The FTC Signals Intent To Expand Its Power And Move The Agency’s Focus Further Away From The Consumer Welfare Standard
Last week, the chair of the FTC testified at an oversight hearing before the Senate Judiciary’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights. Notably, the FTC’s written testimony submitted in advance was not bipartisan. FTC Commissioners Noah Joshua Phillips and Christine S. Wilson submitted dissenting testimony stating the other Commissioners’ decision to decline to submit consensus testimony represented a “dramatic departure from the agency’s tradition of working towards a bipartisan consensus.”
This followed the FTC’s release of its Strategic Plan for fiscal years 2022–2026, which makes clear that the agency intends to expand its own authority and move away from the consumer welfare standard. In a dissenting statement, Commissioner Christine Wilson warns that this Plan “will result in higher prices, suppressed production, fewer choices, and dampened innovation.”
Here are some key things to know:
The FTC Intends To Expand Its Power Outside Its “Statutory Remit”
The FTC has no authority under the Federal Trade Commission Act “to convert antitrust law from 132 years of statutes and adjudicated court decisions to regulations promulgated by the FTC,” explains Commissioners Phillips and Wilson in written testimony before the Senate Judiciary Committee. “We have no such authority under the statute, and if we did it would violate the separation of powers embedded in the U.S. Constitution.”
The “vision for the agency expands its mission to include goals outside our statutory remit. The agency lacks the expertise (and, in some cases, the jurisdiction) to pursue the additional societal goals embodied in the Strategic Plan,” explains FTC Commissioner Christine Wilson. “[M]oreover, pursuing those goals will distract from the important work we were established to accomplish. Prior attempts by the Commission to address myriad societal ills not included in our Congressional mandate invited strong censure from Congress. Recent court decisions underscore the importance of respecting the limits of our authority.”
The FTC’s new shift “would transform the FTC from a thoughtful place focused on building consensus through empirical evidence to achieve specific, non-partisan goals, into a politicized hammer that will swing different ways depending on who holds it,” warns former FTC Chief Technologist Neil Chilson.
The FTC Continues To Pivot Away From The Consumer Welfare Standard, Which Could Harm Consumers Already Struggling With Record Inflation
“As a policy matter, the choice to pivot from a consumer welfare standard is ill-advised, particularly during a period of record inflation,” cautions FTC Commissioner Christine Wilson. “Now more than ever, the agency should be laser-focused on protecting consumers — but the insertion of additional goals into our Strategic Plan means that, by definition, consumer welfare will not be maximized.”
The FTC’s strategic plan “moves the agency’s focus away from maximizing consumer welfare and towards other vague social goals that progressives believe antitrust law can solve,” writes Tom Hebert of Americans for Tax Reform. “For the past half-century, business conduct is generally not considered an antitrust violation unless it demonstrably harms consumers, a legal test called the consumer welfare standard. The consumer welfare standard constrains the government from launching antitrust suits against companies for political reasons.”
— Hebert continues: “[The chair’s] command and control agenda is a clear and present danger to the U.S. economy, but Congress doesn’t have to take it lying down. Instead of expanding the FTC’s power via misguided antitrust legislation, lawmakers should work to rein the runaway agency in.”
The FTC Strategic Plan’s deletion of the phrase “‘without unduly burdening legitimate business activity’ sends a troubling message to the public about the FTC’s purpose and intent,” writes law firm Kelley Drye. “For years, it has communicated that, in enforcing the law and developing regulations, the FTC will tailor its allegations, prohibitions, and remedies to illegal conduct, and will take care to preserve the legitimate business functions that provide products and services to consumers and maintain our vibrant, competitive economy. In other words, the FTC has recognized that legitimate business activity benefits consumers and competition, and has consistently made a public commitment to preserve it.”
Read more about the FTC’s recent actions here.