Federal Trade Commission Chairwoman Lina Khan continues to lose legal battles. Last month, a federal court in New York threw out an FTC lawsuit for the second time, doing so “with prejudice,” which means the FTC is barred from bringing the claim back to court. This loss is the latest in a long string of FTC defeats, including an effort to block Microsoft from merging with game maker Blizzard-Activision and another to stop Meta/Facebook from acquiring a virtual reality application. In fact, over the last three years, the FTC has yet to win a single federal antitrust case. Further, every appeal of those cases has thus far failed. The question that naturally arises is whether such an approach and track record are consistent with a federal agency’s directive to enforce federal law. 

Ironically, Chairwoman Khan recently suggested these strings of losses are by design. At a recent tech industry conference, she observed if “there’s a law violation” and agencies “think that current law might make it difficult to reach, there’s a huge benefit to still trying.” The United States Congress obtained FTC staff e-mails elaborating on — and expressed concern about — this losing strategy. One FTC manager wrote, “I’m not sure being successful (or doing things well) is a shared goal, as the Chair wants to show that we can’t meet our mission mandate without legislative change.” Put another way, the email drafter evidently believes Chairwoman Khan has a strategy of bringing forth losing cases, instead of focusing on enforcing its mandate by litigating meritorious ones, as a way of propelling a like-minded Congress to change the law.

As an administrative law and antitrust scholar, I am sympathetic to much of Chairwoman Khan’s political philosophy, including her New Brandeis antitrust school views, but I worry that intentionally bringing about losing cases in hopes of expanding the FTC’s power will do the opposite. I fear it will lead to a less respected, significantly weakened FTC that has far fewer enforcement capabilities than it does today. 
A former FTC chairman has also expressed this concern, going so far as to warn that ”you could come out of this with an agency that is much weaker than the one that you went in with — permanently weaker.” 

Federal Agencies Are Not Entrusted to Legislate 

The country’s federal agency constitutional structure as well as our separation of powers framework entrust agencies to enforce the laws, not create them. Pursing weak cases undermines the integrity of this constitutional system. Such acts are thus not only a questionable use of resources but they fail to advance the interests of the public, i.e., consumers, ultimately hurting the economy. They are simply not within an agency’s Bailiwick.

Chairwoman Kahn’s tactic of pursuing weak cases is simply not within agency purview. The agency is violating its mandate to execute the laws. It should not be legislating. That is simply not its role. As Congressman Ro Khanna recently observed, “I don’t think the FTC should be making AI policy for the United States of America. The President and Congress should be. It would be a shame if we had ad hoc agency suits making policy.” Indeed, and that should go for all industries, not just AI.

By intentionally pursuing losing cases, the FTC has arguably already weakened the commission in several critical ways.

Staff Morale Has Plummeted 

Morale at the FTC has plummeted, and some of the FTC’s top minds have already resigned, feeling that their work is marginalized.

According to congressional reports, FTC staff feels that commission leadership continues to ignore its prepared economic and legal analyses when said data does not fit senior leadership’s predisposed beliefs.

Per a House of Representatives Judiciary Committee staff report: 

Career FTC staff members expressed concern that Chair Khan may not actually want the FTC to succeed in its enforcement and purposely put staff in a position to lose cases. FTC managers expressed staff’s willingness and desire to bring novel and aggressive cases, but expressed concern that Chair Khan was preventing staff from being successful. Additionally, managers warned against leadership directing staff to bring cases unsupported by facts. FTC staff routinely requested that Chair Khan clarify her priorities for the agency, but she routinely refused to communicate with managers. 

…Career FTC managers repeatedly documented and explained serious concerns to Chair Khan and her leadership team about her public posturing on issues before the FTC, including broad, lofty statements that could not be translated effectively into actionable direction. [10] 

The most recent Federal Employee Viewpoint Survey found that a mere 53% of FTC staff has respect for its senior leaders, down from 83% in 2020. Feelings that their work and analyses have gone unused and unappreciated certainly has not helped. 

Over 100 staff members, including one FTC commissioner and the commission’s Bureau of Economics Director, have already resigned.

People are policy. An agency can only remain effective if it can retain quality staff. While the FTC once prided itself on the number of top national legal and economic experts it employed, the commission’s pursuit of losing cases has significantly shrunk its once-heralded brain trust, turning it into a fraction of its former self. 

FTC’s Powers Are Already Getting Stripped 

Most problematic for the FTC is how this lack of trust for the commission today has flowed from commission staff to key political and legal figures. Congress and the courts have begun taking the FTC to task, stripping it of many of its powers. 

In Axon v. FTC and SEC v. Jarkesy, the Supreme Court took aim at the FTC’s administrative trials — trials run by the agency’s hand-picked administrative law judges. In AMG Capital Management v. FTC, the high court also stripped the commission of its ability to fine companies without first going through a Court of Appeals. Moreover, the commission has felt the effects of the recent overturning of Chevron — which ended deference to agencies’ interpretation of the law — more than most agencies.

For its part, Congress continues holding oversight hearings and sharp interrogations of FTC leadership, issuing subpoenas to the commission’s staff, and considering legislation to reduce the commission’s enforcement authority.

Conclusion
As one former FTC official put it, “I think a lot of the staff at the agency — and a lot of observers, anybody close to the FTC — are asking a good question — ‘What is her long game in this? And is the long game aligned with the interests of the FTC?’” Moreover, is it all appropriate to prod legislative change by continuously failing in court? Is that remotely the role of an executive agency created to enforce federal law?

It no longer appears the FTC is acting in accordance with why it was created or its place in the federal government structure. Losing cases to advance a desired legislative policy aims has done nothing other than to reduce respect for one of the once most respected institutions in Washington, and it has already begun to negatively affect the commission’s enforcement agenda. The commission needs to reverse course and get back to constraining itself under the confines of the law while it still can. 

Ediberto Roman is a Professor of Law at Florida International University.