The current committee-passed print of H.R. 4664, the Financial Services and General Government (FSGG) appropriations bill, reduces funding to the Federal Trade Commission (FTC) and includes two excellent riders which would limit the FTC’s ability to enforce guidance on merger prior approval and its Section 5 policy withdrawal from 2021. These two riders, which were introduced during the markup, are great additions to the final bill and should be retained. However, with recent news of the Hart-Scott-Rodino overhaul and the recently released merger guidelines, as well as the overall lawlessness of the current FTC, more aggressive limitations on this rogue agency are certainly warranted. NTU suggests the following riders be added:
None of the funds made available by this Act may be obligated or expended to prescribe, issue, administer, or enforce any standard, rule, regulation, or order under the Federal Trade Commission Act (15 U.S.C. 45), relating to the rulemaking initiated July 9, 2021 pertaining to unfair methods of competition in or affecting commerce, and the use of contractual provisions imposing limitations on employees or contractors ability to compete.
This rider would specifically prevent the egregious and controversial non-compete rule from coming to fruition next year. The blanket non-compete rule, while certainly interfering with the well-established right to contract, would also put intellectual property rights and training investments at risk for employees. Furthermore, this rule should serve as a bellwether of future standalone uses of Section 5 rulemaking authority - which could lead to even more broad usurpation of congressional authority. This could mark a return to unilateral FTC action as NTU has noted in the past.
None of the funds made available by this Act may be obligated or expended to prescribe, issue, administer, or enforce any standard, rule, regulation, or order under the Federal Trade Commission Act (15 U.S.C. 45) pursuant to the rulemaking initiated on August 8, 2022 relating to commercial surveillance and data security or any similar rule or guidance by the Federal Trade Commission relating to data privacy or consumer protection under section 5 of the Federal Trade Commission Act (15 U.S.C. 45).
Data privacy is a key priority for Congress - but should not be for the FTC. Congress has worked diligently for several years to create a landmark law to govern this crucial element of the digital economy and the FTC should not overstep its bounds by preemptively acting to regulate by fiat. NTU wrote an extensive comment to the FTC when the Advanced Notice of Proposed Rulemaking was released on this topic.
One of the primary arguments from NTU’s comments centers on the negative impact of the European data privacy regulatory regime:
“Heavy-handed and excessive are adjectives that can be certainly applied to the European Union’s (EU) 2018 General Data Privacy Regulation (GDPR). This landmark rule sent shockwaves throughout the business world and continues to hamper internet commerce in the EU today. From 2016 to 2019, one in every three apps on the Google Play store left the European market, and new entrants to the market were halved. Four years on, firms exposed to the law experienced an eight percent decrease in profits, with particular harm focused on smaller businesses. The least affected businesses were also the largest - Facebook, Amazon, Google, faced “no significant impact” from GDPR. Large companies with massive legal teams were able to spend the significant sums for compliance and work around the issues of onerous regulation. The creation of GDPR was a misguided attempt at harmonizing a patchwork quilt of national privacy laws that went too far and was not responsive to business concerns over its extensive overregulation. American lawmakers and regulators should heed the warnings of GDPR and implement a consistent and pragmatic approach in legislation and regulation. The FTC must avoid making the mistakes of their European counterparts and should yield the regulatory pen to legislation in the works by Congress.”
Balancing multiple competing interests with the American people in mind is a job best left to Congress, particularly when negative outcomes can be so profoundly impactful. This rider would prevent the FTC from promulgating this rulemaking further and should be enacted into law.
None of the funds made available by this Act may be used by the Federal Trade Commission to fund any travel, lodging, or reimbursement expenses for any employee or contractor of the Commission in connection with any meeting, consultation, or collaboration with any official or representative of the European Union or any member state thereof regarding any antitrust or competition matter, including the Digital Markets Act.
Congressional scrutiny of FTC officials’ use of taxpayer resources to travel to Europe is heightening - and for good reason. American companies and consumers are suffering due to collusion across the Atlantic and American taxpayers are footing the bill for expensive forays into Brussels and other locations. The European Union (EU) already launched regulatory salvos against American companies with the Digital Markets Act and the Digital Services Act. These regulations effectively wall off European markets by subjecting certain American companies to taxes and requirements that most European companies do not.
Offshoring poor regulatory decisions to the EU to fulfill personal policy agendas should be off the table for the FTC. If FTC regulatory actions are unable to withstand the courts and body of law within the United States, then their response should not be collaborating with competitor nations to hamstring businesses. This rider would prevent this from happening in the future.
None of the funds in this Act may be used to implement, administer, or enforce its statutory mandate relating to “unfair methods of competition” under Section 5 of the FTC Act outside the scope of anticompetitive conduct or activity that would otherwise be challenged under the Sherman Act.
This rider would prevent the promulgation of other rulemakings like the noncompetition agreement ban from taking place. While the current appropriations language includes a rider with a similar goal, this one would get to the heart of the issue by preventing such rules from being devised by restricting the FTC’s authority to issue standalone rulemakings. The current language within the bill could be sidestepped by the FTC generating a new withdrawal of their policy statement on Section 5 rulemaking or by using other authority in conjunction with Section 5 authority. This rider would prevent this by creating a tighter boundary on the lawful use of this authority.