As most of you know, when the FTC votes to issue a complaint, the agency can proceed in federal court or through the administrative law process (there are pros and cons to both, but that’s for another day). When the FTC proceeds through the administrative law process (Part 3), staff prosecutes the case in front of an Administrative Law Judge (known affectionately as the ALJ), who at the conclusion of the hearing issues findings of fact and findings of law. The ALJ’s decision is then appealable to the Commissioners and then, after that, to federal courts. Some have criticized this process, arguing that the Commission cannot – in an unbiased fashion – hear an appeal of a case they voted to bring in the first place.

A new article by Commissioner Maureen Ohlhausen (currently the only Republican commissioner) evaluates this argument by looking at 30 years of Commission Part 3 decisions (145 cases, to be precise). Along the way, Commissioner Ohlhausen also makes an interesting observation concerning the nonpartisanship of the Commission. While we highly recommend that you read the article yourself, we present some highlights below.

First, since everyone is still talking about the election, the nonpartisan point. Commissioner Ohlhausen looked at 30 years of complaints voted out by the FTC relating to both antitrust and consumer protection. Of those complaints, 78% were issued unanimously (100% if you look at just the last 10 years). Furthermore, when it comes time to hear the appeal of an ALJ’s decision, the Commission’s decision has been unanimous 86% of the time. In an age where almost everything seems partisan, those are remarkable statistics.

But what about possible bias by the Commission in hearing what are essentially appeals of their own cases? While Commissioner Ohlhausen cautions against reading too much into the statistics, here too the data appears to support the idea that the Commission does exercise careful independent review when hearing Part 3 appeals.

At first glance the statistics might suggest otherwise. In the last decade the Commission affirmed liability in 11 of the 12 Part 3 decisions examined in the article. If we go back further (4 decades), the history tells a different story, as the Commission dismissed on the merits 16% of all appeals from an ALJ’s decision. However, as we all know, statistics tell only part of any story, and the Commissioner tries to go behind the numbers.

For example, the Commission’s more recent higher affirmance rate of ALJ decisions also coincides with a higher success rate for the Commission when cases are appealed to federal court. This suggests not only that the Commission is reaching the right result rather than merely rubber-stamping its prior decision, but also that the Commission may be doing a better job of case selection in more recent times. In addition, in 72% of the matters studied, a different Commission majority affirmed the ALJ decision than voted to initially issue a complaint, which tends to support the idea of an independent evaluation (though one cannot necessarily rule out some type of institutional bias).

There is far more to the article than what we can cover here, but it’s worth noting in closing that the statistics are also broken down by type of action (antitrust vs. consumer protection). In general, the data suggests that the Commission is more likely to uphold its prior decision in Part 3 consumer protection matters. Commissioner Ohlhausen speculates that this may be due to such factors as the fact that antitrust matters are often more complex and difficult to prove or that antitrust law tends to change more over time. Another possibility that we would add is the nature of many consumer protection defendants and the facts they bring to the table. Many of them are not publicly traded or household names and may have less incentive or less inclination to settle even a non-meritorious case, particularly if the FTC is seeking redress or injunctive relief that would effectively put them out of business.