Subcommittee Begins Comprehensive Look at the FTC on Eve of 100th Anniversary

December 3, 2013

WASHINGTON, DC – The Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Lee Terry (R-NE), today held a hearing on “The FTC at 100: Where Do We Go From Here?” Today’s hearing kicked off a series examining the work of the Federal Trade Commission as the agency approaches its 100th anniversary next year. The subcommittee is examining the commission’s mission, operating budget, and statutory authorities and what improvements are needed to help the agency protect consumers and promote competition in an ever-changing market. FTC Chairwoman Edith Ramirez testified today alongside commissioners Julie Brill, Maureen K. Ohlhausen, and Joshua D. Wright.

The FTC was originally established in 1914 by the Federal Trade Commission Act to enforce competition law and prevent anti-competitive business practices, but over the past 100 years, the commission’s authority has evolved and it now employs broad jurisdiction across most sectors of the economy.

“We all have a stake in the FTC’s current mission to promote consumer welfare by ensuring that business practices in the United States are fair and transparent—while also addressing any market collusion or anti-competitive activity that could unfairly fix prices at a higher level than the market would otherwise demand,” said Terry. “However, like all entities in the government, prioritization of goals is critical. Not only are the FTC’s resources finite, but also the sheer breadth of the FTC’s jurisdiction makes it necessary.”

“From the smallest, independent corner store to the largest industry, from online data collection to multi-million dollar merger reviews, the FTC is charged with ensuring industry players play fair, competition thrives, and that consumers enjoy the fruits of that competition as well as protection from fraudsters.  Of course, with such great power comes equal concern about the appropriate use of that power and potential consequences for job creation and economic growth,” said full committee Chairman Fred Upton (R-MI).

Speaking to the commission’s current consumer priorities, Chairwoman Ramirez said, “In recent years, the FTC has emphasized protecting financially distressed consumers from fraud, stopping harmful uses of technology, protecting consumer privacy and data security, prosecuting false or deceptive health claims, and safeguarding children in the marketplace.”

One of the challenges facing the FTC is the ability to protect consumers as technology rapidly evolves. As consumers spend more and more of their time online and on mobile devices, privacy and security concerns have increased. The FTC is now convening meetings to explore how to address problems created by emerging technologies. “The agency convenes public meetings, such as its recent workshop exploring the Internet of Things, to gather information from those at the cutting edge of technological advances. These meetings help the agency to identify the consumer protection and competition issues that may be raised by the use of new technology,” said Ramirez. Members of the subcommittee stressed the need for the commission to approach online privacy concerns in a way that protects consumers without harming competition. The subcommittee has also convened a bipartisan privacy working group to examine these issues.

Members questioned the commissioners about the FTC’s use of enforcement authorities under Section 5 of the FTC Act – an important tool that could prevent unfair and deceptive activities like patent trolling and pyramid schemes. Commissioner Wright urged the commission to adopt guidelines outlining its authority to combat “unfair methods of competition” just as it did for its “unfair and deceptive” authority. He said, “As the FTC enters its second century, it is an appropriate time to reflect upon whether the agency’s enforcement and policy tools are being put to the best possible use to help the agency fulfill its mission. One of these tools—the commission’s authority to prosecute unfair methods of competition as stand alone violations of Section 5 of the FTC Act—is a particular suitable candidate for evaluation. The historical record reveals an unfortunate gap between the theoretical promise of Section 5 as articulated by Congress and its application in practice by the FTC. The gap has grown large in part due to the persistent absence of any meaningful guidance articulating what constitutes an unfair method of competition.”

Chairman Terry committed to working with the commissioners as the subcommittee continues its review of the agency and looks at potential legislation to modernize the FTC.