NEWSFLASH: The FTC’s New Enforcement Approach Has Raised Serious Concerns Among Experts
As evidenced in this week’s announced departure of an FTC Commissioner, major changes to the Commission’s operations have raised serious concerns from experts across the political spectrum. These experts have been sounding the alarm for months, and this week’s agency shake-up is just the latest in a long list of warnings about the agency’s direction.
Here’s a recap of what they’ve been saying:
Experts note that recent changes at the FTC stray away from long-standing rules of the road and policy precedent, while also posing transparency issues.
The FTC has “erode[d] certainty regarding rules of the road, a central function of the rule of law,” cautions FTC Commissioner Christine Wilson. “Neo-Brandeisians have undermined transparency and predictability in other ways, as well. These actions erode certainty regarding the rules of the road, a central function of the rule of law. For example, the Neo-Brandeisians at the FTC have:
— Rescinded the  Section 5 policy statement and foreshadowed a more expansive enforcement agenda while failing to issue a new policy explaining this agenda;
— Withdrawn support for the Vertical Merger Guidelines and characterized them as insufficiently aggressive, while declining to provide guidance on where the new lines will be drawn; and
— Failed to challenge mergers within the requisite statutory timeframes and instead issued threatening warning letters as waiting periods expire.”
The agency is suffering from a “transparency paradox,” Commissioner Wilson further warns. “[W]e have the FTC’s Transparency paradox. We’re told that our new leadership values transparency and public input. Unfortunately the majority repeatedly has chosen to undermine transparency and limit public input.”
The FTC is taking a “non-analytical” approach to policy, warns Former Treasury Secretary and National Economic Council Director Larry Summers. “The statements on policy coming from @FTC & @TheJusticeDept better reflect legal doctrines of the 1960s than economic understandings of the last two decades. An Administration that prides itself on factual analysis and ‘looking at the science’ is taking a non analytic approach.”
Power grabs at the agency fly in the face of divided government, explains Former FTC Commissioner Noah Phillips. “Our Constitution does not abide an agency arrogating to itself the ability to govern any private economic affair, especially without a clear mandate from Congress. So few people grabbing so much power to govern so many with so little check on it flies in the face of the limited, divided, and democratic structure of the United States government.”
Changes at the FTC are removing institutional guardrails and long-standing bipartisan agreements, notes Robert Bork Jr. of the Antitrust Education Project. “They [the FTC majority] also rescinded a bipartisan commitment to the consumer-welfare standard and changed the rules so that it no longer takes a majority of commissioners to launch the investigation of a company. Any commissioner can now decide to put a company and its executives in the crosshairs.”
FTC leadership is undoing long-standing policy with “little effort to engage impacted constituencies, and little factual inquiry” says Professor Jonathan Barnett of the University of Southern California, Gould School of Law. “FTC leadership has reversed decades-old elements of antitrust policy with little opportunity for public comment, little effort to engage impacted constituencies, and little factual inquiry that have been the hallmarks of modern antitrust policymaking.”
Congress never intended for the FTC to have the competition rulemaking authority it now claims to have, explains the American Bar Association. “The Commission’s [6(g)] rulemaking authority is buried within an enumerated list of investigative powers, such as the power to require reports from corporations and partnerships, for example. Furthermore, the [FTC] Act fails to provide any sanctions for violating any rule adopted pursuant to Section 6(g). These two features strongly suggest that Congress did not intend to give the agency substantive rulemaking powers when it passed the Federal Trade Commission Act.”
Altogether, operational and policy changes at the agency seem to foreshadow “an avalanche of rulemaking” to broaden the FTC’s authority.
The FTC’s plans for “an avalanche of rulemaking” are “well under way,” says Commissioner Wilson in her January 2023 dissent to the Annual Regulatory Agenda. “I dissented from the Commission’s publication of its regulatory agenda in December 2021, given the majority’s plans for an avalanche of rulemaking on both the competition and consumer protection fronts. I can confirm that the FTC’s Rule-a-Palooza is well under way. In 2022, the Commission proposed to issue six new rules, and to expand an existing one.”
Recent policy changes are a “deliberate move” to “bring a broader range of conduct within the FTC’s crosshairs,” explain lawyers from Foley & Lardner LLP. “The [updated Section 5] Policy Statement is a deliberate move to expand the FTC’s enforcement authority to bring a broader range of conduct within the FTC’s crosshairs.”