Yesterday the Senate Commerce Committee held an oversight hearing on strengthening the FTC's tools to protect consumers. Today it held a confirmation hearing for President Biden's nominee to the FTC, Professor Lina Khan, and others. U.S. PIRG supports both Professor Khan's confirmation and strengthening FTC tools. Also, at the end of this post, we describe how you can support some work the FTC can and should do today, without Congressional action, to protect our right to repair our own stuff.
In an endorsement letter to the committee, we described Professor's Khan's qualifications. From the letter:
"We believe Ms. Khan’s expertise and experience as a leading voice in antitrust will be a great asset to the FTC at this critical moment. Lina Khan’s leadership and rigor as an investigator was evidenced in the groundbreaking, bipartisan House Judiciary inquiry into Big Tech competition and monopoly issues. From companies undermining our ability to fix our own devices, to undermining competition in the digital marketplace, to overly-consolidated firms undermining farmers and producers, we know we have problems to fix in terms of competition and antitrust. We believe Ms. Khan is willing and capable to hold Big Tech accountable, delivering results for farmers, consumers and nascent competitors who are being squeezed by overly concentrated markets."
Professor Khan's scholarly writings have already rattled BigTech and many in the traditional antitrust bar. Both back the failed antitrust enforcement theories that had allowed BigTech to grow into a powerful oligopoly that dominates the economy by collecting big data on consumers, which it then uses to manipulate our choices and nudge us into buying more stuff that we don't need. At the same time, BigTech uses data collected on the companies that interact with its platforms to decide which nascent competitors to buy and which ones to kill, further building its market power and stifling innovation.
Professor Khan's 2017 paper "Amazon's Antitrust Paradox" rebuts the 1980s book by Judge Robert Bork, "The Antitrust Paradox," and its central thesis that a generation of corporate antitrust experts and enforcers, and now BigTech, has relied on. Bork's claim summarized: consumer welfare is measured only by corporate efficiency. The argument they make is that big is not necessarily bad (merging), since it purports to promote efficiency. Followers of Bork, called Chicago School theorists, argue, “We 'prove' this by showing prices didn’t go up.”
Yet, as another antitrust scholar, Sally Hubbard, explains in her own recent book, "Monopolies Suck: 7 Ways Big Corporations Rule Your Life and How To Take Back Control":
“The Chicago School takeover of antitrust has actually led to higher prices for consumers by allowing monopolies [and duopolies and oligopolies] to rule America … even as it promised the opposite result.” (One minute video of Sally Hubbard on the consumer welfare standard.)
A variety of assaults on Professor Khan's scholarship, some seeking to denigrate it as "hipster antitrust," have failed. Amazon even funded a former FTC Chairman's legal paper that attempted a takedown. The death by a thousand paper cuts did not work. Professor Khan must be confirmed to promote fair competition. Reining in BigTech will also protect consumer privacy, which is at risk since BigTech has chosen to use our personal data to build its own power without giving us any control.
Yesterday's oversight hearing on strengthening the FTC featured the 4 sitting commissioners. The proximate reason for the hearing was that the Supreme Court is widely expected in AMG v. FTC to re-interpret the FTC's longstanding "Section 13(b)" authority to eliminate the FTC's ability to disgorge illegally-obtained profits to compensate consumers who were harmed. U.S. PIRG supports strengthening all of the FTC's authorities to compel civil penalties and provide victims with restitution. Section 13(b) authority needs to be protected or restored if the Supreme Court eliminates it. In addition, we have long supported strengthening the FTC's core Section 5 authority against unfair or deceptive practices. In most cases, a company gets a "free bite of the apple" for violating the law and can only be fined if it later violates the terms of the settlement order.
Of course, we also echo points made by Commissioner Rohit Chopra during the hearing, including that the FTC has failed to use all of its existing powers to protect consumers and police the marketplace. From his opening statement:
"Second, we must make sure that the FTC is meaningfully deterring wrongdoing in the first instance. The Commission often agrees to no-money no-fault settlements, even in cases of egregious misconduct, like fake review and Made-in-USA fraud, where bad actors simply agree to follow the law going forward. And when the FTC does seek money from wrongdoers, it is often insufficient."
U.S. PIRG strongly backs the confirmation of Commissioner Chopra to head the CFPB. We understand that the President has asked that the Senate's vote on his confirmation be delayed at least until nominee Khan is confirmed to the FTC, to avoid a situation where acting chair Rebecca Slaughter would have no members of her party on the FTC with her.
Finally, I noted that there are other things that the FTC can and should do without Congressional action. Recently, U.S. PIRG's Right To Repair campaign petitioned the FTC to take actions to enforce the Magnuson-Moss Act against companies claiming falsely that consumers who attempt self-repair or hire independent repair businesses void their warranties. Learn more here. Take action to support our petition here.
Cover photo of "Michael Lantz's Man Controlling Trade" (outside the FTC) by Steve Fernie, Some Rights Reserved.