Preventing FTC Abuses of Power During Probes

Preventing FTC Abuses of Power During Probes

The Federal Trade Commission (FTC) plays an important role in protecting consumers and promoting competition. However, recent allegations of abuse of power by FTC Chair Lina Khan have raised concerns. As the FTC conducts more aggressive probes into big tech companies, it’s crucial to have safeguards against overreach.

The FTC wields significant power to investigate companies for potential antitrust or consumer protection violations. This includes issuing subpoenas and civil investigative demands (CIDs) to obtain documents and testimony. However, unfettered power can lead to problems. There have been accusations that Chair Khan has pushed the FTC to overstep its authority.

Concerns Over FTC Overreach

In June 2023, the House Oversight Committee opened an investigation into Khan’s alleged abuses of power. The probe centers around complaints by former FTC Commissioner Christine Wilson. She accused Khan of improperly voting on Meta’s acquisition of Within Unlimited despite a conflict of interest. Wilson also argued Khan has sought to delay proceedings and unfairly target companies.

Critics claim the FTC under Khan has become overly aggressive. Groups like the Chamber of Commerce argue the agency is pushing the boundaries of antitrust law. They want reforms to rein in the FTC’s authority. On the other hand, Khan and FTC supporters say the agency is simply doing its job protecting consumers from harm.

Balancing FTC Oversight Power

There are reasonable steps that can help prevent FTC overreach during investigations while preserving its enforcement powers:

• Increase transparency around FTC probes and enforcement actions.
• Require more detailed justifications for information requests.
• Limit the scope of inquiries to focus on suspected violations.
• Improve recusal rules for conflicts of interest.
• Set time limits on investigations to prevent indefinite probes.
• Allow judicial review of FTC demands for information.
• Establish clear criteria for unfair or deceptive practices.

The FTC needs discretion to thoroughly investigate potential wrongdoing. However, unchecked power can lead to abuse. Reasonable guardrails can balance meaningful oversight while preventing overreach.

Key Laws Governing FTC Investigations

Several laws lay out the FTC’s authority to conduct probes and request information:

• The FTC Act prohibits unfair or deceptive business practices.
• The Clayton Act prohibits anticompetitive mergers and acquisitions.
• The Hart-Scott-Rodino Act requires pre-merger notification.
• The FTC Rules of Practice cover investigations procedures.

Key protections against overreach include:

• Judicial review of CIDs available in federal court.
• Parties can petition to limit or quash CIDs.
• FTC must have reason to believe a law violation occurred.
• CIDs must be approved by a Commissioner.

While the FTC has broad powers, checks like judicial review help prevent unfettered authority. Oversight and transparency are crucial.

Recommendations for Reform

There are several constructive reforms that could improve accountability and prevent FTC abuses:

• Require detailed justifications for starting probes.
• Increase public reporting on investigations.
• Set time limits for completing inquiries.
• Limit repeat or harassing information requests.
• Allow parties to recover costs for overly broad probes.
• Improve recusal rules for conflicts of interest.
• Increase Congressional oversight of FTC activities.

Reasonable constraints on FTC power could increase public trust and prevent problematic overreach. However, the agency still needs tools to effectively investigate anticompetitive and unfair practices.

The Path Forward

The FTC plays a vital role in protecting consumers and ensuring fair competition. However, it must wield its significant investigative powers judiciously. Implementing commonsense reforms to increase accountability, while preserving enforcement tools, can help prevent abuses.

With more high-profile tech probes underway, now is the time to enact measured safeguards. Increased transparency and oversight would benefit both the FTC and the companies it scrutinizes. Constructive reforms would support the agency’s critical mission without enabling overreach. There are ways to empower the FTC while also preventing unfettered discretion.

Striking the right balance will require good faith efforts on all sides. The public interest is best served through reasonable constraints on authority, not elimination of enforcement powers. With wisdom and restraint, the FTC can effectively fulfill its duty without crossing the line into harmful overreach.

References

[1] House Oversight Committee Launches Investigation Into FTC Abuses

[2] Reuters: FTC Chair Khan Faces Abuse of Power Allegations

[3] Law360: House Probe Accuses FTC’s Khan of Abuse of Power

[4] FTC Resolutions Broadening Investigative Powers

[5] FTC Warning About AI and Discrimination