The FTC is Broken, Here Are 10 Ways the Trump Administration Can Fix It

The FTC is broken, parts of the mission abandoned, and its reputation incinerated. The Trump FTC cannot just undo the bad votes. Fixing the FTC will require more. Here are 10 places to start.

Welcome back to Competition on the Merits.

Happy Monday!  It was a big week.  President Trump will be inaugurated on January 20, 2025 and get a second term.  Last week I talked about what that means for FTC personnel. My thesis was a simple one: that the political economy of competition law and regulation among conservatives has shifted substantially since 2016. Vigorous enforcement aimed at Big Tech is one part of the program, but it can no longer serve as an entire antitrust personality.  Because the Biden Administration and Lina Khan have had four years to implement their excessive regulatory agenda – deregulation and fixing what is broken is a first order concern. 

Splitting the uprights between vigorous enforcement and deregulatory correctives to the Khan FTC excesses is the name of the game.  Last week we talked about personnel more than policy.  The focus was on the criteria necessary for the next FTC leadership under President Trump and some possible candidates for the job.  

This week – we turn to policy.  And as always – subscribe.  You know the drill.  

Lina Khan Broke the FTC

It is well understood by all but Khan’s biggest supporters – Stoller, Senator Warren, Bloomberg, and the NY Times – that the FTC is in much worse shape than it was four years ago.  Competition on the Merits readers already know this.  And you already know the agency has a subpar record in court in merger challenges, it has been rebuked over and over again by federal courts for asserting authority it does not have, it has abused the merger process to target political targets in the oil and gas industry, and weaponized its authority to target Elon Musk.  Its Chair used her agency perch to campaign for the losing presidential candidate.  Truth be told, agency morale was a mess before any of that, primarily because Chair Khan and her colleagues developed a reputation of ignoring input from senior staff leadership and staff.  The FTC’s once-heralded and independent Bureau of Economics has also taken a reputational beating over the past four years as its leadership allowed it to put economic analysis second to play a useful pawn for the Khan political agenda.  With “independent” agencies that campaign for political candidates, the cumulative impact of the Khan competition regime has left many – including Senator Lee – asking the perennial question of whether we need two antitrust agencies in the first place.  (We don’t).  

Any one of these could be the subject of its own column.  I guess some have. But the punchline here is that the FTC is broken on many dimensions.  Yes, there are bad policies that need changing. Some of these are obvious.  Every law firm practice note in the world is “predicting” the FTC will undo the unlawful Noncompete Rule.  Of course.  And new leadership should do that.  But that’s not all.  And that is not a plan.  There are institutional changes that need to be made if the FTC is going to play a productive role in the competition landscape once again. Those fixes are harder to implement.  

Say what you will about criticizing Lina Khan (and her predecessor Rohit Chopra) for the content of their policies as the disregard for the rule of law, but nobody should misunderstand that what Khan did at the FTC took planning, strategy, political will, and execution.  That is a compliment. It is exceedingly difficult to get a large, bureaucratic monster of an agency like the FTC to change so dramatically, so quickly.  And between Khan and Chopra, they did that.  It is even more difficult to fix things once they are broken.  It will take more than simply casting votes to undo Khan and Biden FTC policies.  It will take an even greater amount of vision, strategic thinking, and leadership to change things.  The ball is already running down the hill.  That is precisely why FTC leadership and personnel decisions matter so much this time around.  It is time for an FTC fixer and visionary not just a well-qualified competition lawyer.  But we’ve already talked a bit about personnel.  

Let’s talk about some ideas of how to fix the place.  For now I’m going to exclude things that the White House can do separately – like a takeover and reimagining of the Biden Whole of Government Competition Policy.  I do love that idea.  And I think there is an enormous rate of return in reimagining the Competition Council to do what it was meant to do: (1) prevent regulatory confusion and agencies fighting each other with incoherent competition policies; and (2) coordinate the removal of government and bureaucratic barriers to competition.  And I do not mean here things that Congress might do.  And there are a ton of those!  

Think of this as a blueprint for fixing the FTC.  Each of these could be a white paper of its own — but we wouldn’t do that to you.  We will identify the problem, maybe talk about a few different approaches to solving it, and what it will take to do it.  And I might as well rank order these fixes from most important to least important to give some sense of priority.  And just for fun.  Here goes.

Here are 10 Ways the Trump Administration Can Fix the FTC 

#1 Repeal and Replace the 2022 Unfair Methods of Competition Policy Statement 

If you want to start to undo what Lina Khan broke inside the FTC, it makes sense to start where she did.  Indeed, among Chair Khan’s first acts at the Commission was to throw out the bipartisan 2015 UMC Policy Statement. Why? It stood in the way of competition rulemaking – which both Khan and Chopra had signaled as the “next big thing” in competition enforcement.  The consumer welfare standard was alive and well in the courts.  Legislative attempts to reduce the burden of proof for antitrust plaintiffs had failed.  Rulemaking was the last hope for an antitrust revolution.  

As the driving force behind that bipartisan policy statement — I am absolutely a biased observer on this one.  But the 2015 UMC Policy Statement was a fundamentally important constraint on FTC abuse and shenanigans.  There is clear evidence of that.  Perhaps the best evidence is that Chair Khan’s first move was to get it out of the way to clear the road for her agenda. 

The 2015 UMC Policy Statement did a few things.  It tethered the FTC’s Unfair Methods of Competition authority to the consumer welfare standard.  But it also was an agency commitment to apply that authority on a “case by case” basis – that is, not to do rulemaking.  FTC attempts to do UMC Rulemaking with the 2015 UMC Policy Statement in place would have been quickly met by challenging parties waving the Statement around and showing federal courts that the agency was violating its own policies in promulgating rules.  In conjunction with other, very good, legal arguments that the simply does not have the authority to do such rulemaking under a plain reading of the FTC Act, those rules would have been non-starters.  

The Noncompete Rule is destined for failure.  But it may well die without a final Supreme Court ruling on the question of whether the FTC has rulemaking authority under section 6g of the FTC Act.  That is especially true if – wait for a few items down my Top 10 list – the Trump FTC puts an end to that rule.  

So what to do to stop further lawless attempts to do competition rulemaking and evade the courts?  The 2023 UMC Policy Statement – which was so broad that practically anything is a UMC violation (including competition itself).  A UMC Policy Statement is a critical centerpiece to undoing the damage and preventing it in the future.  It really is a unicorn in the administrative state.  It is a Policy Statement adopted by an administrative agency on a bipartisan basis that affirmatively constrains its own power.  An absolute unicorn. 

Indeed, before I proposed it at the FTC back in 2013 I was told in no uncertain terms by Democratic and Republican Commissioners, antitrust practitioners, and academics that there was no shot at such a statement getting bipartisan support.  But for the FTC – it was critical at the time and remains even more critical now.  It also will go a long way to restoring some agency credibility that has been lost along the way.  The only FTC support for rescinding the bipartisan 2015 UMC Policy Statement has come from Democratic Commissioners Khan, Slaughter, Chopra, and Bedoya – the architects of the FTC’s lawlessness problem. The record is quite clear the 2015 Policy Statement was a powerful constraint on FTC abuse. One would like to think that even the small handful of Republican individuals or organizations who doubted the value of the Statement at the time would have come around on this point by now.

The 2015 UMC Policy Statement is not the only possible solution.  It was a compromise back then to attract bipartisan support from Obama-appointed Democrats Edith Ramirez, Julie Brill, and Terrell McSweeney.  There are other options.  One would be an even more restrictive UMC Policy Statement.  My original proposed statement would have restricted Unfair Methods to a subset of conduct with proven anticompetitive effects and no cognizable efficiency justifications.  An even stronger and more restrictive version would be to define Unfair Methods of Competition as congruent with the Sherman and Clayton Acts.  The latter definition would likely require some help from Congress because the Act is pretty clear that unfair methods are broader than what is proscribed under the antitrust laws.

Senator Lee had this just right when the FTC withdrew the bipartisan 2015 Policy Statement:

I am also worried that this is just the beginning of a troubling trend of partisan antitrust enforcement under the Biden administration. This worry was exacerbated when President Biden nominated Ms. Khan to be a commissioner and withheld his intention to immediately name her as Chairwoman. This was undoubtedly an attempt to evade the greater scrutiny and vetting that comes with the confirmation process for the Chair of a Commission, as opposed to an individual commissioner. It is ironic that this kind of deception was used to install leadership at the federal agency tasked with fighting deception and fraud.

The UMC Statement sometimes gets less attention than it should because the FTC does not bring many straight, standalone UMC cases.  Though its weird PBM case has a standalone UMC claim.   But you should think of UMC reform as a piece of institutional reform – it constrains undesirable expansions that go too far beyond antitrust laws and keeps competition policy in bounds and focused upon consumer welfare.  That Chair Khan saw fit to attack it first is probably all of the evidence you should need to understand its structural importance.  

#2 There Will Be Pending Robinson-Patman Cases; Drop Them As Soon as Possible (That May Be Awhile)

I started off by saying the path to “fixing” the FTC is much harder than simply voting to withdraw cases or undo bad Policy Statements but #2 and #3 on my priority list fall into that category precisely because they are so significant as a practical matter of economic value to consumers.  

It is no secret the FTC is planning to bring Robinson-Patman Act cases.  And there is no doubt in my mind that Chair Khan during the lame duck period will be firing off the last items on her agenda.  Robinson-Patman Act cases are the biggest remaining item.  They’ve been rumored for months and the investigations are known.  The economic harm that arises from ill-conceived RPA prosecutions that threaten the cloud of legal liability for companies that seek to lower prices or negotiate for large discounts that are passed on to consumers is tremendous.  Secondary line RPA cases are in direct conflict with competition policy that promotes consumer welfare.  They have to go.  But that is not that easy.

Once cases are authorized by a Commission vote, it requires a vote to withdraw them.  You may remember the saga of FTC v. Qualcomm when the Obama FTC voted out its monopolization case against the San Diego technology company before President Trump was inaugurated for his first term.  The FTC was soon deadlocked 1-1 after departures of sitting Commissioners.  Despite the fact that the Trump administration wanted the case gone, the FTC could not vote to withdraw the case.  Now, the sitting Chairman would have some soft powers available to undermine a prosecution with which they took issue (reducing available resources, dictating that certain arguments not be made) the FTC did not do so.  Even when the agency was back to full strength with its full slate of 3 Republicans and 2 Democrats – Chairman Simons was recused from Qualcomm matters.  Back to a 2-2 deadlock.  And back to no ability for the Trump administration to settle or dismiss a case it wanted nothing to do with.

And so you had this very odd scenario in a case voted out by an entirely different set of Commissioners, from a different administration, was just humming along in federal court with no way to stop it or really, even to settle it.  It can be complicated to end these things as new terms start because the votes do not line up.  But this odd and very unusual circumstance was why you saw things like Republican Commissioner Christine Wilson publishing a Wall Street Journal op-ed as a dissent, or, even more unusual, Makan Delharim’s DOJ Antitrust Division filing an amicus brief with the court at odds with the FTC’s position.  The context makes clear exactly why Delharim’s DOJ did it.  The Trump administration disagreed with the case and wanted it gone.  But it has no control of the FTC.  The Antitrust Division speaks for the United States Government and so made itself heard.  

What does that have to do with killing Robinson-Patman Act cases – or really any other cases or matters requiring votes?  Well, I presume that Lina Khan will resign shortly after inauguration.  And if not, at the very latest she will be gone as soon as President Trump nominates and confirms a successor.  If she leaves quickly, we will most likely be in a 2-2 vote situation.  I may do a separate column later on permutations and combinations of Commissioner votes – things get complicated very fast if Commissioner Slaughter also leaves, or if Commissioner Ferguson is tapped to become the Acting Attorney General.  But suffice it to say that a 2-2 scenario is very likely at the end of most administrations after the Chairman steps down.

So do not be surprised if we end up in a scenario with a 2-2 deadlock and no real “vote-based” mechanism to withdraw a case.   A new Chairman does have some options available to impact those prosecutions.  Again, these are mostly “soft” or “norm-based” powers and a Chairman has got to be willing to use them.  RPA is damaging enough and important enough – and contrary to every ounce of conservative and market-based competition policy thinking – that I suspect an FTC Chairman will be willing to do so.  Indeed, they should be.  And prospective Chairs should be ready and willing to do so.  

Soft powers or not, the FTC will be able to close these cases when they get their third vote and secure a majority.  The timing on that is hard to predict.  Background investigations, Senate hearings, and confirmation take time!  And the Trump White House was not remarkably fast the first time around with respect to the FTC.  Things feel much more organized and prepared this time around.  And the FTC has certainly risen in prominence in terms.  It will receive more attention this time.  That is good news.  But perhaps it will take until the Fall to kill any RPA cases.  

Killing those cases will not be enough.  I’ll write more about this later – but an affirmative policy commitment on RPA by both the FTC and DOJ is certainly something worth considering.  That is not as good as a Congressional repeal – but I promised to focus on agency policy items for this issue.  And I wanted to highlight the complexity and difficulty in killing cases at the FTC (compared to say, the DOJ) when an administration changes.

#3 The New HSR Merger Tax Is Awful – The FTC Should Rescind It

The New and burdensome HSR Rules are – to put it bluntly – a tax on all mergers and acquisitions that have very little to do with the FTC and DOJ mission.  The additional burdens of the New HSR rules are not well-tailored or designed to detect anticompetitive deals that had been sneaking under the radar.  Given that the Khan and Kanter FTC and DOJ had made clear their view that mergers are generally bad for the economy – that mistaken view showing up in the FTC and DOJ’s Premerger Notification Rules is not all that surprising.

But it is an awful idea.  I’ve made my views on the New Khan Merger Tax very clear.  There is little doubt that the New HSR Rules will ultimately be challenged in court – but the fact that the sitting Republican Commissioners supported them in exchange for concessions does make legal challenge less likely to succeed.  The single best predictor of an agency rule failing judicial review is an agency dissent, in my experience.  It also will make it a little awkward for the sitting Republican Commissioners to support a vote to abandon the New HSR Rules.  But both made clear they were supporting the rules only to save the economy from a far worse version of the HSR Rules.  Fair enough. 

It is hard to get folks excited about HSR Premerger Notification Rules.  But dollar for dollar, the Khan HSR Merger Tax will be the biggest and longest lasting hangover from excesses of the Biden antitrust experiment.  Whether it is the long route (waiting for a majority vote at the FTC to rescind the rules) or a shorter route (Congressional Review Act, anyone?) – the HSR Rules are a paradigmatic example of bureaucratic bloat at the FTC and should be a priority target.  

#4 Reinstate the 2010 HMGs and Trump Vertical Merger Guidelines 

This is an easy one.  The 2010 Horizontal Merger Guidelines (HMGs) and the Trump Administration’s 2020 Vertical Merger Guidelines (VMGs) set forth the FTC and DOJ analytical framework for assessing mergers under Section 7 of the Clayton Act.  The 2010 HMGs and 2020 VMGs were consistent with the consumer-welfare focused approach to antitrust – that is, they were consistent with the law.  They also embraced a rigorous approach, grounded in sound economic thinking and evidence, to understanding which mergers were likely to harm competition and which were not.  This is not the column for quibbling over different minor complaints about either set of Guidelines (I certainly have quibbles).  But suffice it to say the both the 2010 HMGs and 2020 VMGs are viewed as sound and reasonable documents consistent with antitrust law and the economic approach to antitrust.

The Biden Administration threw out all of it: the 2010 HMGs, the 2020 VMGs, and the economically sound approach.  Baby.  Bathwater.  All of it.  The new 2023 Merger Guidelines (covering both horizontal and vertical mergers) have been broadly criticized by lawyers and economists alike.  The Khan and Kanter Merger Guidelines provide very little guidance to merging parties other than – “your merger is likely unlawful under Section 7 of the Clayton Act,” putting the 2023 MGs in conflict with existing law.  The Khan and Kanter MGs make economic thinking no more than an afterthought, they demote the role of the Hypothetical Monopolist Test, they substitute away from empirical evidence of the competitive effects of a transaction in favor of presumptions that favor the government, and they embrace a “big is bad” view of antitrust law.  I took some heat several years ago for describing the Khan and Kanter worldview as “hipster antitrust,” (a term I borrowed! HT: Kostya Medvedovsky) because it harkened back to antitrust of the 1940s-1960s.  Well, the description was more than fair when it came to the Khan and Kanter Merger Guidelines.  The consensus view (with much bipartisan criticism) was that the Khan and Kanter MGs took antitrust law and economics back to the 1960s – shifting focus to hot documents and market structure and away from understanding the economics of the proposed transaction and how it would impact consumers.

Punchline: the 2023 Khan and Kanter Guidelines have got to go.  This is one the Trump FTC and DOJ can do just as soon as they get the new Republican FTC Commissioners or Chairman confirmed.  Indeed, the DOJ Antitrust Division can and probably should abandon the 2023 MGs right away – leaving the FTC to follow suit when it is at full capacity.  

The open question will become whether they revert to the 2010 HMGs and 2020 VMGs or take on a more ambitious project of launching new Merger Guidelines.  The latter is a longer-term project.  But I do expect that a high priority item will be to abandon the Khan/Kanter MGs and at minimum to revert to the 2010 and 2020 versions. 

#5 Make the Bureau of Economics Great Again, Or At Least Independent

Here is one you will not see in a Big Law practice note about what the change in administration means for the FTC.  There may be no more outspoken defender of the FTC’s Bureau of Economics.  I started my antitrust career as an intern in the Bureau of Economics as college freshmen.  But when the FTC is working at its best – the Bureau of Economics plays two roles: (1) it supports the FTC in providing analysis to sharpen its decision-making in investigations and policy matters; (2) BE makes independent recommendations to the Commission concerning FTC matters.  It is a tough balance at times, mixing the tasks of “supporting” the agency while simultaneously providing independent and unfiltered recommendations, based upon economic analysis, about whether particular actions will make consumers better off.  But that is the job of the Bureau of Economics (BE).  And the BE staff remains one of the crowned jewels of the administrative state.  It is full of remarkably talented economists.  

What I am going to criticize here has nothing to do with the staff.  Rather, what I will criticize is that the role of BE in providing influential and independent economic analysis has been reduced significantly. That’s a function of FTC leadership (Khan).  But there have been plenty of administrations where an independent BE is a thorn in the side of an FTC majority that wants to take action that is unwise in economic terms.  It is BE leadership that bears the responsibility of preserving its role as independent, and sometimes critical, analyst.  

This was always going to be a challenging time for BE.  Mostly because central to the Hipster / Neo-Brandeisian view of antitrust is the mistaken view that economic analysis has little to do with understanding whether a transaction might lessen competition or an agreement restrains trade.  That view is wrong.  But the Hipster Antitrust crowd has made clear that they have little interest in the role of economic analysis in antitrust law, nor the role of economists.  Given those views the antitrust community seemed pleasantly surprised when Khan appointed University of Pennsylvania’s Aviv Nevo as the FTC’s BE Director.  Nevo is an excellent economist.  One who held the Chief Economist role at the DOJ’s Antitrust Division previously.  He is very well respected and his appointment (and willingness to do the job) suggested to many that perhaps the forecasts for the role of BE in the Khan FTC were mistaken.  

Well, the results are in and the original concerns were absolutely correct.  I say this somewhat cautiously because I have a great amount of respect for Nevo as an economist.  But when it came to the 2023 Khan and Kanter MGs and their retreat from economics in favor of 1960s style structural analysis, Nevo went out of his way to enthusiastically defend them and attack critics who made the pretty obvious points that the 2023 Merger Guidelines said what they said.  That’s one example.  There are plenty of others.  A good place to start is to look at the shoddy analysis allowed to go out the door in the FTC’s PBM and Supply Chain Reports.  

This is not to suggest any BE Director could have stopped the Khan FTC from doing any single thing they wanted to do.  That is an unfair standard.  But BE can and has played an important role as a constraint on FTC action that will make consumers worse off – from rulemaking to bad merger challenges to studies.  And at a minimum, BE can do better than publicly supporting a return to 1960s structural analysis with no more than a shrug of the shoulders.  

What to do?  The next BE Director will be an important appointment.  But an FTC Chairman that embraces economics is a far more important priority.  The next FTC BE Director is going to have work to do restoring public confidence in the institution’s willingness to play its role as independent analyst rather than useful extension of the Chairman’s office. 

#6 Repeal the Noncompete Rule And Don’t Do It Again

Again.  Not complicated.  But the Top 10 list is not complete without mentioning it.  The FTC Noncompete Rule is amidst a variety of legal challenges.  But the fastest way to put an end to the FTC’s attempt to assert authority it simply does not have a Commission vote to rescind the Rule.  A vote must wait until there are three Republican Commissioners.  Perhaps the legal challenges will come to an end first – but that will not moot the issue.  

Merely rescinding the Rule is not enough to make lasting change.  Expect the Trump FTC to try to make some type of binding commitment against competition rulemaking under 6g.  A UMC Policy Statement is a start – but more can be done.  I promised to leave Congressional agenda items for another day.  So I’ll stop there for now.

#7 Rescind Prior Approval and Reinstate the 1995 Policy Statement
In 2021, the Khan FTC abandoned the FTC’s 1995 Policy Statement that committed the agency to avoid seeking “prior approval” provisions in consent decrees arising from merger investigations.  Remember Zombie votes?  This was one of those.  They followed that up with a Policy Statement of their own that announced the FTC would “routinely” require parties who come before the agency to have a merger reviewed to agree to “prior approval” of all future mergers.  Oh, and so would potential divestiture buyers.  The long and short of the Khan Prior Approval policy was an attempt to give FTC bureaucrats control over all future mergers of any company before it (and any divestiture buyer).  

The Prior Approval policy is, well, bananas.  It uses extreme government leverage over merging parties while a transaction is pending (the same sort of leverage that allowed the FTC to sacrifice the rule of law in merger consents to punish individuals from disfavored industries like oil and gas or private equity) to extract a major concession that has nothing to do with the merger or the Clayton Act.  Parties that are forced into Prior Approval consents give up their right to judicial review of future transactions in favor of allowing FTC bureaucrats control.  

Then Republican Commissioners Noah Phillips and Christine Wilson objected vociferously and eloquently to the Khan FTC’s Prior Approval gambit.  It is a great read.  Highly recommended.  The way forward?  Rescind the 2021 Policy Statement; revert to the 1995 Policy Statement.  File this one under restoring some normal order to the merger review process. 

#8 Bring Back the Competition Advocacy Program and Attack Occupational Licensing 

Do you remember the FTC’s competition advocacy program?  I do.  In my very first speech as an FTC Commissioner in April 2013 I wanted to talk about two policy items that were critical to the FTC’s future.  The first was Section 5 Unfair Methods of Competition.  You’ve heard enough from me on that.  The second was the FTC’s competition advocacy program – and in particular, its use to target government barriers to competition.  

The FTC’s Competition Advocacy Program is one of its key assets.  It has done a ton of good for competition and consumers.  Historically, it has focused on educating federal, state, and local governments on proposed legislation and initiatives that will impact competition.  Most often the program has been deployed to help inform and guide governments to reduce barriers to entry and competition.  

State and local laws reducing competition are legion.  State level bans on competition in health care, restrictive use of practice laws that prevent competition with lawyers or nurses, regulations to protect incumbents from ridesharing services, or training requirements that prevent competition for hair braiders and funeral services.  The FTC has helped to reduce barriers to entry in each of these settings with studies and advocacy.  

Federal law and agencies were not immune either.  The FTC’s program took on anticompetitive actions from sister agencies back in the 1980s — now that is Whole of Government Competition Policy.  And indeed, the Biden Whole of Government Executive Order promised not just to let Khan and Kanter run wild under the antitrust laws, but also to tackle government barriers to competition.  The Biden WOG Executive Order directs it agencies to “rescind regulations that create unnecessary barriers to entry that stifle competition.”  

What has happened to the FTC’s Competition Advocacy Program?  Nothing.  And I mean that.  Basically, nothing.  You can search for FTC advocacy filings here.  And you can compare across prior administrations.  When you look you will find a handful of letters from individuals — like the Office of Policy and Planning Director or the Bureau of Consumer Protection Director Sam Levine – to state legislative bodies.  What’s missing?  No FTC Staff letters filled with analysis.  No FTC Staff letters signed by the Bureau of Economics and the Bureau of Competition as a joint production meant to inform and educate state or local lawmakers on the impact of proposed legislation.  Check for yourself.  The competition advocacy letters are generally very high quality work that combines economic and legal analysis.  They’re gone.  The FTC just decided to take a pass on domestic competition advocacy during the Biden Administration.

It should come back.  This will require directing resources as well as an FTC Chairman who makes it a priority.  It should also be a key element of a useful Whole of Government Competition Policy — which, as Competition on the Merits readers know – has not been tried.  

#9 Kill the 6B Studies and Reform the Policy Shops 

There are a handful of pending FTC Section 6b studies: PBMs, grocery prices.  Maybe there will be more before Chair Khan leaves the FTC.  For those unfamiliar, Section 6b of the FTC Act is the authority the FTC uses to do a variety of policy studies.  It can use the authority to issue subpoenas, collect data, and issue reports.  

FTC 6b reports have been the subject of some controversy during the Biden-Khan years in large part because the quality of analysis has gone down substantially.  (Astute readers should connect this item both to the disappearance of the competition advocacy program and diminishing influence of BE).  Commissioner Ferguson has called the FTC’s resource allocation judgment into question for devoting tremendous time and effort to the unlawful Noncompete Rule while dragging its feet on issuing even an “interim” PBM report (and one totally devoid of the typical sort of analysis associated with FTC studies).  Commissioner Holyoak criticized the PBM interim report for precisely that failure, i.e. falling short of the FTC’s typical standard of care for analysis.  

An excellent and aptly titled (“Reports of the FTC’s Intellectual Integrity Have Been Greatly Exaggerated”) blog post by former FTCer Dan Gilman (ICLE) gets to the heart of matters on the PBM Report and speaks with the tone of an understandably disappointed agency alum: 

The tone of the interim staff report is uniformly conclusory, the dearth of solid conclusions notwithstanding. The title page itself screams a lack of seriousness. This is an interim (or preliminary) report to which the commission attached neither the names of staff authors nor the commission’s own imprimatur. So why is it subtitled, “The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies”? Does that seem like the title of an academic study? An objective government report? An interim report on a serious study? An interim report on a study that has no real analysis or general findings of the impact of PBMs on drug costs (or prices) on average or in aggregate? Or—with apologies to the staff—a whole lot of sound and fury, signifying so much less. What happened to the expert agency?

The point by now is clear, I hope.  The policy wing of the FTC has been hijacked.  Most of its human capital is devoted to writing rules (Noncompete, Junk Fees, Click to Cancel, etc.) – many of which the FTC has no authority to promulgate.  Policy studies have been turned to opportunities for propaganda rather than serious analysis.  And the competition advocacy mission? Abandoned.  There is more to do here than simply fix old votes.  This is an institutional problem.  And it requires institutional leadership.  It requires bringing BE back into the policy fold.  And it will require an FTC Chairman who makes the “academic” and “policy” wing of the agency a priority again.  

In the meantime, the studies are fruit of the poisonous tree.  If the Bureau of Economics is nowhere to be found in the resulting study outputs, you can bet that they were not adequately considered in the study design phase.  Even if they were, the studies are too far politicized at this point to be salvaged.  Abandon them.  There are worthwhile questions for 6b studies and the expenditure of those resources.  The new Chairman ought to identify them and pursue new studies with rigorous research design and expert input.  Those studies, like many in FTC history, will have a shot at influencing policy in an educated direction.  The pending studies do not.  Drop them.  

#10 International Competition Advocacy – Consumer Welfare for All

Let’s round out our Top 10 list with a different type of competition advocacy – International Competition Advocacy.  This is a subject near and dear to my heart.  There has been a lot of debate domestically not only about the consumer welfare standard, but also about the direction of antitrust generally.  At domestic academic antitrust conferences they have been debating about whether and how dead the consumer welfare standard is since well before Lina Khan graduated law school.  These are silly debates.  The consumer welfare standard is the law of the land and it will remain so.  The Hipster Antitrust fall might well be inevitable in the United States, but the influence of the populist antitrust movement is global.  

Europeans, Brazilians, and Asian competition jurisdictions watch the debates in the United States and wonder – if evidence-based, consumer welfare focused, competition policy is such a good idea, why has the US abandoned it?  Of course - the US has not done any such thing.  But that has not stopped the lack of clarity internationally on exactly where America stands on global competition policy.  

We used to do real competition advocacy.  The Antitrust Division and the FTC would go out to jurisdictions around the world and defend the consumer welfare standard – sometimes while acknowledging our own deviations from it at times.  In my role as Executive Director of the Global Antitrust Institute – I used to do much of the same and saw first hand the impact it would have on international audiences when the United States was not quite sure where it stood on the big questions.  So where do we stand now?  

The United States not only does not defend the consumer welfare standard in international jurisdictions – we seem to have abandoned international advocacy nearly altogether.  And maybe it is worse than that.  The Khan FTC has raised serious concerns, and triggered Congressional oversight, colluding with foreign antitrust authorities to target American companies.  And I do not mean run of the mill cooperation or sharing of evidence on overlapping investigations.  The concerns have been more significant than that – e.g. using foreign counterparts to attack American companies rather than do so under the constraints of American due process, tougher liability standards, and judicial review.  

One of the dangers of abandoning the consumer welfare standard is that its replacements largely involve far greater reliance upon political discretion and value judgments.  Deviations from that standard in the United States are likely to encourage the spread of a more political, less principled, and less predictable, antitrust system around the world.  Whatever the flaws of the consumer welfare standard and our modern antitrust enterprise, it beats a system filled with dozens of countries serving as political gatekeepers for transactions in the global economy, each imposing its own political tax.  

There are important global antitrust issues to attend to.  They are not all easy decisions.  Europe targets American tech companies while we sit in the middle of a critical technological battle with China involving artificial intelligence.  Whole of Government Competition Policy often takes coordination among federal regulators with differing views.  There are complex questions here.  But our antitrust agencies should not be sitting on the sideline, much less cheering along the destruction of the antitrust approach that has helped make the United States the home of innovation and dynamic competition.  Our antitrust agencies should have a voice in the global antitrust community both to advocate for sound competition policy but also to defend our interests.  This should be on the “to do” list of both the FTC and probably more importantly, the next Assistant Attorney General of the Antitrust Division.  But it is important enough to include here.  

OK, so that is the top 10.  There are so many more.  Honorable mention items could have included evaluating legal and practical infirmities in FTC administrative adjudication, addressing FTC morale, undoing the various omnibus resolutions and procedural shenanigans of the Khan FTC to centralize power for the Chairman, repurposing the FTC’s amicus program to more productive uses, and more.  But we had to stop somewhere and 10 is as good as anywhere.  And that is just to clean house and get the train back on the tracks.  It does not include positive agenda items for the Trump FTC, nor agenda items in the competition space that require White House or Congressional cooperation.  Perhaps we will write about those in the near future.  

Hope you enjoyed. Have a wonderful week. As always, please feel free to reach out with ideas, comments, or suggestions.