United States: FTC Headed Back To The Future?

A recent decision in an antitrust case brought by the Federal Trade Commission (FTC) in the U.S. District Court for Delaware could significantly limit the Commission's ability to bring consumer protection cases in federal court and return the FTC to an enforcement model that it largely abandoned in the early 1980s.

In FTC v. Shire ViroPharma, Inc., the court held that the FTC can only sue in federal court where it is able to allege that the defendant is violating or about to violate a law the FTC enforces. This decision, if broadly accepted, could severely limit the ability of the FTC to pursue cases in federal court for companies that are only accused of past violations by the FTC.

Understanding the Law

The FTC routinely brings enforcement actions in federal court pursuant to Section 13(b) of the FTC Act, seeking permanent injunctions and equitable monetary relief (both consumer redress and disgorgement). Under the first proviso of Section 13(b), the FTC is authorized to seek preliminary injunctive relief where the FTC has "reason to believe" that a defendant "is violating, or is about to violate" a law enforced by the FTC. Under the second proviso, the FTC may seek a permanent injunction. The FTC traditionally relied on the second proviso of Section 13(b) for access to the federal courts.

In the District Court for Delaware considered the statute's procedural requirements, ultimately concluding that to adequately plead jurisdiction under Section 13(b), the FTC must also satisfy Section 13(b)(1) by alleging sufficient facts to demonstrate that the defendant was "violating, or is about to violate" a law over which the FTC has enforcement authority.

The FTC brought the action against Shire for allegedly using the FDA's citizen petition process to delay the FDA's approval of a generic version of its drug, Vancocin, in violation of Section 5(a) of the FTC Act.

Shire, however, filed a motion to dismiss, arguing that because it had sold the rights to Vancocin in 2014—several years before the FTC filed suit –– the FTC could not adequately allege facts supporting its right to injunctive relief. Shire argued that the second proviso of Section 13(b) is not an independent grant of authority allowing the FTC to run to court whenever it seeks a permanent injunction, regardless of whether the defendant — like Shire — was only being sued for alleged past violations. Instead, Shire argued that the FTC must satisfy the requirement set forth in Section 13(b)(1), which grants the FTC authority to seek injunctive relief only when a party "is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission."

The FTC argued that the appropriate pleading standard for a 13(b) action should be the standard for determining whether a permanent injunction should issue, i.e., whether the wrongful conduct was "likely to recur," and further, that even if "about to violate" were the applicable standard, it should be construed identically to the "likely to recur" standard.

The District Court rejected the FTC's argument, holding that the FTC cannot file an enforcement action seeking permanent injunctive relief, and ancillary equitable relief, under Section 13(b) unless it establishes that a party "is violating, or is about to violate" a law the FTC enforces. The Court granted Shire's motion to dismiss, finding that the FTC failed to plead facts necessary to invoke its authority to sue for permanent injunction because it did not adequately allege that Shire was "about to violate" the FTC Act.

The District Court's ruling could, if accepted and applied by other courts, serve to limit the FTC's ability to bring suit in federal court against defendants for past violations without adequately alleging an imminent future violation, thus forcing the FTC to first engage in administrative litigation to obtain a cease and desist order.

If the FTC sought financial redress, it would then have to bring a separate subsequent action in federal court pursuant to Section 19 of the FTC Act, under which it could obtain consumer redress only if it proved that the defendant's conduct was such that a reasonable person would have known it was dishonest or fraudulent. That is a much higher standard than required in a Section 13(b) proceeding, and is the manner in which the FTC proceeded until Section 13(b) was added to the FTC Act in the 1970s.

The court dismissed the FTC's Complaint against Shire without prejudice, allowing the FTC to amend its Complaint, but it is not clear that the FTC can allege an ongoing or incipient law violation. Alternatively, the FTC could seek an appeal. Given the impact of this decision and the pending changes in the FTC's roster of Commissioners, the FTC's response to the decision will be interesting and difficult to predict.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions