FTC Nominee Faces Questioning from Senate Commerce Committee

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

George Mason University Law Professor Joshua D. Wright faced tough questions from members of the Senate Commerce, Science, and Transportation Committee yesterday afternoon as the committee considered his nomination to serve on the FTC. If confirmed, Wright would replace Commissioner J. Thomas Rosch—a fellow Republican—who remains at the Commission although his term expired in September.

Wright, an economist, has written extensively on antitrust law and economics and is a regular contributor to the Truth on the Market blog. Some of those writings have raised concerns among committee members that Wright might not be right for the FTC.

“I profoundly respect the Federal Trade Commission as an institution, its role in protecting consumers, and its mission in ensuring the effective operation of markets,” Wright said in his prepared testimony. “The Commission has earned its reputation as the world’s premiere competition and consumer protection agency.”

However, Senator Barbara Boxer (D-California) said that some of Wright's writings gave her pause. She questioned why Wright would want to be a member of a Commission that he recently described as having “a history and pattern of appointments evidencing a systematic failure to meet expectations.”

Wright explained that he was not talking about the entire mission of the FTC. His criticism stemmed from the Commission's enforcement record under its FTC Act, Sec. 5 unfair methods of competition authority, as opposed to its consumer protection authority. Wright said that he believed greatly in the FTC's fundamental mission of protecting consumers.

Senator Frank Lautenberg (D-New Jersey) also wondered how Wright’s apparent anti-regulatory stance squared with serving as a regulator. “How do you protect the safety of consumers without rules?” the senator asked.

“I do believe in rules and regulation,” said Wright, in response to the questioning. He added that regulations can harness markets to work for consumers but can also operate to the detriment of consumers.

Commerce committee members also sought assurances from Wright that he would recuse himself from FTC proceedings involving companies for which the nominee had authored reports. Wright stated that he would recuse himself from law enforcement matters pertaining to Google and other appropriate cases where potential conflicts called for recusal for a period of two years.

Noting that the FTC can “sometimes move at a glacial pace,” Senator Maria Cantwell (D-Washington) pressed on the adequacy of the two-year period of recusal.

Wright said that he would check with ethics officials at the FTC about his obligations and would recuse himself if appropriate, but the pledge did not seem to satisfy Cantwell.

Wright also said that, if confirmed, he would look into oil market manipulation. Senators Boxer and Cantwell both believe that the FTC should do more to determine whether market manipulation or false reporting by oil refineries contributed to near-record gas prices in Western states this year. Cantwell wants the agency to take a more aggressive role in policing potential oil market manipulation.

Boxer said that she was not happy with the Commission because it “has never so much as scolded” the oil companies.

Wright also pledged support for the FTC’s efforts to develop a “Do Not Track” mechanism for protecting consumer privacy on the Internet. He said that he supported the Commission’s view in favor of Do Not Track and the FTC privacy report's inclusion of notice and choice obligations.

Leibowitz Recites FTC Accomplishments, Future Plans at Nomination Hearing

This posting was written by John W. Arden.

At a hearing on his nomination for a second term as Commissioner yesterday, FTC Chairman Jon Leibowitz recounted some of the achievements of the agency during the last few years and spoke about a “portfolio of issues” that he plans to address during his next term.

Speaking before the Senate Committee on Commerce, Science, and Transportation, Leibowitz said that it has been “a wonderful opportunity” to serve on the FTC for the past seven years, including more than two years as Chairman.

“Just three years shy of our centennial, the FTC is the nation’s premier consumer protection agency,” he said in a prepared statement. “We play a critical role in freeing the marketplace from predatory, fraudulent, and anticompetitive conduct that tilts the playing field against consumers and honest business people.”

According to the Chairman, the “small agency with a big mission” has prioritized the pursuit of unfair and deceptive practices aimed at financially distressed consumers, addressed consumer privacy from both enforcement and policy perspectives, focused on health care competition, and monitored closely petroleum markets.

The growth of the Internet, together with the economic downturn, has fueled a resurgence of “last dollar frauds” aimed at the most vulnerable consumers. These include foreclosure rescue scams, sham debt relief, and bogus job opportunities. The Commission has partnered with state attorneys general and other state agencies to bring more than 400 cases against such schemes.

Consumer privacy has been—and will continue to be—a major focus on Commission enforcement and policy, according to Leibowitz. In the past decade, the FTC has brought more than 100 spam and spyware cases, more than 30 data security cases, and nearly 80 cases for violation of the Do Not Call rule.

Last December, the FTC issued a report setting forth critical self-regulatory principles that seek to promote consumer privacy, while allow industry to innovate on the Internet, he said.

“Of course, protecting privacy in the face of new technologies will remain a challenge. We are aware of this Committee’s concerns about the privacy implications of mobile apps, flash cookies, geolocation, and facial recognition; the value of industry-wide codes of conduct; and the difficulty safeguarding privacy when users of electronic devices every year seem to grow younger as well as more tech-savvy than their parents.”

Health care competition will remain a top priority for the Commission, particularly challenging hospital mergers that are likely to raise prices and “pay for delay” pharmaceutical settlements, he said.

In light of the impact of gasoline prices on American families, the FTC will continue to monitor petroleum markets closely. Recently, the FTC staff issued a study on examining the various factors that increase the price of gasoline, including OPEC’s inherently anticompetitive behavior and the rising demand in China and India.

The agency will continue to issue industry studies such as the periodic reports about the marketing of violent entertainment to children and the marketing of healthy food to children, the Chairman concluded.

Text of Commissioner Leibowitz’s prepared statement appears here on the FTC website.