More and more members of Congress are losing their patience with Federal Trade Commission (FTC) Chair Lina Khan. Yesterday, the House Committee on Oversight and Accountability (Oversight) majority staff released a report entitled, “The [FTC] Under Chair Lina Khan: Undue Biden Harris White House Influence and Sweeping Destruction of Agency Norms.” This follows several reports and investigations by members and committees on both sides of Capitol Hill examining the shenanigans of Khan’s tenure.
Earlier this year, the House Judiciary Committee released a report condemning Khan’s stewardship based on internal documents and testimony of FTC career staff. Then, just this week, they released an additional memo detailing the “weaponization” of the FTC against political enemies of the Biden administration, in particular, entrepreneur Elon Musk. Representative Jim Jordan and Senator Mike Lee also just launched a joint investigation into potential Hatch Act violations by Khan due to her appearances on the campaign trail alongside Democratic candidates for Congress this year. This new Oversight report is no departure from the troubling trend—but rather another account of Khan’s FTC mismanagement.
The Oversight investigation was launched in early 2023, following the high-profile resignation of Republican FTC Commissioner Christine Wilson. Wilson expressed that she felt her continued service at the FTC provided undue “legitimacy” to the actions of Khan and her Democratic colleagues. The Committee’s report is unequivocal: “Former Commissioner Wilson was right. Chair Khan has abused her authority at the agency, trampling on the due process rights of regulated parties, upending the rule of law, and violating ethics standards she is bound to uphold.”
The report Oversight released yesterday on its findings covers five broad categories of allegations: Khan’s use of lawfare, collusion with foreign regulators, agency rulemaking beyond congressional intent, politicization of the agency and general mismanagement.
It describes Khan’s lawfare as not “[ensuring] even-handed administration, blocking anti-competitive mergers and allowing pro-competitive, pro-consumers to proceed,” as is her remit. Instead, the Committee concludes, “Chair Khan seems committed to using all the Commission’s powers to throw sand into all the possible gears over proposed mergers, thereby halting many mergers by abuse of process and chilling other potential mergers from even being suggested.” Another former Republican FTC commissioner, Commissioner Noah Philips, describes Khan’s actions as nothing short of a “tax” on mergers and acquisitions (M&A). Indeed, the data bears out that M&A activity is in a “precipitous decline.”
Oversight next details the FTC’s efforts to not just emulate but also coordinate with foreign regulators, particularly in the European Union (EU). This pattern of behavior is concerning enough on the grounds that American tax dollars should go towards advancing American interests—not foreign demands, which oftentimes conflict with U.S. law.
For example, as the Oversight report notes, the EU has not been shy about targeting Elon Musk over speech on X that is fundamentally protected by the First Amendment in America.
Americans should be particularly troubled by the FTC working hand-in-hand with EU regulators for the simple fact that the European tech sector barely registers when compared to the U.S.’s. Adopting Europe’s approaches to technology and competition regulation means leaving untold trillions of dollars in future innovation and wealth on the table while simultaneously ceding the future of innovation to China, where the only other tech companies of any size compared to U.S. firms exist.
Foreign rules and regulations aren’t the only ones Congress never passed that Khan’s FTC is busy pushing through the back door. Oversight’s report discusses how the FTC has bent, if not broken, several norms and procedures to fast-track rules, some of which would radically reshape large sectors of the economy: “Under Chair Khan, rulemaking at the FTC has followed the same pattern–bulldozing agency norms, going beyond statutory authority, and regulating based on Biden Harris ideology, not the facts.”
The most prominent example is the FTC’s sweeping ban on noncompete agreements, recently blocked by a federal court. “Methodically analyzing the text, structure, and history of the FTC Act, the court found it clear the FTC lacked the rulemaking authority it asserted,” Oversight explains. The report further notes that former FTC Chair Tim Muris and former Director of the FTC’s Bureau of Consumer Protection J. Howard Beales III believe today’s “Commission [is] seeking to reprise its role as the second most powerful legislature in Washington,” which of course flies in the face of the Constitution.
The report continues by detailing more of the FTC’s politicization under Khan that has drawn scrutiny, such as Rep. Jordan and Sen. Lee’s investigation and House Judiciary’s weaponization report. House Oversight’s analysis adds to this chorus by scrutinizing the FTC’s leadership of the White House’s “Strike Force on Unfair and Illegal Pricing.” The report explains the deep connection between the White House’s efforts to deflect blame for inflation away from its own policies and onto the private sector, with both routine and frivolous FTC investigations and actions at the tip of the spear, despite the Commission’s purported status as an “independent” agency.
Its damning conclusion on this matter is that “Chair Khan spent the taxpayers’ time and money and allowed the abuse of her independent agency to provide political cover for the Biden-Harris Administration, parrot Biden-Harris talking points, and give credit to the Biden-Harris Administration for the FTC’s independent work.”
Oversight closes its sweeping findings with further discussion of the general mismanagement and staff displeasure within FTC leadership. Given the plethora of allegations against Chair Khan, it shouldn’t be all that surprising that this new report, too, found staff morale has collapsed.
What is striking, however, is how Khan seemingly chooses to address these morale issues: farming out work to “unpaid consultants from highly partisan non-profit organizations,” not unlike one where Khan spent much of her short career. As if the problem of unelected bureaucrats effectively legislating through regulation was not problematic enough, Khan’s FTC has outsourced work to progressive political allies who are not only unaccountable to taxpayers but employed at tax-exempt organizations.
The breadth of House Oversight’s report is staggering. There are several, distinct categories of malfeasance, supported by multiple examples, which indicate that the problems with Chair Khan’s tenure are not isolated gripes or concerns—they are compounding instances of how the FTC has been mismanaged during this administration. With Chair Khan’s term at the agency officially expired, lawmakers should ensure that she is not re-confirmed to the Commission, regardless of the outcome of next week’s election.
Read the House Oversight Committee’s full report, “The Federal Trade Commission Under Chair Lina Khan: Undue Biden Harris White House Influence and Sweeping Destruction of Agency Norms,” here.