The Federal Trade Commission will meet at noon today to hold the first of a series of open meetings to discuss major changes to how the agency operates. Our comments urge caution on the three major items proposed today by Lina Khan, the Commission’s newly appointed chairman.
First, the Commission has proposed to revoke a 2015 policy statement that ties the term “unfair methods of competition” in the FTC Act to the Sherman and Clayton Acts. This move would allow the FTC to bring cases that would not be actionable under the antitrust laws as well as expand the rationale on which the FTC could make competition rules, as the Chairman and Commissioner Chopra have proposed. Our comments urge the FTC not to rescind the policy statement without public comment and warn that the agency may run into serious constitutional problems. A clear majority of the Supreme Court has expressed their intention to revive the non-delegation doctrine, which holds that only Congress may make laws. The FTC might well wind up as the first test case for that long-dormant doctrine if it departs from the clear principles developed by the courts under antitrust law.
Second, the Commission has proposed streamlining the process for making rules regarding unfair and deceptive acts and practices. A heavily Democratic Congress imposed procedural limits on such rulemakings after the FTC went on a rulemaking bender in the late 1970s. Unlike standard rulemakings, these “Mag-Moss” rulemakings must involve extensive hearings to allow those affected by proposed rules the right to cross-examine witnesses and present evidence rebutting claims about the need for rules, their costs, or how to craft them. As our comments explain, the Commission has some discretion to streamline that hearing process, but in the end, it’s up to the Court to decide whether the agency has “precluded disclosure of disputed material facts which was necessary for fair determination by the Commission of the rulemaking proceeding taken as a whole.” If so, the entire rule could be tossed out. Consequently, the Commission should proceed with caution in reducing the right of affected parties to be heard.
The Commission should also seek public comment on how it will decide whether a practice is sufficiently “widespread” or “prevalent” to justify a rulemaking. The Commission should clearly define the problem it seeks to address, and why it is so prevalent as to merit a rule, in the Advance Notice of Proposed Rulemaking required before issuing a proposed rule.
Finally, the Commission proposes to empower a “single Commissioner” to require companies to answer detailed questions and produce documents in matters related to competition without review by other Commissioners. In practice, this will mean empowering the Chair to bypass all other commissioners. Our comments note the benefits of including other Commissioners in the process and our longstanding concerns about the lack of due process in how investigations work at the FTC.