Senators Chuck Grassley and Mike Lee and Reps. Bob Goodlatte and Spencer Bachus just sent a strongly worded letter to FTC Chairwoman Edith Ramirez insisting on the need for the FTC to issue guidelines defining just how far its Section 5 authority goes beyond the antitrust laws:
We take issue with your views that it is difficult to articulate the outer bounds of Section 5 authority or that existing decisions provide sufficient guidance. In fact, two of your fellow Commissioners have issued separate, but largely consistent, policy statements on the parameters of Section 5. Further, obtaining clear principles from a body of decisions that are largely formed through private settlement agreements and tailored to case-specific facts would be difficult enough, but when coupled with a lack of judicial review by courts who have not upheld a standalone Section 5 case since the 1960s, it is virtually impossible.
Last year, for precisely these reasons, we said it was “Time for Congress to Cancel the FTC’s Section 5 Antitrust Blank Check.” In June, Commissioner Josh Wright (a former TechFreedom Adjunct Fellow and research director of the International Center for Law & Economics) proposed his own policy statement and Commissioner Maureen Ohlhausen offered her own proposal a month later. We held a symposium on the issue over at Truth on the Market, featuring scholars across the ideological spectrum, where there was, in Wright’s words, “near unanimity that the FTC should challenge only conduct as an unfair method of competition if it results in ‘harm to competition.’” And yet, the Commission has done nothing to rein in its discretion in competition cases.
These Congressmen – leaders of the House and Senate Judiciary Committees and relevant Subcommittees – are asking the FTC to do precisely what we urged in a TechDirt piece on the FTC’s 99th anniversary: move from a discretionary model of asserting what the law is to an evolutionary model of developing law over time – if not through actually litigating cases, then, at a minimum, clearly explaining the principles that limit its authority.
The letter quotes Ramirez at a Senate Judiciary hearing in April, claiming it would be “difficult to specify precisely what the outer bounds [of Section 5] are…” It doesn’t even mention Ramirez’s bizarre insistence in her written (and thus presumably carefully considered) responses to Sen. Lee’s questions for the record, that guidelines are “less useful” than case-specific guidance in antitrust (and Section 5) cases – as if the antitrust guidelines issued by the FTC & DOJ haven’t long been crucial in explaining their evolving understanding of antitrust!
Even though the letter focuses on competition cases, the same general principles apply in consumer protection law. Yes, the FTC has issued the kind of policy statement that Wright and Ohlhausen have proposed for competition cases. But in practice, the FTC has still built “a body of decisions that are largely [if not entirely] formed through private settlement agreements and tailored to case-specific facts … with a lack of judicial review by courts.”
That’s precisely our concern in the Wyndham case: We’ve asked the district court to dismiss the FTC’s complaint against Wyndham because it’s insufficiently plead. Worse, what the FTC glibly calls its “common law of data security cases” fails to give fair notice to companies of how the concept of unfairness will evolve in the future.
It’s just turtles all the way down…