May 23, 2018

Crisis at the FTC? The Most Inexperienced Commission in Recent Times Prepares for Business

Background

Back when the Federal Trade Commission (FTC) was a mere glimmer in Congress’ eye, the hope was that a Commission composed of five individuals serving staggered seven-year terms would give American competition and consumer protection law “precedents and traditions, and a continuous policy.” 51 Cong. Rec. 10,776 (1914) (statement of Sen. Newlands, D-Nev.). On occasion, theory is replaced by practice, as is the case for the current Commission. Four commissioners have been sworn in since May 1 (Chairman Simons and Commissioners Phillips, Slaughter and Chopra) and a fifth – Christine Wilson – has been approved by the Senate and awaits the departure of lame-duck commissioner Maureen Ohlhausen who has been nominated to the federal bench, but has decided not to move on until confirmed to the court, making her status unprecedented.

The Most Inexperienced Commission Since the First Commission

The seating of four new commissioners this month and the impending replacement of Ohlhausen is truly noteworthy – aside from March, 16, 1915, when the first Commission was sworn in, there has never been a time in our nation’s history in which four or more of the commissioners had less than one year of experience. In fact, during the FTC’s 100+ year history, on only a half-dozen occasions (1918, 1934, 1962, 1974, 1977 and 1998) have there been three commissioners serving with less than one year of experience.

Inexperience – Possible Implications

What are the potential consequences of an inexperienced Commission? Although my crystal ball is cloudy, this historic lack of experience may have several key implications:

  1. A New “Trump”Agenda?
    The issues awaiting the new Commission range from traditional merger review to Big Data and the "Internet of Things" to prescription drug pricing and the application of antitrust and consumer protection law to big technology companies like Facebook and Google. While bipartisanship has been a part of the Commission’s culture, especially with respect to consumer protection matters, one wonders what the effect of five new Trump appointees will be on both new and past Commission initiatives. For example, will Commission initiatives like those requiring more stringent substantiation for health claims, such as requiring two well-controlled clinical studies to support certain claims instead of a more flexible “reasonable basis” standard, continue to be the policy of the new Trump Commission? 
  2. Possible Missteps
    Only Commissioners Simons and Wilson have previous FTC public service experience. An inexperienced commissioner is more likely to make a misstep or two as part of the learning process. With important competition and consumer protection issues among the Commission’s priorities, the opportunity to act on significant issues is not going to allow much time for learning on the job.
  3. The “Clubhouse” Factor
    The Commission acts only upon a majority decision, but each commissioner has an independent responsibility to carry out the mission of the FTC as he or she sees fit. The FTC Act, with the provision for five commissioners serving staggered terms – no more than three from one political party – contemplates the orderly turnover necessary for a “continuous policy.” But Chairman Simons, subject to the policy guidance of his four new colleagues, has broad authority over the use and expenditure of funds and the distribution of business within the Commission. How group dynamics develop – or don’t – among five new commissioners with no previous experience relating to each other may have a major influence on the initiatives this Commission seeks to take.
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