An Unprecedented FTC Appointment

Photo credit: New America - Flickr

Photo credit: New America - Flickr

In June, President Biden broke precedent when he appointed Lina Khan as the new chair of the Federal Trade Commission (FTC). It has been a longstanding practice for presidents to divulge whether an individual will serve as chair when nominating an individual to an agency. However, with Khan, Biden only nominated her to serve as a commissioner, announcing after she was confirmed that she would be the new chair. The move was likely to assure Khan’s passage through the Senate, as her confirmation vote might have looked different had it been known that she would be the new chair. She has wasted no time showing why.

At the beginning of July, Khan’s FTC strung together a series of votes that fundamentally changed the agency’s course. Yet perhaps the most consequential of the moves was the dismissal of a 2015 bipartisan statement dubbed the “Statement of Enforcement Principles Regarding the ‘Unfair Methods of Competition’ Under Section 5 of the FTC Act,” commonly referred to as the UMC statement. 

The purpose of the UMC statement had been to “provide a framework for the Commission’s exercise of its ‘standalone’ Section 5 authority to address acts or practices that are anticompetitive but may not fall within the scope of the Sherman or Clayton Act.” The statement’s clarification of Section 5’s broad language provided necessary restraint to the FTC’s exercise of its authority over businesses and consumers. 

The decision to remove the UMC statement came not long after Khan publicly stated that the FTC had the duty to protect “consumers, workers, and honest business owners” and “to promote a fair and thriving economy that is representative of all Americans.” Yet, removing the standards set by the UMC statement only opens the door for the FTC to flex its control at will over businesses and consumers. George Mason University Law Professor Joshua Wright put it, the UMC statement “saves consumers and businesses from arbitrary punishment under unpredictable standards.” He is correct; the UMC statement shielded businesses and consumers from agency officials who think they know better. 

Some might say the warnings around removing the UMC statement are overblown. For the sake of argument, let’s say Khan refrains from using her powers as chair. The problem with that assumption is that the unrestricted power of the FTC still remains for the next individual to come along and wield it irresponsibly. It is an age-old lesson as to why giving the government more power, even when politically convenient, is bad, yet it has been forgotten more times than remembered.