Drama and chaos at the Federal Trade Commission
The Federal Trade Commission (FTC) is having a meltdown. Congress should remedy the root cause before this seriously damages the U.S. economy.
According to the FTC’s website, its “mission is protecting the public from deceptive or unfair business practices and from unfair methods of competition.” Its enforcement levers can stymie mergers, disrupt companies’ marketing campaigns, and, if it succeeds in a recent, especially bold move, ban noncompete agreements.
But according to FTC Commissioner Christine Wilson via a Wall Street Journal Op-Ed on Valentine’s Day, it is FTC Chair Lina Khan who has “disregard for the rule of law and due process.” This includes “willful disregard” for congressional limits on the FTC’s power and defiance of legal precedents.
Wilson makes a strong case in the article, but there is other prima facie evidence of serious, striking problems at the FTC.
First, with Wilson’s resignation the FTC will have three Democratic Commissioners and no Republicans or independents. A full commission is supposed to have five commissioners.
As an independent government agency, the FTC can have not more than three members of the same political party. President Biden has yet to nominate a replacement for former Commissioner Noah Phillips, a Republican, who resigned on Oct. 14. On Feb. 13, though, the White House announced it would nominate Democratic FTC Commissioner Rebecca Kelly Slaughter for another term.
Typically, when there are multiple vacancies at a federal agency, presidents pair nominations, one Democrat with one Republican, so that the confirmation process can proceed expeditiously. This ensures a fuller complement of government appointees.
Independent government agencies are by law and structure supposed to build consensus and keep political agendas at bay. The absence of Republican commissioners will soon mean there is not even competition for ideas in a government agency that is supposed to ensure healthy business competition.
Many professional federal employees at the FTC are troubled by Khan’s leadership, according to the Office of Personnel Management (OPM). In 2022, just 49.2 percent of the FTC’s employees believed the agency’s “senior leaders maintain high standards of honesty and integrity,” a 40 percent plummet from two years earlier, before Khan’s leadership began.
Despite this, the FTC received a 14 percent funding boost from the omnibus package and the authority to significantly raise fees for proposed mergers under the Hart-Scott-Rodino Act.
The FTC’s blatant anti-technology crusade has already created disincentives for entrepreneurs and others who want to develop dynamic, innovative technology that may one day be sold to larger companies. And with the FTC having lost four major court cases on what it claimed were antitrust violations, confidence in the agency’s effectiveness has been shaken.
Unfortunately, in its rhetoric and policies, the FTC seems determined to double down, regardless of the consequences.
Congress should step in and put the brakes on the FTC’s reckless operations. This should include the following:
- Promptly ask President Biden to nominate two Republicans to the Commission. These should be people with real-world business experience, to balance out the heavy academic and political backgrounds of the Democratic commissioners. Both Democrat and Republican senators should petition the president for thoughtful, independent leaders with business backgrounds, while making clear that tech-bashing ideologues should not be nominated.
- Ask the U.S. Government Accountability Office to investigate Commissioner Wilson’s charges. There should also be a probe of the dramatic drop in morale at the FTC, the reasons for it, and recommendations to correct it.
- Relevant Congressional Committees, including the House Committee on Oversight and Accountability should also hold hearings about the priorities and management practices of the FTC.
The FTC has a proud history and has made many important contributions to America. This includes curtailing unwanted telemarketing calls, outlawing deceptive practices in the funeral home industry, and fighting identity theft. It needs to return to its core mission of protecting consumers, rather than trying to audaciously over-regulate our innovative, dynamic, free-market economy.
Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.
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