Federal Trade Commission Chair Lina Khan, whose anti-capitalist views have upended more than 100 years of antitrust law enforcement based on the consumer welfare standard, tried to defend her policies and justify her request for a massive 37 percent increase in the agency’s budget for 2024 at a House Judiciary Committee oversight hearing. The FTC, which received $430 million for the 2023 fiscal year, requested $590 million for 2024, an increase of $160 million.
The July 11 hearing also focused on the chair’s conduct, her refusal to recuse herself from matters on which she had previously expressed her opinion, her expansion of the agency’s jurisdiction over matters beyond its statutory authority, and her losing streak in court, bringing cases that match her (clearly incorrect) philosophy.
The legal quagmire and waste of money on unwinnable cases began in July 2021, when during the first meeting after Khan was elevated to the chair position, the agency voted along party lines, without any opportunity for public comments, to dismantle the consumer welfare standard. The antitrust laws, according to the FTC website, have had the same basic objective for more than 100 years: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.”
Khan signaled her disdain for this concept in her January 2017 Yale Law Journal article, “Amazon’s Antitrust Paradox,” in which she claimed that even though Amazon saves money for consumers, its benefits cannot be measured “primarily through price and output.” Rather than working with Congress to amend the Sherman and Clayton acts, passed in 1890 and 1914, respectively, she decided that the FTC should act on its own to change the interpretation and enforcement of those and other antitrust laws. Federal courts have repeatedly rejected the adoption of her radical ideas.
Khan’s effect on the FTC expands beyond agency actions. In 2022, the agency plummeted from being among the highest ranked in employee satisfaction for mid-size government agencies to number 22 on the annual list compiled by the Partnership for Public Service and Boston Consulting Group. Compared to an average drop of 4.5 points in employee satisfaction across federal agencies, the FTC dropped by 24.2 points. This was partly attributed to “frustration with Khan and her allies’ public discontent with the FTC’s track record.”
It is little wonder that the FTC and its chair are under heightened scrutiny. Khan has been acting without dissent since Republican commissioner Christine Wilson announced on February 14 that she would be leaving the FTC, noting her repeated concerns about Khan’s “disregard for the rule of law and due process and the way senior FTC officials enable her. I have failed repeatedly to persuade Ms. Khan and her enablers to do the right thing, and I refuse to give their endeavor any further hint of legitimacy by remaining.”
Republican commissioner Noah Phillips left in October 2022 to focus on his family, but another factor for his departure was cited as “his sense that other commissioners weren’t open to discussion and compromise.”
On July 3, President Biden nominated two Republicans for the FTC, who serve as the solicitors general of Utah and Virginia. The Senate should act quickly to confirm these nominees to ensure that there is a record of dissenting opinion to Khan’s actions at the FTC and an opportunity for the new commissioners to try to restore the bipartisan and balanced approach to antitrust enforcement and the consumer welfare standard that has worked well for more than 100 years. And the House and Senate should agree to reject the absurd increase requested for the FTC’s budget.
