John E. Villafranco and William C. MacLeod are partners in the Washington, DC office of Kelley Drye & Warren LLP. This post originally appeared on the firm’s Ad Law Access blog and is reposted with Kelley Drye & Warren LLP’s permission.
For decades, the FTC has explained that the omission of information can lead to liability. It is also a canon of statutory construction that an amendment helps reveal legislative intent. And of course, your mother put it simply: words that you say (and take back) have meaning.
Earlier this month, the Commission released its draft Strategic Plan for 2022 to 2026, which included a glaring revision to the FTC’s Mission Statement. See for yourself:
- Strategic Plan for Fiscal Years 2018 to 2022: Protecting consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity (emphasis added).
- Draft Strategic Plan for Fiscal Years 2022 to 2026: Protecting the public from deceptive and unfair business practices and policing unfair competition through law enforcement, advocacy, research, and education.
Pretty bold retraction, eh? Especially given the heat directed to Chair Lina Khan from Members of Congress and others regarding her perceived attitude toward U.S. businesses. Just last week, the U.S. Chamber of Commerce issued a blistering statement, accusing Chair Khan of caving to “undue influence” from the Biden White House, “misusing her authority” by issuing dusty notices of penalty offenses, and relying on so-called “zombie votes” from former Commissioner Rohit Chopra. According to the Chamber:
American companies are facing historic challenges with inflation, strained supply chains and worker shortages, while the FTC is going rogue and engaging in regulatory overreach that is accelerating uncertainty and threatening our fragile economic recovery.
With enemies taking aim and allies taking cover, what is to be gained by eliminating the express commitment to avoid unduly burdensome regulation of legitimate business activity, especially when leadership at the Agency complains about a shortage of resources and a surfeit of illegitimate business practices?
Well, it is just a Mission Statement, you might say, and it has little practical effect. But a Mission Statement is an explanation of an organization’s purpose and overall intention. And with that in mind, how are we supposed to interpret this edit by the drafters of the FTC Strategic Plan: without unduly burdening legitimate business activity.
It is no small thing. This language has appeared in the FTC’s Mission Statement for decades, through both Democratic and Republican administrations. It proclaims that the FTC will tailor its allegations, prohibitions, and remedies to illegal conduct, and will preserve the legitimate business functions that provide products and services to consumers in a vibrant, competitive economy.
In fact, this balance is built into the policies that have long governed the Agency. For example:
- “Unfairness” is defined as a practice that “causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition”;
- The FTC’s Deception Statement requires that a statement (or omission) be material and likely to mislead a reasonable consumer, reflecting a balance between avoiding deceptive practices and the burden in anticipating every possible consumer interpretation;
- The Commission’s Substantiation Policy Statement considers factors relevant to the benefits and costs of substantiating a particular claim; and
- Section 5 competition analysis distinguishes between illegitimate practices that burden competition and legitimate business practices that further competition.
In this context, the suggested revision to the Mission Statement would be a head-scratcher standing alone, but this is merely the latest in series of announcements that focus on pursuing policy goals through an aggressive reinterpretation of FTC authority, without regard for the costs to consumers or the economy.
In recent months, we have seen (1) repeated references to accepted forms of online behavioral advertising as “surveillance,” (2) an objective to impose more “substantive limits rather than procedural protections” on business practices through Magnuson-Moss rulemaking and FTC orders; (3) the rescission of the FTC’s 2015 Competition Policy Statement because its focus on cost-benefit analysis and competitive markets is considered by this Agency to be too narrow; and (4) the imposition of prior approval requirements for mergers, including “before closing any future transaction affecting each relevant market for which a violation was alleged.”
Is it any wonder that the Chamber is fired up? And how did the FTC respond? By stating it was merely “ramping up efforts to combat corporate crime” and by characterizing the Chamber as “corporate lobbyists,” who will not deter FTC efforts to “stand up for consumers, honest businesses, workers, and entrepreneurs who deserve a fair marketplace.” But there is no lobby for corporate criminals and surely one way to “stand up” for “honest businesses” and “entrepreneurs” would be to refrain from unduly burdening them.
Words matter, and the deliberate deletion of “legitimate business activity” from the FTC’s draft Mission Statement is material and meaningful. This move is likely to trigger another hostile response, creating an unnecessary distraction of the Agency’s own making. Fortunately, the FTC has solicited comments on its proposed draft (Kelley Drye’s comment can be found here), allowing room to ditch the proposed amendment to the Mission Statement and ensure that the Agency’s purpose and overall intention will maintain its historic balance.