For years, the US antitrust enforcers at the Federal Trade Commission have pledged only to go after companies that have harmed consumers. Now, under its new chair Lina Khan, the FTC is expanding its approach in a move that could make it easier to go after tech companies like Amazon (AMZN) that may offer attractive prices to customers, but have also been accused of harming small businesses, workers and innovation.
The FTC on Thursday voted 3-2 to rescind a 2015 policy document that restricted how officials could bring cases against alleged antitrust violators, meaning more corporate conduct could become subject to FTC investigations and lawsuits.
The 2015 policy statement, a voluntary commitment by the Obama-era FTC, assured the public that the agency would prioritize “consumer welfare” in its enforcement decisions. The FTC at the time also pledged to consider “business justifications” that might offset alleged harms to competition, in what amounted to a series of self-imposed limits on the scope of FTC authority.
By moving to undo those limitations, Khan has sent a powerful signal that regulators may soon more heavily scrutinize business practices whose allegedly harmful effects go beyond impacts to consumer prices. Conduct that harms innovation or workers could see renewed attention, said Charlotte Slaiman, competition policy director at the consumer group Public Knowledge and a former FTC official.
That could be bad news for Amazon. Various critics of the company have decried how the e-commerce giant allegedly mistreats its drivers and warehouse employees, abuses its market dominance in e-commerce and restricts innovation by dominating the smart home speaker market.
Amazon recently invited even more antitrust scrutiny with its proposed $8.45 billion acquisition of film studio MGM, a deal that will reportedly be reviewed by the FTC. Earlier this week, Amazon requested that Khan recuse herself from cases involving the company, noting that she has “on numerous occasions argued that Amazon is guilty of antitrust violations and should be broken up.” The FTC has not commented on the petition.
“Withdrawing the 2015 statement is only the start of our efforts,” Khan said at an open commission meeting, the first such event in over 20 years. (The FTC typically conducts its business behind closed doors.) Khan said in the coming months the agency will consider whether to issue new guidelines on what business practices will “warrant scrutiny.”
Khan’s opponents on the commission, Republican commissioners Noah Phillips and Christine Wilson, said the vote would usher in uncertainty for business leaders who had relied on the FTC’s guidance for years.
“Businesses want to follow the law, but they need to know what the law is,” Wilson said. “Are we concerned with the lack of clarity we would create for the business community if we rescind the policy statement?”
Khan, who has called for sweeping changes in the practice of antitrust law, has highlighted in prior academic writings how the commitment to a “consumer welfare” standard risks ignoring business practices that don’t appear to harm consumers but are nevertheless a danger to competition.
In theory, the consumer welfare standard is supposed to consider those types of harms, Slaiman said. But, in practice, courts have interpreted the law so narrowly as to, in some cases, focus exclusively on consumer prices.
“Rescinding the policy statement is not saying the FTC can do whatever it wants; it’s just removing this particular limitation the FTC had placed on themselves,” Slaiman said. “Now the FTC will be able to use its fuller statutory authority that Congress gave it.”