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Three years of Chair Lina Khan’s unhinged FTC

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Lina Khan’s appointment to the Federal Trade Commission (FTC) was meant to bring about significant change and a new direction for the independent agency. Before even being confirmed, some were already describing her as a “tech antitrust icon.” Realistically, the ambitious agenda may have been difficult for anyone to accomplish. But it’s fair to say that the results of those high expectations have been underwhelming and contrary to the public good.

This Saturday, June 15, marks Lina Khan’s three-year anniversary as chair of the FTC. Shortly after being confirmed by the Senate as a commissioner, President Biden elevated Khan to chair. This was a departure from historical norms. Presidents normally specify when a nominee will serve as chair of an independent agency. The unprecedented nature of the appointment was fitting in a way, because Chair Khan would attempt to usher in radical change at the FTC.

CEI launched a new illustrative timeline this week as part of our Eye on FTC campaign, a project initiated last year to raise awareness about the administrative overreach and lack of transparency taking place at Khan’s FTC. Entitled “Federal Trade Commission Unhinged,” the timeline highlights the most glaring and head-scratching actions taken by the agency over the last three years.

In antitrust cases, Khan’s FTC has consistently defined relevant markets narrowly to make companies seem more dominant than they really are. We call this the relevant market fallacy, and others describe it as relevant market gerrymandering. In its challenge to Meta’s acquisition of virtual reality (VR) developer Within Unlimited, the Commission defined the market as “virtual reality dedicated fitness apps,” excluding VR apps that are merely incidental to fitness even if users burn more calories per hour. The FTC excludes highly relevant competitors by name in its attempt to block the Kroger/Albertsons merger: Costco, Sam’s Club, Dollar General, Dollar Tree, Aldi, and Amazon. The agency’s market definition in its suit against Tapestry and Capri Holdings is comical, defining the market as “accessible luxury” handbags and excluding other luxury brands like Louis Vuitton, Prada, and Gucci.

Lina Khan’s litigation strategy is questionable as a fiduciary of taxpayer dollars. Early in her tenure as Chair, she said “We’re going to be focusing our resources on litigating, rather than on settling.” That hasn’t gone well. The FTC has racked up a string of high-profile losses in federal court, with some arguing that Chair Khan is trying to win by losing. She hopes the losses could signal Congress to strengthen the antitrust laws. Worse, Khan is bringing losing cases to trial as a sort of test tube legal strategy. Even if the FTC loses on the merits, a judge may endorse a single legal theory, possibly giving the agency ammo for the next challenge. The FTC is entrusted with enforcing the law, not trying to change it. Nonprofits and legal advocacy groups are free to use private donations to achieve these types of changes in their litigation strategies. Funding these same strategies with taxpayer money is irresponsible and wasteful.

Chair Khan emphasized the importance of transparency during her first month as Chair, opening up monthly commission meetings to the public for view and comment. However, much of the FTC’s work under her leadership has been shrouded in secrecy. Then Commissioners Christine Wilson and Noah Phillips dissented from a vote approving a new statement on the use of prior approval provisions in merger orders in October 2021. Namely, the deciding vote came from Rohit Chopra, who was no longer a sitting commissioner. Chopra had cast his vote weeks before, a process that has been called “zombie” voting. Wilson and Phillips added that “The Policy at it issue was announced without our participation” and averred that the policy would have benefited from public comment.

Commissioner Wilson raised further concern regarding a lack of transparency when she announced her intent to resign from the FTC in February 2023. She pointed to her heavily redacted dissent in the Commission’s decision affirming Khan’s non-recusal in the Meta/Within Unlimited merger challenge. Wilson said, “Commission opinions commonly use redactions to prevent disclosure of confidential business information, but my opinion contained no such information. The redactions served no purpose but to protect Ms. Khan from embarrassment.” It was later revealed that Chair Khan refused ethics advice from the FTC’s designated agency ethics official recommending that she recuse herself in the Meta/Within matter. Members of Congress soon accused Khan of giving misleading testimony on whether should would heed such ethics advice. The House Judiciary Committee also published an interim staff report finding that “Managers viewed Chair Khan’s actions as attempting to limit transparency and consolidate power.”

Last month, CEI published research by former FTC Bureau of Consumer Protection director Howard Beales and former FTC Chair Timothy Muris evaluating the effectiveness of Chair Khan’s reformative agenda at the Commission. They acknowledge that Khan has implemented an “impressive norm-busting campaign” but ask “to what end?” An unfortunate consequence is the conclusion of civility and bipartisanship at the FTC. They draw attention to a quotation from the legendary UCLA basketball coach John Wooden, who said “Never mistake activity for achievement.” Lina Khan’s tenure as FTC Chair has produced plenty of activity, but little achievement. According to Beales and Muris, Lina Khan’s FTC experiment has failed.

See the full Timeline here.

The post Three years of Chair Lina Khan’s unhinged FTC appeared first on Competitive Enterprise Institute.
 
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