[co-author: Nick Gouverneur]*

On June 2, the Federal Trade Commission (FTC) announced modifications to its in-house adjudicative proceedings of agency challenges to mergers and acquisitions by reducing the decision-making power held by administrative law judges (ALJs). This change will affect how the agency’s antitrust challenges are decided. Even though the previous process had been in place for decades, the FTC was not required to receive public comment because the change affects only internal procedures.

Originally, ALJs rendered “initial decisions,” which would become the agency’s final order if none of the parties filed an “appeal” of that decision. Under the new changes, ALJs will issue “recommended decisions” that the commissioners — who initially voted to lodge the complaint — will automatically review, and possibly modify, to determine how the matter will proceed.

Once the ALJ submits the recommended decision, parties can file “exceptions” to the decision through an opening brief. The FTC may then hold an oral argument on the exceptions. At the conclusion of proceedings on filed exceptions, the commissioners will place the case on their own docket and affirm or reject the recommended decision in full or in part.

The changes also preclude ALJs from ruling on motions for summary decision (equivalent to summary judgment). This change, however, will unlikely have a significant impact because, as noted by the FTC, “the Commission has not referred any motions for summary decision to the ALJ since” its implementation in 2009.

Why It Matters

The proposed changes emphasize seismic shifts in the FTC’s enforcement agenda under Chair Lisa Kahn and underscore the many constitutional challenges presently facing the FTC’s administrative process. Commentators are split in their interpretation of the rule change. Some claim that the changes will have an insignificant effect in practice. Others insist that the FTC’s enforcement scheme is now susceptible to legal challenges.

The Supreme Court recently opened the door for constitutional challenges to sidestep the FTC’s internal appeals process. Early this year, in Axon Enterprises, Inc. v. FTC, the Court ruled that constitutional challenges to the FTC’s in-house proceedings may occur in federal court directly.

*Summer Associate