Independent federal agencies have power over American life that the Founders never imagined, and that reign is about to expand with a vengeance in the Biden era. Witness the unprecedented power grab engineered last week at the Federal Trade Commission by the new chair,
The events didn’t get much attention because the press cares more about politics than governance. But on a series of 3-2 votes, the Democratic commissioners turned agency tradition upside down and gave themselves vast new powers to harass business.
The agency eliminated the long-standing role of the agency’s chief administrative law judge in presiding over fact-finding and rule-making. Now Ms. Khan, or someone of her choosing, will preside. The Democrats also killed the requirement that the FTC staff get a majority vote of the commission to start an investigation. Now only a single commissioner can sign off. Subpoenas can also fly at Ms. Khan’s discretion.
The commissioners rescinded the bipartisan Obama-era FTC statement, adopted in 2015, that the agency follow antitrust law as it has evolved in the courts. This is a sure signal that the three Democrats are planning to dump the consumer-welfare standard for antitrust that has prevailed for decades. Instead the agency will replace it with some new standard it hasn’t specified. Also on the chopping block is the “rule of reason” the Supreme Court has applied to antitrust law for more than a century.
This is the handiwork of Ms. Khan and
who is still a commissioner but has been nominated by Mr. Biden to run the Consumer Financial Protection Bureau. Ms. Khan is a 32-year-old academic who has no experience running anything. She helped write the October 2020 House Antitrust Subcommittee report on Big Tech and has called for breaking up large firms. Now she’s teeing up the FTC to stretch its powers in a way it hasn’t done since the 1970s and 1980s before it was rebuked by Congress and the courts.
Ms. Khan and her academic ally
who now works in the White House, claim they are merely restoring proper antitrust law from the intellectual detour pioneered by the late, great
But they ignore that modern antitrust law, with its focus on economic analysis and consumer benefit, has also been nurtured by many others. They include scholars
and Supreme Court Justice
Ms. Khan appears to reject all of that. She writes fondly of railroad regulation, of all things, which was repudiated by Congress after demonstrable failure. She wants to apply the Robinson-Patman Act of 1936 to Amazon and other giants. That price discrimination law was long ago diminished by the courts with hardly a word of objection from Congress.
Ms. Khan may feel she has the political wind behind her given the anti-Big Tech mood on Capitol Hill. Twenty-one GOP Senators voted to confirm her, including some upset with Big Tech for censoring conservative speech. But they voted to make her a commissioner before President Biden made her Chair—a decision he announced only after her confirmation. That was a clear break with tradition that a nominee for Chair be identified before a Senate vote.
These Republicans may be under the illusion that Ms. Khan has only Big Tech in her sights. But the new powers she is claiming will give her authority to shoot at business in all directions. The FTC is supposed to be mainly an enforcement agency that polices bad practices, but Ms. Khan and her fellow Democratic commissioners want to expand its regulatory powers as well. Watch out for rules on privacy and data-collection for starters that will affect hundreds if not thousands of companies.
The U.S. Chamber of Commerce awoke to criticize the FTC votes last week. But Republicans in Congress are still asleep.
Wide awake is Amazon, which last week filed a petition with the FTC seeking Ms. Khan’s recusal from actions concerning the giant retailer. The petition includes a declaration from
one of the country’s foremost experts on legal ethics who was retained by a firm working for Amazon. Mr. Morgan recounts Ms. Khan’s extensive record of hostility to Amazon and thus her inability to fairly judge the facts of an antitrust case.
“The Majority Staff Report in which Chair Khan played a large part in effect asserts that Amazon is guilty of violating the law,” Mr. Morgan writes. “In my opinion, in any future matter tried before the FTC, Amazon is entitled to decision makers who have a more open mind about those issues than Chair Khan would appear to a reasonable observer to have.”
We have no special brief for Amazon and have criticized its dominance in the e-books market. But the point here is about Ms. Khan’s blinkered zealotry. Don’t expect her to take Mr. Morgan’s recusal advice, but the courts may come to a different conclusion. Meanwhile, American business should get ready. The Khan FTC is coming after you.
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