Antitrust Law Daily FTC asks Congress to pass reform bills to restore enforcement powers
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Wednesday, July 28, 2021

FTC asks Congress to pass reform bills to restore enforcement powers

By Jody Coultas, J.D.

At a hearing before the House Energy and Commerce Subcommittee, Chair Khan and the FTC Commissioners testified on the issues facing the agency.

FTC Chair Lina M. Khan and Commissioners Noah Joshua Phillips, Rohit Chopra, Rebecca Kelly Slaughter, and Christine S. Wilson testified before the House Energy and Commerce Subcommittee on Consumer Protection and Commerce on the 16 pending bills aimed at modifying the FTC’s authority and on some of the challenges faced by the FTC.

The FTC is facing a myriad of issues, the Commissioners said, including schemes taking advantage of the global pandemic, an increase in corporate mergers that may substantially lessen competition, and the FTC’s loss before the Supreme Court in AMG Capital Management.

In the face of those issues, the FTC has stopped many COVID-related schemes in part by using the civil penalty authority provided by the Subcommittee in the COVID-19 Consumer Protection Act. However, the FTC’s ability to address these issues was diminished by the Supreme Court’s decision to remove the agency’s ability to seek monetary relief under Section 13(b) of the FTC Act, the Commissioners said. For example, said Chair Khan, pending cases involving $2 billion in potential relief to victims is now not available because of the AMG ruling. The FTC urged the Subcommittee to restore the FTC’s ability to secure monetary relief.

The Commission also faces challenges in obtaining injunctive relief, the testimony noted. In FTC v. Shire ViroPharma, Inc., the Third Circuit held that the language in Section 13(b) of the FTC Act describing a company that "is engaged in, or is about to engage in" illegal conduct means the FTC can initiate enforcement actions only when a violation is either ongoing or "impending" at the time the suit is filed. This decision limits the Commission’s ability to hold accountable entities who engaged in illegal conduct that occurred entirely in the past. The recent dismissal of the FTC’s antitrust complaint against Facebook cited ViroPharma in concluding that the Commission could not use Section 13(b) to address Facebook’s alleged past anticompetitive conduct. "Restoring the FTC’s power to seek injunctions and monetary relief is critical to our work to protect Americans from unlawful business conduct."

There are several bills pending before the House that have had longstanding bipartisan support at the Commission, the Commissioners said. These include a repeal of the telecommunications common carrier exemption, legislation that would subject nonprofits to the FTC Act, and in certain contexts give the Commission rulemaking and civil penalty authority.

Finally, the FTC testified that the agency is facing severe resource constraints as it works to address the soaring number of global mergers and acquisitions and a large numbers of consumer complaints to the agency about a broad range of pandemic-related marketplace abuses.

Wilson’s testimony. Wilson’s prepared testimony argued that the "traditions and norms" of Commission actions being the product of robust dialogue and considerable analysis supported by thorough briefings and memoranda from our staff have been "jettisoned." Wilson stated that recent actions by Commission leadership have deepened her concerns about agency overreach, and she fears "that some of the bills would give authority to the FTC that ultimately would result in stifled competition and innovation to the detriment of American consumers, U.S. industries, and our economy."

Wilson also stated that she had become more receptive to a Magnuson-Moss rulemaking on privacy to address the information asymmetry between the providers of goods and services and their users. However, the Commission recently voted along party lines to pare back procedural safeguards and limit opportunities for public input during agency rulemakings. "Given these changes, I am less inclined to support a Mag-Moss rulemaking on privacy. Federal privacy legislation remains the optimal solution."

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