Federal Trade Commission Chairwoman Lina Khan faced intense questioning from Republicans on a Senate oversight panel delving into her leadership over enforcement of federal antitrust laws.
While Democrats were largely supportive of Ms. Khan, a Biden appointee who took the helm of the FTC in June 2021, Republicans complained that the commission has shifted far to the left under her leadership, hurting small businesses by overstepping its authority, diminishing morale among FTC staff and threatening a long tradition of bipartisanship on the five-member panel.
Utah Sen. Mike Lee, the top Republican on the Senate Judiciary subcommittee dealing with antitrust and competition issues, cited concerns the agency has strayed from its primary mission of enforcing antitrust laws. Mr. Lee said the FTC under Ms. Khan has reduced enforcement and replaced it with petty, partisan actions that impose costs on businesses.
“What little we have seen from the agency has frequently been legally questionable and ill-considered,” Mr. Lee said. “What’s concerning to me is at a time when there’s broad bipartisan support for stronger antitrust enforcement, our antitrust enforcement agency… would defiantly eschew that collegiality and cooperation and sacrifice actual enforcement for flashy headlines.”
In one case cited by critics, the commission recently voted 3-2 to file a lawsuit to block Facebook from acquiring the virtual-reality app developer Within Unlimited. The FTC acted over the objections of career staff and the two Republican appointees on the five-members commission.
Ms. Khan, 33, defended her record as did Jonathan Kanter, the assistant attorney general who heads the Justice Department’s antitrust divisions, who appeared alongside her.
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“Congress charged the FTC with enforcing the antitrust laws and promoting open markets and fair competition,” Ms. Khan said. “We are pursuing this mission with renewed vigor ensuring that we are faithfully discharging our statutory obligations.”
Ms. Khan’s FTC is under increasing scrutiny for what critics say is a move to expand and extend the role of the FTC beyond the commission’s historic boundaries to more aggressively restrict mergers and block business practices it deems unfair.
The actions have triggered a number of lawsuits and legal challenges from businesses and business groups.
The Chamber of Commerce sued the FTC in July over a lack of transparency and accountability, which, Chamber officials said, increases uncertainty for businesses and holds back new investments.
The FTC has sued retailing giant Walmart for fraud through its money transfer services, which the agency said led to hundreds of millions of dollars being stolen from consumers by scam artists. Walmart is seeking to have the lawsuit tossed, arguing the FTC does not have constitutionally valid authority to sue.
The FTC is also facing pushback from the auto industry over proposed new rules that would add significant new regulations for the sale of most cars, boats, motorcycles and RVs.
Questions of morale
In Tuesday’s hearing, Republicans cited reports of poor employee morale at the commission, which they say plummeted after Ms. Khan took over, according to a survey of FTC staff. Before Ms. Khan’s tenure, the FTC routinely scored among the highest agencies in government-wide employee satisfaction surveys.
“Recent reporting revealed that staff morale and faith in FTC leadership has sunk to historic lows,” Mr. Lee said. “Whatever your view of antitrust policy, everyone should agree that we need functioning antitrust enforcement agencies and I increasingly worry that the FTC no longer meets that basic threshold standard.”
Ms. Khan told the panel the FTC staff are concerned about “the uncertainty of what the future of work would be,” and said she is taking the negative survey results seriously.
“My team and I have been aggressively identifying what the source is and taking action,” Ms. Khan said.
Republicans also questioned Ms. Khan over the practice of counting votes cast by an FTC commissioner after he left for a new job, which critics have denounced as “zombie votes.”
Under Ms. Khan’s leadership, the commission used an obscure rule to record several votes cast by Democratic Commissioner Rohit Chopra before he departed to head the Consumer Financial Protection Bureau. Some of the votes were then used to give Democrats a majority while the panel was evenly split.
“In my view, this practice is plainly illegal,” Sen. Ted Cruz, a Texas Republican, told Ms. Khan.
Ms. Khan told Mr. Cruz the practice began in the 1980s. She said she believed about five of Mr. Chopra’s votes were used after he left the commission, and were cast to approve policy statements.
Sen. Marsha Blackburn, a Tennessee Republican, said Republicans and staff on the FTC believe Ms. Khan’s plan to reexamine past mergers is adding another layer of uncertainty to the marketplace.
“I’ve heard from some of the FTC’s minority commissioners that have said your actions are really harming small and midsize businesses,” Ms. Blackburn said.
Ms. Khan said the FTC has the authority to “review prior transactions” and pointed out the FTC sued Facebook over its past acquisitions during the Trump Administration.
“As a general matter, I’m committed to really focusing where we see the biggest harm, which oftentimes comes from the biggest companies,” Ms. Khan said.