FTC Chairwoman Lina Khan testifies during the House Appropriations Subcommittee in Washington, May 18, 2022.
Photo:
Tom Williams/Zuma Press
When
Lina Khan
assumed the chairmanship of the Federal Trade Commission, she said her goal was to “shape the distribution of power and opportunity across our economy.” Her proposed ban on all employment-based noncompete agreements suggests she doesn’t intend to let the law or Constitution get in her way.
The U.S. Chamber of Commerce will oppose the proposed regulation with all the tools at our disposal, including litigation. If the FTC can regulate noncompete agreements without authorization from Congress, there is no aspect of employment or commercial arrangements that it doesn’t have the authority to regulate or ban arbitrarily.
In its more than 100-year history, the FTC has never enforced a rule to regulate competition, and Congress never intended the agency to have that power. Instead, legislators gave the FTC authority to identify on a case-by-case basis individual acts that constitute unfair competition. Critically, this authority is subject to judicial oversight.
This structure has been a key to preserving innovation in a free market and avoiding overregulation. It prevents the FTC from writing the laws it is assigned to enforce, which is necessary to protect the constitutional separation of powers.
Yet the present FTC isn’t content to live under the legal strictures imposed by elected representatives and the Constitution. Before issuing the proposed noncompete ban, the FTC issued a radical reinterpretation of the agency’s authority under Section 5 of the Federal Trade Commission Act, which governs “unfair methods of competition.” This means the FTC is walking away from having to weigh consumer benefits against consumer harms or even identify actual harm to consumers. In her dissent, FTC Commissioner
Christine Wilson
slammed the new rules…
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