Radical change at Biden FTC leads to busted norms, new agenda facing skeptical judiciary: CEI paper

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In July 2021, President Biden signed an executive order on competition policy, calling the previous 40 years of bipartisan agreement on the issue “an experiment failed.” Standing next to him was his new Federal Trade Commission (FTC) Chair Lina Khan, who made fundamental change her top priority and set out to alter not just policy, but also the agency’s career staff.

According to a new study from the Competitive Enterprise Institute (CEI), the Biden FTC violated historic norms, beginning with President Biden designating a Chair initially named as a non-Chair Commissioner. Once in office, Chair Khan chose to be the first agency employee to ignore the advice of the Designated Agency Ethics Official (DAEO) to recuse herself because of a perceived conflict of interest in the litigation challenging Meta’s acquisition of a virtual reality company. Her decision appeared to violate her promise to Congress during her confirmation hearing to consult the DAEO and “proceed accordingly.” The norm-busting continued with the agency reducing information available to minority commissioners, companies under investigation, and congressional oversight committees.

Co-authors former FTC Bureau of Consumer Protection Director J. Howard Beales III and former FTC Chair Timothy J. Muris contrast the radical change in agenda at the Biden FTC with previous change eras in 1971 and 1981, when belief the agency needed fundamental change was widespread.

The radical change at the Biden FTC came after decades of acclaim that the agency had finally developed a robust agenda to benefit consumers, and adequate tools to implement its agenda. Bipartisan and international support for the FTC (a key measure of success for any government agency) continued well into this century. Indeed, the FTC was the only one of about 40 ranked global competition agencies to receive five stars each year since publication of the survey began in 2001—a streak that ended under this administration.

The progressives who dominate the Biden economic policy rejected the pre-existing consensus and acclaim with an approach to change that was markedly different from prior reform eras following the elections of 1968 and 1980. Although most elected Democrats, much of the mainstream press, and many opinion leaders support the radical change sought by the Biden team in 2021, important institutions supported the FTC’s existing course.

“The Biden FTC under Chair Khan has been actively seeking fundamental change but has not laid the foundations to achieve the transformation it desires,” said former FTC Chairman Muris. “The agency faces a hostile judiciary that supports policy determined by the consumer welfare standard – a standard the new leaders reject. Given that dynamic, a well-planned strategy for change is even more important than in prior eras.”

Read the full report, “Achieving Change at the Federal Trade Commission: Success and failure,” on CEI.org.

For more information on CEI’s Eye on FTC project, visit www.eyeonftc.com.


Wednesday, May 8 at 3:00pm
FTC Policy Unpacked: Achieving Change at the Federal Trade Commission
Hosted by the Federalist Society, featuring Howard Beales, Timothy J. Muris, Svetlana Gans, and Maureen Ohlhausen

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