Despite heated debates, Phillips says FTC commissioners still get along

24 May 2021 12:00 am by Claude Marx, Kathleen Murphy

Federal Trade Commission

After three years on the Federal Trade Commission, Noah Phillips says comity still exists among commissioners even though it’s sometimes “frustrating” when they don’t get along. He also called on Congress to keep in mind the principle of consumer harm.

Phillips talked with FTCWatch May 19 about his term so far, which expires Sept. 25, 2023. President Donald Trump in 2018 nominated Phillips, a Republican who was formerly chief counsel for Texas Republican Senator John Cornyn on the Senate Judiciary Committee.

Phillips, who worked for a New York investment bank and as a litigator before joining Cornyn’s staff, spoke of his concerns about undoing predatory pricing law, his prediction that there will be more aggressive conduct by merger parties, and his ideas about the parameters of confidential information in a telephone interview that has been edited for brevity.

FTCWatch: How would you describe at this point the comity between the commissioners now versus when you started?

Phillips: The last three years have absolutely included some strident dissent and back-and-forth between commissioners, but at the end of the day, I like to think that we are an agency that has a history of comity, and that comity fundamentally continues today. You know, we work together on lots of issues. There are issues of common interest, issues where different commissioners, wherever they are, may not see precisely eye to eye, but fundamentally I do think there is a good amount of comity which I like.

FTCWatch: Some Republicans say Congress should make sure there are “guardrails” for the FTC if Congress were to restore the powers under Section 13 (b) of the FTC Act that were taken away by the Supreme Court. What are your thoughts on what those guardrails might look like or should look like?

Phillips: Well, let me step back for just a moment, say two things. The first is that there is consensus on the commission that we need a fix. There is, I think, consensus or what appears to be consensus in Congress that we need a fix. So I actually am considerably perhaps more optimistic than the question assumes in terms of the willingness, or the ability of Congress, to get to something. I do think that guardrails are appropriate.

One of the things that I talked about in my testimony a few weeks ago was that a lot of the case law rules built upon 13(b) that developed over the last few decades were really built to deal with fraud cases. … That makes a lot of sense when I stole your money. But if what I did was rent you a hotel room, and failed to give you adequate data security, it's not clear that that is the right amount of money at all.

I think that one of the principles I want Congress to keep in mind is consumer harm, which has traditionally been something at which the commission looks, and I think ought to continue to be looking at going forward.

FTCWatch: There's a lot of talk on Capitol Hill about possibly changing the rules of antitrust, including possibly changing the definition of what constitutes consumer welfare. Are there any changes to antitrust law that you’d like to see?

Phillips: Look, I think the consumer welfare standard can capture a lot. And it's not just about price and it's not just about price in the short term. We look at quality, we look at innovation, things like that, and we've used it flexibly to challenge a whole host of things.

I do think that, to the extent people try to pour into the vessel of antitrust a variety of different things outside of consumer welfare, and to the extent those things themselves conflict, that that puts agencies, it puts businesses, it puts consumers in the difficult place of not really understanding what the standards are which, among other things and somewhat ironically, I think, may even inhibit enforcement in certain contexts.

FTCWatch: How so?

Phillips: Consider some sort of merger where, let's say it eliminates some price competition or other aspects of quality competition, but the parties commit to greater privacy going forward and we've decided that privacy, not as an aspect of quality on which companies compete, but rather a standalone value, is something that we should understand. How do we weigh between the two? I think that's a much more difficult problem.

FTCWatch: Would you expect that we're going to see more aggressive conduct from parties in general? Do you think that parties are going to think they're going to get a fair deal or want to take chances like in the 7-Eleven case?

Phillips: I don't know. I think it's a question better put to the private bar. But I think if companies don't believe they can get a fair shake, aggressive conduct would be something that I would expect more. I think that would be regrettable. Hart-Scott-Rodino established a process that was a win, both for the government, right, and consumers because the government was able to take a look at and, if necessary, block or remedy deals before they happen, before consumer harm occurred. And it was a win for businesses because they would have a sense ahead of time, of what they had to do, what they couldn't do, and things were a mess before Hart-Scott-Rodino with the government having to go into court and ask courts to break up companies after they were engaged in the business of merger integration.

I think that was a bad state of affairs, and I think the statute was a win-win. The more we moved to a place where the process breaks down, the more consumers I think lose. I think antitrust enforcers are weaker. I think we are less efficient. And I think businesses don't have the benefit of planning and doing all of that work ahead of time. I think that would be a regrettable outcome.

FTCWatch: What's been the best thing about it and what frustrates you about being a commissioner?

Phillips: I think when you have a chance to effectuate policy, and you're unable to, that can be a frustrating thing. I think when we can't all get along, sometimes that can be frustrating, sometimes the volume of work can be frustrating, but getting a chance to work for the public, to kind of make things right, is something that I find immensely gratifying.

FTCWatch: What do you wish Congress understood better about the FTC?

Phillips: Look, Congress' oversight role is critically important to how all agencies, independent agencies, other agencies in the executive branch work. I'm not gonna say anything negative about or, you know, insinuate any lack of understanding on their part …

There's a lot of times where we cannot speak to what we know, because we have obligations to the parties and under the law, not to reveal information that is confidential. And this is true with respect to the press, it's true with respect to Congress although Congress has special mechanisms to get briefings on particular matters. There are often times where many different audiences I feel don’t quite get the full picture. But I do think congressional oversight is essential, and you know we've had a lot of it, and I would expect more.

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