FTC Doublespeak

Sean Heather
Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce

Published

January 24, 2023

In late December 2022, the Federal Trade Commission’s Chair, Lina Khan penned a curious op-ed for The Wall Street Journal regarding the agency’s authority with respect to enforcing antitrust law. In it, Khan wrote, “If a merger would crush competition, the parties can’t obtain a dispensation by swearing to use their power for whatever they view as the greater good. For enforcers to act otherwise would undermine the purpose of merger enforcement.” This view, expressed just last December, comports with the traditional view regarding the role and limits of antitrust law.

Given this, it is all the more unfortunate that Chair Khan’s actions directly and frequently contradict her op-ed. Under her leadership, it is the FTC that has been widely reported to be asking merging parties about non-competition matters, not the other way around. For her to suggest otherwise raises plenty of questions especially as there is ample evidence that Khan is dedicated to using the antitrust laws to implement a range of progressive policy goals that have little or no relation to the protection of competition.

Abandoning traditional antitrust

Since taking office, Chair Khan has sought to expand the FTC’s reach beyond traditional antitrust concepts. In a memo laying out her priorities, Chair Khan described the FTC as “a public body whose work shapes the distribution of power and opportunity across our economy.” She promised a “holistic approach to identifying harms, recognizing that antitrust and consumer protection violations harm workers and independent businesses as well as consumers.” Consistent with this vision, Chair Khan recast the FTC’s strategic plan to encompass “conduct that causes or is likely to cause substantial injury to the public. This includes not only monetary injury, but also, for example, unwarranted health, safety, and privacy risks.”

To implement her broad views, Chair Khan has now directed the agency to regulate the relationship between companies and their employees. In a new policy statement interpreting part of the FTC Act, the FTC has declared that companies act unfairly when they “negatively affect … consumers, workers, or other market participants.” As a result, the FTC issued another policy statement that targets independent contractors and is now proposing a rule to ban virtually all non-compete clauses. Will the FTC next declare wage rates or the level of benefits offered is unfair? No one has any idea.

Moreover, the FTC now shares the progressive obsession with the size of companies, rather than the more salient question of whether those companies are offering consumers quality goods and services at low prices. For progressives, apparently only the federal government is allowed to grow large – anything in the private sector must shrink in comparison. In its semiannual regulatory agenda, the agency defended the need for more regulation due to “a hyper-concentrated economy whose harms to American workers, consumers, and small businesses demand new approaches.” Accordingly, the Commission revised its rulemaking procedures to strike sentences describing the mission of the Bureau of Competition as one that “aims to preserve the free market system.”

A sweeping campaign to replace the free market system

This deletion is not only telling about the views of the majority of commissioners, it also allows the agency to implement its progressive agenda more easily. As two commissioners explained, “The deletion of this description makes clear the majority’s intention to embark on a sweeping campaign to replace the free market system with its own enlightened views of how companies should operate, and to replace the goals of price competition, quality, and efficiency with subjective and as-yet-unstated goals that are ripe for political manipulation.” Since then, the dissenting commissioners argue, the agency has sought to “transform Section 5 into an undefined antidiscrimination statute,” target private equity, and generally, “shift the Commission’s attention from its traditional mission of protecting consumers and competition” in favor of “mercurial political winds.”

This progressive shift could devastate the FTC. As Commissioner Christine Wilson has laid out, “Prior attempts by the Commission to address myriad societal ills not included in our Congressional mandate invited strong censure from Congress.” In the 1970s, in response to FTC excesses, Congress nearly eliminated the FTC altogether. After the next change in Congress, and administrations, the FTC may not be so lucky.

In the meantime, the FTC’s progressive shift is harming consumers and the business community. As Commissioner Wilson explained, “The agency lacks the expertise (and, in some cases, the jurisdiction) to pursue the additional societal goals embodied in the Strategic Plan; moreover, pursuing those goals will distract from the important work we were established to accomplish.” In other words, instead of developing meritorious cases, the agency is wasting resources on aggressive rulemakings that have little chance of surviving in court. Workload data indicates that the FTC has brought far fewer cases during Chair Khan’s tenure than under prior chairs, while the business community continues to suffer under the agency’s burdensome approach to mergers and regulatory onslaught.

It is hard to reconcile the Federal Trade Commission’s actions with the words expressed in Chair Kahn’s December op-ed. If anything, the dissonance between them serves as a reflection of the agency’s wayward path under her leadership. Without a return to the traditional limits of her office and antitrust law in general, Congress and the courts will have to provide a course correction.