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.
As the Federal Trade Commission (FTC) continues to push the boundaries of its power and influence through an aggressive new regulatory regime, it has simultaneously abandoned any pretense of operating with transparency. Rather than recognizing the important role that transparency plays in building public trust, the Commission increasingly treats the disclosure of information as an obstacle to be overcome. Unfortunately, this undermines the Commission’s credibility as an objective enforcer of consumer protection.
This past March, the House Select Committee released a 112-page report which found the FTC had sent 12 separate letters to Twitter over a span of just three months. In the letters, the Commission makes over 350 demands, ranging from requests for the names of specific journalists involved in the so-called “Twitter files” to all internal communications “relating to Elon Musk.” Not only do most of these demands border on possible harassment, but they also have nothing to do with the Commission’s statutory mission, which is to protect consumers and enforce U.S. antitrust law.
Following the publication of the report, House Judiciary Chairman Jim Jordan (R-OH) subpoenaed FTC Chair Lina Khan for information on the Commission’s probe of Twitter after numerous requests for comment went unanswered. Regarding the FTC’s cooperation with the Committee, Chairman Jordan wrote that the Commission’s “voluntary compliance has been woefully insufficient” and that the Committee would be forced to “compel the production of documents” to establish appropriate oversight.
This isn’t the first time the Commission has proven less than forthcoming with the sharing of information. Last July, the U.S. Chamber of Commerce filed a lawsuit against the agency after the Commission failed to respond to a Freedom of Information Act (FOIA) request. Specifically, the Commission had requested information on agency communications with foreign competition authorities regarding a recent American biotech merger. The Commission stonewalled the Chamber for over a year before the Commission was ultimately forced to turnover the pertinent documents.
After finally being able to review the documents, the Chamber determined that the Commission had been actively coordinating with foreign regulators about how best to block U.S. mergers without going to court. These revelations are yet another example of the agency operating with complete disregard for its role as designated by Congress.
The FTC’s lack of transparency extends to its own operations and rulemaking procedures. For instance, in 2021 the FTC voted to overhaul its “Rules of Practice” under Section 18 of the FTC Act. The Commission argued the change was needed to modernize “the way it issues Trade Regulation Rules.” However, it did away with many long-standing rulemaking procedures and safeguards that had been in place for several decades.
Back in the 1970s, the Commission had gone on a rulemaking spree that generated significant public controversy and famously resulted in the Washington Post dubbing the agency the “national nanny.” In response, Congress briefly denied the Commission funding and passed the Federal Trade Commission Improvements Act of 1980, which established new requirements related to Commission rulemaking. The Commission itself also implemented a series of new Rules of Practice safeguards designed to rebuild public trust. It is many of these safeguards that the Commission recently decided to cast aside.
In her dissenting statement regarding the 2021 changes, former Commissioner Christine Wilson notes that self-imposed procedures like “additional public comment periods, publication of a staff report, and multiple opportunities for the public to weigh in on disputed issues” play an important role in supporting public transparency. Yet the Commission has decided to eliminate them, even though they were put in place to help aid public understanding of agency actions. Americans deserve to have a consumer protection agency that listens to their voices and operates with transparency. If the FTC is not capable of doing that on its own, then it is the responsibility of Congress to help them course correct. Congress should begin the process of reining in the FTC and require the agency to prioritize transparency.
You can also read this article in the Medium.