Americans Deserve a Transparent and Accountable FTC

December 10

• The FTC published its semiannual regulatory agenda, in which the Commission commits to exploring rulemakings for competition, as well as consumer protection, because “the case-by-case approach to promoting competition, while necessary, has proved insufficient, leaving behind a hyper-concentrated economy whose harms to American workers, consumers, and small businesses demand new approaches.”  In her dissent, Commissioner Wilson writes that the agenda could lead to “an avalanche of problematic rulemakings.”  In his dissent, Commissioner Phillips writes that the Commission’s “anti-growth scheme involves regulation after regulation that exceed our legal authority and would recast the FTC as a mini-Congress.”

December 8

• Representatives McMorris Rodgers and Bilirakis send a letter to Chair Khan asking her about zombie votes, communications with the White House, and numerous other topics.

November 9

• Senator Mike Lee, the leading Republican on antitrust, gave a speech to the ABA Antirust Section where he called recent action by FTC Chair Lina Kahn “a litany of appalling developments.” He labeled the actions as being “lawlessness.”
• The Federal Trade Commission and the Department of Justice released a typically non-controversial fact-based report on merger activity in the economy.  FTC Commissioner Wilson blasts the politicization of the report stating, “In their statement, Chair Khan and Commissioner Slaughter attempt to use the increase in merger filings as justification for sweeping and detrimental changes imposed on our merger review process. In our statement, attached, Commissioner Phillips and I explain that these recent changes are destroying the merger review framework established by Congress and displacing actual antitrust enforcement.”

October 26

• The FTC deploys its Penalty Offense Authority to notify more than 1,100 companies that they could incur significant civil penalties if the FTC determines that they made claims about money-making opportunities that run counter to prior FTC administrative orders.

October

• In a press release associated with an October letter signed by several Republican colleagues to the DOJ and FTC, Sen. Lee said, “When Congress gave DOJ and FTC shared merger enforcement powers under the Clayton Act, it never imagined a world in which the two agencies would apply two different legal standards—the very definition of arbitrary and capricious. Sadly, thanks to Chairwoman Khan’s FTC, we live in that world now. It’s time for Congress to fix its century-old mistake and reconsolidate antitrust enforcement at the Department of Justice.”
• In the same press release, Rep. Jordan said, “The Biden FTC’s abuse of its power to promote radical leftist goals shows why Congress should not give more authority to this rogue agency.”

October 25

• Companies can be blacklisted, requiring approval for future merger activity.  The FTC announced that it was reversing itself by reinstating an outdated policy allowing the FTC to require certain companies to get approval prior to any future merger.  The position was adopted 3-2, with the use of a “zombie” vote with the minority commissioners issuing a strong dissent.

October 1

• The FTC issues a report to Congress on privacy and security.  Chair Khan states that the Commission “should approach data privacy and security protections by considering substantive limits rather than just procedural protections.”  The dissenting commissioners contend that the majority improperly conflates privacy and antitrust and threatens to impose remedies for which it lacks statutory authority.

September 28

• In a letter to the House Judiciary Committee, Chair Khan signals clear intent to use antitrust to address issues outside the bounds of consumer welfare, in this case issues of labor law, related to wages and labor unionization.
• The FTC’s Chair is concentrating power.  At a House antitrust hearing, Ranking Member Jordan expresses concern about Chair Khan’s “authoritarian” leadership style.  In written testimony, a commissioner complains that “procedural irregularities” have precluded robust dialogue within the agency, including the following; 
  • “Muzzling staff internally and externally;
  • Stifling the flow of agency records and information from staff to the Commission;
  • Largely abandoning the tradition of comprehensive staff recommendations discussing legal and economic issues, prudential considerations and litigation risks for matters before the Commission;
  • Giving minimal notice to Commissioners (and the public) of sweeping policy changes;
  • Giving no written explanations for sweeping policy changes until after those changes are implemented;
  • Evading meaningful dialogue at the Commission level;
  • Voting against notice and comment on major policy changes; and
  • Short-circuiting public input by adopting policy statements during ongoing rulemakings that address precisely the topics at issue.”

September 22

• In a memo laying out her vision for the FTC, Chair Khan announced that the FTC would no longer focus on consumer welfare and would seek to restructure the U.S. economy across many industries.  Specifically,
  • Enforcement no longer focuses on consumer welfare: “we need to take a holistic approach to identifying harms, recognizing that antitrust and consumer protection violations harm workers and independent businesses as well as consumers” and “we need to further democratize the agency. This means recognizing the agency as a public body whose work shapes the distribution of power and opportunity across our economy.”
  • The FTC wants to restructure the economy: “we need to orient our enforcement efforts around targeting root causes rather than looking at one off effects. This means focusing on structural incentives that enable unlawful conduct—be it certain conflicts of interest, business models, or structural dominance” and “Growing evidence suggests that market power now looks to be an increasingly systemic problem across the economy.”
  • The entire economy is a target, not just tech: “we need to be forward-looking in anticipating problems and taking swift action.  On both the competition and the consumer protection sides, this means being especially attentive to next-generation technologies, innovations, and nascent industries across sectors.”
  • European concepts are in vogue: “we should broaden our institutional skillsets to ensure we are fully grasping market realities … technologists, data analysts, financial analysts, and experts from outside disciplines will build on our existing talent … I admire the interdisciplinary approach adopted by some of our international counterparts and am eager for us to learn from their experience and execute on best practices.” (all emphases added).

September 14

• The FTC expands areas in which one commissioner can authorize compulsory process, reducing internal transparency and removing a check against overly aggressive investigations.  Adding to its moves of July 1, the FTC approves eight more omnibus resolutions that allow one commissioner to authorize compulsory process: unlawful conduct directed at veterans and service members; unlawful conduct directed at children; bias in algorithms and biometrics; dark patterns and deceptive conduct on the internet; repair restrictions; abuse of intellectual property; common directors and officers and common ownership; and monopolization offenses.

September 27

• Enforcement no longer focuses on consumer welfare.In merger probes, the FTC is now asking unprecedented questions about topics such as unionization, environmental issues, and corporate governance.

September 15

• The FTC repeals the 2020 vertical merger guidelines – creating uncertainty and ignoring basic economics.  In repealing the guidelines, the FTC sows uncertainty by reverting to guidance that had been discarded by DOJ.  Economists sharply criticize the move.  A dissenting commissioner protests that, “the FTC leadership continues the disturbing trend of pulling the rug out under from honest businesses and the lawyers who advise them, with no explanation and no sound basis.”
• The FTC issues a report on non-HSR reportable acquisitions by technology platforms.  For the five largest technology platforms, the report identified 616 non-HSR reportable transactions in excess of $1 million from 2010-2019.

September 3

• The FTC discards transparency – even internally. An FTC Commissioner is forced to ask private companies for copies of second requests.

August 13

• The FTC games a challenge to a vertical merger.  After dismissing its federal suit, the FTC filed an administrative complaint to challenge Illumina’s proposed acquisition of Grail.

August 3

• The FTC tries to chill merger activity.  The FTC announces that it will send pre-consummation warning letters in connection with deals it cannot fully investigate within the HSR timelines.  One commissioner protests that the action “defies the will of Congress by undermining the premerger notification program” because “it cannot be that the FTC will keep merger investigations open indefinitely, as a matter of routine, every time there is a surge in filings.”

July

• In a July letter to Chair Kahn, Senator Lee writes, “The unifying theme of these developments is a progressive push to consolidate power and burden American businesses. For the sake of our antitrust enforcement regime, competitive markets, and the American economy, I hope you will change course.”

July 21

• The FTC announces that it will heighten its review of future mergers.  Without public comment, the FTC rescinded a 1995 policy statement on prior notice and approval for future acquisitions.  As a result, the FTC will seek to require prior approval of a merging party’s future acquisitions.  A dissenting commissioner calls the repeal “bad government and bad policy.”  Another commissioner complains that the Chair has limited public meetings to “delivering monologues with no interaction. The format makes these events more akin to theatre than to the reasoned decision making.”

July 6

• News reports reveal that FTC staff has been “muzzled externally,” as the Chair forbids agency personnel from appearing at any public events.  A commissioner notes that, “it appears that staff is being silenced internally, as well.”

July 1

• The FTC allows one commissioner to authorize compulsory process, reducing internal transparency and removing a check against overly aggressive investigations.  A dissenting commissioner expressed concern that “these seven omnibus resolutions remove significant swaths of Commission oversight from our investigations without adequate justification.”  Another dissenting commissioner predicts that the changes “would allow the chair, or one commissioner they select, unilaterally to initiate a large number of full-phase investigations across the economy. That means less room for input and oversight from all commissioners and more room for mistakes, overreach, cost overruns, and even politically-motivated decision making.”
• At a public meeting announced with just one week’s notice, and without public input, the FTC revises its Section 18 rulemaking procedures to eliminate safeguards and give the Chair more control over the process.  Under the revisions, the Chair will select the Presiding Officer for rulemaking hearings and have far more control over the hearing agenda and factfinding process. Commissioner Slaughter in comments during the hearing called for using the new Section 18 procedures to address “data abuses.”   The dissenting commissioners, who stress that the FTC’s mission is to protect competition rather than regulate, note that the revisions strike sentences describing the mission of the Bureau of Competition as one that “aims to preserve the free market system.”  The dissenting commissioners predict that, “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. The revisions thus confirm the suggestion elsewhere that the majority intends to jettison the consumer welfare standard.”
• Without public input, the FTC withdraws the statement of enforcement principles regarding “unfair methods of competition” under Section 5 of the FTC Act, removing guardrails and reducing transparency. The dissenting commissioners complain that the withdrawal “[h]int[s] at the prospect of dramatic new liability without any guide regarding what the law permits or proscribes.”

June

• Just ahead of withdrawal by the FTC of its Section 5 UMC Guidance, Senator Lee said, “I am also worried that this is just the beginning of a troubling trend of partisan antitrust enforcement under the Biden administration. This worry was exacerbated when President Biden nominated Ms. Khan to be a commissioner and withheld his intention to immediately name her as Chairwoman. This was undoubtedly an attempt to evade the greater scrutiny and vetting that comes with the confirmation process for the Chair of a Commission, as opposed to an individual commissioner. It is ironic that this kind of deception was used to install leadership at the federal agency tasked with fighting deception and fraud.”

June 25

• The FTC ignores HSR timelines. In settling a dispute involving 7-Eleven’s purchase of several thousand gas stations, the FTC ignored statutory deadlines, thereby imposing extra costs and uncertainty on the affected companies.

June 15

• Lina Khan sworn in as chair of the FTC

February 4

• The FTC and DOJ seek to delay mergers that raise no competitive concerns. The agencies announce a “temporary” suspension of grants of early termination. To date, this temporary suspension has not ended.