The new progressive chairwoman of the Federal Trade Commission is already riling Republicans by pushing to expand the limits and powers of the agency significantly.
Lina Khan announced on Thursday that the independent agency's five commissioners would vote next week on whether to rescind a 2015 policy statement regarding regulating “unfair methods of competition” under Section 5 of the FTC Act.
The policy, adopted in 2015 by then FTC Chairwoman Edith Ramirez, requires the agency to focus on the “promotion of consumer welfare” and “business justifications,” restricting its enforcement to anti-competitive behavior that cannot be addressed by the two major antitrust laws, the Sherman and Clayton Acts.
For the past few decades, antitrust laws have focused on protecting consumers from anti-competitive mergers and business practices. But many liberals such as Khan are keen to expand the agency's rule-making authority to include economic factors beyond the consumer welfare standard, such as corporate concentration and income inequality.
Because the trade commission’s three Democratic commissioners now have a majority within the agency and are all in favor of more aggressive and expansive antitrust enforcement, the policy statement is expected to be rescinded.
This has worried the two Republican commissioners at the agency, and some in Congress say the trade commission under Khan could overstep its bounds and regulate industries in a way never seen before.
“Rescission of the FTC’s existing Section 5 policy statement would have many significant and harmful effects on American consumers and broader efforts to rebuild our economy post-COVID,” Republican Commissioner Christine Wilson told the Washington Examiner.
Wilson said the policy reflected a long-standing bipartisan consensus of focusing on consumer welfare. If the agency “caves to populists” to rescind the policy, the trade commission could pursue goals contrary to consumer’s benefit — thereby “paving the way for higher prices, fewer choices, and less innovation,” she added.
Furthermore, she said antitrust enforcement by the trade commission that focuses less on consumers and more on harming specific companies, as some Democratic commissioners have suggested, would “reward inefficient companies that spend more energy complaining about competitors than dreaming up new ways to meet consumer demand.”
The other Republican at the trade commission also said he worried about how rescinding the policy could allow the agency to overstep.
“My concern with rescinding the Section 5 statement is that it was intended in the first instance by a bipartisan group of commissioners to add clarity, and I think clarity in law is a good thing,” Commissioner Noah Phillips told the Washington Examiner.
Republican Sen. Mike Lee, ranking member of the Senate Judiciary antitrust committee, said he was “disappointed” in Khan’s decision to vote on rescinding the policy, saying it “would also signal that the Commission rejects the idea that there are any limits to its power or regulatory reach.”
Conservative antitrust lawyers say a policy rescission could be the start of a campaign by Khan to gain more power.
“While I don’t see big legal impact immediately from the policy being rescinded, I see a clear signal that Chairwoman Khan wants to use Section 5 rather expansively, which is a bad sign,” said Neil Chilson, who worked as acting chief technologist at the Federal Trade Commission for a year during the Trump administration.
“It makes me curious to know what she would like to try under an expanded Section 5, which could mean the FTC being able to regulate any company if they can find a connection to competition,” added Chilson, who is now a senior research fellow on tech issues at the Charles Koch Institute, a libertarian research organization.
However, liberal antitrust lawyers say current consumer welfare-focused antitrust enforcement at the trade commission fails to account for those at the bottom of the socioeconomic ladder.
“The concern is that this strict use of the consumer welfare standard at the FTC clearly hurts workers and other input providers in our economy,” said Hal Singer, an adjunct professor at Georgetown University.
“Something is really wrong with consumer welfare standard, and I think Lina wants us to be freed from requirements that make workers' needs subservient to that of consumers, who shouldn’t be any higher in the hierarchy of importance.”
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