FTC Enforcement Isn’t a Matter of One and Done

I can’t recall the number of times I have heard from industry players that they had “issues” with the FTC but those are done now. The fact of the matter is that the “FTC will take the steps necessary to see that companies comply with the terms of orders.” I learned that lesson early in my work for clients before the FTC. It is not the damages that will take a company or individual out of the industry, it is the injunctive portion of the stipulated order. The same is true for State Attorney General inquires and subsequent stipulated orders. Most businesses can recover from the revenue loss from an FTC or AG inquiry, but later find they cannot overcome some portion of the stipulated order which has injunctive relief. As such, focus must be placed on the injunctive portion of the order during negotiations. Any ambiguities will be held against the business and its principals. Further, it is important that the company and individuals who are going to be placed under that order consider their future business models and upcoming technology. These orders remain in place for 20 years and that is a long time to guess how the order will restrict the company or its principals from joining new markets and using new technologies. To the extent possible, owners and companies need to narrowly tailor any stipulated order to the violation that is the subject of the inquiry. They should also be well counseled as to what business models they may enter and which they must leave.