Recently Amy Mudge and I, along with Bethany Lukitsch and Julie Singer Brady, the co-leads of our class action group, attended and spoke at the Consumer Brand CPG Legal Forum. There were lots of great sessions and speakers, but I want to highlight the keynote address given by FTC Commissioner Melissa Holyoak, who, along with Chair Andrew Ferguson and likely new Commissioner Mark Meador, will make up the new Republican majority on the Commission.
Commissioner Holyoak addressed both the FTC’s competition and consumer protection missions. Even though I consider myself a recovering antitrust attorney from many years back, I will forgo discussing her comments on competition except to say she gave a thorough critique of the Khan Commission’s revival of Robinson-Patman enforcement.
Speaking of the Khan FTC, Commissioner Holyoak also criticized it for what she characterized as its disdain for economic analysis and the rule of law. With respect to the latter, she said that reasonable people can disagree over what the law means, but that the Khan FTC approved complaints and entered into settlements that no one would file in a court, let alone litigate. She assured the audience that both of these policies would end under the Ferguson FTC.
The Khan FTC also engaged in a considerable amount of rulemaking activity. When asked whether that might continue, Commissioner Holyoak noted the Trump administration’s requirement that 10 old rules be eliminated every time a new rule is promulgated. She said that while it was certainly worthwhile for the FTC to evaluate the continued utility of its existing rules, this requirement would create a significant burden with respect to creating any new rules.
Updating the Green Guides was one thing left undone by the Khan FTC. Commissioner Holyoak noted that the Guides are not law but that many states have adopted part of the Guides into their state laws, so the Commission should proceed cautiously with respect to updating the Guides. She noted that there have been significant technological advances since the Guides were last updated, in 2012. For example, she said that chemical recycling (breaking down waste and turning it into new material) is now far more common. Her goal, she said, was to have Green Guides that focus on false or fraudulent claims but that don’t impede innovation.
With respect to surveillance and its relevance to issues such as pricing, advertising and workers, she advocated for removing that word from our vocabulary. She argued that the FTC’s job is to do a cost-benefit analysis with respect to any potential action. “Surveillance,” she said, is a pejorative term that prejudges the activity. She noted that there can be real benefits to some forms of surveillance, such as increasing sales, assisting new entrants and helping consumers lower their search costs. She advocated for the Commission to collect robust economic evidence before taking any action in this area.
The commissioner then turned to artificial intelligence. Here as well she argued that the FTC should combat fraud and deception while encouraging innovation. She argued that the Khan FTC overregulated AI, for example, by taking action against neutral AI tools that could be used for good or bad purposes. She said the message that approach sends to innovators is, don’t innovate because you’ll be punished if somebody misuses your innovation. She distinguished that type of situation from a scenario where the AI was created not as a neutral tool but as a tool to facilitate deception. As an example, she cited an AI widget that would take a consumer review generated at online checkout and label the review a “product review” even though the consumer had obviously not used the product yet.
Finally, Commissioner Holyoak offered some guidance on how to interact effectively with the FTC. She encouraged companies to consider proactively reaching out to the FTC about a new product or service. She urged companies to, if they become the target of an FTC investigation, work cooperatively with staff, and said that if the matter proceeds far enough that you meet with her, come prepared to engage meaningfully on the issues and a possible outcome if the matter were to proceed to litigation.
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