Ramirez’s exit leaves two FTC commissioners, increasing possibility of stalemate

24 March 2017 10:16am

By Kirk Victor and Claude R. Marx. Originally published on FTC:Watch January 19, 2017

The decision of Federal Trade Commission Chairwoman Edith Ramirez to leave the agency on Feb. 10 after leading it for nearly four years means that for the first time in the agency's more than 100-year history, it will be operating with just two commissioners and three open seats.

Longtime FTC practitioners and veterans of the agency have different takes on how well a two-member commission will navigate the first months of Donald Trump's administration. They uniformly note that Commissioner Maureen Ohlhausen, a Republican, who likely will take on the role of acting chairman, is collegial and works well with her Democratic colleague, Terrell McSweeny.

"Is this ideal? No," David Vladeck, a former director of the Bureau of Consumer Protection, said. "Should it be rectified as soon as possible? Yes. But is this agency going to be gridlocked? Not for a minute."

"The good news is that you have experienced, able commissioners who by and large share a common vision of what the agency ought to do," he added. "Yes, one is a Republican, and one is a Democrat, but they both care deeply about the agency's mission. They are both smart, energetic, sensible, collegial people who will run and move the agency ahead."

Echoing that sentiment, McSweeny, in an e-mail to FTC:WATCH, wrote that she looks forward to serving with Ohlhausen and is "confident that we will continue to work together well to forge bipartisan decisions to protect consumers and competition."

But because operating with just two commissioners is uncharted territory for the agency, some practitioners point to potential practical problems, no matter how well Ohlhausen and McSweeny get along.

"Antitrust analysis, consumer protection analysis doesn't break down literally on party lines, but as a practical matter having two versus three — having an even number versus an odd number — means you are more likely to get a stalemate," Joseph Ostoyich of Baker Botts said. "At least in the short run, until the full commission is appointed and approved, it makes it more likely that things that are on the margins are going to be harder for the commission to challenge."

When asked if this is a good time for clients to put pedal to the metal on deals, as a 1-1 commission increases the likelihood that they won't get stopped, Ostoyich said it is. "The period from Feb. 11 until whenever the full commission gets in place is a good period to get [deals] done," he said.

William Kovacic, who served as a commissioner for nearly six years, including as chairman for a year that stretched into the first three months of Barack Obama's administration, also noted the awkwardness of operating as a two-person commission.

"The encumbrances of the Sunshine Act remain terribly onerous," he said, referring to the law that bars a quorum of the commission from talking about FTC work unless their meeting is notified in advance. "You almost have to convene a closed commission meeting to do business. It is horribly awkward. Of course, you need consensus to act because you cannot take positive action without the affirmative vote — you can't block a merger, you can't [approve] a settlement, you can't take positive steps without a consensus."

"A difficulty if Commissioner Ohlhausen is made acting chair in the anticipation of a further appointment is that it is difficult to formulate a forward-looking program," he noted. "You can get things done, but certainly for myself — I had the job basically for a cup of coffee, one year, but it meant a lot to me that I was not acting — that was a participle I could happily do without."

"If the expectation is that you are there for a few months or there is an inevitability that you will be displaced by somebody else coming in, it does limit what you can do as everyone in the world waits for your successor," Kovacic added.

At the same time, the former chairman dismissed the notion that Ohlhausen, who is a candidate for the top job under Trump, would be a caretaker while serving as acting chairman. "There are enough decisions that you have to make in that time and you can't literally be a caretaker — there are things anticipated and unanticipated that you have to address. You will be making decisions that will have an impact going ahead. I don't think it is possible to simply mind the store in a very passive way."

"In short, even if you have the job for five months, you are running for your life," he noted.

Aside from those difficulties for an "acting chairman" in a two-person commission, another impact of a short-handed FTC played out this week, when Ohlhausen filed a withering dissent in the commission's decision, on Jan. 17, to sue Qualcomm for allegedly abusing its patents essential to industry standards. She blasted the action as based on a "flawed legal theory (including a standalone Section 5 count) that lacks economic and evidentiary support."

But that 2-1 decision will remain on the books and the litigation will proceed as long as Ohlhausen and McSweeny are the only two commissioners. Once Trump nominates two more Republicans and they are confirmed by the Senate to gain a majority for the GOP — a process that could take several months or more — they could move to dismiss the case. Ohlhausen pointedly took note of the timing of the decision to sue Qualcomm — "on the eve of a new presidential administration."

The practical impact of a two-member commission can be evident in other ways, too. "If nothing else, from the bureau director's perspective, it reduces the number of meetings the director would have to go to," Richard Feinstein, a former director of the Bureau of Competition, said.

"So it will free up some time, but the commission is intended to have five commissioners. When you have five well-qualified commissioners, the ultimate decisions benefit from multiple perspectives," Feinstein added. "It'll be good to have a full complement of commissioners in place, but I also don't assume that is going to be any time soon."

But even with a full complement, new antitrust officials in a Trump administration may not be as independent as has been the case historically. Recent news that the president-elect met with top honchos of companies with merger deals pending has raised questions about presidential freelancing and the independence of new antitrust officials in a Trump administration.

Such unpredictability contrasts with the low-key, steady approach of Ramirez, who has been on the commission since 2010 — and chairwoman since 2013 — after she joined the agency from her perch as a litigation partner in the Los Angeles, California, office of Quinn Emanuel Urquhart & Sullivan.

"Edith's legacy looms very large — she has gotten a huge amount done — if you look at the consumer protection side, there have been a number of really blockbuster things," Vladeck said, pointing to recent technologically complex cases in the privacy area. "She really has taken to a new level the technological sophistication the agency has shown."

In the statement announcing her resignation, the agency noted that during her time as chairwoman, the FTC brought nearly 400 law enforcement actions covering a range of consumer protection issues as well as about 100 enforcement actions challenging anticompetitive mergers and business conduct that resulted in billions of dollars in redress for consumers.

Still, while Ramirez won plenty of praise, her record also attracted some brickbats from critics who either thought she wasn't aggressive enough or that she went too far in some cases.

"The chairwoman has been steady, competent, but unremarkable," Christopher L. Sagers, a law professor at Cleveland State University, said. "I wish she had been more aggressive…I wish both agencies [FTC and the Department of Justice] had been willing to take bigger chances. My sense is generally that they both have been too afraid of losing cases."

But Bilal Sayyed of McDermott Will & Emery saw Ramirez as pushing the envelope too much. He found the commission sometimes had been, under her leadership, "more aggressive than the facts…warranted" in some "non-fraud-based consumer protection cases, as well as some antitrust conduct cases." The agency failed, he added, in those instances, "to identify real harm from the conduct being challenged."

Ramirez took on some critics, including those who questioned the effectiveness of the FTC's remedies, most particularly John Kwoka, an economics professor at Northeastern University, whose oft-cited work found that conditions imposed by the FTC and the Justice Department "have been largely ineffective in achieving their remedial goals."

The chairwoman struck back in a speech last fall chiding his work with the caveat that "one has to be careful not to draw generalized conclusions from limited data sets." She has repeatedly referred to a study that the FTC has undertaken to review some 89 merger orders between 2006 and 2012. Despite repeated requests to the agency about when to expect this long-awaited and oft-referred to report, at press time no answer was provided about when it would be issued.

Other veterans of the FTC give Ramirez high marks. One credited her for not bowing to a report by the White House's Council of Economic Advisers last year that highlighted declining competition in many economic sectors and concluded that "government action could help reverse this trend." In a speech in September, Ramirez stressed no need to change the FTC's approach.

"Edith, particularly for someone who had no history at the FTC, has left a mark," a former high-ranking FTC official said. "She has had good bureau directors that she brought in — Debbie [Feinstein of the Bureau of Competition] was a real coup. Edith appropriately defended the work of the FTC against some of the attacks out of the Obama White House. That would have been harder for Renata [Hesse, head of the Justice Department's antitrust division] to do. I'm glad that Edith did that."

"Edith served as head of the agency with great distinction; in particular, she served in a way that focused attention on the long-term well-being of the agency," Kovacic said. "She showed how a chair first and foremost could be concerned with building a place that is better than the one she inherited. I think she did that in a very noble way."

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