Reforming the Federal Trade Commission through better process

The Federal Trade Commission (“FTC” or “Commission”) has been the chief consumer protection and competition agency in the United States for over 100 years. During that time, this “uniquely compelling experiment in economic regulation” has had mixed results. While the agency and the consumers it represents have enjoyed some tremendous victories along the way, there have also been some notable failures and missteps, which have resulted in numerous course corrections from the courts and Congress.

Such moments of conflict and transformation often followed periods of disruptive technological innovation, when business models, consumer habits and American lifestyles were undergoing tremendous change. Arguably, we are in a similar period today, as advances in digital services, broadband connectivity and smartphone adoption continue to create new markets and disrupt existing ones—all of which dramatically changes the ways consumers behave and companies do business. In recent years, such changes have generated numerous conflicts and there are serious concerns that the FTC has not been handling them appropriately. Moreover, in the near future, the FTC will once again be tasked with regulating the practices of broadband providers and policing any violations of Net Neutrality that threaten to harm consumers or competition. Advances in artificial intelligence, automation and blockchain technologies will also surely present additional challenges for the FTC going forward.

Accordingly, it is imperative that the agency’s processes are in good working order. While its missteps could be corrected by the courts, their limited scope of review may allow deficiencies to persist for longer than they should. For this reason, a more direct path to reform is for Congress to amend the FTC Act and implement changes to the agency’s processes directly. To this end, numerous reform bills have recently been proposed. However, a full review of these is beyond the scope of this study, which instead seeks to focus specifically on the FTC’s abuse of consent decrees and the marked benefits that would be reaped if Congress were to circumscribe their use. Such an action would generate significant benefits for the regulatory environment as a whole because litigation of cases drives evolution and development of the law over time, and thus provides increased certainty for both industry and consumers about how the FTC’s broad standards apply in different circumstances.

Image by Roman Babakin


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