June 06, 2022

With a Full Slate of Commissioners, the FTC Is Poised to Tackle the Chair’s Ambitious Antitrust Enforcement Agenda

With the May 16, 2022, confirmation of Commissioner Alvaro Bedoya, the Federal Trade Commission finally has a 3–2 Democratic majority and can move forward with Chair Lina Khan’s ambitious agenda.

The Commission majority has significant ramifications for numerous industries, which are likely to see the FTC flex its rulemaking muscles consistent with the president’s 2021 Executive Order on Promoting Competition.

Breaking the Deadlock

The FTC, a five-member Commission where only three members can be from the same political party, became deadlocked 2-2 in October 2021, when former Democratic Commissioner Rohit Chopra stepped down to become the head of the Consumer Financial Protection Bureau. Because the FTC needs a majority vote of Commissioners to conduct most business, the deadlock effectively prevented the chair’s ability to move forward on items that did not have bipartisan support. For example, since both Republican Commissioners are generally opposed to the FTC’s exercising its rulemaking authority in the antitrust arena, the chair did not have the votes to initiate rulemaking proceedings.

Commissioner Bedoya, a Georgetown University law professor and privacy scholar, has a track record primarily in the consumer protection space. His views on antitrust are less well known, but he has said that he “want[s] to help small business owners across the country who are struggling to compete on their merits, without a bigger company using its power to stifle that competition.” And since his confirmation, Commissioner Bedoya has filled out his staff with competition attorneys who have FTC and state antitrust enforcement experience. Therefore, he is expected to be a reliable third vote supporting Chair Khan and Commissioner Rebecca Slaughter on antitrust matters.

The Biden Administration and Chair Khan’s Antitrust To-Do List

The White House Competition Council and the FTC have indicated they intend to use the antitrust laws and the FTC Act to target not only market concentration and big business, but also to address other issues such as non-compete practices and wage inequality. Among the 72 specific initiatives identified in the Executive Order are many tasks specifically directed to the FTC, including:

In Agriculture

  • Exercise the FTC’s rulemaking authority to limit manufacturer restrictions on “third-party or self-repair of items, such as restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment.”
  • Work with the Department of Agriculture to submit a report to the White House Competition Council “on the effect of retail competition in the food industries,” including whether the FTC Act or the Robinson-Patman Act might be used to enhance farmers and other small producers’ access to retail markets. 

In Healthcare/Pharma Markets

  • Exercise the FTC’s rulemaking authority to limit “unfair anticompetitive conduct or agreements in the prescription drug industries, such as agreements to delay the market entry of generic drugs or biosimilars.”

In Technology Markets 

  • Exercise the FTC’s rulemaking authority to stop “unfair competition in major Internet marketplaces.”

In Real Estate Markets

  • Exercise the FTC’s rulemaking authority to restrict “unfair tying practices or exclusionary practices in the brokerage or listing of real estate.” 

In Labor Markets

  • Along with the DOJ, consider additional revisions to the October 2016 Antitrust Guidance for Human Resource Professionals “[t]o better protect workers from wage collusion” by employers. 
  • Exercise the FTC’s rulemaking authority to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility,” and to limit “unfair occupational licensing restrictions.”

The FTC Appears Poised to Take On New Competition Rulemakings This Month

Given the deadlock, the FTC has yet to tackle any of the major competition-related rulemakings and other agenda items proposed by the Executive Order or identified in the Commission’s Statement of Regulatory Priorities for 2022. While it has initiated several rulemakings in recent months, they have all related to consumer protection issues with bipartisan support, such as issues related to telemarketing scams, false earnings claims and impersonation fraud. The FTC also initiated rulemakings related to children’s privacy online and advertising to children shortly after Commissioner Bedoya was confirmed.

With a Democratic majority in place, the standstill in major rulemakings likely will change in the near term. Under Chair Khan, the FTC has been holding monthly Open Meetings. The next meeting is expected in mid-June, with a date and agenda to be announced. We believe the FTC fairly quickly will begin to tackle some of the more controversial competition issues on its docket, particularly in the agriculture, healthcare and technology sectors.

The FTC Also Is Hiring Aggressively and Pursuing Increased Funding for Enforcement

As the FTC is poised to ramp up rulemaking efforts, it also is significantly increasing its enforcement capability through hiring. 

President Biden has proposed a 2023 budget that would increase funding for the FTC by $139 million, and for the Antitrust Division of the DOJ by $88 million. 

Chair Khan echoed Biden’s call for increased funding for the FTC. In recent testimony before the House Appropriations Subcommittee on Financial Services and General Government, she explained that the recent increase in merger filings has outpaced and overwhelmed the FTC’s ability to investigate them. “An astounding 3,644 transactions were reported to the FTC and DOJ in FY 2021, a figure that is 87% higher than the average number of transactions reported over the past five years,” she explained, adding that the agency does not have enough resources to meet its statutory obligations to review those mergers in a timely manner.

Per Chair Khan’s testimony, the requested increase would fund the addition of about 215 full-time employees to the FTC’s staff. This is on top of the increase in funding the agency received in fiscal year 2022, which is currently allowing it to hire about 85 full-time employees. Massive hiring efforts are underway at the FTC to meet this goal.

Conclusion

With its deadlock ended and hiring underway, the FTC appears ready for an eventful period of competition-related rulemaking and enforcement. Companies should keep the agency’s stated priorities and broad mandate in mind as they consider compliance issues or potential M&A activity. They also should stay tuned for future FTC rulemakings and consider whether to participate to help the agency make decisions based on a more complete record. Businesses with questions regarding the antitrust enforcers’ likely enforcement priorities and the rulemaking process are encouraged to consult with antitrust counsel.

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