FTC UMC Roundup – It’s Getting Hot in Here

Gus Hurwitz —  22 July 2022 — Leave a comment

Someone has turned up the heat on Congress. I’m not saying Congress is responsible for the extreme heat being felt in much of the world this week – but I wouldn’t be surprised. With forward movement this week on both the CHIPS Act (with the Senate version partially resuscitating UCITA as well) and ADPPA. It seems possible (if still not yet likely) this Congress will pass some tech-related legislation. Will all this heat provide some lift below the wings of Senator Klobuchar’s (D-MN) stalled American Innovation and Choice Online Act (AICOA)? Read on … 

But first: this week’s headline looks at some recent talks by FTC Chair Lina Khan. Videos were posted this week of two recent talks the FTC Chair gave at the UNCTAD Intergovernmental Group of Experts on Competition Law and Policy and to Yale’s Law and Political Economy Project. Both are worth watching. Speaking with NYU professor Eleanor Fox at UNCTAD, Khan discussed the FTC’s “ongoing project to reinvigorate the FTC’s standalone Section 5 authority,” explaining her view that Section 5 “is intended to go beyond the four corners of the Sherman Act and the Clayton Act,” and her efforts “to make sure that [the FTC is] resuscitating this tool and making the best use of it.”

Notably, if subtly, she also discussed the need to “make sure that the reforms we’re implementing will be durable. How do we ensure that we’re really pursuing these with an eye to longevity over the long term.” It is worth recalling here that one of Khan’s first acts was to rescind the FTC’s still-new Statement of Enforcement Principles Regarding “Unfair Methods of Competition.” As I wrote here back in 2013, “a policy statement isn’t enough” – subsequent commissions can wipe away a policy statement by administrative fiat. Rather, durable policies (to the extent agencies can render them) require rulemaking – Khan’s statement about durability seems to telegraph that long-anticipated UMC rulemaking is coming soon.

In her comments to the Yale LPE group, she reflected more on the FTC’s UMC authority. She pointed to Sandeep Vaheesan’s work on UMC as influential to her thinking. Here it is worth quoting at length, as she pondered aloud

“what do we really mean by Unfair Methods of Competition? This is in some ways a question that goes to the heart of the FTC’s existence and reason for being. I take very seriously that the text of the FTC statute uses this term Unfair Methods of Competition, but I think there are really still basic questions to be engaged in regarding how we distinguish fair from unfair methods of competition, questions that are rarely frontally engaged among antitrust practitioners but that are really critical for us as we chart a path forward.”

This takes us back to the UNCTAD discussion, where Khan noted that the FTC is “in a moment in our legal environment where there are a whole set of legal challenges to the FTC’s authority,” explaining that this “complicates how we’re approaching what level of risk we’re comfortable with and that sort of thing.” It is curious that she didn’t seem to discuss these risks or challenges in her discussion at Yale, especially given her own expressed uncertainty about the meaning of Unfair Methods of Competition. But surely she is correct: in a post-West Virginia v. EPA environment, any FTC action that “reinvigorate[s] the FTC’s standalone Section 5 authority … beyond the four corners of the Sherman Act and the Clayton Act” very likely poses some major questions.

Enough about Khan’s recent speeches. What else is going on at the FTC? Well, the FTC and NLRB have announced a Memorandum of Understanding around labor issues. At least one commentator has already suggested that this is the FTC “thumbing its nose” at the Supreme Court’s West Virginia v. EPA ruling. I’m less sure – a lot will depend on what the FTC substantively does. There is a good argument that the FTC turning to work with the NLRB is a positive turn, recognizing that the NLRB is the nation’s labor regulator, such that attempting to turn antitrust law into a tool for labor regulation would present some risky major questions. On the other hand, action under the MOU could flow the other direction – the FTC and NLRB might collude to address labor issues outside of the NLRB’s authority using the FTC’s UMC or UDAP tools. Major questions abound!

Is AICOA dead? Not yet, but its closest known relative is a doornail. This week saw meta-activity on the hill. Both the Wall Street Journal and CPI report that Senator Klobuchar is pushing Senate Leader Chuck Schumer (D-NY)  to bring the bill to the floor for a vote. 

Whether Klobuchar has the needed 60 votes remains unclear. In an effort to gin up support for the bill, the House Judiciary Committee “formally published” the Committee’s report on competition in the digital marketplace. That’s the report that the Committee marked up in 2021, and released in 2020. In other words, this week the Committee did a thing to get an already twice-released report back in the news in order to help push AICOA in the Senate. This included releasing many of the documents supporting the report – though as one would expect, these documents have already been quoted and discussed extensively over the past two years.

Outside support for AICOA continues to trickle in. Mozilla has opened a new tab in the Washington Post, taking out a full page ad “open letter to Congress.” And Yelp’s General Counsel Aaron Schur published a defense of the bill, attempting to respond to criticisms such as those raised by Georgetown professor Anupam Chander and University of Arizona professor Jane Bambauer. Adam Kovacevich isn’t impressed. Neither is Mark Jamison. The basic disagreement is over what words mean. Schur assures us they mean one thing; Kovacevich and Jamison argue they could mean other things – or at least, that their meaning is unclear enough that they would allow competition-damaging litigation. ICLE’s Brian Albrecht cuts to the quick, reminding us that “the bill’s ambiguity will scare companies” and that the cost of that ambiguity “will ultimately fall on consumers in the form of higher prices, lower quality or fewer innovative products.”

Wherever you are, it’s likely going to be hot. If you’re looking for something to do while you stay cool inside, you could do worse that catching up on the Shane Tews’s conversation with FTC Commissioner Noah Phillips. And CEI has published a comprehensive discussion of “terrible tech bills from the 117th Congress” – a great one-stop-shop summarizing, and offering one informed perspective on, the very many bills that have been on the table over the past two years. 

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