By Shane Tews

As I wrote for a June 9 AEI event, “Progressives are waging a Neo-Brandeisian regulatory crusade against America’s top innovators.” I held a conversation that day with Commissioner Christine Wilson of the Federal Trade Commission (FTC) and Phil Gramm, a former senator from Texas, to discuss how efforts to create a new antitrust enforcement regime in both Congress and the FTC could stifle innovation and harm consumers. The primary aim of this new regime is to pivot away from the consumer welfare standard as the FTC’s basis for identifying enforcement-worthy conduct. My AEI colleagues and I have warned repeatedly that abandoning the consumer welfare standard backtracks on decades of established legal precedents and will harm everyday Americans when all is said and done.

At an event this afternoon, we will hear from FTC Commissioner Noah Phillips about how efforts to change the FTC’s mission and day-to-day affairs are far from over. Below are some key moments from my last event with Christine Wilson and Phil Gramm that will help refresh our audience for this afternoon. These quotes have been lightly edited and abridged; you can view the full transcript here.

Wilson on the rule of law:

The Neo-Brandeisians are seeking to act outside the law. If Congress wants to revise antitrust laws, great, but they’re not asking Congress to revise the law. They have launched a war on mergers because big is bad, and any growth toward big is bad. But they cannot get where they want to go in terms of blocking mergers on the basis of challenging deals in court. The court precedent is not as permissive as they would like. So what they’ve decided to do is use all of the bureaucratic red tape at their disposal to slow, delay, deter, and heighten risk of doing mergers without actually challenging them in court—another abuse of due process and the rule of law. The stories are stunning.

Gramm on the “mythology of progressive regulation”:

Around 1870, we had rapid industrialization of America and a growing concentration of production as companies seized economies of scale. Under the progressive interpretation, this produced massive trusts and monopolies that were harmful to the economy and consumers. A progressive era of regulation destroyed the trusts and brought those monopolies under control and benefited the American consumer, and we’ve been happy ever since.

Now, there is virtually no factual basis to any of that mythology. . . . So inefficient was this system in terms of production at a suboptimal level that by the 1970s, even the Democratic Party was hard in favor of deregulation. You can criticize Jimmy Carter all you want, but he made a massive contribution to America when he led the deregulation effort that in essence destroyed progressive-era regulation. For moving people and freight, costs fell by half—an extraordinary improvement.

Gramm on the consumer welfare standard:

From 1970 onward, we for 50 years had a bipartisan consensus that regulation ought to be on the basis of consumer welfare—that the whole purpose of antitrust regulation was to produce benefits for the consumer. If you can’t demonstrate economically hard consumer benefit for intervening in the marketplace in the name of antitrust, you shouldn’t do it. Now, the progressives believe we should go back to an era of regulation where they regulate under whatever notion they choose.

Once you throw out consumer welfare as the standard for antitrust action, you can do anything under antitrust action. You are giving the FTC a broad writ to do whatever they want in an extraordinary grant of power. This is an assault on the American free enterprise system and freedom itself.

Wilson on internal process reforms at the FTC:

At the FTC, we have seen sweeping policy reversals invoked on a 3-2 partisan basis with very little notice to the minority commissioners, let alone to the public. Policies that were adopted with notice and comment procedures were rescinded immediately with absolutely no replacement guidance while at the same time promising much more aggressive enforcement, leaving a guidance vacuum but telling people “we’re going to punish you more severely.”

There was a gag order that was imposed on staff almost immediately after Chair Lina Khan assumed her new position. They were not allowed to participate in panels or conferences. Shutting down communication between staff and the business world and other stakeholders creates uncertainty. Staff view those experiences as enhancing their own profile and experience. Explaining to other people what the expectations are is a way of reinforcing the expertise of our personnel. And so that was taken away. . . . It’s been an exodus of personnel.

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