House Subcommittee Continues Review of the FTC at 100 in Effort to Modernize Agency for the Innovation Era

The House Commerce Committee’s Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Lee Terry (R-NE), continued its review of the Federal Trade Commission as it celebrates its 100th anniversary. The subcommittee heard from academic experts about their perspective on the FTC’s mission and authority and ideas to modernize the agency. The subcommittee is examining the commission’s mission, operating budget, and statutory authorities and what improvements are needed to help the agency protect consumers and promote competition in an ever-changing market.

• George Washington University School of Business Professor Howard Beales spoke to the broad authority and jurisdiction of the FTC and urged the commission to focus its resources and efforts on protecting consumers from identifiable harms to avoid unnecessary and potentially harmful regulation. “The Commission can reduce the risks of overregulation by focusing on real and identifiable harms. That is a proper role for consumer protection in general, and privacy regulation is no different. Regulation to prevent hypothetical problems, however, poses far greater risks that the next big innovation will be precluded, not because it would have caused a problem, but simply because no one had previously considered the possibility,” said Beales.
• Geoffrey Manne, Executive Director of the International Center for Law and Economics, explained the need for the commission to exercise regulatory restraint and embrace sound economic reasoning. He testified, “The most important, most welfare-enhancing reform the FTC could undertake is to better incorporate sound economic- and evidence-based analysis.”
• Witnesses also urged the commission to adopt enforcement guidelines under Section 5 of the FTC Act to help enhance the commission’s consumer protection authority and its ability to protect competition. University of Michigan Law Professor Daniel Crane explained that guidelines would also help judicial interpretation. He said, “Although guidelines issued by the Commission may not be legally binding, they can provide a set of principles that can be invoked initially before the commission and ultimately in court to limit the commission’s discretion. Given that the FTC acts principally as a law enforcement agency rather than as a legislative or judicial body, it is important that it be constrained by principles announced in advance that can be fairly contested in litigation and ultimately resolved by the courts.”