Democratic candidates are crisscrossing the country to garner support before November’s elections. Joining campaign events alongside the likes of Senator Bernie Sanders, Democratic Rep. Ruben Gallego, and Rep. Raja Krishnamoorthi will be an unlikely star and supposedly independent federal employee, Federal Trade Commission (FTC) Chair Lina Khan.
Khan is due to travel to Austin, Chicago, and Arizona to stump for Democratic candidates, trumpet her antitrust record at FTC such as the effort to break up Amazon, and spin why voters should be clamoring for more.
The head of an independent government agency publicly tying her fate to Democratic electoral prospects is not normal, and key lawmakers have taken notice of Khan’s plans. In a short tenure which expired last week, Lina Khan has gone from DC darling to political pariah. Remarkably, both political parties have found common ground in their condemnation of Khan's regulatory actions as the head of the FTC. Her partisan tour is a mark of desperation, and Congress must check the politicization of the FTC by reconfirming Lina Khan in the event she’s asked to stay in the job.
Khan’s overreach has stunted the economy, harmed consumers, and negatively impacted middle America. From her crackdown on so-called “junk fees” to her anti-growth merger policies hamstringing consumer companies, Khan's agenda has rightfully faced growing bipartisan backlash.
Her unilateral actions have sent shockwaves through industry, creating a climate of uncertainty that stifles innovation and investment. Rather than focusing on safeguarding consumers and promoting fair competition, the organization has opted for overzealous regulation that a former commissioner called “disregard for the rule of law and due process.” A company that turns profits is guilty until proven innocent with Lina Khan at the FTC’s helm.
As a result, rather than investing in new technology or innovations, companies have been forced to beef up their legal departments out of fear over FTC lawfare. The metric of consumer welfare, which informed antitrust law for nearly a generation, was chucked aside for a hyper-active legal movement that sees every corporate boardroom as an opponent.
Instead of thoroughly researching the law to drive legal change, the commission hastily pursued court action and lost three of its highest-profile merger cases that dealt with popular consumer and patient products. This series of losses includes Microsoft's acquisition of Activision Blizzard, Meta's acquisition of Within, and Illumina's acquisition of Grail.
What Khan and many of her ideological allies fail to realize is that mergers are a natural cycle of competitive free enterprise. Many mergers play a vital role in sustaining companies, preserving jobs, and supporting local economies, such as the proposed Nippon Steel takeover of US Steel, which would help sustain thousands of jobs in America’s heartland. Or the failed Frontier-Spirit merger, which now puts an entire airline’s future in jeopardy. Spirit Airlines, one of the best travel options for consumers on a budget, is now exploring Chapter 11 bankruptcy.
To counter these losses, the agency is now seeking to revise its merger-review policy, which is even facing opposition from former Obama administration officials and ex-FTC chief economists. This all stems from an ideological position that aims to cut down big players rather than sound economic or policy reasoning.
Additionally, the FTC is catching heat on its proposed final rule to ban non-compete agreements. The U.S. Chamber of Commerce was successfully able to freeze the order after a court injunction, arguing the FTC overstepped its authority in issuing the rule.
Another overzealous initiative by Lina Khan is her crackdown on so-called “junk fees”, or back-end charges commonly found in consumer services and transactions. They can include a wide range of charges – from hotel resort fees and airline baggage fees to banking overdraft charges and cable TV installation costs. Seeking to increase transparency and safeguard consumers is noble, but Khan's assertive approach has resulted in a series of new regulations that will only end up costing consumers more.
This regulatory crackdown has left many firms scrambling to comply, resulting in a constriction of consumer options, higher overall costs, and a general sense of disorder and uncertainty. This has undoubtedly caused confusion and frustration for both companies and the consumers they serve.
Both sides of the aisle are rightly apprehensive about Lina Khan's leadership at the FTC and the agency's overall effectiveness. Consumers even more so. Her misguided priorities threaten the very competitiveness that fuels our nation's economy and rewards consumers every day.
In today's economic climate, prioritizing innovation, job creation, and growth is crucial, and the FTC's initiatives must reflect these objectives. The FTC needs to realign its focus and avoid overstepping its boundaries. American consumers and businesses alike benefit from having an effective and focused competition watchdog, but as Lina Khan finishes her term at the FTC, it is nowhere to be found.
Yaël Ossowski is deputy director of the Consumer Choice Center.