Experts Underscore Lack Of Legal Foundation For FTC Activities And Warn Of Negative Ramifications For Consumers
In October and November, Competition Policy International (CPI) and CCIA held a four-part series on Challenges to Antitrust in a Changing Economy. The events featured panels of lawyers, journalists, Hill staffers, and professors discussing the shifting landscape around antitrust policy.
Notable panelists included Former Assistant Attorney General Barry Nigro, former General Counsel at FTC Alden Abbott, and Former FTC Chairman William Kovacic.
Over the course of four events, the panel touched on several key themes–primarily, that the FTC’s sharp shift in enforcement activity and rulemaking is not based on solid legal precedent, and the agency should instead focus on enforcement of current regulations. Specifically:
– The FTC’s current competition enforcement efforts are risky and rest on shaky legal grounding
– Straying from the FTC’s historically incremental approach to rulemaking has serious downsides for consumer protection
– Policymaking around competition should be left to legislators
The FTC’s current competition enforcement efforts are risky and rest on shaky legal grounding
Former Assistant Attorney General Barry Nigro emphasized that “losing a lot of cases is [not] enough to justify radical changes in the law”. “I think it’s going to be incumbent on the agencies if they lose a lot of cases to also show that there’s actual consumer harm or harm to competition that they were unable to address as a result of the loss, and then in addition to that, explain why certain changes in the law, narrowly tailored to address that gap that’s been established based on the facts are needed. I don’t think just losing a lot of cases is enough to justify radical changes in the law.”
Regulatory agencies should abide by “a well-developed body” of existing competition case law, and avoid bringing “cases based on exotic and speculative legal theories,” according to Former Director of the FTC Bureau of Competition Richard G. Parker. “I think that if the agencies are going to govern, they’re going to have to recognize certain things, and certain things are that you can’t bring cases without solid facts, you can’t bring cases based on exotic and speculative legal theories”
Straying from the FTC’s historically incremental approach to rulemaking has an “opportunity cost” in terms of consumer protection
Dramatic changes via rulemaking have an “opportunity cost” in the form of less enforcement of activity by bad actors “that could be usefully attacked,” says Former FTC General Counsel Alden Abbott. “I think there’s a real risk in rulemaking, which also raises an opportunity cost. Incremental change can be a slow process, but there is a lot of fraud and consumer deception and unfair practices online that could be usefully attacked, and are usefully being attacked by the FTC. So to me the opportunity cost is if you’re spending a lot of resources on rulemaking that is risky and uncertain, you really are also missing opportunities to perhaps direct your attention and activity [elsewhere].”
Howard University Law Professor Andrew Gavil underscored the likely legal obstacles the FTC will face from ambitious rulemaking. “The FTC is inevitably going to face some challenges in the courts. It’s not a good time to be flexing your authority to the max.”
Enforcement bodies should “think incrementally and modestly,” says University of Michigan Law Professor Daniel Crane. “I’m not sure what they will do, I certainly know what I’d advise them to do, which is to think incrementally and modestly.”
– Crane added: “I just think rulemaking is not the way you get that done quickly. It’s going to take a very long time, there will certainly be court challenges, those will take a long time, and by the time we actually know whether they even have this power or not, there’s likely to be another set of people running the FTC.”
Policymaking around competition should be left to legislators
American Antitrust Institute President Diana Moss says “I think the answer is no” when asked if agencies like the FTC can use antitrust tools to regulate privacy issues.
– Moss added: “I don’t think antitrust enforcers are good at this and they have other things to do, better things to do.”
Former FTC Chairman William Kovacic explains the FTC “doesn’t have the power to overcome” what he describes as “massive carve-outs” in its purview through rulemaking. “Congress has left what I consider to be serious gaps in the FTC’s coverage. The FTC can’t cover common carriers. It does not cover non-for-profits. It doesn’t cover banking and banks. It doesn’t cover key areas in the provision of insurance services. So whatever the FTC does with its rules, it doesn’t have the power to overcome these massive carve-outs.”
Former Director of the FTC Bureau of Competition Richard G. Parker recommends adherence to case law, urging regulators to “play ball according to those rules.” “If society decides that it has less tolerance for mergers than it once did, then Congress ought to say something. But until that happens, there’s a well-developed body of case law, and you have to play ball according to those rules if you want to be effective.”