In recent comments, Ohio Senator JD Vance praised Federal Trade Commission (FTC) chair Lina Khan for her performance, stating she was “doing a pretty good job.” However, a deeper look into Khan’s tenure reveals significant controversies and criticisms. The House Judiciary Committee recently released a report that paints a starkly different picture, highlighting alleged mismanagement and disregard for the FTC’s professional staff’s advice. In a new piece in Real Clear Markets, Market Institute Senior Fellow Norm Singleton explores the implications of Khan’s leadership style and its alignment with Senator Vance’s views on antitrust enforcement, examining how their approach could impact consumers, businesses, and the broader economy.
Singleton writes:
“Ohio Senator JD Vance recently commented that Federal Trade Commission (FTC) chair Lina Khan was “doing a pretty good job.” Senator Vance must not have heard about the House Judiciary Committee’s report detailing Khan’s mismanagement of the agency. Using subpoena documents and transcribed interviews with FTC staff, the report explores how Khan regularly ignores the advice of FTC’s professional staff.
One reason Khan may ignore the FTC’s staff is because it favors the consumer welfare standard, which judges a business’s actions based on how those actions affect consumers. Khan (and Vance) favor a holistic approach that considers the interests of all “stakeholders.” This holistic approach does not provide clear guidance for enforcers. Khan and her allies view this as a feature, not a bug, because it allows federal bureaucrats and lawyers to challenge any and all mergers and acquisitions, and force businesses to prioritize pleasing Khan above serving consumers. The open-ended nature of Khan’s approach may help explain why FTC members feel that Khan does not provide the staff with clear directions.
Instead, as one FTC manager put it, Khan’s “stated objectives sound more like progressive buzzwords than actual direction.” Under Khan’s leadership, the FTC has filed a record number of lawsuits and “second requests.” The second requests are, as the name suggests, requests for more information from companies pre-filing permission for a merger or acquisition. Khan’s FTC has suffered a number of high-profile losses. This does not bother Khan, who said in an April 2021 speech shortly after becoming FTC chair that there are huge benefits to bringing “cases the FTC was likely to lose” since those losses would show Khan’s allies in Congress where to make changes in the antitrust statutes.
Being forced to be part of Khan’s “lobbying by litigation” strategy is no doubt one reason why, under her direction, the FTC has gone from being rated one of the best agencies in the federal government to work for to one of the worst.
However, Senator Vance seems to share Khan’s belief that government must aggressively protect Americans from big business, particularly big tech, and that therefore the consumer welfare standard must be abandoned in favor of a more aggressive approach to antitrust. What Senator Vance and Chair Khan overlook is how their preferred approach to antitrust will harm not just workers and investors, but consumers as well. For example, Amazon abandoned their plan to acquire iRobot because it was clear that EU antitrust regulators would never approve the deal. One reason the EU regulators may have been so determined to block the deal was that they were consulting with the FTC. After Amazon withdrew from the acquisition deal, iRobot laid off half their workforce. Those workers could have helped Amazon develop new products, but instead, thanks in part to JD Vance’s heroine, they are now unemployed.
The Amazon-iRobot case is not the only example of the FTC having a detrimental effect on American workers. Another example is the FTC’s efforts to block the merger between grocery stores Kroger and Albertsons. This merger will better enable Kroger and Albertsons to better compete with Walmart, Costco, and other big box retailers. Khan is actually working to make the grocery market less competitive, which will raise prices, lower quality, and reduce employment.”
