A sleepy federal consumer agency is about to become very political

This week’s Senate Commerce Committee hearing on Federal Trade Commission nominations seemed uneventful. After 2.5 hours of cordial questions and innocuous answers, one might have thought the next few years at the FTC would differ little from the last few decades: five experts from both parties collegially debating how best to serve consumers through the FTC’s uniquely broad legal authority — “Team FTC,” as Joe Simons, the former FTC bureau director nominated to be chairman, put it.

That happy image — of significant philosophical differences mediated through legal and economic analysis on both sides of hard cases — shattered at the very end of the hearing. Sen. Richard Blumenthal (D-Conn.) closed with these remarks:

I’d like you to be a champion. I think there’s a real opportunity here for this new populism we see sweeping the country to be articulated, and in fact enforced, through your advocacy — going beyond your narrow legal jurisdiction, and I understand it may not be within that legal jurisdiction, but you have the bully pulpit. You can bring a zeal and passion to consumer issues that no one else will do at the federal level.

{mosads}It wasn’t clear whether Blumenthal was speaking to Democrat Rohit Chopra or Republican Noah Phillips or all four nominees, and, in fairness, the limit on the FTC’s jurisdiction that had come up was that which leaves airline mergers to the Department of Transportation. But Blumenthal’s point was unmistakable: populism should matter more than legal details. For a law enforcement agency, that’s downright gobsmacking.

That wouldn’t be so unusual at the Federal Communications Commission, where three commissioners define the “public interest.” But the FTC isn’t a “regulator” or “policymaker.” With authority over nearly every business in America, the commission’s vast power to declare business practices “unfair” or “deceptive” is tempered by legal standards and economic analysis.

And “zeal and passion” once brought the FTC to the brink of self-destruction. A vague 1972 Supreme Court decision compared the FTC to a “court of equity, [which] considers public values beyond simply those enshrined in the letter or encompassed in the spirit of the antitrust laws.” The FTC went on rulemaking spree — from funeral home practices to banning advertising of sugared cereals to children. The Washington Post dubbed the agency the “National Nanny.” In 1980, a Democratic Congress briefly shuttered the commission, and imposed significant evidentiary safeguards on its rulemaking powers. The FTC survived only because its Democratic chairman promised Congress the agency would focus on consumer harms — instead of divining “public policy.”

That 1970s FTC seems to be what Blumenthal and many other Senate Democrats wants: not just more active, but unmoored from legal or economic analysis. Sen. Elizabeth Warren recently succeeded in making “Cracking Down on Corporate Monopolies” a key pillar of Senate Democrats’ “Better Deal.” The platform calls for returning antitrust to the static “Big is Bad” approach of the 1950s, when market share percentages, rather than impact on consumers, decided cases. Its proposed “competition advocate” (who would push lawsuits that reshape antitrust law) seems to be exactly what Blumenthal expects from Chopra.

On consumer protection, the 1970s FTC is essentially what Congress revived in 2010 as the Consumer Financial Protection Bureau — Sen. Elizabeth Warren’s brainchild, whose “‘I know it when I see it’ approach naturally grants [it] maximum flexibility,” as lawyers have warned. Warren and Chopra worked together at the CFPB — making him a hero to anti-corporate activists, who ran petition drives on his behalf after he left the CFPB. Democratic insiders hailed his nomination as a sign that “Warren has become a force in the Democratic caucus.”

Expect the “Warren Caucus” push Democratic commissioners to use their “bully pulpits” aggressively — and for the FTC to be politicized as never before. Most notably, the agency will soon again become the lead federal cop on the net neutrality beat — and thus the focal point of the “new populism” Blumenthal celebrated.

Simons will have the most difficult chairmanship in nearly four decades. But his approach is exactly the right one. From his statement at the hearing:

I believe that big is not necessarily bad. I also believe that big is not necessarily good. Sometimes big is good, sometimes big is bad and sometimes it’s both at the same time. Often times, companies get big because the are successful with the consumer. They are offering good services at low price and that’s a good thing and we don’t want to interfere with that. On the other hand, companies that are already big and influential can sometimes use inappropriate means, anticompetitive means to get big or to stay big. And if that’s the case we should vigorously be enforcing the antitrust laws and attacking that conduct and prohibiting it.

Weighing each case on its merits and focusing on harm to consumers — rather than abandoning long-standing doctrines to follow the the political winds — won’t satisfy populists, but it’s exactly what the FTC is supposed to do.