Lawmakers could strip FTC powers in response to Khan’s activist agenda

Federal Trade Commission Chair Lina Khan’s bold attempts to reshape the agency’s enforcement priorities could cause pushback from her adversaries on Capitol Hill.

Several prominent Republicans advocate stripping the agency of its antitrust powers and their efforts could gain momentum if the party seizes control of one or both chambers of Congress in next November’s mid-term elections. There’s little chance of this occurring as long as the Democrats are in control.

Senator Mike Lee, the top Republican on the Judiciary Subcommittee on Antitrust, is the lead sponsor of a measure to give the Department of Justice sole jurisdiction over antitrust. During his Nov. 9 speech at the American Bar Association Antitrust Section’s Fall Forum, he excoriated the agency’s expansive approach to antitrust, especially in merger reviews.

He criticized the FTC for “asking merging parties about their relationships with labor unions and their environmental, social and governance policies.”

The senior senator from Utah said “attorneys have told my office that the FTC staff relaying these questions are practically apologetic when doing so — simply saying they have been directed by the FTC leadership to ask the questions without explanation.”

He said that practice, and other actions such as the agency’s withdrawal of its approval of the Vertical Merger Guidelines, provided further justification for his Tougher Enforcement Against Monopolies Act. The measure, cosponsored by Senator Charles Grassley, would consolidate enforcement, increase funding for the DOJ’s antitrust division, and institute reforms such as allowing indirect purchasers to recover damages for antitrust violations and limit the ability of courts to infer antitrust immunity.

Grassley, the senior senator from Iowa, is the top Republican on the Judiciary Committee.

Staff members said there may be additional sponsors announced in the next few months, all Republicans.

When lawmakers deemed the FTC too aggressive during the chairmanship of Michael Pertschuk, twice in 1980 they let the agency’s funding lapse, and its doors closed for two days. The Senate also came within two votes of passing legislation to eliminate the FTC’s authority over state-regulated professions.

But turf battles between committees could make the Lee-Grassley bill hard to pass. The House and Senate Judiciary committees would lose their oversight over the FTC and panels guard their turf ferociously.

Those panels share their jurisdiction over the FTC with the Senate Commerce Committee and House Energy and Commerce Committee. The Judiciary panels oversee the FTC’s antitrust activities and the Commerce panels oversee its consumer protection work.

It was a similar turf battle that scuttled a plan hatched by the DOJ and FTC in 2001 to revamp how the agencies would review mergers. The plan would have given the DOJ the power to review communications mergers, which didn’t sit well with then-Commerce Committee Chairman Ernest Hollings, a South Carolina Democrat.

There hasn’t been a companion bill to the Lee-Grassley measure in the House. However, Representatives Jim Jordan of Ohio and Ken Buck of Colorado, the top Republicans on the Judiciary Committee and Antitrust Subcommittee, signed a letter with their Senate counterparts criticizing the FTC’s actions under Khan and the “lack of alignment between DOJ and FTC in antitrust enforcement.”

From 1890, when Congress passed the Sherman Act, until lawmakers passed the Federal Trade Commission Act in 1914, the DOJ had exclusive jurisdiction over antitrust matters. But Louis Brandeis, the FTC’s intellectual architect, persuaded President Woodrow Wilson to include a provision allowing the agency to act against “unfair competition,” as defined in light of the Sherman Act but going beyond that statute.

Khan hasn’t backed down in the wake of criticisms from congressional Republicans or from GOP commissioners. She has said the changes are needed because past enforcers have taken a too-narrow view of their work and had often been insufficiently aggressive.

She recently told New York Magazine that she worries about “the existential stakes of underreaching,” and doesn’t worry about going too far.

When identifying the top 10 threats to this agency, Khan said, “that’s not on the list.”

Republican FTC member Christine Wilson has a different take. She fears the agency’s actions will result in history repeating itself, with lawmakers cutting its powers. That could be damaging in the long term, she warns.

“The FTC is an independent agency — but it is not an island. We cannot ignore our Congressional appropriators and oversight committees, and we cannot ignore legal precedent,” she said at the ABA conference.