How the New FTC Majority Will Rewrite Antitrust Laws without Congress
As time runs out for major antitrust legislation on Capitol Hill, the Federal Trade Commission emerges as the last, best hope for neo-Brandeisians looking for aggressive progressive moves against Big Tech. The recent confirmation of a third Democrat commissioner and the fact that the FTC chair herself helped craft the bills stalled in Congress mean that they’ll probably get their wish.
FTC chair Lina Khan was hampered in her policy agenda by the equal party split of her commissioners, but Georgetown Law professor and privacy expert Alvaro M. Bedoya’s recent razor-thin confirmation by the Senate gives her the majority she needs to make big changes. But even before Bedoya’s arrival, Khan has made good use of her time. She has already paved the way for a policy lurch to the left at the nation’s most powerful consumer-protection agency.
She spearheaded the rescinding of the 2015 Policy Statement, a bipartisan Obama-era policy that confined the meaninglessly broad congressional directive of combating “unfair methods of competition” to the consumer-welfare standard widely recognized by the courts. Those guardrails are now off. Khan also put a gag order on staff speaking publicly, revised the FTC’s Mission Statement, and has begun the process of revamping merger guidelines.
With the stage set internally for major changes and a political majority on the commission in place, onlookers don’t have to wonder what specific policy priorities Khan will pursue next. During her time as counsel to the House Judiciary Antitrust Subcommittee, she helped investigate competition in the technology industry, resulting in a suite of House and Senate antitrust-reform bills. Today, that legislation is stalled in Congress, owing to slim Democratic majorities and the increasing distraction of midterm elections.
But no matter. Khan will skip the part about the U.S. Constitution vesting Congress with “all legislative powers” and fashion new antitrust laws out of whole cloth via FTC rulemaking and enforcement actions. No elected representation needed.
Discussing merger reform on CNBC, Khan said that, “The project of potentially revising the guidelines is to basically identify: What are the blind spots right now?” Meanwhile, legislation restricting mergers sits unpassed in the U.S. Senate. And for good reason: The practical consequence of changes will be more cases reviewed, more deals challenged, and a deeper chill in the markets as more and more companies which would otherwise seek to improve efficiency or benefit from economies of scale via acquisitions, shy away from even trying. Those inefficiencies lead to higher prices and less innovation for consumers.
Concerns around digital platforms self-preferencing their own products and services over those of third parties will proceed similarly. In a 2019 law-review article, Khan wrote that practices such as Amazon offering generics and Google showing Google Maps in its search results were “creating a conflict of interest that platforms can exploit to further entrench their dominance, thwart competition, and stifle innovation.” Alternatively, consumers may just find those offerings convenient and attractive. Perhaps that’s why Majority Leader Schumer hasn’t brought proposed legislation that would destroy those options to the Senate floor for a vote. But Khan faces none of those constituent pressures.
With her new political majority, Khan can create de facto federal privacy law via FTC rulemaking. In a letter last year to Congress, she highlighted the intersection of data privacy and competition, noting that “concentrated control over data has enabled dominant firms to capture markets and erect entry barriers, while commercial surveillance has allowed firms to identify and thwart emerging competitive threats.” She also said that privacy considerations are a blind spot of current antitrust enforcement. New rules could mean more specifics on how companies store and use consumer data. Bedoya’s expertise in the field will likely make this an even higher priority. Meanwhile, federal privacy legislation sits stalled in Congress, likely due to a party split over the inclusion of a private right of action. That split marks a very legitimate policy consideration that should be decided by elected representatives. Instead, the FTC will likely move to fill the void based on the personal preference of three over two commissioners.
The practical results of these policy ideas would harm consumers, suppress innovation, and weaken the economy, whether it were to be Congress or an unelected agency that put them into practice. But compared with the legislative process, the bureaucratic method lacks accountability or the requirement to secure the buy-in of many involved parties. These initiatives will create an extra layer of uncertainty for the business community. That’s the last thing the sputtering U.S. economy needs right now.
Antitrust, once unmoored from the economic analysis that underlies, and the clear objective that comes with, the consumer-welfare standard, will be weaponized by the FTC for conveniently vague societal goals that will give ambitious progressive bureaucrats the opportunity to pursue their agenda: “protecting democracy,” “ensuring equity,” securing a “fair deal” for labor (in reality, promoting the interests of labor over consumers), and so on. This reimagined, unpredictable, and aggressive antitrust enforcement will move on from Big Tech to countless other industries such as energy, meat, health care, and even grocery stores, all in the name of tackling a wide variety of “ills.”
Former FTC chair Tim Muris wrote that, “because the bedrock principle of the FTC’s agenda is that robust competition in a strong market is the primary bulwark of consumer protection, the agency strives to reinforce these other institutions without undercutting their vitality.” Not anymore. The FTC’s new direction represents a return to a time when the agency failed to recognize the power of markets to benefit consumers. The FTC’s new antitrust will be a regime of full bureaucratic discretion, and, in all probability, emptier consumer wallets.
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