The Federal Trade Commission (FTC) plays a vitally important role in protecting consumers and the competitive process. However, this role is limited to the enforcement of existing laws as enacted by Congress and focused on cases where there is demonstrable and legitimate harm. Under current leadership, the FTC has brought complaints against companies using untested legal theory and pursued rulemaking authority under an expansive reading of Section 5. In response to the Innovation, Data and Commerce Subcommittee Hearing, the American Consumer Institute has released a series addressing the changes at the FTC and how they undermine consumer interests in the competitive process.

With 71 senior staff attorneys leaving the Federal Trade Commission (FTC) between 2021 and 2022, the FTC is experiencing an unusual spike in the departure of highly skilled professionals. This growing dissatisfaction with the FTC’s leadership coincides with a change in the agency’s approach. In practice, its new direction shifts away from a more objective standard of harm toward a subjective and ideological approach. This overhaul is likely causing employee dissatisfaction and resignation, leading to a loss of institutional knowledge and making it more difficult for the FTC to accomplish its mission.

FTC Chair Lina Khan wants to move past the Consumer Welfare Standard (CWS) and expand the FTC’s authority. Replacing the ad hoc approach the courts had adopted, which set inconsistent standards for applying antitrust law, the CWS, initially introduced in Robert Bork’s book “The Antitrust Paradox,” established a much narrower guideline to work with to determine whether business practices should be stopped to better facilitate a competitive market.

Khan has built her career on redefining the scope of antitrust law. Using Amazon as an example, her Yale Law Journal article criticized limitations of the CWS and brought her into the spotlight as a leading advocate of a new framework. With her appointment to the FTC, Khan has begun to refocus the agency’s mission on a more active approach. In a vote, the FTC decided to move away from the CWS as a guiding principle in antitrust investigations.

This move away from the CWS and traditional antitrust enforcement has facilitated unease at the agency. 

A new survey by Mlex suggests employees believe the FTC faces a general willingness to put ideology ahead of the law. Employees also reported been afraid to voice their concerns for fear of reprisals if they were not ideologically loyal to Khan and her agenda.

Confidence in the leadership of the FTC has plummeted around the same time , with less than half of employees surveyed saying that the FTC’s leadership maintains high standards for honesty. Compared to about 86 percent of employees answering “strongly agree” or “agree” for the same question in the 2020 survey, this response represents a significant backsliding. Christine Wilson, a former commissioner at the FTC, echoed these concerns when she publicly resigned with an op-ed in the Wall Street Journal explaining her opposition to the changes Khan has pushed and the politicization of a formerly nonpartisan institution.

This rapid change in the FTC’s mission has caused it to lose senior officials when the agency needed them the most. The Mlex survey reports that workloads are growing to the point at which they are unsustainable, with one senior manager surveyed saying, “There is just a sheer lack of recognition that the FTC has a resource constraint. Everything is a priority and any pushback that this doesn’t add up…There is no priority — everything is a priority. And when everything is a priority, nothing is a priority.”

The increased workloads and reduction of high-level staff should help the agency justify its budget request, which calls for increased funding to enable the agency to add 310 more staff. However, with the current workplace morale, it’s worth asking whether the agency will be able to retain its new staffers.

As the FTC’s mission becomes more ambitious, the simultaneous spike in workload for agency employees and the loss of experienced government workers who likely could help Khan prioritize the flood of new requests will only lead to more uncertainty for businesses and make the FTC less effective at its job.

Published in the Economic Standard