On February 26, 2018, the U.S. Court of Appeals for the Ninth Circuit issued an en banc decision in FTC v. AT&T holding that the Federal Trade Commission (FTC) Act’s “common carrier” exemption is activity-based, reversing the panel’s decision that the exemption is status-based, which would have opened a large enforcement gap for telecommunications companies like AT&T. This is an important decision in terms of FTC jurisdiction: it means that the FTC can and will continue to regulate common carriers to the extent that they provide non-common-carrier services, such as mobile internet services.
Section 5 of the FTC Act gives the commission enforcement authority over unfair and deceptive acts or practices, but exempts “common carriers subject to the Acts to regulate commerce.” Unsurprisingly, the question of whether a company qualifies as a “common carrier” under the exemption is a loaded and complicated one. If an entity falls within the exemption, the FTC cannot bring an enforcement action against it for conduct it considers harmful to consumers. Conversely, companies that fall outside the exemption are subject to FTC regulation, leaving them open to liability for unfair or deceptive conduct, and requiring that they comply with a long list of FTC rules. Continue Reading