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Lina Khan’s FTC takes first step to expanding antitrust enforcement

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FTC Commissioner nominee Lina M. Khan testifies during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington, DC, April 21, 2021.

Graeme Jennings | AFP | Getty Images

Just over two weeks since being sworn in as FTC chair, progressive antitrust scholar Lina Khan took a first step toward expanding the agency’s ability to crack down on unfair competition practices.

In a 3-2 vote along party lines, the Democratic-majority commission opted at an open meeting Thursday to revoke a 2015 policy statement. The statement essentially limited the types of competition practices the agency would seek to challenge under Section 5 of the FTC Act.

The decision to revoke the policy will give the FTC more leeway to pursue competition claims that may not fall squarely within the two existing antitrust statutes: the Sherman Act and the Clayton Act, which govern unlawful monopolization and mergers, respectively.

“In practice, the 2015 statement has doubled down on the agency’s longstanding failure to investigate and pursue unfair methods of competition,” Khan said.

The vote could have significant implications on antitrust cases in the tech industry and elsewhere. The FTC must decide within the month if and how to move forward with its antitrust lawsuit against Facebook after a federal judge dismissed its initial complaint. The judge gave the FTC 30 days to file an amended complaint, but the agency could choose instead to bring the case before its internal administrative law judge under Section 5, a broad tool that gives the agency the authority to challenge “unfair methods of competition.”

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Khan argued in her 2017 Yale Law Journal article, “Amazon’s Antitrust Paradox” that the existing framework for antitrust cases focused around the consumer welfare standard is inadequate to assess digital monopolies that own platforms on which their rivals rely.

The consumer welfare standard looks at whether a particular business practice harms consumers, often defined by whether prices go up or down over the long term. That standard can be less relevant in digital markets, which often offer free products or discounted prices subsidized by other parts of the business.

Khan made clear in her remarks Thursday that the policy statement vote should be considered a first step toward renewing the agency’s antitrust enforcement prowess.

“Withdrawing the 2015 statement is only the start of our efforts to clarify Section 5 and apply it to today’s market,” she said.

Democratic Commissioner Rohit Chopra said the vote to revoke would help the FTC “move past this period of perceived powerlessness.”

The two Republican commissioners, Noah Joshua Phillips and Christine Wilson, objected to the motion in part because of the lack of public comment ahead of the vote and for fear that revoking the statement would reduce clarity for businesses and lead to overreach of the FTC’s authority.

Khan noted that the 2015 statement itself did not have a public comment period before it passed. She also said the commission would later consider providing new guidance to businesses on what types of practices could be subject to Section 5 challenges.

WATCH: How US antitrust law works, and what it means for Big Tech

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