Since it opened its doors in 1915, the Federal Trade Commission (FTC) has been dedicated to its mission of protecting consumers and competition. The Federal Trade Commission Act, which established the FTC, gives it the power to “prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.” The FTC achieves these ends by setting rules for what is unfair or deceptive, gathering information and conducting investigations into organizations, as well as numerous other powers.1 Essentially, the FTC is the backbone of antitrust policy and consumer protection. However, in the years following the Reagan Administration the U.S. moved towards a more hands-off economic approach, resetting guidelines to mitigate the FTC’s regulatory influence and leaving it up to market forces to discipline companies.2 As a result, corporate consolidation has increased in a range of markets over the past few decades, creating stronger companies bordering on monopolies with the power to raise prices, lower wages, and influence policymakers.3
Enter Lina Khan, nominated by President Biden in 2021 as the new chair of the FTC. At 32, she was the youngest chair ever named, but that did not stop her from revitalizing the FTC and creating a massive antitrust movement. Since the start of her tenure, Khan has worked to reestablish and utilize the full extent of the FTC’s legal and regulatory power to fight against harmful consolidation and monopolistic practices. From threatening and bringing lawsuits against major corporations, to sending warning letters to predatory patents, to major policy wins, Khan’s FTC has been a thorn in the side of anti-competitive business practices. Even when the FTC has lost lawsuits, the fact that they are challenging corporations instead of letting them act as they please creates a tangible impact on the way business is conducted, scaring off potential acquisitions.4
The FTC’s resurgent influence under Khan has proved divisive on both sides of the aisle. While progressive Democrats such as Amy Klobuchar (D-MN), Bernie Sanders (I-VT), and Alexandra Ocasio-Cortez (D-NY) have praised Khan’s work at the FTC and want her to remain in place, her leadership has faced significant criticism from major business-owning supporters and donors of the Democratic party, including LinkedIn’s Reid Hoffman and billionaire Mark Cuban, who have called for a change in FTC leadership.5 On the Republican side, while the incoming Trump administration and its business-owner heavy ties will undoubtedly replace Lina Khan, she has garnered support from an unlikely source: vice president-elect nominee J.D. Vance. Vance has praised Khan on multiple occasions for her efforts combatting major tech industry players, referring to her as “one of the few people in the Biden administration […] doing a pretty good job.”6 He is not alone in this opinion, as Josh Hawley (R-MO) and Matt Gaetz (R-FL) have supported Khan and her antitrust movement. However, numerous other Republicans have criticized Khan and accused her of overstepping her authority and abusing the FTC’s power. With strong dissenting views of Lina Khan and the FTC under the Biden administration within each party, it is worth a closer examination of what the FTC has accomplished over the last four years to determine for ourselves whether the Khan has revitalized the antitrust movement or overstepped her powers.
Resetting Guidelines
A formative impact of the Khan administration was the new guidelines for mergers which the FTC and Justice Department released in December 2023 with the goal of safeguarding competition and improving economic opportunities for all Americans.7 In many instances, these guidelines restore authority in the review and challenging of merger cases stripped away by previous administrations . For example, the FTC is now allowed to designate a merger as illegal if it holds an undue or highly concentrated market share. This rule was used during the 1980s and 1990s but fell out of use with the 2010 Merger Guidelines, so the 2023 guidelines are restoring this power. The new guidelines similarly revitalize past authority to more directly protect competitors to major corporations who could be bullied or bought out by larger counterparts.8 Where controversy ensues and these guidelines differ from the past are in the broader scope afforded to the FTC in enforcing and litigating merger cases, allowing them to pick and choose useful guidelines and rules to bolster their individual cases. The FTC can also presume an illegal merger if it would create a “dominant” or monopolistic market position. These new merger guidelines have been met with pushback, especially from people who believe mergers can be economically beneficial and improve economic efficiency. Additionally, there is valid criticism of the guidelines as a return to a “the government always wins” mentality, giving the FTC an unfair overarching power over all mergers.9 In response to these critiques, I would respond that while in some cases mergers can be economically beneficial, the degree of dominance and consolidation we see from already large corporations are not examples of economic efficiency. As for the problem of a “government always wins” system, there are still cases where the FTC has failed to break up large mergers, such as a court ruling against the FTC’s motion to block Microsoft’s $68.7 billion purchase of gaming company Activision Blizzard, showing larger mergers still occur.10
Quality-of-Life Improvements
Beyond the world of corporate merger regulation, the Khan administration has fought for and succeeded in attaining a number of quality-of-life improvements for consumers and promoting competition. The first of these is the FTC ruling on non-compete agreements. Non-compete agreements are clauses in contracts prevent an employee from working for a competitor of a previous employer for a designated period after leaving their job. Initially intended to protect trade secrets, businesses have used non-competes in a predatory manner, for example, against workers like hairstylists or florists who do not work with proprietary information, making it prohibitive for workers to find work upon leaving their current job. This action in turn lowers job mobility, allowing companies to suppress wages.11 In response to this misuse, the FTC announced a rule to ban non-compete agreements nationwide, claiming that it will allow workers to change jobs, increase innovation, and foster new business formation, while also fighting wage suppression. During the comment period for the rule, 25,000 out of 26,000 comments were in support of the ruling to ban non-compete agreements, a ringing endorsement of the FTC’s action. While the ruling has been blocked by a district court in Texas, the FTC is in the midst of appeals and can still address non-compete disputes on a case-by-case basis. Regardless of its longevity, the ambition of the non-complete ban to empower the estimated 30 million workers affected by these agreements reflects a renewed commitment for worker protection from the FTC.12
Another quality of life issue the FTC has ruled on is a consumer’s “right to repair” their products without nullifying their product warranties. The FTC has sent letters to multiple companies whose warranty practices may be violating the Magnuson-Moss Warranty Act (MMWA), which allows the FTC to govern and enforce product warranties. Some companies have made their product warranties contingent on the owner using specific parts or service providers during repair for the warranty to hold, which is prohibited under the MMWA.13 By enforcing the right to repair, the FTC has not only benefitted consumers by expanding options and lowering costs for repairs, but also opened new market availability for repair companies.14 Once again, these simple yet important actions by the FTC help the common consumer lower costs and improve quality-of-life.
Finally, the FTC is benefitting consumer quality-of-life with its recent decision on a “click-to-cancel” rule for subscription services. This rule is aimed at making it easier for consumers to cancel unwanted descriptions by preventing businesses from making difficult or convoluted ways to unsubscribe. As part of this rule, negative option programs (subscriptions which renew if the consumer fails to take action to cancel the agreement15) will now be regulated by requiring sellers to have a consumer’s informed consent before using negative option programs, and sellers will be required to provide more information before receiving billing information. Most importantly, businesses will be mandated to have a simple way to cancel negative option programs. Lina Khan commented on this rule saying that it will save “Americans time and money,” and that “Nobody should be stuck paying for service they no longer want,” further emphasizing the FTC’s renewed focus on protecting consumers not just in words but in action.16
Combating the Pharmaceutical Industry
Along with general rule changes, the FTC under Lina Khan has targeted specific industries, with the pharmaceutical industry and its exorbitant drug pricing being a top priority. Their efforts include a lawsuit brought against the three largest prescription drug benefit managers (PBMs) for a harmful drug rebate system that has artificially raised insulin prices. In short, the FTC has charged these PBMs with excluding available lower priced insulin in favor of higher prices so that the PBMs can make more money as the middlemen between drug manufacturers and consumers. Furthermore, the FTC has threatened to go after drug manufacturers themselves, some of whom have increased the price of insulin by 1,200% over the last 25 years.17 Additionally, the FTC has combatted predatory medicine patent practices which are increasing costs for consumers, such as with asthma inhalers. An inhaler which costs $7 in France costs around $500 in the U.S. due to American companies’ patent rights for the inhaler device. In response, the FTC sent letters to four major inhaler makers, leading to three of them lowering the price to $35.18 These efforts extend to major individual contributors to the industry’s corruption such as Martin Shkreli, who was accused of using an anticompetitive scheme to increase the price of a life-saving drug from $17.50 to $750 per tablet. In 2022, Shkreli was banned from participating in the pharmaceutical industry and made liable for $64.6 million he made through his illegal means.19 While there are still many problems in the pharmaceutical industry, the contributions of the FTC have been an unquestionable win for consumer protection and healthy competition during the Khan administration.
Combating the Tech Industry
Outside of pharmaceuticals, the FTC has also gone after technology companies to protect consumers. One of the largest cases the FTC has taken up is a lawsuit against Amazon. Lina Khan had been a vocal critic of Amazon’s monopolistic power prior to her position at the FTC, and her opposition manifested in office as the FTC and 17 state attorneys general have sued the company for taking actions that prevent the growth of competitors and the emergence of future competitors to maintain multiple monopolies. The suit finds Amazon anticompetitive in two areas, the Amazon store itself and the marketplace services it sells to other companies. Tactics under scrutiny include Amazon reducing the visibility of online retailers with lower prices than Amazon within Amazone’s search results, making Amazon Prime eligibility conditional on sellers using Amazon services, search result prioritization for Amazon products over others of better quality, and exorbitant fees for sellers who rely on Amazon for business. Combined, these anticompetitive actions restrict competition and harm consumers by centralizing online marketplaces to one monopolistic provider. Thus, the lawsuit of Amazon is a major move by the FTC to uproot the monopolistic trend of online commerce.20
The FTC has also been active in the emerging world of artificial intelligence. With the speed at which AI has been developing, government regulation is struggling to catch up, but the FTC is working hard to try to maintain a regulated market and clamp down on bad actors. The agency has taken actions against multiple schemes to hype-up or sell AI technology that could harm consumers. For example, they have restricted AI tools that create fake reviews, claim to have law services, and run deceptive online stores. Khan herself has stated “The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books. By cracking down on unfair or deceptive practices in these markets, FTC is ensuring that honest businesses and innovators can get a fair shot and consumers are being protected.”21 Overall, government regulation has always lagged behind the tech industry, and Khan and the FTC are attempting to remedy that issue.
Success or Overstepping?
Despite the criticism of the FTC delegating itself too much power, the successes of the FTC over the last four years make it hard to view the Khan administration as anything other than a success. Whether or not the FTC overstepped their bounds, the benefits it has gained for consumers and the competition it has inspired are undeniably good and contribute to the FTC’s foundational mandate. Resetting merger guidelines to prevent corporate consolidation and anticompetitive deals was an invaluable step towards preventing the massive companies who dominate the economy from increasing monopolistic power, pushing out small businesses, and reducing competition. The quality-of-life improvements of fighting non-compete contracts, establishing a right to repair, and supporting click-to-cancel services will save consumers money and provide more freedom for personal economic choices. Finally, culling the massive pharmaceutical and technology industries and holding them accountable for harmful and predatory actions not only helps consumers and competition now, but also disincentivizes companies from using shady tactics in the future. As for the criticism levied against the FTC for ‘abusing its power,’ the fact that many of the tools and rules the FTC is using are revivals of tools and rules it had in the past allows one to argue the FTC is not overstepping its boundaries, but returning to the more hands-on approach to antitrust policy it once had. If policies and guidelines during the Regan administration weakened the FTC, then it only makes sense that new policies and guidelines under Biden’s presidency and Khan’s leadership of the FTC can restore its power. As for newer policies, there are plenty of legal mechanisms the courts, Congress, or the President could use to restrict the FTC if they thought it was overstepping its boundaries, and in some cases they have. That we have not seen abundant restrictions of the FTC is a testament to the good the FTC’s actions have done in protecting consumers and competition.
Looking to the future and the incoming Trump administration, while it is unlikely that Lina Khan will remain as the chairperson of the FTC, due to the Democratic antitrust fever and the support the Khan administration has had from some Republicans, it remains to be seen the extent to which the expanded powers of the FTC will be rolled back. Even without Khan, recent popular support for antitrust conviction has the chance to keep the aggressive stance of the FTC going. Furthermore, regulating the ever-expanding technology industry is a goal for both sides of the aisle, and as Khan’s time at the FTC has shown, the agency is one of the best ways to deal with regulating new industries in a timely manner. Whether you agree with the actions of Lina Khan and the FTC or not, the last four years have changed the face of consumer and competition protection, the antitrust movement, and the FTC for the foreseeable future.
- “Federal Trade Commission Act” Federal Trade Commission, www.ftc.gov/legal-library/browse/statutes/federal-trade-commission-act. ↩︎
- Stofferahn, Justin. “Corporate Consolidation Is Hurting Americans. Now Is the Time to Rein It In.” Washington State Standard, 5 Sept. 2023, washingtonstatestandard.com/2023/09/05/corporate-consolidation-is-hurting-americans-now-is-the-time-to-rein-it-in/. ↩︎
- “Americans Pay a Price for Corporate Consolidation.” The New York Times, The New York Times, 26 Aug. 2023, www.nytimes.com/2023/08/26/opinion/biden-lina-khan-ftc.html. ↩︎
- Primack, Dan. “Harris Faces Fight over Lina Khan’s Future.” Axios, Axios Media, 18 Oct. 2024, www.axios.com/2024/10/18/kamala-harris-lina-khan-ftc. ↩︎
- www.washingtonexaminer.com/magazine-washington-briefing/3198509/hed-kamala-harris-lina-khan-shaped-elephant-in-room-subhed-ftc-heads-aggressive-approach-left-many-corporations-feeling-like-every-move-being-watched-regulated/. ↩︎
- Dodd, Ethan. “JD Vance Hints Elon Musk, FTC Chair Lina Khan Could Be in Trump Admin: ‘I Agree with Them Both on Some Issues.’” New York Post, NYP Holdings Inc., 16 Oct. 2024, nypost.com/2024/10/15/us-news/j-d-vance-hints-elon-musk-and-lina-khan-could-be-in-trump-admin-i-agree-with-them-both-on-some-issues/. ↩︎
- “Federal Trade Commission and Justice Department Release 2023 Merger Guidelines.” Federal Trade Commission, 18 Dec. 2023, www.ftc.gov/news-events/news/press-releases/2023/12/federal-trade-commission-justice-department-release-2023-merger-guidelines. ↩︎
- Bolema, Ted. “Decoding the 2023 FTC and DOJ Merger Guidelines: Insights into Shifting Antitrust Enforcement.” Mercatus Center, George Mason University, 15 Feb. 2024, ↩︎
- Bolema, “Decoding the 2023 FTC and DOJ Merger Guidelines,” Mercatus Center. ↩︎
- Warren, Tom. “FTC v. Microsoft: All the News from the Big Xbox Courtroom Battle.” The Verge, Vox Media, 19 July 2024, www.theverge.com/23768244/ftc-microsoft-activision-blizzard-case-news-announcements/archives/2. ↩︎
- Ryan, Sean M. “Commentary: Noncompete Agreements Are Bad for Workers, Bad for Consumers, and Bad for the Economy.” The New York State Senate, 16 May 2023, www.nysenate.gov/newsroom/in-the-news/2023/sean-m-ryan/commentary-noncompete-agreements-are-bad-workers-bad. ↩︎
- “FTC Announces Rule Banning Noncompetes.” Federal Trade Commission, 23 Apr. 2024, www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes. ↩︎
- “FTC Warns Companies to Stop Warranty Practices That Harm Consumers’ Right to Repair.” Federal Trade Commission, 3 July 2024, www.ftc.gov/news-events/news/press-releases/2024/07/ftc-warns-companies-stop-warranty-practices-harm-consumers-right-repair. ↩︎
- “FTC Focus: Competition and the Right to Repair – Insights.” Proskauer, Proskauer Rose LLP, 28 June 2024, www.proskauer.com/pub/ftc-focus-competition-and-the-right-to-repair. ↩︎
- Goodrich, Brian J., et al. “The New Cancel Culture: The FTC’s ‘Click to Cancel’ Rule: Insights.” Holland & Knight, Holland & Knight LLP, 30 Oct. 2024, www.hklaw.com/en/insights/publications/2024/10/the-new-cancel-culture-the-ftcs-click-to-cancel-rule. ↩︎
- “Federal Trade Commission Announces Final ‘Click-to-Cancel’ Rule Making It Easier for Consumers to End Recurring Subscriptions and Memberships.” Federal Trade Commission, 16 Oct. 2024, www.ftc.gov/news-events/news/press-releases/2024/10/federal-trade-commission-announces-final-click-cancel-rule-making-it-easier-consumers-end-recurring. ↩︎
- “FTC Sues Prescription Drug Middlemen for Artificially Inflating Insulin Drug Prices.” Federal Trade Commission, 23 Sept. 2024, www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices. ↩︎
- Stahl, Lesley. “FTC Trustbuster Lina Khan: Feared in Boardrooms, Cheered on by Progressives – and Even Some Maga Republicans.” CBS News, CBS Interactive, 22 Sept. 2024, www.cbsnews.com/news/ftc-chair-lina-khan-60-minutes-transcript/. ↩︎
- “Statement on Second Circuit Order Upholding ‘Pharma Bro’ Martin Shkreli’s Lifetime Ban.” Federal Trade Commission, 23 Jan. 2024, www.ftc.gov/news-events/news/press-releases/2024/01/statement-second-circuit-order-upholding-pharma-bro-martin-shkrelis-lifetime-ban. ↩︎
- “FTC Sues Amazon for Illegally Maintaining Monopoly Power.” Federal Trade Commission, 26 Sept. 2023, www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintaining-monopoly-power. ↩︎
- “FTC Announces Crackdown on Deceptive AI Claims and Schemes.” Federal Trade Commission, 25 Sept. 2024, www.ftc.gov/news-events/news/press-releases/2024/09/ftc-announces-crackdown-deceptive-ai-claims-schemes. ↩︎