The Camouflage Of Expertise: The Failed Promise Of Ftc Independence
Abstract
This article critiques the claim that independence promotes FTC expertise, using the Commission’s 2024 ban of employee noncompete agreements (“NCAs”) as a case study. President Biden urged the Commission to “curtail” NCAs, claiming that employers use growing labor market power to impose them. President Biden’s three Commission appointees—including the two removed commissioners—approved the ban, which President Biden endorsed.
The article shows that the process resulting in the ban ignored procedural norms designed to ensure that commissioners gather and consider data and expertise external to the Agency. The Rule ignored or mischaracterized record evidence contradicting key empirical assumptions supporting the ban. The Rule also repeatedly ignored comments on the proposal highlighting such evidence or refuting assumptions informing the ban.
The refusal to consider data and significant comments violated the APA’s requirement that commissioners “consider relevant material” submitted in response to proposed rules. Such refusal also rendered the resulting rule arbitrary and capricious, because the Commission did not “consider the relevant factors” when assessing the proposal and suggested alternatives. Despite their self-portrayal as independent experts, the removed commissioners ignored rules that enhance and exploit such expertise.
The article identifies three consequences of such refusals to cultivate and apply expertise. First, such abdication justifies removal under the FTC Act’s definition of cause. Congress designed for cause restrictions to enhance and exploit expertise, and refusal to behave as an expert constitutes “neglect of duty,” one cause for removal.
Second, the removed commissioners’ refusal to behave as experts may impact their ability to obtain the equitable remedy of reinstatement. Having breached their duties to cultivate and apply expertise, plaintiffs have unclean hands, barring equitable enforcement of protections designed to enhance such expertise. Recognizing this defense is particularly appropriate here, where continued neglectful service as Commissioners would threaten public injury in the form of expertise-free decision making.
Third, the article supplements previous research concluding that, despite insulation from Presidential control, the Commission has not functioned in the nonpartisan, expert manner that Congress expected. The assumption of nonpartisan expertise having proved false, Humphrey’s rationale no longer withstands analysis. Absent some other rationale supporting such restrictions, Humphrey’s should be overruled.
Read the full piece at SSRN.