Skip to main content

The Specter of 1970's Era FTC Should Haunt Congressional Appropriators

The House Committee on Appropriations hosted a hearing this week on the FY 2024 Budget Request for the Federal Trade Commission (FTC), which comes at a time of nearly unprecedented controversy surrounding one of the government’s most expansive executive agencies. It’s becoming clear that the specter of the overly aggressive 1970s FTC is again encircling an agency that could potentially regulate the entirety of the nation’s economy. In the aftermath of that 1970s power trip, the FTC was nearly permanently closed, and was forced to briefly cease operations, only reopening with numerous restrictions placed upon it. Today’s FTC is headed down a similar path and should consider facing similar consequences.

With the FTC under embattled Chair Lina Khan requesting a massive 37 percent budget increase, it bears examining their past year’s track record and historical precedent to see if this substantial windfall is worthwhile.

Much has been written already on how line staff morale has plummeted, that the FTC leadership has torn up decades-long norms and guardrails, removed merger guidelines (revoked 2021, as of 2023 still not replaced), and used questionably empowered consultants, but some of the most recent overreaches have been the most egregious.

Over the past year, the FTC has taken an unprecedented step forward in banning noncompetition agreements entirely - using a facet of its authority that has never been attempted before. Furthermore, the disregard of long-standing norms such as the consumer welfare standard and economic rationale even led to the resignation of the last Republican FTC Commissioner, Christine Wilson. Right now, the current FTC is operating with fewer restrictions than in recent memory, and with no internal voices of dissent to raise alarms.

On a more specific level, this budget request should raise eyebrows for appropriators. The document includes a request for $70 million for 310 new Full Time Employees (FTEs). 106 of those new hires would be dedicated to further increasing a historic rate of spurious lawsuits against mergers and acquisitions. 62 of these FTEs would also be partially tasked with “increasingly complex consumer protection investigations, including privacy and data privacy issues,” which as NTU has written, is part of a rulemaking process that sidesteps explicit Congressional intent. Three new FTEs would be dedicated to working with foreign regulators to hamper and restrict American companies’ operations overseas.

The current FTC stands at a precipice that reflects its unique place in the federal bureaucracy and its own historical precedent. While the Commission plays an important role in protecting consumers and providing a fair economic playing field, this current iteration has fallen prey to the same temptations as its 1970s predecessors who were briefly shut down and had their powers severely curtailed.

From 1980s Washington Post: “The 66-year-old commission, which employs more than 1,600 people countrywide including 1,100 here, has been the target of intense criticism from Congress and segments of the business community as a result of its recent aggressive monitoring of virtually every segment of economic activity.

That criticism, which encompasses FTC action involving fields as diverse as broadcasting and agricultural cooperatives, has resulted in congressional action to limit, if not end, commission investigations and rule-making actions.”

And to quote from William and Mary Law Review’s analysis on FTC Chair Michael Pertschuk’s 1970’s crusade to maximize the FTC’s authority: “To implement competition policy “in its broadest sense,” Pertschuk enumerated a number of specific steps he expected the FTC to consider and, in many instances, to carry out. One element would be forward-looking applications of Section 5 of the FTC Act to address “the future structure, conduct and performance of industry.” The application of Section 5 “require[d] boldness on the part of the decision-makers” and “bold action based upon reasoned prediction.” 

Pertschuk noted that this dimension of the FTC’s mandate “ha[d] been largely dormant since 1914,” but its revival would be “central to the implementation of an effective competition policy in the last quarter of this century.” 

He added that the FTC was “contemplating a number of test cases [it] would like to bring,when the appropriate facts are presented, to resolve the breadth of Section 5 so that Congress will have a clearer picture of the scope of existing competition legislation and the possible need for statutory revisions.”

Michael Pertschuk Boston Speech, 1977Joint FTC Statement, 2022

Where does the FTC fit into this? The FTC is more than a cop on the beat. It must look not only to past and present law violations, but also toward the future structure, conduct and performance of industry.  


I have mentioned the breadth of Section 5. What is often overlooked is that the mandate of Section 5 is essentially future-oriented. Our most difficult and important judgments are those that deal with incipient problems. Our economists, analysts, accountants and other experts ably inform us of past trends and present violations, but boldness in enforcement requires more and better prediction analysis. That is a part of the mandate of Section 5 which has been largely dormant since 1914. 

When Congress passed the FTC Act in 1914, it didn’t just create a new agency. It created

new law for that agency to enforce. Section 5 of the Act provides that “unfair methods of

competition in or affecting commerce” are “hereby declared unlawful.” The next clause states, “The Commission is hereby empowered and directed to prevent” businesses “from using unfair methods of competition.”


Together these sentences form the heart of the Commission’s legislative mandate in the

domain of competition. Accordingly, over the last century the Commission used its Section 5 authority to challenge a host of unlawful business practices. In recent decades, however, the Commission has allowed this Section 5 authority to lay dormant. With today’s policy statement,

we rededicate ourselves to executing the full set of duties Congress tasked us with more than a century ago.

With today’s FTC walking in the same “super-regulator” footsteps as their since discredited forebears, it is clear that Congress must again restrain the forceful impulses of the inherent nature of the agency and the temptations of its potential scope. Simply because regulators are not using their authorized powers as a blunt cudgel to hammer businesses does not mean that the enacting law is “dormant”. Congress should immediately reduce funding for the FTC and consider policy restrictions on its federal funding as well.