President Biden’s pick to Chair the Federal Trade Commission (FTC), Lina Khan, was confirmed and appointed on June 15, and has already moved to kick-start agency action on a number of fronts, including on both Commission process and substantive issues.
As a process matter, on June 24, Chair Khan announced that the Commission would have an open public meeting on a monthly basis. This type of public Commission meeting is a departure from the Commission’s recent practices. Commission votes do not require formal meetings, and meetings have not typically been public. However, one key feature of the open meeting is that it can set up votes on specific agenda items. While debates over certain proposals may otherwise occur behind the scenes, putting these votes on the agenda can both highlight the debate and move them towards resolution.
At the first such meeting on July 1, all of the measures being considered, as well as certain aspects of the process, drew pointed dissents from Commissioners Noah Phillips and Christine Wilson. Below is an overview of the measures considered and passed (by a 3-2 vote in every case) at the July 1 meeting:
- Streamlining of FTC internal rulemaking procedures: The FTC approved changes to streamline its FTC Act Section 18 rulemaking process related to unfair or deceptive practices – often known as “Magnusson-Moss” rulemaking. The changes mean that this rulemaking process will proceed more quickly, though it still will be more cumbersome than traditional Administrative Procedure Act (APA) rulemaking. The debate during the meeting primarily concerned whether the proposed changes to streamline the rules would make it too easy to pass regulations or for the Commission to weigh in without staff input. The passage and debate is another signal that the current Commission intends to be aggressive on rulemaking, including potentially on privacy and algorithms.
- Withdrawal of the 2015 statement on unfair competition: The Commission voted to withdraw the Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act (available here), which was adopted on a bipartisan basis. Among other things, it states that the FTC will limit bringing cases against “unfair methods of competition,” under Section 5 of the FTC Act, on the basis of a number of factors including the promotion of consumer welfare.
Chair Khan was explicit about the withdrawal of the 2015 statement being the first step to FTC Act enforcement that goes beyond traditional antitrust doctrine. She noted that the rescission of the 2015 statement was “only the start” of efforts “to clarify the meaning of Section 5 and how it applies to today’s markets.” Chair Khan also previewed that the FTC will “consider whether to propose rules that will further clarify the types of practices” that might warrant scrutiny under Section 5 of the FTC Act “in the coming months.” The Commissioners argued whether the proposal to withdraw previous guidance should be put out for public comment, and that debate appears to be a preview of whether any guidance that replaces the public statement will be put out for public comment, which remains to be seen.
- New investigation resolutions: The FTC generally conducts investigations under resolutions it periodically adopts and reauthorizes, and these are not usually controversial. Nevertheless, a package of resolutions to investigate certain matters drew dissent on various process grounds. According to a Commission press release, the resolutions will reinforce Commission priorities to investigate a number of areas, including repeat offenders, technology companies and digital platforms, healthcare businesses, harms against workers and small businesses, harms related to the COVID-19 pandemic, and both proposed and consummated mergers.
- Made in the USA Rule: The Commission passed a rule that codified its existing guidance on when a product can be labeled or advertised as “Made in the USA” (or similar phrases). Our more detailed summary of the rule is here. The primary effect of passing the rule is that the FTC can seek monetary penalties for false “Made in the USA” claims, which would otherwise be limited under current law. The dispute at the Commission was largely around whether the FTC has authority to make rules only as to labels (the dissenters’ view) or whether the rule can extend to online advertising (which prevailed). As passed, the rule does apply to online advertising, though this potentially could be subject to challenge.
Overall, the public meeting points in one direction for the FTC – more (and faster) rulemakings, more active enforcement, and more investigations. We will be closely watching the Commissioners’ statements and future public meetings to see what comes next.