The Federal Trade Commission as an Independent Agency: Autonomy, Legitimacy, and Effectiveness

• Author: William E. Kovacic & Marc Winerman
• Position: Global Competition Professor of Law and Policy/Formerly of the Federal Trade Commission
• Pages: 2085-2113

2085

The Federal Trade Commission as an

Independent Agency: Autonomy,

Legitimacy, and Effectiveness

William E. Kovacic & Marc Winerman

I. INTRODUCTION ........................................................................... 2086

II. THE RELATIONSHIP OF THE COMPETITION AGENCY TO THE

POLITICAL PROCESS: DESIGN TRADEOFFS ................................... 2088

III. THE SOURCES OF POLITICAL PRESSURE ...................................... 2091

A. IMPLICATIONS FOR LAW DRAFTING AND INSTITUTIONAL

DESIGN ................................................................................. 2092

B. THE FTC’S CHARTER ............................................................ 2092

IV. THE MEANING OF INDEPENDENCE .............................................. 2096

V. ORGANIZATIONAL CHOICES THAT CAN DETERMINE

INDEPENDENCE ........................................................................... 2098

VI. UNIVERSAL PRESSURE POINTS FOR POLITICAL CONTROL OR

INFLUENCE .................................................................................. 2100

A. THE APPOINTMENTS PROCESS ................................................ 2101

B. FUNDING ............................................................................... 2103

C. LEGISLATIVE CHANGES .......................................................... 2104

D. ROUTINE OVERSIGHT ............................................................ 2104

E. SETTING THE FORM OF JUDICIAL REVIEW ................................ 2105

 Global Competition Professor of Law and Policy, George Washington Universit y Law

School; Non-Executive Director, United Kingdom Competition and Markets Authority. From

2006 to 2011 he served as a member of the Federal Trade Commission and chaired the agency

from March 2008 to March 2009.

 Formerly of the Federal Trade Commission, where he served for over 31 years as an

attorney advisor to Kovacic and to FTC Commissioner Maureen Ohlhausen, and also in the

Bureau of Consumer Protection, the Office of the General Counsel, and the Office of

International Affairs.

The authors are grateful to the Competition Committee of the Organization for Economic

Cooperation and Development for comments on an earlier version of this Essay. The views

expressed here are the authors’ alone.

2086 IOWA LAW REVIEW [Vol. 100:2085

F. INCREASED MONITORING BY EXTERNAL PARTIES .................... 2105

G. THE TRADEOFF BETWEEN ACCOUNTABILITY AND THE BREADTH OF

DELEGATED AUTHORITY ........................................................ 2106

H. SUMMARY: SIGNIFICANCE OF THE PRESSURE POINTS ................ 2106

VII. HOW MUCH INDEPENDENCE IS DESIRABLE IN PRACTICE? .......... 2107

VIII. MEANS TO PRESERVE NECESSARY DEGREES OF AUTONOMY ........ 2109

A. GREATER SPECIFICATION OF AUTHORITY ................................ 2109

B. MORE TRANSPARENCY, INCLUDING RELIANCE ON POLICY

STATEMENTS AND GUIDELINES ............................................... 2109

C. STRENGTHEN THE AGENCY’S PROCEDURAL SAFEGUARDS ......... 2110

D. ADJUST THE FOCUS OF THE LEGISLATIVE OVERSIGHT

PROCESS ............................................................................... 2111

IX. CONCLUSION .............................................................................. 2112

I. INTRODUCTION

On March 16, 1915, the Federal Trade Commission (“FTC”) opened for

business and began what has proven to be a uniquely compelling experiment

in economic regulation.1 The FTC was the first law enforcement agency to be

designed “from the keel up” as a competition agency.2 One vital consideration

in forming the new institution was to define its relationship to the political

process. Among other features in the original FTC Act, Congress provided

1. The creation of the FTC is recounted in Marc Win erman, The Origins of the FTC:

Concentration, Cooperation, Control, and Competiti on, 71 ANTITRUST L.J. 1 (2003). One measure of the

significance of the FTC’s creation and operations is the extraordinary attention that the agency

has commanded in commentary about competition policy. See generally D

ANIEL A. CRANE, THE

INSTITUTIONAL STRUCTURE OF ANTITRUST ENFORCEME NT (2011) (examining the U.S. antitrust

enforcement system and focusing chiefly on the FTC in discussing the federal antitrust agencies).

2. When Congress adopted the first U.S. federal antitrust statute, the Sherman Act, in

1890, it did not create a separate antitrust body to enforce the law. The Department of Justice

(“DOJ”) assumed responsibility for enforcing the new law, and a dedicated enforcement unit, the

Antitrust Division, was formed in 1933. For information on the creation of the Antitrust Division,

see History of the Antitrust Division, U.S. DEP’T JUST., http://www.justice.gov/atr/about/division-

history.html (last visited May. 18, 2015). Congress had created the FTC’s predecessor agency, the

Bureau of Corporations, in 1903. However, the Bureau, which was initially within the Department

of Commerce and Labor (and later within the Department of Commerce), was a purely

investigative agency without enforcement authority. Act of Feb. 12, 1903, 32 Stat. 827. Canada

enacted the first national competition law in 1889, but did not establish a specialized institution

to implement the statute. On the creation of Canada’s antitrust system, see D. Jeffrey Brown,

Introduction to Competition Law, in COMPETITION ACT & COMMENTARY 1, 6–13 (Stikeman Elliott

LLP ed., 2015).