To the extent the McCarran antitrust immunity is narrowed by judicial interpretation and/or congressional action, in addition to the Department of Justice, the FTC would accrue additional antitrust authority to challenge insurer and agent conduct with the resultant potential preemption or dual regulation. Even more ominous from the perspective of state insurance regulation, however, would be congressional action which directly or indirectly removes the bar to FTC regulatory as well antitrust jurisdiction over the insurance industry. Various bills introduced in Congress over the past few years would do just that.

The FTC is not only an antitrust enforcement agency, it is a major regulatory agency possessing sweeping authority over both competitive and consumer practices pursuant to Sec. 5 of the FTC Act, which bans unfair methods of competition and unfair or deceptive acts or practices. The Commission’s consumer protection activities embrace such areas as advertising practices and consumer fraud.

To define and enforce the broad proscriptions of Sec. 5, the FTC possesses both adjudicatory and rulemaking authority. If the Commission determines in an adjudicatory proceeding that a party engaged in an unfair trade practice, it may issue a cease and desist order even if such conduct was taken pursuant to state law. Furthermore, the FTC possesses authority to promulgate rules having the effect of substantive law capable of preempting state law. Since the state action doctrine enunciated in the Parker case and its progeny was decided with respect to the Sherman Act, it can be argued the FTC adjudicatory and rulemaking activity can even preempt state law that qualifies as state action.

Armed with sweeping legal power to define what constitutes an unfair trade practice, to adjudicate conduct under such definition and to perhaps preempt state law (and thereby preclude private action performed thereunder), introduction of the FTC into the regulation of trade practices in the insurance business, in addition to its existing antitrust authority, promises not only extensive dual regulation but also very likely dominant federal regulation in those antitrust and trade practice areas embraced by Sec. 5.