By Alex Reinauer and Jessica Melugin, Competitive Enterprise Institute
In recent years, the Federal Trade Commission (FTC) has become increasingly aggressive in its antitrust actions and policies. This expansion will be harmful to American prosperity, consumers, and the nation’s global economic leadership. There are concrete steps that courts and Congress can take to reverse this damaging regulatory trend.
Ideally, the FTC’s adjudicatory role in antitrust enforcement should be eliminated. The current dual-enforcement regime between the FTC and Department of Justice (DOJ) has created an atmosphere of confusion and uncertainty as industries attempt to navigate changing markets and new economic realities. The overall effect is likely a chill on innovation and economic progress for consumers. Lawmakers should consider proposals like the One Agency Act (S. 633), which would remove the FTC from antitrust cases and place sole authority with the DOJ.
Failing the removal of FTC authority in antitrust actions, common sense suggests that an agency acting as rule-maker, investigator, prosecutor, and judge is problematic. Concentrating those roles in one body invites abuse of power.
FTC rulemaking outside of congressional grants of authority should be met with staunch opposition—whether it be from courts, Congress, or private parties. In its 2022 “Statement of Regulatory Priorities,” the FTC expressed willingness to create rules defining “unfair methods of competition” as opposed to its traditional function of adjudicating claims on a case-by-case basis.
Imposing blanket rules of this sort would supplant fact and evidence-based enforcement with more dogmatic bureaucracy. While Congress did give the FTC broad investigative authority and the agency possesses the power to bring cases, it never gave the FTC rule-making authority to decide what is and is not an unfair method of competition. The agency should be limited to investigating and litigating in Article III Courts.
The FTC’s internal adjudicative process, in which the agency rarely loses, should be eliminated. Federal courts are better equipped to handle these claims without sacrificing the procedural rights of litigants. The FTC’s role in competition enforcement is inefficient, repressive, and perhaps unconstitutional.
There is some hope, however. The Supreme Court’s willingness to review a procedural matter in Axon v. Federal Trade Commission raises prospect that the Court will ultimately agree to hear a constitutional challenge to the “clearance” process between the FTC and DOJ.
Furthermore, such an endeavor is irreconcilable with statutory law and possibly the Constitution. Claims of congressional delegation to promulgate substantive rules defining unfair methods of competition under Section 6(g) of the FTC Act of 1914 are dubious. And considering the FTC’s concurrent prosecutorial and adjudicative roles, additional legislative authority would prompt constitutional concerns about due process and the separation of powers.
The FTC should not depart from the consumer welfare standard. It released its new Policy Statement on unfair methods of competition last month. The statement made clear that Chair Lina Kahn intends to abandon the standard, despite it being widely accepted by courts for decades and it bringing much needed clarity and reason to antitrust law.
Instead, Kahn plans to use antitrust to create a “level playing field” by protecting competitors at the expense of consumers. Instead of placing the consumer at the forefront of antitrust inquires, Kahn’s FTC continues to pursue regulation in support of vague societal goals like “ensuring equity” and guaranteeing a “fair deal” for labor interests.
This neo-Brandeisian view of antitrust enforcement as an opportunity for economic central planning shows a peculiar disdain for market-based economics. It is a direct regulatory threat to innovation, prosperity, and the free enterprise system that has lifted millions of people out of poverty.
Alex Reinauer is a Research Fellow with the Center for Technology and Innovation at the Competitive Enterprise Institute, focusing on tech policy and antitrust. Jessica Melugin is director of the Center for Technology & Innovation at the Competitive Enterprise Institute.