Khan Starts Putting Stamp on FTC as Obama-Era Rule Rescinded

(Bloomberg) -- Federal Trade Commission Chair Lina Khan took her first steps toward reshaping the agency and implementing her agenda to step-up enforcement of competition and consumer protection laws.

Khan and her two fellow Democrats on Thursday voted to rescind an Obama-era competition policy that put limits on how the agency uses its authority in bringing antitrust cases. Advocates for more aggressive enforcement have said the FTC can use that authority more broadly that the 2015 policy allowed.

“In practice, the 2015 statement has doubled down on the agency's long-standing failure to investigate and pursue unfair methods of competition,” Khan said during an open meeting held virtually by the agency Thursday. The policy, she added, turned the FTC's authority into a “dead letter.”

The vote marked Khan's first official move to toughen the agency's approach to policing conduct by dominant companies since being named head of the agency last month. The FTC authority at issue -- known as Section 5 of the FTC Act -- has long been seen as a tool the commission can use to tackle conduct traditional antitrust laws have trouble addressing.

Both Republicans on the commission voted against withdrawing the statement.

“I am deeply concerned that the commission action today unleashes unchecked regulatory authority on businesses subject to Section Five, while keeping those businesses in the dark about what conduct is lawful,” said Commissioner Noah Phillips.

Khan said the 2015 policy conflicted with the original purpose of the FTC when it was established by Congress in 1914 with authority that was broader than existing antitrust law.

“Congress directed the commission to identify and combat unfair methods of competition,” she said, “and I intend to help restore the agency to this critical mission.”

In addition to rescinding the policy, the commission voted 3-2 along party lines to approve resolutions authorizing investigations by agency staff in priority areas, including technology platforms, pharmaceutical companies and proposed and consummated mergers.

A little more than two weeks into the job, Khan is already coming under pressure. On Monday, a federal judge in Washington threw out the FTC's landmark antitrust lawsuit against Facebook Inc., giving the agency 30 days to fix errors in the complaint and refile.

For more: Saving Facebook Case Falls to Tech Foe Khan in First Test at FTC

The case, filed in December, sought to break up the company by forcing Facebook to unwind its acquisitions of Instagram and WhatsApp. The case was part of a broad assault on America's biggest tech platforms under way in Washington and signaled a new era of antitrust enforcement.

Then on Wednesday, Amazon.com Inc. filed a petition with the FTC asking that Khan be recused from matters involving the company because of her history criticizing the online retailer as a threat to competition.

Khan “has on numerous occasions argued that Amazon is guilty of antitrust violations and should be broken up,” Amazon said in its petition. “These statements convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon's antitrust culpability as well as about the ultimate issue of culpability itself.”

For more: Amazon Wants FTC Chair Khan Recused Over Past Criticism

The move comes as the FTC is reviewing Amazon's proposed $8.45 billion acquisition of movie studio Metro-Goldwyn-Mayer. The agency is also investigating Amazon's conduct in its online marketplace alongside attorneys general in New York and California, and is reviewing the company's data practices.

The FTC declined to comment on how it will handle Amazon's request.