The Federal Trade Commission (FTC) announced April 14 that it has “launched a public inquiry into the impact of federal regulations on competition, with the goal of identifying and reducing anticompetitive regulatory barriers.” A request for public comment (RPC) on the inquiry has also been published in the Federal Register.
Bravo.
The inquiry will not be conducted in isolation. The RPC notes that it is being conducted pursuant to President Donald Trump’s April 9 executive order on “Reducing Anti-competitive Regulatory Barriers.” The U.S. Justice Department (DOJ) has also initiated a parallel effort with the March 27 launch of its Anticompetitive Regulations Task Force, which seeks “to advocate for the elimination of anticompetitive state and federal laws and regulations that undermine free market competition and harm consumers, workers, and businesses.”
Bravi.
As the RPC notes:
Appropriately tailored economic regulations can play an important role in ensuring that markets function efficiently. Often, however, regulations become unnecessarily onerous. Rather than serving the American people, such regulations can operate to exclude new market entrants, protect dominant incumbents, and predetermine economic winners and losers. Regulations that have the effect of reducing competition, entrepreneurship, and innovation—and thereby holding back the American economy—should generally be eliminated or modified.
Indeed. And there are some regulations that don’t just “become” that way; indeed, there are some regulations (and regulatory provisions) that were designed that way, working to protect competitors under the guise of protecting consumers.
That’s hardly a new observation. One can see articulations of the “economic theory of regulation” (ETR) in the 1970s by George Stigler, Sam Peltzman, and others for the law & economics roots. And the notion that regulation can, at least sometimes, be a form of rent seeking traces back further still. For a more recent treatment, see John Vernon, Joseph Harrington, & Kip Viscusi; for a brief overview, see my entry on “Advocacy” in the Sage Encyclopedia of Political Behavior.
The proof will be in the pudding (or the proof of the pudding will be in the eating). Still, these are promising endeavors, and there’s much good that might come of them. They don’t really represent innovations in the ordinary sense of the term. Regulatory barriers to competition have been a matter of some concern to the federal antitrust agencies since well into the last century, as have agency efforts to advocate for regulatory reform.
Indeed, the FTC Act—the FTC’s establishing statute—expressly contemplates some version of competition research and advocacy as part of the agency’s statutory mission, and it has been since the agency’s inception in 1914. In varied forms, those projects have a 100-year-plus history, and the FTC has maintained a distinct program of competition advocacy since at least the early 1980s.
As with many things in agency law, there’s a literature for that. Useful discussions can be found in, for example, articles by James Cooper, Paul Pautler, & Todd Zywicki, Maureen Ohlhausen, Andrew Gavil, Arnold Celnicker, and me, and receive significant attention in Paul Pautler’s “A History of the FTC’s Bureau of Economics” and in former FTC Chairman William Kovacic’s study “The Federal Trade Comission at 100: Into Our Second Century.”
None of this is to say that the new endeavors are old hat. For one thing, such advocacy waned—and “bigly”—under the last administration. It was suspended while former Commissioner Rebecca Kelly Slaughter served as acting chair. And it remained that way during the first part of Lina Khan’s tenure as chair, although it returned, in limited fashion, with, e.g., some welcome advocacy against certificates of public advantage (COPAs) (here and here). Those efforts continued prior work by the FTC and its staff against COPA statutes and regulations, which seek to immunize anticompetitive health-care acquisitions against federal antitrust scrutiny. And it’s gratifying to see the FTC under Chair Andrew Ferguson build on decades of staff work in reviving the commission’s advocacy against anticompetitive certificate-of-need (CON) regulations.
The DOJ Task Force announcement recognizes that the Antitrust Division had its own competition-advocacy program. And, indeed, competition advocacy could be especially effective when issued jointly by the FTC and DOJ.
Renewing, and building on, prior advocacy initiatives is a sensible start. One hopes, moreover, that the endorsement of the White House, along with the RPC and the DOJ’s task force announcement, signal new interest and, perhaps, the devotion of staff resources needed to bring new life to the once-vibrant competition-advocacy program. And, of course, renewed interest and resources can yield new issues, information, and perspectives, as well as new advocacies.
A tour of the sources above will show that competition advocacy addressed both federal and state restrictions on competition, which included restrictions in statutory law, regulatory codes, and the administration of those statutory and regulatory provisions. The executive can (and should) hold special sway with federal agencies, but experience suggests that regulatory reform is not necessarily easy at the federal level, or futile in the states.
On that point, I offer not just three cheers, but one caution. Regulatory reform, even with legislative and executive support, can be tough sledding for several reasons (including, but hardly limited to, those noted by Stigler, Peltzman, and others in the ETR). The RPC, DOJ task force, and the executive order could well come to naught—or rather little—if the agencies and administration do not play the long game (or if they try to play it with inadequate resources).
New advocacies, building on new research and enforcement experience, would be most welcome. Still, building on an established base is a sensible place to start.
In that regard, it’s worth highlighting a report from the first Trump administration: “Reforming America’s Healthcare System Through Choice and Competition.” That report was issued by the departments of Health and Human Services, Treasury, and Labor, but I’m revealing no secrets in noting that FTC staff from the Bureau of Economics, the Office of Policy Planning, and the General Counsel’s Office contributed draft material, as well as editorial comments.
On the theory that regulatory reform begins at home, here are a few suggestions for the FTC.
Build on Prior Efforts
To some extent, that’s already begun with advocacies regarding state COPA and CON regimes. On those, and other issues, research and policy analyses can be updated without starting at zero.
Excessive state occupational regulations are another area where the FTC has a well-developed base from which to launch new advocacy efforts. In addition to a considerable body of academic economic literature, there are FTC economic and policy reports (here and here); numerous examples of advocacy comments (among many others, here, here, here, and here); testimony before the Senate and the House (here and here); and diverse initiatives under the Economic Liberty Task Force convened by Maureen Ohlhausen when she was acting chair of the FTC.
Staff can also review advocacy topics from the past decade or two with an eye toward issues that might well be revived, and what it would take to bring them up to date. Indeed, building on past interagency cooperation—such as the joint FTC/DOJ hearings that led to the joint 2004 report “Improving Health Care: A Dose of Competition.” For health-care competition advocacy, the previously mentioned 2017 “Choice and Competition” report might be an excellent place to start.
A Small Point
Under Lina Khan’s leadership, a number of earlier efforts were “stickered” with pseudo-warning labels—akin to those mandated for cigarettes—that cautioned policymakers against relying on such dated materials.
Everybody knows that many things have changed since 2004. But “many things” is not elliptical for “everything,” and the warning labels convey no real information about what’s fundamentally different in markets, regulations, or research to warrant such broad caution.
With more recent advocacy documents, such as these submitted to the Centers for Medicare and Medicaid Services (CMS) in 2014 about “any willing provider” and “freedom of choice” provisions, the virtual warning labels seem arbitrary, if not wholly political. Here’s a suggestion for a light lift: just have the fake stickers removed and publish new positions as research and enforcement experience warrant.
True, it’s not being enforced, given a memorandum and order by Judge Ada E. Brown of the U.S. District Court for the Northern District of Texas. Judge Brown set aside the noncompete rule and ordered that it “shall not be enforced or otherwise take effect on its effective date of September 4, 2024 or thereafter.”
It’s also true that the 5th U.S. Circuit Court of Appeals has, at the FTC’s request, stayed the agency’s appeal of the district court decision. Similarly, the 11th U.S. Circuit Court of Appeals has stayed the agency’s appeal of a decision from the U.S. District Court for the Middle District of Florida that also enjoined the rule’s enforcement.
Most critics of the rule recognize that noncompete agreements can be anticompetitive under the right facts and circumstances. Here are comments from the International Center for Law & Economics (ICLE) and various scholars of law & economics, and here’s an article of mine on the law and pertinent research on physician noncompete agreements.
Law-enforcement actions that target anticompetitive noncompete agreements are well within agency authority and capacity. But research and precedence also suggest that there are facts and circumstances under which noncompete agreements can provide benefits to employees and competition—and not just benefits to employers, whether or not those employers enjoy monopsony power in certain labor markets.
Moreover, rules are not self-enforcing, and the FTC, as presently constituted, cannot possibly enforce a rule of such breadth as the one that the commission adopted. All of that is apart from the likelihood that the FTC’s authority to issue a general competition rule (or, at least, a general competition rule of the scope of the noncompete rule) will not survive at the appellate level.
This is a rule that was adopted on a pure party-line vote, with dissents from now-Chairman Ferguson and Commissioner Melissa Holyoak detailing a number of these concerns about the rule. The simplest and most procompetitive course of action would be to ditch the rule and use the commission’s law-enforcement authority to address genuinely anticompetitive and harmful noncompete agreements.
Hart-Scott-Rodino (HSR) Rules and Form
As I wrote here, and as Ferguson and Holyoak wrote in concurrence, the final rule (amendments) to the HSR form and regulations published in October 2024 represented both a compromise and a vast improvement over those that had been proposed in 2023. The rule is now in force, but HSR reform is periodic, and the rule should also be considered a work in progress.
At the moment, rather than suggest any single revision (even though I have some in mind), I’ll simply suggest that the commission attempt to track the costs and benefits of the changes adopted, with an eye toward reporting that may influence future changes to the benefit of both competition enforcement and legitimate competition.
Guidance that Can Inform Enforcement
For now, I’ll skip over the merger guidelines jointly adopted by the FTC and DOJ in December 2023. As I explained recently here, I understand Chairman Ferguson’s reasons to leave them be for now, even as I would revise them if it were up to me.
Setting that issue aside, there can be no good policy reason to maintain the FTC’s November 2022 policy statement on unfair methods of competition. It is, as my ICLE colleague Gus Hurwitz and I wrote in an ICLE issue brief, untethered from consumer welfare and the rule of reason.
It is a fuzzy and wrong-headed account of the law, and it is far more likely to confuse the antitrust bar and the business community than it is to provide useful guidance. It is, moreover, likely to confound, rather than enhance, enforcement of the FTC Act. And I find it hard to believe that Ferguson, Holyoak, or newly appointed Commissioner Mark Meador think well of it. Rescind it.
Finally, a Bit Further Afield
And in another matter that has, for now, been pushed aside by the courts, the FTC should advocate that the Federal Communications Commission (FCC) rescind its April 2024 order reclassifying broadband service as a Title II telecommunications service. There is an ample body of literature, dating back well over a decade, to support such reform. As my ICLE colleagues Gus Hurwitz and Eric Fruits wrote in 2024:
Title II’s comprehensive regulatory framework threatens to commoditize broadband by banning practices like paid prioritization, zero-rating, and usage based pricing, thereby reducing consumer choice and stifling innovation. Such heavy-handed regulation is unnecessary given the increasing competition in broadband markets from new technologies like 5G and satellite internet. Title II common carrier regulation is an outdated regulatory model ill-suited for modern broadband services and may do more harm than good for consumers.
And here’s an FTC report on “Broadband Connectivity Competition Policy” from way back in 2007. As I wrote in “Net Neutrality and Broken Records,” the FCC has been flip-flopping on related issues since at least 2005. That agency, and competition, would be better off if this classification were once and for all laid to rest. And while the 6th U.S. Circuit Court of Appeals struck down the FCC’s April 2024 order in January of this year, a formal determination from the agency would still be appropriate.
That’s really just the tip of the iceberg when it comes to the potential for procompetitive regulatory reform. But chipping away is a commendable project, and this is a start.
