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Invitations to collude – the unprecedented expansion of the FTC Act

Dale Joerling June 2, 2011

Business Litigation partner Dale Joerling wrote an article for the Spring edition of the St. Louis Bar Law Journal that focuses on the Federal Trade Commission’s efforts to expand the scope of the FTC Act to include invitations to collude. 

The article, entitled “Invitations to Collude – The Unprecedented Expansion of the FTC Act,” analyzes the consent decree in In re: U-Haul International, Inc. The case involves U-Haul’s CEO’s effort to persuade its major competitor, Budget Truck Rentals, to agree on the prices to be charged for one-way rental trucks. Under Section 1 of the Sherman Act, an agreement between two parties to set prices is not only illegal, but is also considered to be a “per se” violation, which is presumed to be illegal and can be prosecuted criminally. The U-Haul CEO’s attempts to persuade Budget to agree on prices were rejected by Budget. However, notwithstanding the fact Budget rebuffed U-Haul’s offers and refused to modify its prices, the FTC filed a complaint against U-Haul under Section 5 of the FTC Act for simply suggesting that the parties agree on prices. U-Haul quickly entered into a consent decree pursuant to which its prices and marketing will be monitored by the Commission for the next 20 years. 

In a public statement accompanying the consent decree, three FTC Commissioners asserted that the FTC did not need to show that the invitation to collude caused any type of injury to competition and that there was no need to prove that any type of agreement was actually reached for there to be a violation of the FTC Act. 

Despite the fact that there is no binding court decision supporting the FTC’s position, the Commissioners made it clear that they will continue to look for examples of invitations to collude, as well as other ways, to expand the scope of Section 5 of the FTC Act.

Click here to read the article.