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Khan seeks to ‘democratize’ FTC
18 October 2021 00:00 by Kathleen Murphy
Can a law enforcement agency relying on secrecy to do its work be democratized? Federal Trade Commission Chair Lina Khan says she thinks so.
In a memo outlining her priorities to the staff, Khan listed democratizing the FTC as a goal.
“This means recognizing the agency as a public body whose work shapes the distribution of power and opportunity across our economy. It also means ensuring the Commission is in tune with the real problems that Americans are facing in their daily lives and using that understanding to inform our work,” she wrote.
Democratization, the process that leads to a more open and participatory society, embodies the ideal of political power based on the will of the people. But democracy always has its detractors, ranging from those who stormed the US Capitol Jan. 6 to others who point out democracy can lessen efficiency, be useless in times of war or that it violates minority rights.
Reclaiming the FTC
Khan’s memo is a bold call to push the FTC’s mission beyond neoliberal law and economics that have predominated since the 1980s, said Bill Novak, a University of Michigan law professor who researches the history of the modern American regulatory state.
“By reclaiming the FTC as a ‘public body’ rather than a mere technocratic or econometric organization, the memo signals an attempt to reinvigorate the original progressive and democratic mission of the agency, animating broader concerns for the redistribution of power, the equalization of opportunity and impacts on marginalized communities as much as consumer welfare and allocative efficiency,” Novak said.
Micah Altman, a social and information scientist at MIT who says the market has failed with respect to personal digital information, said Khan’s “memo reflects a promising step towards engaging with the market failures and abuses in information governance.”
But not everyone sees Khan achieving a lofty goal of democratization.
Republican Commissioner Christine Wilson has suggested her rights as a minority-party member of the FTC are being trampled by not receiving requested information about mergers. She’s also called the agency less efficient under the new regime.
“We are told that our new leadership values transparency and public input. Unfortunately, the majority repeatedly has chosen to undermine transparency and limit public input. At our open commission meeting in July, the majority voted to revise our rules of practice so that in rulemakings going forward, public input will be more limited,” Wilson said at the FTC meeting Sept. 15.
Darren Tucker, former attorney adviser to Republican Commissioners Joshua Wright and J. Thomas Rosch, told commissioners that he welcomed efforts to increase transparency through open meetings, but said he’s concerned transparency in other areas is lacking. Tucker is chair of Vinson & Elkins’ antitrust practice group.
Tucker said an increasing number of FTC merger investigations include requests for information regarding how the proposed transaction will affect unionization or treatment of franchisees, questions he said lack connection to competition concerns.
“If by ‘democratizing’ the agency, she intends to expand the agency’s mission beyond policing anticompetitive, deceptive, or unfair conduct, I worry that the agency may stray beyond its longstanding statutory and consensus-driven mission,” Tucker said in an email.
Hybrid by design
The FTC’s statutory origin established a hybrid identity as an independent regulatory agency that now has enforcement responsibilities under more than 70 laws. Decision-making rests with five presidentially appointed, Senate-confirmed commissioners. Staggered seven-year terms mean appointees may be less responsive to whoever holds the White House rather than an extension of the president’s command. But the chair wields significant power.
Meanwhile, the Justice Department is a purely executive branch agency also focused on antitrust but without diffusing power to commissioners. Earlier this month, Senators Mike Lee and Chuck Grassley and Representatives Ken Buck and Jim Jordan wrote to Khan and Acting Assistant Attorney General Richard Powers concerning the antitrust enforcers’ “increasingly divergent standards” in enforcing the law.
Lee said when “Congress gave DOJ and FTC shared merger enforcement powers under the Clayton Act, it never imagined a world in which the two agencies would apply two different legal standards — the very definition of arbitrary and capricious. Sadly, thanks to Chairwoman Khan’s FTC, we live in that world now. It’s time for Congress to fix its century-old mistake and reconsolidate antitrust enforcement at the Department of Justice.”
In setting the FTC’s agenda, Khan keeps returning to democratization as a top concern.
“One priority of mine has been ensuring that the FTC is regularly hearing and learning from the broader public, including the consumers, workers, honest businesses that we strive to protect,” she said at a recent agency meeting.
“Guarding against insularity is a constant challenge for virtually all federal agencies, and ensuring that the FTC is accessible, even to those who lack well-heeled counsel or personal connections, is essential to our institutional credibility,” she added. “Introducing these open meetings and inviting public comments on a monthly basis has been part of a broader effort to democratize our work in this way.”
Americans’ treatment of each other has long been a focus at the FTC. President Franklin Roosevelt laid the cornerstone for the FTC building in 1937, saying, “[m]ay this permanent home of the Federal Trade Commission stand for all time as a symbol of the purpose of the Government to insist on a greater application of the Golden Rule to the conduct of corporations and business enterprises in the relationship to the body politic.”
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