After nearly 100 years, the stars may finally be aligned so that the Federal Trade Commission can live up to its original promise. The FTC, a small agency created in 1914 during the Progressive Era, was endowed with a potent authority for promoting competition and consumer protection that it has never fully used. This includes investigative authority over virtually all businesses, backed by subpoena power and the capacity to demand reports of data that corporations would rather withhold from public view.
The FTC and its antitrust big brother, the Justice Department, have for generations competed, not partnered. Now the stage is set for a more productive collaboration, with the FTC taking more far-reaching and innovative approaches to corporate giantism. Recently President Obama’s chief antitrust enforcer at the Justice Department, Christine Varney, announced a return to aggressive antitrust enforcement. What was not generally noted by the press was that Varney had previously served as a Democratic FTC commissioner and has a deep commitment to the agency’s broad mandate. After decades of Justice Department antitrust chiefs looking down their noses at the FTC’s efforts to expand its antimonopoly reach, the agency now has an ally and partner at Justice.
Under the Bush administration, the FTC performed useful, if modest, tasks and emerged with its competent and committed investigative and prosecutorial staff intact and uncorrupted. Under its chair, William Kovacic, a veteran antitrust enforcer, the FTC went after anticompetitive mergers, recession-spawned debt-collection abuses and Internet fraud, and stubbornly refused to cooperate with the Bush Justice Department’s efforts to eviscerate antitrust enforcement.
The FTC has even more progressive leadership now. Its new chair, Democrat Jon Leibowitz, appointed by Obama from among the sitting commissioners (thus, not needing Senate confirmation), has been a vigorous proponent of strong agency action in critical areas of consumer protection, such as children’s advertising that promotes obesity, and more vigorous antitrust action. This FTC has brought action to stop brand-name pharmaceutical companies from paying generics to stay off the market as part of their patent settlements. These agreements cost consumers billions of dollars. The three other sitting commissioners–two Republicans and one independent–believe in the agency’s mission and are prepared to take progressive, even radical, action. For example, one of the Republicans, Thomas Rosch, a lively relic from the days when Republicans believed in competition and rigorous antitrust enforcement, recently exhorted the FTC to use its broad antitrust mandate to break up those “too big to fail” corporations that have bedeviled the Obama administration’s economic recovery strategies. “Antitrust laxity during an economic recession can result in a deepening of economic contraction,” Rosch declared. The progressive economic adage “Bigness can be badness,” heresy under the Bush administration, is back.