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“Contrary to everything I’ve seen at the FTC”: Biden’s chair makes her public debut

Thursday’s video conference was the first public glimpse of what awaits the 106-year-old agency under her junior chair, a former Columbia University law professor who has made her reputation as a critic of tech giants like Amazon. And the other technology critics were particularly enthusiastic.

“More progress has been made today than in the last quarter of a century,” said Jeff Chester of the Center for Digital Democracy watchdog group, who has worked before the FTC since the 1990s. “It’s very, very important and it’s unlike anything I’ve seen at the FTC.”

Here are POLITICO’s insights from Khan’s debut:

Partisanship is back

The FTC has long touted itself as a bipartisan agency less susceptible to the voices of the party line that characterize much of the dealings in bodies such as the Federal Communications Commission and the Securities and Exchange Commission.

“The FTC has a long history of bipartisanism, and we are working hard to maintain that tradition,” then Chairman Joe Simons, a Republican, told a Senate panel in 2018.

That spirit was lacking on Thursday, however, as every item on the agenda was passed in a 3-2 party vote. Republicans Noah Phillips and Christine Wilson repeatedly condemned the new approach, accusing the Democrats of risking a backlash from Congress by breaking decades of precedent and the agency’s legal authority.

The split was markedly different from the agency’s usual partisan divisions, although Democrats tended to advocate enforcement in high profile cartel cases rather than Republicans. It was only in December that Simons and the two Democratic commissioners of the FTC agreed to a major antitrust lawsuit against Facebook.

In her first public statements as Chair, Khan Also expressed very different priorities than the Republicans of the commission, stressing that the FTC is mandated to “protect consumers, workers and honest business owners” and “promote a fair and prosperous economy representative of all Americans.”

Former Chairs and Commissioners have set the Agency’s main focus on promoting consumer protection. This standardized approach examines how corporate behavior affects the way people buy goods and services, which is often translated as an impact on price. But progressives say that other considerations like fairness and privacy are underestimated.

Back to the 70s … or 80s

“If we do not acknowledge the mistakes of the past, we are doomed to repeat them,” warned Wilson as he argued against one of the Democratic Action Points.

She was referring to the 1970s, when the FTC, under then chairman Michael Pertschuk, wanted to establish rules for television advertising for children in the so-called KidVid controversy. Washington Post Post editor accused the FTC of attempting to be the “national nanny” and, under pressure from advertisers and corporate groups, Congress passed legislation to severely restrict the FTC’s regulatory powers.

Since then, the FTC has been reluctant to set rules, even if the founding statute of the agency expressly provides for the commission to issue rules. (More on this below).

The FTC also suffered a number of legal losses in the early 1980s when it attempted to bring cases under its legal authority to monitor “unfair competitive practices,” as Wilson pointed out.

The FTC “must acknowledge the Commission’s losses in these cases,” she said. The answer “should not be a new concerted effort by the Commission to transgress the authority of the FTC”.

However, Khan and her supporters argue that Republicans are looking out for the wrong decade in antitrust law and FTC history. When Ronald Reagan became president in 1981, he brought a young, enthusiastic, and strongly ideological cadre to the federal authorities who turned antitrust law into the pro-business policy it is today. That is the legacy that the Democrats are now trying to undo, and they call it a return to the principles that underpinned the FTC in 1914.

“Legislature created the FTC to oversee unlawful business practices with greater expertise and democratic accountability than the courts provided.” She said.

Rules come

One of Thursday’s most important actions – a project by Democratic Commissioner Rebecca Kelly Slaughter – creates the conditions for a return to active rule-making.

After Congress passed law in 1980 to restrict the FTC’s rulemaking, the agency passed procedures that Slaughter said further restricted the agency’s ability to propose rules. A proposal adopted on Thursday aims to remove these “self-imposed” requirements while providing “sufficient transparency and opportunities for public participation,” said Slaughter, the agency’s former vice-chair.

One major change would eliminate the FTC’s administrative judge’s role in the presidency Regulations. Instead, the FTC chairman, or someone of their choice, can act as chairman, oversee public hearings, and establish the facts behind the rule.

Republicans opposed the change on the grounds that a person chosen by the chairman was less neutral than the agency’s internal judge.

Butcher suggested that online ticket sales and data collection are two potential areas for possible regulation. Khan also said the FTC would likely consider writing its own definition of what amounts to “unfair competition method” – an idea that could allow the agency to sue companies for bad behavior that does not fall under traditional antitrust law .

So further research

The commission also lowered the threshold for FTC staff to open antitrust investigations, a move that could have a huge impact.

For years, the agency has asked its antitrust lawyers for the approval of the Commission to start investigations. In contrast, lawyers from the consumer sector often had more leeway for the agency to send subpoenas and requests for documents to companies or to ask for interviews with business employees as part of so-called “omnibus” resolutions.

Slaughter said the inequality “never made sense”. But the FTC Republicans attacked the move to give antitrust lawyers a freer hand.

“I cannot understand why the Commission is giving up so much of its authority at such a critical time,” said Wilson.

Now, antitrust workers only need the approval of a commissioner to subpoena information for specific types of investigations, including those involving repeat offenders, technology companies or digital platforms, as well as pharmaceutical companies or hospitals. In cases where employees are looking for information about the Covid-19 pandemic or damage to workers or small businesses, only the approval of a commissioner is required.

While Khan and her allies described the resolutions as “streamlining” the investigation, they actually have more strategic value to the Democrats.

Democratic Commissioner Rohit Chopra is likely to leave in the coming months because President Joe Biden has named him head of the Consumer Financial Protection Bureau. Upon his departure, the FTC will be split evenly between Republicans and Democrats until Biden is nominated and the Senate approves a fifth member. Thursday’s change ensures Republican commissioners can’t block investigations that the Democrats are about to open.

More transparency, but only so much

The meeting on Thursday was the first of its kind for the first time in decades, FTC commissioners met publicly to vote, and for the first time accepted public comments. (The FTC often holds workshops and hearings on a variety of topics, but the five commissioners rarely attend.)

Khan announced that the meeting would bring the necessary transparency into the work of the FTC by “establishing a regular public forum”.

Republicans were less enthusiastic, and Wilson noted that while the FTC published the meeting’s agenda a week in advance, Khan’s office did not provide the text of the items considered by Friday.

“With sufficient advance notice, advanced planning, input from our knowledgeable staff and a solid dialogue between my fellow Commissioners, open Commission meetings could facilitate transparency,” she said. “Today’s meeting is too short in every way.”

The public comment deadline was also scheduled for the end of the meeting, which meant the commissioners would vote on the items before anyone had a chance to speak about them, Phillips said.

“Transparency is important, but I don’t think the Commission is living up to that ideal,” he said.

Both Phillips and Wilson offered proposals where the FTC would have posted their proposals in the Federal Register for public comment before the commissioners voted on them. (These motions failed with the votes of the party line.)

After the meeting on Thursday, the agency announced Press releases announcing each of the proposals – if not the actual text of what the FTC approved in at least one of the proposals.

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