Republicans clash with FTC chief Lina Khan over morale, partisanship and ‘zombie votes’ at agency

Federal Trade Commission Chair Lina M. Khan has faced intense questions from Republicans on a Senate oversight committee about her leadership in enforcing federal antitrust laws.

While Democrats broadly backed Ms. Khan, a Biden appointee who took over as head of the FTC in June 2021, Republicans complained the commission moved far left under her leadership, hurting small businesses. by overstepping his authority, diminishing the morale of FTC staff and threatening a long tradition of bipartisanship on the five-member panel.

Utah Sen. Mike Lee, the top Republican on the Senate Judiciary Subcommittee on Antitrust and Competition Issues, has raised concerns that the agency has strayed from its primary enforcement mission. antitrust laws. Mr. Lee said the FTC under Ms. Khan has reduced enforcement and replaced it with small partisan actions that impose costs on businesses.

“What little we’ve seen from the agency has often been legally questionable and thoughtless,” Lee said. “What worries me is that at a time when there is broad bipartisan support for tougher antitrust enforcement, our antitrust agency … would defiantly avoid that collegiality and cooperation and sacrifice real enforcement for big bucks. flashy titles.”

In one case cited by critics, the commission recently voted 3-2 to file a lawsuit to stop Facebook from acquiring virtual reality app developer Within Unlimited. The FTC acted over objections from career staff and the two Republican appointees to the five-member commission.

Ms Khan defended her case, as did Jonathan Kanter, the assistant attorney general who heads the Justice Department’s antitrust divisions, who appeared alongside her.

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“Congress has charged the FTC with enforcing antitrust laws and promoting open markets and fair competition,” Ms. Khan said. “We are pursuing this mission with renewed vigor, ensuring that we faithfully discharge our legal obligations.”

Ms. Khan’s FTC has come under increasing scrutiny for what critics say was a decision to broaden and expand the FTC’s role beyond the commission’s historic boundaries to more aggressively restrict mergers and block commercial practices that it deems unfair.

These actions have sparked a number of lawsuits and legal challenges from companies and business groups.

The Chamber of Commerce sued the FTC in July for lack of transparency and accountability, which Chamber officials say increases uncertainty for businesses and stifles new investment.

The FTC sued retail giant Walmart for fraud through its money transfer services, which the agency said led to hundreds of millions of dollars being stolen from consumers by scammers. Walmart is seeking to have the lawsuit dismissed, arguing that the FTC lacks the constitutional authority to prosecute.

The FTC is also facing pushback from the auto industry over proposed new rules that would add significant new regulations for the sale of most cars, boats, motorcycles and recreational vehicles.

Morale issue

At Tuesday’s hearing, Republicans cited reports of poor employee morale at the commission, which they say plummeted after Ms Khan took office, according to a staff survey. of the FTC. Prior to Ms. Khan’s tenure, the FTC consistently ranked among the highest agencies in government-wide employee satisfaction surveys.

“Recent reports have revealed that staff morale and confidence in the FTC’s leadership have fallen to historic lows,” Lee said. “Regardless of your view of antitrust policy, everyone should agree that we need functioning antitrust agencies and I’m increasingly concerned that the FTC is no longer meeting that basic threshold standard.”

Ms. Khan told the panel that FTC staff were concerned about “uncertainty about what the future of work would be like” and said she took the negative survey results seriously.

“My team and I actively identified the source and took action,” Ms Khan said.

Republicans also questioned Ms. Khan about the practice of counting votes cast by an FTC commissioner after she left for a new job, which critics denounced as “zombie votes.”

Under Ms Khan, the commission used an arcane rule to record several votes cast by Democrat Commissioner Rohit Chopra before he left to lead the Consumer Financial Protection Bureau. Some of the votes were then used to give the Democrats a majority while the panel was also split.

“In my opinion, this practice is simply illegal,” Sen. Ted Cruz, Republican of Texas, told Ms. Khan.

Ms. Khan told Mr. Cruz the practice began in the 1980s. She said she believed about five of Mr. Chopra’s votes were used after he left the commission and were cast to endorse policy statements.

Senator Marsha Blackburn, Republican of Tennessee, said Republicans and FTC staff believe Ms. Khan’s plan to review past mergers adds another layer of uncertainty to the market.

“I’ve heard from some of the FTC’s Minority Commissioners who have said your actions are really hurting small and medium-sized businesses,” Ms. Blackburn said.

Ms. Khan said the FTC has the power to “review past transactions” and pointed out that the FTC sued Facebook over its past acquisitions under the Trump administration.

“As a rule, I commit to really focusing where we see the greatest harm, which often comes from the biggest corporations,” Ms Khan said.

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