The Many Abuses of Lina Khan’s FTC Christine Wilson’s resignation highlights the agency’s bad turn.
Federal Trade Commission Chair Lina Khan is breaking sundry regulatory norms in her rush to remake modern antitrust law, as commissioner Christine Wilson details nearby in explaining her resignation. Ms. Khan’s norm-busting ironically may make the FTC more vulnerable to legal challenges that eventually weaken its powers.
President Biden first broke political norms by installing Ms. Khan as FTC Chair immediately after the Senate confirmed her by a 69-28 vote to serve on the commission. It’s customary for a President when nominating members to independent agencies to announce at the same time if they will serve as chair. Mr. Biden didn’t.
The Chair has considerable power to control hiring, direct investigations and set the agenda. Many Senate Republicans might have opposed Ms. Khan as Chair because of her long record agitating to replace the antitrust consumer-welfare standard that Robert Bork helped develop in the 1970s.
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After her elevation, Ms. Khan quickly expanded her power. On a series of 3-2 votes, Democratic commissioners supplanted the agency’s chief administrative law judge who had long presided over fact-finding and rule-making. They also scrapped a requirement for a commission majority vote before staff can launch an investigation.
She then abused an obscure voting rule in the autumn of 2021 to let former Democratic commissioner Rohit Chopra cast pivotal votes even after he had left the agency to head the Consumer Financial Protection Bureau. These “zombie” votes allowed Mr. Chopra to break the agency’s then 2-2 partisan split, including on a major shift in merger policy.
To advance the progressive agenda, she has also breached her ethical obligations. She assured Senators during her confirmation hearing that she would “seek the guidance of the relevant ethics officials at the agency and proceed accordingly” if she were asked to recuse herself from a matter.
Federal ethics rules require that executive-branch employees recuse themselves if “a reasonable person with knowledge of the relevant facts would question his impartiality in the matter.” That fits Ms. Khan’s situation on many issues. Prior to joining the FTC, she called for the government to break up Big Tech companies and block future acquisitions.
In 2017 she wrote to then-acting FTC Chair Maureen Ohlhausen asking the agency “to prohibit mergers between Facebook . . . [and] other new and promising products and services.” The letter stated that Meta “has become too big and complex for any executive team to manage responsibly” and that all transactions involving Meta should be blocked.
Yet Ms. Khan declined to recuse herself from the FTC review of Meta’s acquisition of virtual reality app developer Within Unlimited. As Ms. Wilson wrote in a dissent, Ms. Khan either did not “seek the guidance of the relevant ethics officials at the agency and proceed accordingly” or “asked for guidance and then ignored the recommendation.”
Democratic commissioners Rebecca Slaughter and Alvaro Bedoya required heavy redactions of Ms. Wilson’s statement, so we can’t know what ethical advice Ms. Khan received. Lack of transparency appears to be the new norm at the agency.
The FTC invoked agency deliberative privilege to hide documents sought by Meta in legal discovery that are crucial to its defense in the agency lawsuit seeking its divestment of WhatsApp and Instagram. Yet the FTC shared these same documents with the House Judiciary antitrust subcommittee investigating Big Tech, where Ms. Khan was once majority staff counsel. Bloomberg reported that she overruled agency staff who recommended against bringing the Meta-Within lawsuit. Democrats would be screaming from the rooftops if a Republican appointee behaved as Ms. Khan has.
Ms. Khan’s bias and lack of transparency undermine due process for defendants and bolster arguments made by some companies in legal challenges to the FTC’s constitutional structure, statutory powers and administrative proceedings. The deck is stacked against business under Ms. Khan.
The Supreme Court in Humphrey’s Executor (1935) upheld restrictions on the President’s removal authority of FTC commissioners on the premise that the agency was an “administrative body” that exercised only “quasi-legislative or quasi-judicial powers.” But Ms. Khan is exercising prosecutorial power while sidelining staff and fellow commissioners.
Ms. Wilson has decided to stop indulging the conceit that Lina Khan’s FTC is independent and impartial. When will the courts?
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