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NTUF Comment on FTC Draft Strategic Plan for 2022-2026

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NTU Foundation has submitted a comment to the new proposed Federal Trade Commission (FTC) Strategic Plan for Fiscal Years 2022-2026. Though merely a guidance document, this proposed plan lays out a vision for a fundamental shift in how the FTC views its role in enforcing consumer protection and antitrust laws. By unmooring FTC enforcement activities from its present focus on consumer welfare, FTC Chair Lina Khan is opening the door to the use of antitrust enforcement to pursue nebulous social goals such as "racial equity." Although much of the public debate about antitrust lately has been on reining in the giant online platforms, these policy changes at the FTC will impact every sector of the U.S. economy.

Our full comment to the FTC is below.


Comment on the Federal Trade Commission’s draft Strategic Plan for Fiscal Years 2022-2026

National Taxpayers Union Foundation (NTUF) appreciates the opportunity to comment on the draft of the newest 5-year Strategic Plan to guide the Federal Trade Commission’s (FTC) consumer protection and antitrust enforcement mission.

Although the FTC’s announcement of this new draft strategic plan claims that “the current draft tracks closely to” the previous plan authored by former acting FTC Chair Margeret Ohlhausen in 2018, in fact a number of both semantic and substantive changes have been made that signal a profound shift in the Commission’s operations. This comes as no surprise given both Chair Khan’s own stated intentions to pursue a much more aggressive antitrust enforcement and regulatory agenda, as well as the requests made of the Commission in President Biden’s Executive Order on Competition earlier this year. To claim that this draft agenda represents merely a minor adjustment to the status quo seems disingenuous. 

Right from the beginning, the 2022 draft’s summary mission statement is altered to eliminate “without unduly burdening legitimate business activity” and to replace “consumers” with “the public.” Each of these revisions is significant.

The removal of the goal of enforcing antitrust “without unduly burdening legitimate business activity” is alarming within the context of the actions of the Commission’s majority over the past several months. One of the key attributes of effective antitrust enforcement is that it should be reasonably predictable; that is, that businesses that operate on the level should have a good idea of what practices they ought to avoid to remain within the boundaries of competition law.

Instead, the new regime at the FTC has rescinded many standards and guidelines, especially those relating to mergers and acquisitions (M&As), in a manner that seems intended to slow these transactions by creating maximum uncertainty. For example, the Commission has been sending aggressively worded letters to warn companies that M&A activity can be policed at any time after the ordinary review period has passed, language which Commissioner Noah Phillips has worried could be read as “intended to chill legal M&A across the board.” The Commission has also rescinded its 2020 vertical merger guidelines, and its 1995 policy guidelines on prior approval requests for M&As, and has suspended most early terminations of merger review since February 2021. 

While the 2022-2026 proposed guidelines continue to tout the Hart-Scott-Rodino (HSR) Premerger Notification act as its “primary tool” for evaluating whether to challenge mergers, in fact the Commission has consistently eroded the HSR process in what Commissioner Christine Wilson has likened to “death by a thousand cuts.”

The merger review changes, in particular, create maximum uncertainty at a time when M&A activity is particularly necessary, as companies continue to adjust in an economy recovering from unprecedented and lasting shocks due to government responses to the Covid-19 pandemic and the supply chain disruptions, social changes, and labor shortages that have followed. M&As are transactions that often stand to benefit consumers by increasing efficiencies in markets, and are a natural way for startups to cash in and for failing firms to be repurposed or liquidated.

In all cases, these recensions of prior FTC policy were done via partisan 3-2 votes, steamrolling the Republican minority commissioners, even though most were adopted along bipartisan lines in years prior. Most of these changes were done via the new “Open Meetings,” which have been held with scarce time for comments to be filed and in which public comments have been heard after commissioners’ votes have been tallied. The many sudden changes from prior FTC policies have left it an open question how the Commission will enforce the existing laws, from merger reviews to determining “unfair methods of competition.”

Meanwhile, the replacement of “consumers” with “the public” appears to echo the Neo-Brandesian school of antitrust reform in its desire to eliminate the consumer welfare standard that has defined antitrust enforcement for four decades, in order to broaden the scope of antitrust enforcement to further social policy goals. This is in keeping with Chair Khan’s scholarly writings, and is echoed by the removal of both of the references to “consumer welfare” that were present in the 2018 plan.

It bears remembering that the consumer welfare framework for antitrust enforcement was arrived at in response to an FTC that was widely considered — by legal scholars and economists across a wide ideological spectrum — to be out of control and overstepping its authority. The new consumer focus helped align antitrust closer to due process of law, by requiring that the government be able to demonstrate that a given business practice or transaction would likely result in genuine harm to consumers in order to bring a costly enforcement action against a firm. Requiring a more data-driven approach to antitrust, one backed by both economic and legal analysis, has helped render enforcement more predictable, while the enforcement agencies have continued to maintain a decisive win rate when pursuing antitrust cases. 

In contrast, this new 2022-2026 draft strategic plan not only excises any mention of consumer welfare, it explicitly sets new social goals for the FTC to pursue via antitrust, such as advancing “racial equity, and all forms of equity” and supporting “underserved and marginalized communities.” However meritorious these social welfare goals may be in their own right, antitrust law is a powerful, blunt instrument, the purpose of which is and ought to be solely to prevent anticompetitive harms from disrupting the free market. Incorporating evaluations of economic inequality, and the disparate impacts of business practices upon underserved communities, would distort any attempt at objectivity in antitrust enforcement, and may likely be found by the courts to exceed the FTC’s mandate under existing law.

In sum, this new draft Strategic Plan, though merely an aspirational document, appears to affirm the majority’s intent to continue a rapid and radical departure from prior theory and practice in enforcing the Commission’s consumer protection and antitrust enforcement missions. We would urge the Commission not to abandon the consumer welfare standard that has ably guided antitrust enforcement for nearly four decades, and to return to the more deliberative, transparent, and bipartisan approach to internal decision-making that has made the FTC such a respected institution. Rapid policy shifts that create uncertainty about competition policy enforcement among legitimate businesses will merely inhibit economic growth and threaten U.S. global economic competitiveness.

 

Respectfully,

Josh Withrow

Director of Technology Policy

National Taxpayers Union Foundation