For those who follow the Federal Trade Commission and are anxiously awaiting the Supreme Court’s decision in AMG Capital Management v. FTC, several recent developments at the Commission may foreshadow the enforcement road that lies ahead. In many ways, the future may look a lot like the past, especially the 1960s and 1970s, when the FTC pumped out rules regulating many aspects of economic activity, including frosted cocktail glasses.
First, earlier this month, President Biden nominated Lina Khan, an associate professor of law at Columbia Law School, to replace departing Commissioner Rohit Chopra, who has been nominated to lead the CFPB. At 32 years of age, Khan would be the youngest FTC commissioner in the agency’s history.
Acting Chairwoman Rebecca Kelly Slaughter has lauded Khan’s “creative energy, groundbreaking antitrust work, and passion for the FTC’s mission,” which includes her previous role as counsel to the House Antitrust Committee, where she assisted in producing a 400-page report on antitrust enforcement against tech companies. Prior to that role, she served as a legal advisor to Commissioner Chopra, with whom she authored an article arguing for expanded use of the FTC’s Section 5 rulemaking authority to supplement antitrust adjudication.
Given Khan’s relevant experience and publications, it is likely that, as an FTC commissioner, she will seamlessly transition into Commissioner Chopra’s role in advocating for creative and aggressive enforcement efforts, on both the antitrust and consumer protection sides of the FTC.
Second, Acting Chairwoman Slaughter seemingly acted on Khan’s and Chopra’s calls for reinvigorating the FTC’s rulemaking authority when she announced on Thursday that the FTC will now have a dedicated “rulemaking group” in the Office of the General Counsel. Currently, the FTC’s bureaus and divisions maintain decentralized authority over the periodic review of existing rules. According to the announcement, the creation of the rulemaking group will not only assist in strengthening existing rules, but will undertake new rulemaking to prohibit unfair or deceptive practices and unfair methods of competition.
The consolidation of rulemaking in one office is interesting on multiple levels. In their article, Chopra and Khan argued that the FTC could use Section 5 of the FTC and the Administrative Procedures Act to engage in notice and comment rulemaking to regulate unfair methods of competition. Suffice it to say that the subjects of that regulation may take the view that the FTC must follow the far more onerous requirements of the Magnuson-Moss Warranty Federal Trade Commission Improvements Act, which requires the FTC to (1) show that the conduct at issue is “prevalent” and (2) conduct informal hearings that allow interested parties to cross-examine. Chopra and Kahn argue that the FTC only needs to follow Magnuson-Moss rulemaking in regulating unfair or deceptive acts or practices, not unfair methods of competition. If Chopra and Khan are correct, the new office will be promulgating rules under two different standards.
Furthermore, the FTC frequently touts its status as an expert agency and would certainly do so in defending any regulations it issued. That expertise would seem to be diminished if rules are pumped out by one office for the entire agency rather than by the specific “shops” within the FTC with subject matter expertise.
As Acting Chairwoman Slaughter alludes to in the press release, the rulemaking group’s creation gets out in front of an adverse ruling in AMG Capital Management. The acting commissioner has previously voiced concerns to Congress about the FTC’s need for more enforcement authority, and the rulemaking group is a step in that direction that the Commission can take on its own.
Venable has the experience needed to help clients navigate these issues as the FTC transitions to new enforcement priorities and procedures. We will continue to monitor developments relevant to the FTC’s enforcement authority on this blog.