Thursday, April 30, 2009

Utah Supreme Court Refuses to Broaden State Antitrust Law to Cover Unfair Acts and Practices

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Utah Unfair Practices Act was unambiguous in its focus on competition and monopolistic behavior and made unlawful only unfair methods of competition, according to the Utah Supreme Court. Therefore, the court declined to expand the reach of the Act beyond anticompetitive methods to unfair and discriminatory practices as defined by the federal Cigarette Rule.

Similarities to FTC Act

A consumer unsuccessfully argued in a suit against a furniture store and a process server that, because of similarities between the Utah Unfair Practices Act and the Federal Trade Commission Act, the Utah Act should be extended to cover unfair and discriminatory practices as defined by the federal Cigarette Rule. The FTC uses the Cigarette Rule, which was originally adopted to regulate unfair or deceptive advertising or labeling of cigarettes, to determine whether an act is unfair under the federal Act.

Prohibition of Unfair or Deceptive Practices

Unlike the FTC Act, the Utah statute (Utah Code §13-5-1 to §13-5-18) lacked an independent reference to unfair acts or practices. The FTC Act made unlawful "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce." On the other hand, the Utah Act contained no language prohibiting unfair or deceptive practices in commerce. A directed verdict in favor of the furniture store and process server was affirmed.

The April 17 decision in Garrard v. Gateway Financial Services, Inc. appears at 2009-1 Trade Cases ¶76,571. It will be published in the CCH State Unfair Trade Practices Law.

1 comment:

Paul Sobel said...

The FTC abandoned the Cigarette Rule as of 1980. See P. Sobel 77 Conn. B.J.105, Unfair Acts or Practices Under CUTPA (2003); and American Financial Services v. FTC, 767 F. 2d 957 (D.C. Cir. 1985). Many state courts do not realize this. See Sobel, p. 140, N. 142.