Section 13(b), Federal Trade Commission, Antitrust, Consumer Protection
The Federal Trade Commission (FTC) enforces over 70 laws in the areas of antitrust and consumer protection, and one valuable tool to support their enforcement is Section 13(b) of the Federal Trade Commission Act (“Section 13(b)”). Section 13(b), among other features, grants the FTC authority to seek an injunction in district court against any defendant that is “about to violate” one or more of those laws. For the past three decades, courts have adopted a permissive judicial interpretation of that language, authorizing injunctions against defendants when the allegedly impending violations were only “likely to recur” based on past misconduct. This is known as the “likelihood of recurrence” standard.
Recently, the Third Circuit’s holding in FTC v. Shire Viropharma, Inc. potentially upends the longstanding dominance of that permissive judicial interpretation. Shire found that the “likelihood of recurrence” standard was incompatible with the statutory text of Section 13(b). In particular, the court found that the phrase “about to violate” sets a benchmark for seeking injunctive relief that is higher than the “likelihood of recurrence” standard. In other words, for the FTC to seek injunctive relief, the alleged violation needs to truly be about to occur rather than merely likely to occur.
An examination of the plain meaning and congressional intent, which can be discerned from the legislative history, of Section 13(b) shows that the statute does indeed set a standard for awarding injunctive relief that is higher than the “likelihood of recurrence” standard. Namely, Section 13(b) requires that future violations be imminent or impending–not merely likely–for injunctive relief to be granted. Since the “likelihood of recurrence” test does not comport with the plain meaning or congressional intent of the statute, courts should no longer use it when determining if a defendant is “about to violate” the law. Instead, courts should undertake an analysis that is true to the text, and carefully and properly consider whether future violations are genuinely about to occur.
Christopher Halm, Returning to the Statutory Text: Why the Language of Section 13(b) Requires Courts to Narrowly Construe the FTC’S Ability to Obtain Injunctive Relief, 27 Fordham J. Corp. & Fin. L. 235 (2022).