The Federal Trade Commission (FTC) is again under public scrutiny after it was reported that the Commission recently deleted important documents pertaining to a House Judiciary Committee request for information regarding a controversial new rule that would “ban” employers from imposing non-compete clauses on workers.
As early as Feb. 14, the Committee had sent a letter to the FTC requesting documents concerning “the “litigation risks due to this rulemaking” as well as any information regarding the Commission’s economic analysis of the proposed rule and communication with outside parties. Yet, it took until May 16 — over three months later — before the FTC finally informed the Committee that it had deleted pertinent materials.
Whether accidental or not, the deletion of these documents only provides further confirmation that the Commission desperately needs greater legislative oversight. Not only has the Commission proven time and again to be incapable of conducting itself in an open and transparent manner, it’s also apparently incapable of maintaining even rudimentary operational records and responding to congressional requests for information in a timely manner. These things matter because they undermine public faith in the agency and raise serious doubts about whether the Commission can be trusted to perform more serious tasks like carrying out its mission to protect consumers and enforce U.S. anti-trust law.
The Commission’s ongoing struggles with transparency and accountability are nothing new. In April, House Judiciary Chairman Jim Jordan (R-OH) was forced to subpoena FTC Chair Lina Khan for information on the Commission’s controversial Twitter probe after numerous requests for comment went unanswered. An earlier March House Select Committee report had discovered that the FTC sent 12 separate letters to Twitter over a span of just three months. These letters included a wide variety of outlandish 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 were these demands inappropriate, but they also had nothing to do with the Commission’s mission.
In a letter discussing the matter, Jordan wrote that the Commission’s cooperation had been “woefully insufficient” and that the Committee would be forced to “compel the production of documents” to establish appropriate oversight. More recently, he concluded that the evidence “strongly suggests that the FTC’s actions against Elon Musk and Twitter were politically motivated” and only came after significant political pressure to investigation Musk’s acquisition of the social media giant.
Other examples are equally troubling. Last July, the U.S. Chamber of Commerce was forced to file a lawsuit against the FTC after the Commission repeatedly failed to respond to a Freedom of Information Act (FOIA) request for information regarding a recent a American biotech merger. The Commission stonewalled the Chamber for over a year before the Commission ultimately turned over pertinent documents, which detailed how the agency actively coordinated with foreign regulators about how best to block U.S. mergers while avoiding legal action.
The FTC’s disregard for transparency has also carried over into its own operations and rulemaking procedures. 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, the change did away with many long-standing rulemaking procedures and safeguards that had been in place for several decades.
Indeed, actions such as these are one of many reasons former Commissioner Christine Wilson decided to resign from the Commission this past March. For instance, in a dissenting statement on Section 18 rule changes, Wilson criticized the abandonment of long standing agency procedures like hosting “public comment periods” and publishing “staff reports” on rulemaking, which she believed played an important role in promoting public transparency.
Ironically, the Commission also stands accused of imposing “heavy redactions” to an unrelated Wilson dissent that criticized Khan for refusing to recuse herself from a case involving Meta’s proposed merger with Within Unlimited, despite her having previously urged the FTC in 2017 to adopt a “ban on all acquisitions by Facebook” while serving as Legal Director at the Open Markets Institute.
The House Committee on Oversight and Accountability has since launched an investigation into matters raised by Wilson in her February resignation. However, as has proven to be the case with other investigations, the FTC seems unlikely to voluntarily cooperate.
That’s why it’s long past time for Congress to reign in the FTC. It’s painfully obvious that the FTC is either incapable, or unwilling, to conduct itself with honesty and transparency. Rather than sticking to its original statutory mission as outlined by Congress, the FTC has decided that today’s unique challenges require a much more powerful and assertive consumer protection agency that is no longer content with allowing the market to operate freely. That decision, and the subsequent politicization of the agency, has led to a steady erosion of transparency.
The FTC has forgotten that is fundamentally an agent of Congress that is accountable to the American people. This means that Congress is within its authority to crack down on the FTC when its behavior merits intervention, such as when it claims to unintentionally delete important documents. Congress should not be afraid to exercise that authority to conduct more hearings, pass transparency measures, and if necessary, deny the FTC more funding and rulemaking enforcement authority. The FTC has an important role to play in protecting consumers, but that means operating with transparency.
Nate Scherer is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us on www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.