By Kirk Victor Originally published on FTCWatch™ on February 16, 2018
Goliath tech firms — think Google and Facebook — got a blunt message from the new team that likely will be taking charge of the Federal Trade Commission: step over the line and the agency will not hesitate to pull the trigger and launch an investigation.
While “big is not necessarily bad,” if a company uses “inappropriate means” to get big or to stay big, “then we should be vigorously enforcing antitrust laws” to attack that conduct, Joseph Simons, the nominee to be chairman of the commission said at a hearing of the Senate Commerce, Science and Transportation Committee on Feb. 14.
That statement may not seem remarkable, but it screams that there is a new day at the agency. After all, controversy still swirls around the commission’s decision, in 2013, after a lengthy investigation, not to pursue charges that Google unfairly biased its search results page.
The other three nominees — Republicans Christine Wilson and Noah Phillips and Democrat Rohit Chopra — agreed that “no company is above the law,” as Wilson put it. They also, with Simons, offered a range of other views that suggest the agency is about to head in a different direction.
From creating a task force to investigate price hikes in the pharmaceutical industry to seeking authority to levy civil penalties on firms that fail to provide adequate data security to re-examining “self-critically” the effectiveness of its merger remedies, Simons appeared confident that he could win bipartisan support for his agenda.
It’s unusual for the commission to get a total makeover all at once. Though no one has been nominated yet to fill the fifth seat that must be occupied by someone who does not belong to the majority (Republican) party, the agency will have four members for the first time in nearly two years.
After more than a year in which the five-member body was operating with three empty seats, it is “high time to get things up and running again at the FTC,” Utah Republican Senator Orrin Hatch said in introducing Simons.
With the coming departures of Democratic commissioner Terrell McSweeny and of acting chairman Maureen Ohlhausen, who has been nominated for a judgeship on the US Court of Federal Claims, a new slate of commissioners will not feel compelled to defend past merger remedies or past controversial decisions.
Even before the four nominees are confirmed — which is all but a foregone conclusion — speculation is ramping up about other moves that may be coming, both in policy and personnel. We take a look at some possible early moves or changes:
*Simons, who has had two earlier tours at the agency, including as director of the Bureau of Competition and has spent about 30 years as an antitrust litigator in private practice, has little expertise on the consumer protection side of the agency. He’s likely to choose someone to head the Bureau of Consumer Protection whom he knows well and can lean on to navigate its broad portfolio, according to various sources. Behind the scenes, he may also look to Wilson, who is well-versed in advertising and other consumer protection issues from her practice and from serving as chief of staff to former FTC Chairman Timothy J. Muris from 2001 to 2002. By contrast, Simons has deep knowledge in the competition area and strong ties to D. Bruce Hoffman, acting director of the Bureau of Competition, with whom he worked closely when they were previously at the agency. Those factors make it more likely that Hoffman will remove the “acting” from his title in a Simons-led commission.
*In his opening statement Simons vowed to lead the FTC in its “rich tradition of bipartisan policymaking and enforcement,” but that may not be as easy as it sounds. The vacant seat on the commission has made some Democrats unhappy since it gives the Republicans a 3-1 edge. The pique was reflected when Connecticut Democratic Senator Richard Blumenthal noted to Simons that the commission should consist of five members, not four, to which Simons replied, “I agree.” Also, Democrats have criticized what they see as weak antitrust enforcement and the need to upend antitrust law. They highlighted their agenda in a blueprint called “A Better Deal,” which would create a new enforcement paradigm in which the largest proposed mergers would be presumed to be anticompetitive and would be blocked unless the merging firms could establish the benefits of the deal. Suffice it to say, that it is likely a longshot that any of the three Republican nominees would sign on to such a shift. It also puts Chopra, the lone Democrat, in a tough spot, as he navigates the best path for tough votes that might be viewed with disfavor by Democrats on Capitol Hill, including his patron, the hard-charging Massachusetts Democratic Senator Elizabeth Warren.
*Chopra did not follow the standard nominees’ playbook at confirmation hearings that calls for them to say as little as possible to avoid missteps or offending anyone. He was downright garrulous, even commenting when the more cautious Simons, who was following the playbook, held back. Also, Chopra is a short-timer, as his term will expire next year. The Republicans jiggered the nominations so Chopra is filling the shortest term — another maneuver that annoyed some Democrats. Presumably he would like to be re-upped for another term, but how best to go about that? His specialty is consumer protection after working at the Consumer Financial Protection Bureau where he was a critic of student lending practices. Most recently he was a senior fellow at the Consumer Federation of America, but he has no antitrust experience. So he may feel conflicting pulls over how well to play with his Republican colleagues over the next year. Should he pull his punches to win GOP support for another term? Or would it be better to be aggressive even if it means butting heads with his colleagues to reinforce his position with Warren and other Democrats who hope to re-gain control of the House (the Senate is a longer shot) by stressing such issues as their call for stepped-up enforcement?
*Look for more emphasis on fraud cases — the bread and butter matters that are not controversial but have long been a key part of the FTC’s agenda — as well as increased focus on payday lending. As the CFPB has signaled a less aggressive approach to enforcement, it is a good bet that the commission will step up its visibility to pursue payday lending companies that it views as failing to play by the rules.
*High tech shot: even before the hearing, chatter was growing that Simons could well push for opening an investigation into Google, whose critics charge the mammoth firm has amassed a huge level of concentration of wealth, power and control and question how it has done so. Sentiments are so raw that there is lots of talk that anti-Google forces lobbied to undermine Ohlhausen’s bid to gain the chairmanship, as they remain unhappy that she voted to end the investigation in 2013. Of course, even if Simons launches a preliminary investigation, it may go nowhere. But at the moment, it cannot make Google executives happy that the firm is the subject of so much speculation about its fate when the new FTC team takes office.