667 | PUBLIC

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UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

COMMISSIONERS: Joseph J. Simons, Chairman 

Noah Joshua Phillips 

Rohit Chopra 

Rebecca Kelly Slaughter 

Christine S. Wilson 

In the Matter of 

HEALTH RESEARCH LABORATORIES, LLC, 

a limited liability company, 

DOCKET NO. 9397 

WHOLE BODY SUPPLEMENTS, LLC 

a limited liability company, and 

KRAMER DUHON, Exhibit 

individually and as an officer of HEALTH 1 

RESEARCH LABORATORIES, LLC and 

WHOLE BODY SUPPLEMENTS, LLC 

[PROPOSED] RESPONDENTS’ AMENDED ANSWER 

Respondents Health Research Laboratories, LLC (“HRL”), Whole Body 

Supplements, LLC (“WBS”) and Kramer Duhon (collectively, “Respondents”) file this 

Amended Answer to the Complaint filed by the Federal Trade Commission (“FTC”). 

ANSWER PURSUANT TO 16 CFR § 3.12(b)(2) 

Pursuant to 16 CFR § 3.12(b)(2), Respondents elect not to contest the allegations 

of fact set forth in the complaint. Respondents admit all of the material allegations to be 

true. Pursuant to 16 CFR § 3.12(b)(2), Respondents reserve the right to submit proposed 

findings of fact and conclusions of law. 

LEGAL DEFENSES 

1. Requested Relief Exceeds Statutory Authorization: Section 5 of the FTC Act only 

grants the Commission the legal authority to enter an “order requiring such person, 

partnership, or corporation to cease and desist from using such method of competition or 

such act or practice.” 15 U.S.C. § 45(b). FTC requests relief that exceeds the authority 

granted to the FTC under the FTC Act. Respondents object to any Order that includes 

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any findings, statements, or relief that exceeds the statutory authority granted by the FTC 

Act. 

2. Mootness and Lack of Statutory Authority: The causes of action alleged in the 

Complaint are barred by mootness because all alleged conduct (i.e., marketing and 

advertising) referenced in the Complaint ceased more than year prior to the filing of the 

Complaint and will not reoccur in the future. The FTC has alleged no facts regarding a 

likelihood of reoccurrence. Further, the FTC Act does not grant the FTC the authority to 

seek a cease and desist order under these circumstances. 

3. Not in the public interest: Neither the filing of the administrative action nor the 

contemplated relief is in the public interest as required by 15 U.S.C. § 45. 

4. Violation of the United States Constitution: The FTC’s administrative process 

violates the Fifth Amendment to the United States Constitution because it seeks to deny 

Respondents of property and rights without due process of law. Further, the FTC 

receives its authority through Article II of the United States Constitution. The FTC’s 

structure violates and is inconsistent with Article II of the United States Constitution 

because the Commissioners and the Administrative Law Judges (“ALJs”) can only be 

removed by the President for “inefficiency, neglect of duty, or malfeasance in office,” 

which means that the Commissioners and the ALJs are not subject to the supervision and 

authority of the President. 

5. De Novo Review of Factual Findings Violates of the United States Constitution: 

Even though the Commissioners do not hear live testimony from witnesses, the 

Commissioners conduct a de novo review of the ALJ’s factual findings. This de novo 

review of the ALJ’s factual findings violates the United States Constitution and the 

Administrative Procedure Act. 

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Dated: February 12, 2021 Respectfully submitted, 

REESE MARKETOS LLP 

By: /s/ Joel W. Reese 

Joel W. Reese 

Texas Bar No. 00788258 

joel.reese@rm-firm.com 

Joshua M. Russ 

Texas Bar No. 24074990 

josh.russ@rm-firm.com 

750 N. Saint Paul St., Suite 600 

Dallas, TX 75201-3201 

Telephone: (214) 382-9810 

Facsimile: (214) 501-0731 

ATTORNEYS FOR RESPONDENTS 

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CERTIFICATE OF SERVICE 

I hereby certify that on February 12, 2021, I filed the foregoing document 

electronically using the FTC’s E-Filing system, which will send notification to: 

April J. Tabor The Honorable D. Michael Chappell 

Acting Secretary Administrative Law Judge 

Federal Trade Commission Federal Trade Commission 

600 Pennsylvania Ave., NW, Rm. H-113 600 Pennsylvania Ave., NW, Rm. H-110 

Washington, DC 20580 Washington, DC 20580 

ElectronicFilings@ftc.gov 

Elizabeth Averill 

eaverill@ftc.gov 

Jonathan Cohen 

jcohen2@ftc.gov 

COMPLAINT COUNSEL 

/s/ Joel W. Reese 

Joel W. Reese 

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FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 2/12/2021 | OSCAR NO. 600667 | PUBLIC

Exhibit 2 

PUBLIC
Federal Trade Commission 

Section 5 Revisited: Time for the FTC to Define the 

Scope of Its Unfair Methods of Competition Authority 

Remarks of Joshua D. Wright" 

Commissioner, Federal Trade Commission 

at the 

Symposium on Section 5 of the Federal Trade Commission Act 

The Willard InterContinental 

Washington, D.C. 

February 26, 2015 

Good afternoon. Thank you for the kind introduction and warm welcome. I am 

delighted to be here today. I would like to thank Baker Hostetler, and especially Carl 

Bittinger, for organizing this terrific symposium and for the generous invitation to 

share my views with you this afternoon. Events such as this one are no small task to 

organize and they serve an incredibly important role in the development of antitrust 

and consumer protection law because they offer a vital platform for the honest 

exchange of ideas among practitioners, consumer advocates, agency officials, members 

• The views stated here are my own and do not necessarily reflect the views of the Commission or any 

other Commissioner. I am grateful to my attorney advisor, Jan M. Rybnicek, for his invaluable assistance 

in preparing this speech. 

Exhibit 

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Exhibit 

2

3 
of the judiciary, and Congress. Given the caliber of the panelists at today's event, I have 

no doubt that we will all walk away having learned something new about Section 5. 

I have made no secret of the fact that I believe there is no more important 

challenge facing the Commission today than finally articulating the appropriate scope 

and role of the agency's "unfair methods of competition" authority under Section 5. 

The historical record reveals a remarkable and unfortunate gap between the theoretical 

promise of Section 5 as articulated by Congress over a century ago and its application in 

practice by the Commission. Congress intended Section 5 to play a key role in the 

Commission's competition mission by allowing the agency to leverage its institutional 

advantages to develop evidenced-based competition policy. However, the record 

suggests that the Commission's use of Section 5 has done very little to influence 

antitrust doctrine or to inform judicial thinking since the agency's inception. In order to 

fulfill Section 5' s promise, and finally provide meaning and purpose to the agency's 

signature competition statute, it is clear that the Commission must first provide a 

framework for how it intends to use its "unfair methods of competition" authority. 

That is why, soon after joining the Commission, I publicly distributed a proposed 

policy statement outlining my views as to how the Commission should use its Section 5 

authority. My hope was that doing so would start-or at least restart-a conversation 

on the topic and help the Commission identify areas of consensus upon which we as an 

agency could build. I view the release of my proposed policy statement as an 

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unequivocal success in this regard. In the two years since issuing my policy statement, I 

have been pleased by the many thoughtful contributions to the marketplace of ideas 

discussing the scope and role of Section 5. Academics and practitioners have 

responded to the Section 5 debate with dozens of articles and hundreds of pages of 

analysis. Current and former Commissioners also have shared their views. 

Conferences have been held, replies have been written, criticisms leveled, biogs posted,. 

and speeches made-there was even a Section 5 hashtag on Twitter for a few days. The 

point is, a substantial record has been compiled. These contributions have helped bring 

several key policy questions into focus and, in my view, positioned the agency to 

undertake the long overdue task of issuing a policy statement that both strengthens the 

Commission's ability to target anticompetitive conduct and provides meaningful 

guidance to the business community about the contours of Section 5. 

I would like begin today by briefly taking stock of the Section 5 debate. I would 

like to summarize the case for formal agency guidance defining the boundaries of 

Section 5 and dispel a couple of myths about the disadvantages to drawing some 

meaningful parameters around the Commission's "unfair methods of competition" 

authority. Beyond taking stock of the current debate, I also would like to share with 

you what I think is the next logical step in rehabilitating Section 5 and making it a 

productive member of the competition community as the Commission embarks upon 

its second century of protecting competition and consumers. Lastly, I would like to 

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discuss some of my concerns about what is likely to happen to the FTC's Section 5 

authority if the Commission fails to provide guidance. I intend to leave time for 

questions at the end of my remarks, so please do not be shy when that time comes. 

Before I get too far along in my comments, however, I am obligated to provide a 

short disclaimer familiar to most of you, and that is that the views I express today are 

my own and not necessarily those of the Commission or any of the other 

Commissioners. With that bit of business out of the way, let's jump right in. 

I. THE CASE FOR FORMAL GUIDANCE DEFINING THE SCOPE OF 

THE FTC'S "UNFAIR METHODS OF COMPETITION" AUTHORITY 

I have shared my views on why the Commission should issue formal guidance 

defining the parameters of the agency's "unfair methods of competition" authority in 

countless forums since coming to the Commission. 1 Rather than using my time today 

to restate each of those arguments in detail again, I would like to quickly touch upon 

what I view as the most salient points before moving on to what I propose the agency 

should do as a first step to rehabilitating Section 5 so that it can contribute effectively to 

the Commission's competition mission as Congress intended. 

1 See, e.g., Joshua D. Wright, Recalibrating Section 5: A Response to the CPI Symposium, 11 CPI ANTITRUST 

CHRON., Nov. 2013, available at 

http://www.ftc.gov/sites/default/files/documents/public_statements/recalibrating-section-5-response-cpisymposium/1311section5.pdf; Joshua D. Wright, Comm'r, Fed. Trade Comm'n, Section 5 Recast: Defining 

the Federal Trade Commission's Unfair Methods· of Competition Authority, Remarks at the Executive 

Committee of the New York State Bar Association's Antitrust Section Gune 19, 2013), 

http://www.ftc.gov/sites/default/files/documents/public_statements/section-5-recast-defining-federaltrade-commissions-unfair-methods-competition-authority/130619section5recast.pdf. 

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There are at least two principal reasons the Commission's "unfair methods of 

competition" authority has not lived up to its Congressional promise, both of which 

would be solved by formal guidance explaining how the agency intends to implement 

Section 5 as part of its competition mission. The first reason arises from a combination 

of (1) the agency's administrative process advantages and (2) the vague and ambiguous 

nature of the agency's "unfair methods of competition" authority. Together these two 

characteristics pose a unique barrier to· the application of Section 5 in a manner that 

consistently benefits rather than harms consumers. 

The vague and ambiguous nature of Section 5 is well known. Proposed 

definitions for what constitutes an "unfair method of competition" have varied 

substantially over time and belief that the modern FTC has now somehow moved 

beyond this inherent product of its institutional design are no more than wishful 

thinking. Indeed, for at least the past twenty years, commissioners from both parties 

have acknowledged that a principled standard for the application of Section 5 would be 

a welcome improvement. The lack of institutional commibnent to a stable definition of 

what constitutes an "unfair method of competition" leads to two sources of problematic 

variation in the agency's interpretation of Section 5. One is that the agency's 

interpretation of the statute in different cases need not be consistent even when the 

individual Commissioners remain constant. Another is that as the members of the 

Commission change over time, so does the agency's Section 5 enforcement policy, 

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leading to wide variations in how the Commission prosecutes "unfair methods of 

competition" over time. In short, the scope of the Commission's Section 5 authority 

today is as broad or as narrow as a majority of commissioners believes it is. 

This uncertainty surrounding the scope of Section 5 is exacerbated by the 

administrative procedures available to the Commission. Consider the following 

empirical observation. The FTC has voted out a number of complaints in 

administrative adjudication that have been tried by administrative law judges in the 

past nearly twenty years. In each of those cases, after the administrative decision is 

appealed to the Commission, the Commission has ruled in favor of FTC staff and found 

liability. In other words, in 100 percent of cases where the administrative law judge 

ruled in favor of the FTC staff, the Commission affirmed liability; and in 100 percent of 

the cases in which the administrative law judge ruled found no liability, the 

Commission reversed. 2 This is a strong sign of an unhealthy and biased institutional 

process. By way of contrast, when the antitrust decisions of federal district court judges 

are appealed to the federal courts of appeal, plaintiffs do not come anywhere close to a 

100 percent success rate-indeed, the win rate is much closer to 50 percent. Even bank 

robbery prosecutions have less predictable outcomes than administrative adjudication 

at the FTC. One interpretation of these historical data is that the process at the FTC 

2 See, e.g., David Balto, Can the FTC be a Fair Umpire?, THE HILL (Aug. 14, 2013), 

http://thehill.com/blogs/congress-blog/economy-~-budget/316889-can-the-ftc-be-a-fair-um pire; Doug 

Melamed, Comments to Fed. Trade Comm'n Workshop Concerning Section 5 of the FTC Act (Oct. 14, 

2008), available at http://ftc.gov/os/comments/section5workshop/537633-00004.pdf 

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stacks the deck against the parties. Another is that the FTC has an uncanny knack for 

picking cases; a knack unseen heretofore within any legal institution. I will allow 

discerning readers to choose the most likely of these interpretations-but suffice it to 

say the "case selection" theory requires one to also grapple with the fact that 

Commission decisions, when appealed, are reversed at a rate four times greater than 

antitrust opinions by generalist federal judges.3 

Significantly, the combination of institutional and procedural ad vantages with 

the vague nature of the Commission's Section 5 authority gives the agency the ability, in 

some cases, to elicit a settlement even though the conduct in question very likely may 

not be anticompetitive. This is because firms typically will prefer to settle a Section 5 

claim rather than to go through lengthy and costly litigation in which they are both 

shooting at a moving target and have the chips stacked against them. Such settlements 

also perpetuate the uncertainty that exists as a result of the ambiguity associated with 

the agency's "unfair methods of competition" authority by encouraging a process by 

which the contours of Section 5 are drawn through settlements without any meaningful 

adversarial proceeding or substantive analysis of the Commission's authority. 

The second principal reason Section 5 has failed to contribute effectively to the 

Commission's competition mission is because of the absence of even a minimal level of 

certainty for businesses. A stable definition of what constitutes an "unfair method of 

3 See Joshua D. Wright & Angela M. Diveley, Do Expert Agencies Outperform Generalist Judges? Some 

Preliminary Evidence from the Federal Trade Commission, J. ANTITRUST ENFORCEMENT 1, 16 (2012). 

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competition" would provide businesses with important guidance about what conduct is 

lawful and what conduct is unlawful under Section 5. The benefit of added business 

certainty is less important than ensuring Section 5 enforcement actions-including 

consents-actually reach and deter anticompetitive conduct rather than chill 

procompetitive conduct. However, guidance to the business community surely is 

important. Indeed, the FTC has issued nearly 50 sets of guidelines on a variety of 

topics, many of them much less important than Section 5, to help businesses understand 

how the Commission applies the law and to allow practitioners to better advise their 

clients on how to comply with their legal obligations. Without a stable definition of 

what constitutes an "unfair method of competition," businesses must make difficult 

decisions about whether the conduct they wish to engage in will trigger an 

investigation or worse. Such uncertainty inevitably results in the chilling of some 

legitimate business conduct that would otherwise have enhanced consumer welfare but 

for the firm's fear that the Commission might intervene and the attendant consequences 

of that intervention. Those fears would be of little consequence if the agency's authority 

was defined and businesses could plan their affairs to steer clear of its boundaries. 

Some commentators have asserted that formal agency guidance would too 

severely restrict the Commission's enforcement mission. 4 They warn that defining the 

4 See, e.g., Sharis A. Pozen & Anne K. Six, Section 5 Guidelines: Fixing a Problem that Doesn't Exist?, 9 CPI 

ANTITRUST CHRON., Sept. 2013, available at https://www.competitionpolicyinternational.com/section-5-

guidelines-fixing-a-problem-that-doesn-t-exist/; Edith Ramirez, Chairwoman, Fed. Trade Comm'n, Unfair 

Methods and the Competitive Process: Enforcement Principles for the Federal Trade Commission's Next 

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boundaries of the Commission's "unfair methods of competition" authority would 

achieve stability and clarity only at the expense of creating an enforcement regime that 

fails to adequately protection competition. These commentators instead urge reliance 

upon the same case-by-case approach that has garnered success in the context of the 

traditional antitrust law. Under this view, the scope of the Commission's authority to 

prosecute unfair methods of competition is best determined by reading the leading 

cases to identify which enforcement principles the Commission applies when 

determining whether to prosecute a particular business practice under Section 5. 

Although the desire to strike the correct balance between flexibility and certainty 

is well intended, the so-called common law approach to defining Section 5 is a recipe 

for unprincipled and inconsistent enforcement and an invitation for an outside 

institution-the courts or Congress in particular-to define Section 5 for the FTC. The 

approach of reading a stack of Section 5 consents elicited from parties bargaining in the 

shadow of the administrative process advantages for the FTC just discussed to decipher 

its meaning ultimately offers no certainty and results in a boundless standard under 

which the Commission may prosecute any conduct as an unfair method of competition. 

As I have recently written, this is because reliance upon the common law method 

for developing "unfair methods of competition" law mistakenly assumes that the 

Century, Keynote Address at the George Mason Law Review and Law & Economics Center Antitrust 

Symposium: The FTC: 100 Years of Antitrust and Competition Policy (Feb 13, 2014), available at 

http://www.ftc.gov/system/files/documents/public_statements/314631/l40213section5.pdf. 

9 

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common law virtues that have proved beneficial to the development of the traditional 

antitrust laws apply equally in the context of Section 5. 5 They do not. Fundamental 

differences between the inputs and outputs of traditional litigation and the inputs and 

outputs of Section 5 enforcement prevent the common law process from generating 

meaningful guidance for what constitutes an "unfair method of competition." But you 

do not have to take my word for it. Indeed, the Commission has employed the socalled case-by-case approach for a century and, to date, Section 5 has not meaningfully 

contributed to competition policy. In addition to failing to produce any direct and 

positive influence on antitrust law during that time period, Section 5 cannot point to a 

single standalone "unfair methods of competition" victory affirmed by a federal 

appeals court in the modern antitrust era. One hundred years is ample time for a robust 

natural experiment to evaluate the virtues of the Commissions' case-by-case approach 

to Section 5. The results are in. The common law method has proven incapable of 

generating meaningful guidance as to what constitutes an "unfair method of 

competition." To expect better results from the same approach is unwise. 

Moreover, as I have already mentioned, the Commission has provided guidance 

in a number of areas of competition and consumer protection law-many of them far 

less important than the scope of Section 5-without compromising its enforcement 

agenda. Consider an obvious example in the arena of competition law, the Horizontal 

5 See generally Jan M. Rybnicek & Joshua D. Wright, Defining Section 5 of the FTC Act: The Failure of the 

Common Law Method and the Case for Formal Agency Guidelines, 21 GEO. MASON L. REV. 1287 (2014). 

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Merger Guidelines, which explain ho_w the antitrust agencies analyze the likely 

competitive effects of a merger. Those guidelines have proven to be one of the most 

significant contributions to antitrust law and policy and have greatly benefited the 

antitrust agencies, the federal courts, and the business community. 

Similarly, in response to Congressional criticism about how the FTC was 

implementing its consumer protection authority under Section 5, and amidst serious 

threats of shut down the agency, the Commission issued policy statements explaining 

how it analyzes whether conduct was unfair or deceptive. 6 Today the Commission's 

deception and unfairness policy statements are widely regarded as a major success and 

serve as a key basis for the Commission to more confidently litigate disputes when its 

authority is challenged. The FTC should be proud of the fact that it has not reflexively 

refused to place limits on its own discretion when appropriate. Historically, even if at 

times under some pressure from Congress, the FTC has embraced limits on discretion 

both in the name of sound policy and to strengthen the foundation of questionable legal 

authority. Guidance regarding what precisely constitutes an "unfair method of 

competition" under Section 5 would similarly improve significantly the FTC's 

competition mission and shore up an obvious weakness in its authority. 

6 See FTC Policy Statement on Unfairness (1980), appended to Final Order, Int'l Harvester Co., 104 F.T.C. 

949, 1070 (1984), available at http://ftc.gov/bcp/policystmt/ad-unfair.htm; FTC Policy Statement on 

Deception (1983), appended to Final Order, Cliffdale Assocs., Inc. 103 F.T.C. 110, 174 (1984), available at 

http://www.ftc.gov/bcp/policystmt/ad-decept.htm. 

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II. THE TIME IS RIPE FOR THE FTC TO VOTE ON THE SCOPE OF THE 

AGENCY'S "UNFAIR METHODS OF COMPETITION" AUTHORITY 

Having summarized the case for formal "unfair methods of competition" 

guidance, let me tum now turn to the current state of play and what I believe the 

Commission should do next. The last two years have witnessed what amounts to a 

healthy and fruitful public comment period on the appropriate scope and role of the 

Commission's "unfair methods of competition" authority. During that time, members 

of the antitrust bar, academics, consumer advocates, and business stakeholders have 

together participated in dozens of panel discussions on Section 5 and penned countless 

articles debating various proposals. Members of Congress, too, have sent letters to the 

Commission urging us to act and have ·even raised the scope of Section 5 as an issue 

during Congressional hearings. 7 Commentators have had no shortage of opportunities 

to weigh in with their views on what the Commission should do with respect to Section 

5, as well as to consider and respond to the views offered by others. And this of course 

only represents the most recent round of commentary, which necessarily builds on 

decades of scholarship and debate-much of it offered by experts at today's 

symposium-as well as a formal workshop on the scope of Section 5 organized by 

Chairman Leibowitz in 2008. I do not know of any topic in competition policy that has 

7 See Letter from Members of the House and Senate Judiciary Comms. to FTC Chairwoman Edith 

Ramirez (Oct. 23, 2013), available at 

http://judiciary.house.gov/_files/news/2013/Signed%20Letter%20to%20FTC.pdf; Hearing on "The FTC at 

100: Where Do We Go From Here?", Before the Subcomm. on Commerce, Manufacturing, and Trade of the H. 

Comm. on Energy and Commerce, 113th Cong. 1 (Dec. 3, 2013). 

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been deliberated more thoroughly before a policy decision has been made than the 

scope and role of the Commission's "unfair methods of competition" authority. 

Significantly, each of my colleagues at the Commission has also voiced, to 

varying extents, her opinion about the appropriate scope and role of Section 5. 8 This is 

a welcome addition to the conversation and one that I do not believe any previous 

Commission has enjoyed. Importantly, the gap between each Commissioners' views, 

and indeed the views of an overwhelming majority of commentators generally, appears 

to be relatively narrow and essentially limited only to the question of how efficiencies 

should be treated when deciding whether to pursue an enforcement action under 

Section 5. This is an important milestone and one that I think this Commission should 

seize upon. I am optimistic that this Commission can finally do what other 

Commissions have been unable to do: issue agency guidance defining what constitutes 

an "unfair method of competition" under Section 5. Indeed, as I will elaborate upon in 

a moment, I believe any of the three primary definitions of an "unfair method of 

competition" that have been articulated by myself or my colleagues is better than the 

status quo. As such, if there is consensus within the Commission on any of these three 

alternative definitions, the Commission ought to vote to adopt that definition for what 

8 Interview with Commissioner Terrell McSweeny, MONOPOLY MATTERS (ABA Section of Antitrust Law, 

Unilateral Conduct Comm.), Fall 2014, at 3, 4; Maureen K. Ohlhausen, Comm'r, Fed. Trade Comm'n, 

Section 5: Principles of Navigation, Remarks before the U.S. Chamber of Commerce Ouly 25, 2013), 

available at http://www.ftc.gov/sites/default/files/documents/pub1ic_statements/section-5-principlesnavigation/130725section5speech.pdf; Ramirez, supra note 4; Julie Brill, Comm'r, Fed. Trade Comm'n, 

Remarks at the Technology Policy Institute Aspen Forum (Aug. 20, 2013), available at 

http://youtu.be/9V _ YEu1FIAE. 

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constitutes an "unfair methods of competition." And, after 100 years without any 

meaningful guidance on Section 5 and with Congress watching, it ought to do so now. 

With this in mind, next week I intend to put each of the three principal 

definitions for how to define an "unfair method of competition" up for a vote by the 

Commission. The precise language of the three proposed definitions are attached as an 

appendix to this speech, which will be available on the Commission's website later 

today. The three proposed definitions reflect the three definitions of an "unfair method 

of competition" contemplated by current Commissioners, including myself. Each 

proposal includes at its core the element that an "unfair method of competition" under 

Section 5 requires evidence that the conduct in question "harms or is likely to harm 

competition significantly" as that term is understood under the traditional federal 

antitrust laws. Harm to competition is a concept that is readily understandable and that 

has been deeply embedded into antitrust jurisprudence since the early part of the last 

century. Each of my colleagues has acknowledged that Section 5 should only be used to 

prosecute conduct that actually is anticompetitive. This is a significant and welcome 

area of consensus in light of past commissioners' efforts to use Section 5 to remedy a 

variety of social and environmental ills unrelated to competition. 9 This element 

9 See Michael Pertschuk, Chairman, Fed. Trade Comm'n, Remarks before the Annual Meeting of the 

Section of Antitrust and Economic Regulation, Association of American Law Schools (Dec. 27, 1977) 

(asserting that Section 5 can be used to remedy "social and environmental harms" such as "resource 

depletion, energy waste, environmental contamination, worker alienation, [and] the psychological and 

social consequences of producer-stimulated demands"). 

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prevents the Commission from reverting to considering non-economic factors, such as 

whether the practice harms small business or whether it violates public morals, when 

deciding whether to prosecute conduct as an "unfair method of competition." 

Significantly, however, this element also allows the Commission to challenge conduct 

that, for one reason or another, might not fit within established Sherman Act or Clayton 

Act precedent, and thus might find resistance initially in the federal courts. In doing so, 

it allows the Commission to leverage its institutional advantages to develop evidencedbased competition policy that can then shape antitrust doctrine in the federal courts. 

The second element of each definition that I will offer for a vote is that Section 5 

cannot be used to challenge conduct where there is well-forged case law under the 

traditional federal antitrust laws. The federal judiciary has provided little lasting 

guidance on the appropriate scope of Section 5. But, as one court has explained, and 

many current and former commissioners have acknowledged, this requirement ensures 

that the Commission will not use Section 5 to shop for favorable law to attack conduct 

governed by the more rigorous requirements of Section 2 of the Sherman Act. 10 

Prosecuting the same or similar conduct under disparate standards blurs the lines 

between lawful and unlawful commercial behavior and invites the Commission to 

evade advances in antitrust law designed to protect consumers from false positives and 

10 Boise Cascade Corp. v. FTC, 637 F.2d 573,582 (9th Cir. 1980) (stating that where there is "well forged" 

case law governing the challenged conduct, the Commission cannot prosecute the conduct under Section 

5 because doing so might "blur the distinction between guilty and innocent commercial behavior"). 

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false negatives. Whether well-forged case law exists in any particular case will of 

course remain within the Commission's discretion, but the requirement nevertheless 

adds an important measure of stability regarding the agency's "unfair methods of 

competition" authority. 

The area in which each of the three proposed definitions differs is in how 

efficiencies are treated under Section 5. This is the area in which my colleagues have 

expressed slightly different preferences. My preferred approach is that Section 5 only 

be used where there are no cognizable efficiencies present. In my view, where the 

parties can show cognizable efficiencies the agency is better off challenging the conduct 

under the traditional antitrust rules that are better designed for balancing. I do not 

believe the Commission's track record in administrative adjudication-in terms of both 

substance and process-justifies the view that it has a comparative advantage in cases 

requiring balancing. I will give my colleagues an opportunity to vote on this proposal, 

but I will not be surprised if a majority of them view this approach as too restrictive. 

The second option incorporates into the definition of "unfair methods of 

competition" a test my colleague Commissioner Ohlhausen has thoughtfully advocated 

for as an element of her own policy statement, which requires that any antitrust harm 

be disproportionate to any cognizable efficiencies. 11 

11 See Ohlhausen, supra note 8, at 10. 

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The third option requires the Commission to show that the harms are not 

outweighed by the cognizable efficiencies before bringing an "unfair methods of 

competition" claim under Section 5. This approach has been pointed to by 

Chairwoman Ramirez as the appropriate framework to apply for "unfair methods of 

competition" cases and essentially employs the modem day "rule of reason" when 

deciding whether conduct violates Section 5. 12 The basic view underlying this 

definition of an unfair method of competition is that the institutional differences 

between administrative adjudication and federal court do not require any adjustment to 

the rule of reason framework. While I do not believe a rule of reason approach is the 

best available choice, in my view, any of the three potential options I have discussed 

would be superior to the status quo. Each would create a stable definition for what 

constitutes and unfair method of competition and tether that definition to modern 

economics. Accordingly, to be clear, I intend to vote in support of each of these 

proposals in hopes that one gains the support of a majority of the Commission. 

While I am truly hopeful at least one definition of "unfair methods of 

competition" attracts three votes, I am also acutely aware that optimism in light of a 

record of a century without guidelines is indulged at my own risk. So what happens 

next? There are a few possibilities. One possibility is that the Commission defines an 

12 See Ramirez, supra note 4, at 8 ("Our most recent Section 5 cases show that the Commission will 

condemn conduct only where, as with invitations to collude, the likely competitive harm outweighs the 

cognizable efficiencies."). 

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"unfair method of competition" next week. Indeed, my hope is that my colleagues will 

recognize the important consensus that exists on the scope and role of Section 5 and 

take a modest step in articulating the agency's enforcement policy with respect to 

Section 5 by adopting one of these three proposed definitions. 

A second possibility is that a majority of my colleagues choose to vote "no" on 

each of these proposals. That possibility does not require much in the way of additional 

explanation. While a "no" vote by the full Commission would be non-public, close 

observers of the agency will surely take note of the lack of any press release or 

announcement that the agency at long last has produced Section 5 guidelines. 

A third possibility, worse still in my view, is that a majority of Co~missioners 

simply may choose not to vote at all. Under Commission rules, the full Commission 

need not vote unless and until a majority has formed. Thus, it is possible that my 

motion finds itself languishing in agency procedural purgatory, because 

Commissioners are not required to vote. I believe either of these last two possibilities 

would be a lost opportunity for the FTC and would send the wrong message about the 

Commission's desire for Section 5 to live up to its Congressional promise. 

III. IF THE COMMISSION FAILS TO ARTICULATE THE SCOPE OF 

SECTION 5, CONGRESS MAY DEFINE IT FOR THE AGENCY 

Not only is the question of what constitutes an "unfair method of competition" 

particularly ripe for agency action in light of the considerable thought that has been 

devoted to the issue in recent years, but I also believe that there exists a significant 

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risk-maybe now more so than at anytime in FTC history-that if the Commission fails 

to take action to define the scope of the Section 5 soon, Congress may choose to define 

the statute for the Commission. Indeed, in recent years numerous members of Congress 

have grown interested in the scope of the Commission "unfair methods of competition" 

authority and have voiced concerns regarding the absence of any clear standard to 

which the business community can tum in order to better understand the agency's 

enforcement policy. Members of both the Senate and House Judiciary Committees have 

sent Chairwoman Ramirez a letter urging the Commission to finally provide guidance 

that would make Section 5 enforcement transparent, fair, predictable, and reasonably 

stable over time. Other members of Congress have raised questions about the vague 

and ambiguous nature of Section 5 during recent Congressional hearings. I do not 

believe this interest should be taken lightly, and continued resistance on the part of the 

Commission to define the parameters of Section 5 could spur legislative action. 

If Congress were to define Section 5, it without question would result in a more 

restrictive definition of what constitutes an "unfair method of competition" than 

anything the Commission would implement. Indeed, the simplest and most obvious 

solution Congress might adopt, and one that would have the added benefit for many of 

harmonizing the powers of the FTC and the Department of Justice's Antitrust Division, 

would be to define an "unfair method of competition" under Section 5 as a violation of 

the Sherman Act or Clayton Act. A slightly broader, and just as simple solution for 

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Congress would be to define an unfair method as either a violation of the Sherman Act 

or Clayton Act or an invitation to collude. A third possibility, and one that attacks the 

Section 5 problem not from a standpoint of substance but rather of procedure, would be 

for Congress to remove the Commission's administrative advantages altogether and 

allow the federal courts to supervise the Commission's use of Section 5 and define the 

boundaries of what constitutes an "unfair method of competition" when necessary. 

Although at one point this might have seemed like an unlikely option, recent legislative 

proposals stripping the agency of its administrative powers in the context of merger 

challenges in order to align the preliminary injunction standards between the FTC and 

the Department of Justice suggest that this might not be so farfetched of a possibility. 13 

In short, if the FTC continues to refuse to define what constitutes an "unfair 

method of competition," it should not be surprised when and if Cong_ress ·becomes 

intensely interested in introducing legislation to finally solve a problem created more 

than a century ago. A solution to the Section 5 problem is inevitable. It is my sincere 

hope that this Commission seizes the opportunity it has before it now to solve the 

Section 5 problem on its own terms rather than leaving the solution to Congress. 

Thank you for your time. I am happy to take any questions. 

13 See Brent Kendall, A Challenge to the FTC Methods, WALL STREET JOURNAL (Nov. 15, 2014), 

http://www.wsj.com/articles/a-challenge-to-ftc-methods-1416184116; Hearing on the SMARTER Act of 2014 

Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary, 

113th Cong. 2 (Apr. 3, 2014); Joshua D. Wright, Comm'r, Fed. Trade Comm'n, Judging Antitrust, Remarks 

at the Global Antitrust Institute Invitational Moot Court Competition (Feb. 21, 2015), available at 

http://www.ftc.gov/system/files/documents/public_statements/626231/150221judgingantitrust-1.pdf 

(expressing support for the passage of the SMARTER Act). 

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APPENDIX 

Option 1 - Efficiencies Screen 

An "unfair method of competition" is an act or practice (1) that harms or is likely to 

harm competition significantly, (2) that lacks cognizable efficiencies, and (3) for which 

there is not well-forged case law under the traditional antitrust laws that might cause 

the distinction between lawful and unlawful commercial behavior to become blurred. 

Option 2- Disproportionality Test 

An "unfair method of competition" is an act or practice (1) that harms or is likely to 

harm competition significantly, (2) where the harms are disproportionate to the 

cognizable efficiencies, and (3) for which there is not well-forged case law under the 

traditional antitrust laws that might cau~e the distinction between lawful and unlawful 

commercial behavior to become blurred. 

Option 3 - Rule of Reason 

An "unfair method of competition" is an act or practice (1) that harms or is likely to 

harm competition significantly, (2) where the harms are not outweighed by the 

cognizable efficiencies, and (3) for which there is not well-forged case law under the 

traditional antitrust laws that might cause the distinction between lawful and unlawful 

commercial behavior to become blurred. 

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FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 2/12/2021 | OSCAR NO. 600667 | PUBLIC

Exhibit 3 

PUBLIC
1. 

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f!! IAdmfnlstratlve) ~!mbnd1@ Analy!l_ca, LLC. In~ 

Matter of CAdmlnlstraliveJ 

Federal Trade Commission Adjudicative Proceedings Updated as of January 1, 2015 

Source; FTC Website, at https:/Jwww.ftc.gov/enforcement/cases-proceedings/adjudicative•proceedings 

Includes proceedinp In which Part 3 Complaint was filed; excludes cases flied exclusively In Federal Court 

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• Columns A-D were copied directly from the FTC Website, at: hllps://www.ftc.gov/enforcement/cases-proceeding:s/adiud1cative-proceedings (as of January 9, 2020 at 12:00 pm Ea

-1-

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I C ., F 

1 1 I DOCKET I J I -- . ' .. --- 

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9. 1 ·JmQ Conla~ Inc In lhe Mam::r 51f 9372 October a. 2019 Uabllty Uability 

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Adr!i~ National Finan051llSt~art September 25, 10. lolormati51n ~ices In the Mi111ter 938S Closed Party Ahandonll!d Merser Party Abandoned Merger 

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Chl!,ilD §1:ldge & Iran i::2mgan1 Case Settled 

15. N.V. ""'" the Matter of 9300 Mayll.2O19 llabi0ty (Divestiture Orderedl 

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Monier Ll~111£ LLC. Bo[al Lid., and Case Settled Case Settled 16. l,i{irl( ~.A I!] the M alt!:r gf 9290 February 5, 2019 (Oiwstiture Ordered) (Divestiture Ordered) 

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-2-

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7 ~~a,,~ 1 

• !n l_!!ie__Ma~ IAdmlnlstraUvet 9380 August 1, 2018 Party Abandoned Merger Party Abandoned Merger 

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22 OrahKi!!B,!1 Inc. l FanOuel limited In 

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30. ~~2.!illQJ_f~_lli~ill!!...!_h J!u~_ fy!_~ 1J 11.!_ 9367 May 19,201G Party Abandoned Merger Party Abandoned Merger 

Q.f (Administrative) 

31. Steris/Synergy He.11th Jn thf! Matter 936S October 7, 201 S N/A N/A 

2f.(Admlnlstr•tlve) (case dismissed aher losing Pl Motion in federal court) 

32. SIJ.<..r:o[USr l~old111gfu\ fooct~.l!.!...!.!!£ 9364 June 29, 201S Party Abandoned M~rgcr Party Abandoned Merger 

Mc1~te1 of (Administrative) 

Liability 

Liability (Upheld and Reversed AU, in part) 

In AU's Initial Decision on May 9, 2013, held that Commission affirmed. In part. a May 2013 Initial Decision 

evidence did not support complaint counsel"s charges by the AU. finding McWane unlawfully maintained a 

that McWan• illegally conspired with Sigma and Star monopoly in the domestic '"fittings .. product market. McWane Inc., and St;;u P1pC' to raise and stabilize fittings prices. Based on these 33. Products, Lt,d.:, In the Matte, of 93S1 April 17, 2015 findings, he dismissed the first three counts In the The Commission dismissed the remaining counts. Dismisse

(Administrative) seven-count FTC complaint. But AU ruled that the Counts 1 and 2 in the: public interest, because no majority 

evidence did suppOlt other four counts in the position was re~ched (Ramirel/Brill were deadlocked with 

administrative complaint, and his Initial Decision Ohlhausen{Wright). Count 3, which the AU dismissed, was 

would have required Mc.Wane to stop engaging in the not appealed by complaint counsel. Commission reversed AU's findingofliability on Count 4; and dismissed Counts S conduct outlined In those counts. and 7 aher determining it was not necessary to address 

merits, based on other findings. 

34. rhocbe rulfl£Y Hc,1lth Sy\h'!n IIIC-!.t 9348 M•rch 31, 2015 case Settled Case Settled 

.. In the MJtt('1 of (Administr.Jtive) 

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A 8 C D 

I l DOCKET : ! I . . ! 

l TITlE 1 "UMBC:-R j STATUS I UPDATED AU Liabdrty Oc"slon Commission Liabllrty Oecisron 

: ,, . , : 

$jra~Q I~ lfllnmi l!:121 ~grki lni;. 

35. and ITW Finlthll!B 1.1:t, In lhS: Matter 9350 March 25, 2015 case Settled Cue Settled 

QL(AdmlnistrativeJ 

36 Ameri~as and Blue Rhino In the 

• Matte, of (Adminlsmt~J 9360 January 9, 2015 CaseSetded CaseSeuled 

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