Welcome to the show! On this episode, Alden Abbott Senior Research Fellow at the Mercatus Center at George Mason University and former general counsel at the Federal Trade Commission, speaks with Commissioner Noah Phillips about all things FTC, including consumer protection, antitrust, monopolies, privacy, competition policy, and much more.
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Note: While transcripts are lightly edited, they are not rigorously proofed for accuracy. If you notice an error, please reach out to [email protected].
ALDEN ABBOTT: Greetings. I'm Alden Abbott, senior research fellow at the Mercatus Center at George Mason University, and former general counsel at the Federal Trade Commission or FTC. Today I'm joined by a distinguished guest FTC commissioner Noah Phillips, and we'll discuss a very hot public policy topic, Antitrust competition, and particularly its intersection with privacy data protection.
These areas are the subject of current legislative proposals, and potentially major change of direction in the federal agencies, not just the FTC but perhaps the justice department as well. Now, President Trump nominated Noah Joshua Phillips to be an FTC commissioner, and he was confirmed unanimously by the Senate on April 26th, 2018.
Before coming to the FTC, he served as chief counsel to US Senator John Cornyn of Texas on the senate judiciary committee. During 2011 to '18 in particular, he advised Senator Cornyn on legal and policy matters including antitrust, constitutional law, consumer privacy fraud, and intellectual property. I was privileged to get to know Noah during that period, and I learned a great deal from our discussions.
Prior to his Senate service, commissioner Phillips worked as a litigator at Cravath, Swaine & Moore, and Steptoe & Johnson. He began his career however in investment banking at Wasserstein Perella & Co, a very well-known New York investment bank. He received his AB from Dartmouth College and his JD from Stanford Law School. Commissioner Phillips, I'm honored and delighted you are here today. May I call you Noah or should I stick with Commissioner Phillips?
NOAH PHILLIPS: Alden you can continue to call me, Noah. It's such a delight to be here with you, it has been too long and it's great to be here with Mercatus. Mercatus does such great work. I should note before we get started though for your listeners that it's just me that they're listening to not necessarily the entirety of the FTC because sometimes my colleagues and I don't always agree.
ABBOTT: That's certainly a fact, it's important to say that. I know we were always reminded to do that at the Federal Trade Commission and each commissioner I know often speaks for himself or herself. Let's get started. You've been a commissioner now for nearly four years and you've served with three different chairs. How have things changed since 2018?
PHILLIPS: The more things change, the more they stay the same. It has been an interesting four years at the FTC. We've had three very different chairs, and to some extent, it is actually a story of continuity. Maybe it's important to start there. We continue to bring cases to enforce the antitrust laws, we continue to bring cases to enforce the consumer protection laws that come under our purview.
Even in the specifics in terms of the cases that we are bringing and the theories that we are advancing, and the remedies that we are seeking. There is for the most part actually quite a bit of continuity. Some of the most high-profile cases in the merger space that we've brought in recent weeks - objecting to the merger between Lockheed Martin and Aerojet, or the merger between Nvidia and Arm in the UK.
Those were both vertical merger cases, they involve really interesting sets of facts but they both align with the basic principles that were adopted by the commission in the vertical merger guidelines in 2020. They both garnered unanimous votes, so we are seeing a degree of continuity which is a good thing. I do think there are some areas where there is a bit of a break and in particular a break under the most recent chair, Chair Khan.
One important area of difference I think is an optical one. The FTC is much more press-facing than it used to be, it is much more public-facing than it used to be. We are having public meetings. There are real benefits to that. I think there are benefits to the public knowing what we are doing, understanding a little bit about how commissioners are thinking, but there are also costs.
One of the things that I've been disappointed to observe is that sometimes I feel we are rushing to get out policy because we have the public meeting. Sometimes too often for my taste, we have been doing our policy work whether it is 6B studies or policy statements without the careful analysis and deliberation that traditionally has characterized the agency over time.
You don't see as many memos as you used to, there isn't as much time to chew on them, there isn't the dialogue that traditionally has allowed the FTC across administrations with leadership from both parties often to arrive at consensus: consensus documents, consensus regulations, consensus cases. I fear we are on a downward trend in those regards and that to me is unfortunate.
ABBOTT: Okay. Well, certainly from my time at the FTC, I think you're quite right. The FTC certainly-- I spent three different periods of time at the FTC and it has a history of bipartisanship and continuity with, historically, differences at the margin. As political party leadership changed, you didn't have radical differences - certainly until potentially recently we shall see - but the commission just continued on which at least to me it was a model of bipartisanship for a long period of time and hopefully it'll be able to retrieve that tradition, we would hope.
PHILLIPS: Absolutely, I think we certainly got off to a bit of a rocky start. You may have noted that at one point we even voted on a partisan basis and one of the votes was no longer in the building. That was certainly something to behold.
ABBOTT: The so-called phantom vote? Yes, the ghost of the FTC, yes.
ABBOTT: Well, we shall see how that develops, but let's turn now to a specific area where when I was general counsel, we filed a brief. Unfortunately, the Supreme Court ruled in April of last year unanimously that the FTC did not have authority to get monetary relief under its injunctive authority section 13(b) of the FTC Act.
Now there's talk of legislation to give it such authority or to give it indeed authority get disgorgement of ill-gotten gains. If that happens - and it remains to be seen what Congress will do - but should the authority be limited to hardcore deception fraud or should be it be applicable to the full range of unfair and deceptive action practices or unfair methods of competition?
PHILLIPS: Sure. Let me step back and I think for the listeners explain a little bit of how we got where we got on Section 13(b) and monetary relief. As you noted that provision of the statute allows the FTC to get an injunction. Beginning under chairman Muris, the FTC--
I guess that might have been before chairman Muris, forgive me on that one. Led by Tim Muris, the FTC started working in particular in the context of fraud cases through the district courts and ultimately into the appellate courts, and convincing the judges that where a court allowed for a remedy in equity, which an injunction is, that also included traditional monetary equitable remedies.
For example, restitution to harm consumers or the disgorgement as you noted of ill-gotten gains. That was the state of play in case after case, in court after court. I think a total of about eight appellate courts blessed this theory up until fairly recently, until the seventh circuit, Judge Sykes in particular, saw it differently.
Ultimately that is what got up to the supreme court, and you saw that issue is what got up to the supreme court and nine justices took the, in my view very reasonable, view that this part of the statute says injunction, other parts of the statute say other words including with regard to monetary remedies.
What this part of the statute allows you to get is an injunction. Let me start by saying this is already having a profound effect, and it is my view that Congress should fix it, they certainly can. We can talk about how in just a moment. In the interim, I think it's going to be very interesting to watch how this affects the agency. There are cases where we still want to get money and from my perspective, the most important subset of those cases are cases where people have been harmed. You want to return the money to them. Now, our statute still does afford several avenues, but those avenues raise other issues. One avenue is section 19. It's a longer process. It includes a statute of limitations and critically it has a sort of mens rea requirement. It is actually framed in terms of a reasonable person so we think of it as an objective standard, but it requires either fraud or dishonesty. And so we will over time see some cases that we can put into that Section 19 box and either through settlement get the money or go through a longer process of litigation and ultimately try to get that money on behalf of consumers.
The other avenue is where we have rules. There's actually a third avenue but it probably doesn't warrant comment here but where we have a rule in place, the FTC can either get penalty money or under Section 19 redress for consumers.
I think that over time, what you're starting to see and what you will continue to see especially if Congress doesn't act is pressure on those rules. Now, sometimes the conduct will clearly fall within the rule and we'll be able to get the money or assess a penalty but sometimes - and these are going to be the more interesting cases - the agency is going to get creative with how it reads the rules.
I have already flagged a number of instances in my public dissents where I think we've gone too far. We've had sometimes not a good claim, sometimes a plausible one, but in these cases at the end of the day, not in my view a compelling argument for the application of the rule to the conducted issue. But I think trying to fit things into the buckets of either Section 19 or rules are two trends to watch. To answer your question though, what should Congress do?
I think there are two different areas where you're going to see debate. One is about antitrust, where monetary relief has not been as important among other things because the Sherman Act since 1890 has afforded treble damages and we have a robust market in class action lawsuits and this sort of thing that effectively penalized and thus deter bad acts. With respect to consumer protection, the bigger debate isn't whether I think everyone agrees there ought to be some ability to get redress but what kind of conduct it should apply to and what kind of money you can get.
My view, which is not necessarily a consensus view at all is that the limitations should have less to do with the kind of conduct. In other words, I don't think we need to limit it to hardcore fraud, but I do think we should be looking at the kind of money that adequately calibrates the law to go after the people who are harming consumers most. I would like to see a remedy built around consumer harm.
My concern with the disgorgement of ill-gotten gains is that in cases where you see the most harm, frauds which cost money, ill-gotten gains is not going to get enough back for consumers. The other thing ill-gotten gains will do - especially in cases where consumers are harmed less - is that it will operate more as a penalty and Justice Sotomayor has a great opinion in the Liu case about how disgorgement of ill-gotten gains really is a penal remedy in the way that the redress of injury is not.
Ultimately, when we're doing 13(b) and we're looking at the full breadth of the FTC statute, unfair or deceptive acts or practices, or even possibly unfair methods of competition, and the defendant doesn't have the notice that they would have where a rule applies or you have Section 19's higher standard of fraud or dishonesty, there I think a penal remedy is not a good idea.
That was the basic assumption when Congress gave us this kind of power that you wouldn't want to create a penalty or you couldn't anticipate what was penalized in advance, it doesn't make sense to say to someone drive at a “reasonable rate”. That's why we say you can't drive faster than 65 on the highway. I think ultimately where disgorgement steps in and operates as this plenary penalty, I think we're going in the wrong direction.
ABBOTT: Interesting. Now you mentioned consumer harm. I take it you're also interested in looking at antitrust cases. What about cases that may not violate the Sherman Act but may violate Section 5 of the FTC Act or is it your view that for these purposes Section 5 “unfair methods of competition” should only apply to violations of Section 1 or Section 2 of the Sherman Act?
PHILLIPS: I don't think Section 5 applies quite that narrowly. I think courts have recognized that it can reach incipient violations of Clayton or Sherman. I expect that that will be an ongoing, it has long been a debate as you know and I expect it will be a debate going forward, but I think wherever you’re coloring in terms of standalone, Section 5, outside the lines of Sherman and Clayton you're necessarily coloring in an area where defendants may not have noticed that the conduct was illegal in the first instance. Which is of course part of the idea of the FTC Act. A group of experts who can study business practice and determine that which is unfair. In that context, a penalty, again, doesn't make sense.
ABBOTT: Okay. That's helpful. Switching gears now, we mentioned mergers very briefly earlier, but the FTC and DOJ have issued a request for information on possible merger guideline revisions which sets forth a long laundry list of potential competitive problems. Now, should new guidelines assuming they're issued reflect that level detail or should they be shorter and more general?
Also I noticed, and lots of people have noticed, that the RFI requests for information referenced a lot of old cases from the 1960s such as Proctor and Gamble, Brown Shoe, Philadelphia National Bank, and some observers would argue that those cases really represent dated precedents that do not reflect current economic analysis of antitrust. What's your position?
PHILLIPS: Let me start with this. I think it is a good thing from time to time for us to re-evaluate our approaches to pretty much everything and the horizontal merger guidelines were lasted reviewed in 2010, and there has been some development in case law. There has been some development in the economic understanding of some of the practices at issue and to some extent, there's been some development in agency practice.
I think it is fair to ask some of the questions in the RFI. If you want guidelines that are going to reflect thoughtful policy; if you want guidelines that are going to stand the test of time and I'll be a little bit more specific in terms of what I mean by that. You want guidelines that have innovation that is warranted. They're based on real developments and understanding, real experiential change including, and critically, in courts.
That is the development of case law and reflecting what agencies have been doing. That's how you get good guidelines. You use a consensus basis to get there. This was the story of the 2010 horizontal merger guidelines and they were very successful.
When companies would challenge or rather when the agencies would challenge companies in court to block their mergers, they would fight about a lot of things. They would fight about the application of case law. They would fight about the facts of the case. They would fight about the economics but the fundamental framework that the guidelines laid out ended up being where the parties agreed.
It was because of that, critically, that courts adopted the guidelines into what they were doing. If the guidelines are more edge, if they don't reflect case law, if they don't reflect sound economics, if they don't track what the agencies are doing, if they're not based on a consensus view, my fear is that, well, I guess, depending on what I think of the guidelines, but I think the likelihood that parties agree on the guidelines and the likelihood that courts adopt them and thus they have the meaning that they have, is less.
I think that would be an unfortunate waste of a good project which is again, to look critically at some of the assumptions underlying the horizontal merger guidelines from 2010. There also discussion, of course, of the vertical merger guidelines. As I noted earlier, you were here. We adopted a set of vertical merger guidelines with the DOJ in 2020, at the FTC, they were scrapped unceremoniously with virtually no consideration.
They are still operative at DOJ today, although there is a footnote in the RFI that suggests that DOJ leadership doesn't like them. We'll see what happens there. My view is that those were sound principles on vertical merger enforcement and, again, I think are recent cases which are not easy cases absolutely aligned with the standards laid out in the vertical merger guidelines with respect to the precedent you mentioned, yes, they are quite old.
Certainly, they do not account for a lot of the new case law that has developed in a period much longer than my own lifetime with regard to mergers. I do think that we know a lot more than we knew then, and to draft guidelines without regard to where judicial precedent is, is not the right way to go. I'm mindful of the fact that at least one of the quotations excerpted in the RFI is what then Judge Kavanaugh on the DC Circuit referred to as “drive by dicta”. Yes, of course, new guidelines ought to reflect the current state of the law, not the state of the law circa 1965, or what have you.
ABBOTT: Right. There's some who might say that some of those cases reflected a big is bad philosophy that seemed to permeate some of the discussion, for example, in Brown Shoe, but you're right, it'd be interesting to see what comes out of all this. Moving on to whether antitrust should be broader and what it has been. Now, Chair Khan and Tim Wu appear to take the position, that competition law should be applied to cope with new sets of problems, such as inequality, racial discrimination, labor bargaining power, social role of small businesses. What's your view on such an extension?
PHILLIPS: Let me start with a few things. The first thing I see is I hear two arguments being made almost simultaneously. One is, I suppose, a positive claim, and the other, a normative. The positive claim is that if we had more competition, we would have better results for labor and the environment, and so forth. A second claim is that, in fact, as a normative matter, antitrust law applies to address all those social goals. I think the first is right to some extent, but the limits of that extent are critical. We'll talk about in a moment. The second, I think, isn't really true. What competition law addresses is competition.
With regard to what you can achieve in the world through competition, and I'm a person who believes in market competition, I think it's true that we can achieve a more equitable distribution of goods and services and resource distribution in society with competition. I think that's the story writ large of free markets as opposed to government-directed markets. At the end of the day, it is the free market that has been a much better distributor of goods and services to people, a much better means to grow out of poverty across society, if you look at the results of government planned economies, they're really grim. They're really grim.
Not every good thing in the world is a necessary corollary of the competitive process. You mentioned labor. We hear a lot of talk about antitrust and labor. To be clear, there is work for antitrust in labor. I think, for instance, the work that the Department of Justice has been doing on no-poach agreements is terrific work. Where people are preventing competitive market forces from helping workers, we need to go after them and I'm glad we're going after them criminally. Let me just start with that. Of course, antitrust has a role in labor.
The FTC has, in my tenure and in the Grifols case, has pursued labor and monopsony matters. Let's start there. However, I don't think it's right to argue that the unfettered, unencumbered market - without anti-competitive activity - would result in labor taking a necessarily greater share of economic growth, or perfect working conditions. Those, in fact, are the justifications for progressive taxation. They are the justifications for regulation. If you don't think the market will produce it, I think you have to admit that antitrust alone is not going to solve it because the point of antitrust is allowing the market to work.
It's very odd for me to hear from people who fervently believe in regulation, more on that in a minute, claiming that antitrust is the solution to all of these problems. One of the things that I observed in the President's executive order on competition is that it called for a lot of rulemaking. Rulemaking is just another way of saying regulation. Now, to be clear, there was some regulations that I like, but there are even some regulations that can help stoke competition. The fact that you can take your prescription with you from your eye doctor and go and shop it around is a good thing.
Allowing more information into the world, allowing firms to compete, but a lot of regulations produce the opposite of competition. They entrench incumbents, they create moats, barriers to entry. Looking at the President's executive order and seeing him call for rule after rule after rule, what I see is a little bit too much of simply calling regulation competition, and perhaps making it more palatable to the American public's ear. I'd also add this. Sometimes when we are protecting competition, we may be protecting market forces that aren't necessarily the thing we want as a society.
I'll give one example. We had a coal joint venture case involving the Southern Powder River Basin. It was litigated in Missouri, the Arch Coal case. The point of the case was to protect competition selling to power plants that burn coal. Power plants that many view as too dirty. They want to see us move to renewables, they want us to move to cleaner natural gas-burning power plants. That was in fact, the trend that the defendants cited in the case, which is, "We won't be able to raise prices, even though it was in effect a merger to monopoly, because if we get too expensive, they'll just move off coal as they have been moving to natural gas."
We saw a problem for competition. It's plausible that the competition, the competition harm that we were addressing, which is the cost to coal-burning plants, by remedying it, we will allow those plants to last longer. Maybe that's not good if you're worried about coal-burning plants. If you're worried about the competition, that's the problem antitrust is solving.
ABBOTT: Good. That's very helpful. Speaking about rules and regulation, what about rulemaking? Competition rulemaking is a possibility, it seems, based upon a release by the FTC in December. Now, in light of concerns about rulemaking, would you be inclined to vote against considering Section 6(g) competition rules? I know you and Commissioner Wilson have expressed concerns that the FTC's authority to conduct competition rulemaking is lacking. If not Section 6(g), the general rulemaking, what about Section 18 of the FTC Act that allows rulemakings based on series of unfair acts?
PHILLIPS: Let me start with the law, then go to the policy for unfair methods of competition, that is, antitrust rulemaking. As for the law, my baseline opinion is first, I don't think we have the authority. The theory for this was blessed by the DC Circuit in, I think it's 1972, in the Petroleum Refiners case. I think to read that opinion today, it's almost unrecognizable as a matter of a modern jurisprudential approach to statutory interpretation with regard to regulations. If you look at the cases coming out of the Supreme Court, with respect to the vaccine mandate or the eviction ban, there are a lot of others like this.
The message that the court has made very clear is that when Congress intends to vest agencies with broad regulatory authority to settle matters of vast economic or social importance across the US economy, Congress has to be clear about that. Congress wasn't clear, and the DC Circuit recognized that in Petroleum Refiners. You have a provision in the statute that no one for half a century recognized as conferring regulatory authority. All of a sudden, in the 1960s, the agency discovers it.
If you take the view, especially the view that my colleagues do with respect to the scope of unfair methods of competition, you're essentially talking about plenary regulatory authority for the economy, because of a line in a provision about classifying corporations in the part of the FTC Act, that doesn't go to our enforcement authority and doesn't concern regulation, and isn't even backed by penalties. It's the part that has to do with studying markets. Section 6.
I also think as a legal matter, there's a constitutional issue here. That is the following. Where you have such a capacious grant, even if it were there, which I don't believe it is. Even if it were, such a capacious grant of regulatory power without any real balance - you raise a real issue of non-delegation. It's not lost on me that the National Industrial Recovery Act which was invalidated as a violation of the non-delegation doctrine in Schechter Poultry allowed the president to promulgate codes of fair competition.
What the president's executive order, what Chair Khan has written in academic work, what Commissioner Slaughter has endorsed is rules about unfair methods of competition. Codes of fair competition and unfair methods of competition sound a lot alike to me. If you look either at the president's executive order which names I think like seven different topics on which we might apply this - privacy and pharmaceuticals and labor and so on and so forth - it's virtually without limit.
The icing on that cake is the fact that the first move of the Khan chairmanship was to get rid of a policy that put modest limits on standalone Section 5. We are not defining where we think the limits of our power are, and just to be clear we, not including me here, we are not defining what those limits are if we believe there are any.
The president of the United States in an executive order which is law for the executive branch has laid out at least seven different very far-reaching concepts of how this rule-making authority might be applied. I think there is a delegation problem. I also alluded to a policy problem and that is the following. From 1890 to today, anti-trust law has been mediated through the litigation process. Courts have had the opportunity to take a close look at business conduct.
This is taking the process out of courts, it's getting rid of antitrust as we know it and replacing it with regulatory fiat. I don't think that's the right way to approach it, I also think it runs directly contrary to the trend in courts which is moving away from per se rules to the rule of reason. This is talking about-- This whole idea is the reimposition of per se rules, and not even by judges looking at a wide span of cases, this is by a bare majority of FTC commissioners. I don't think it's legal, I don't think it's constitutional, and I don't think it's the right idea.
ABBOTT: Interesting. Well, we shall see it's-- I think lots of people have been writing about that and I'm sure the courts and their judicial clerks are taking notice as well. Let's briefly talk about intellectual property which is really tied to innovation, a very important topic. Increasingly important in the high-tech economy, patent licensing in particular. Now the FTC lost a Qualcomm case over a year ago but remains active in the area. What are your broad thoughts about the intellectual property-antitrust interface?
PHILLIPS: Let me start by saying some of my greatest moments at FTC have been working on cases where IP and antitrust meet. When I dissented in 1-800 Contacts, when I wrote the opinion for the unanimous commission and impacts both of which opinions were ratified by appellate courts, you got to look very carefully at this nexus which I think is going to be an ongoing issue.
Antitrust and intellectual property on average over time by and large pursue common goals. Innovation is good for consumers. Innovation is a critical part of competition, and government policies directed by congress to help support innovation even where they, in the intermediate term or the immediate time, displaced competition for a while are still consistent with the goals of antitrust law.
The patent laws were adopted long before the anti-trust laws. The two have been linked for a long time. In England, the king used to issue letters of patent, and these were monopolies. They were grants of exclusive rights to sell, and they were offensive to thoughtful Englishmen of the time, and the founders in the US. You had in England the law against monopolies because people saw the king giving favors and it was bad for consumers, it was bad for competition.
What the founders realized is that the right balance was saying, "We could continue to grant these letters patent, these government monopolies, but we should do them to further science and the progress of the useful arts." What they wanted was innovation, and IP still today plays that role. The US economy is less focused on manufacturing than it used to be, it is more of an information-based economy.
These are areas where we are innovating, where we are winning, and where people are benefiting. They're benefiting from drugs that save lives, they're benefiting from processing power of computers, all over the economy we see this. I think at the end of the day, what we should have is a law that to the extent the two work together fosters that cooperation, that's a good thing.
Where there is abuse of IP, the Rambus case had the facts been different is a good example, the impacts case. I do think there is still a role for anti-trust. I mentioned-- one of the cases I mentioned was 1-800 Contacts. In general, the Second Circuit went against the commission but I and the Second Circuit judges and the commission all agreed on one thing, and that was the trademark agreements were not exempt from antitrust law.
Standards had to be applied and you wanted to have an antitrust law that accommodated the congressionally created IP rights. Antitrust still had a say and I was glad I thought the court got exactly to the right place on that one.
ABBOTT: Good, yes. I know you were quite prescient in that case I recall. Now let's move quickly to monopolization cases. Facebook of course has gotten a lot of attention. There's the Justice Department's case against Google but it looks as if the Facebook case if it continues may not get to-- may be bifurcated and may not get to trial until 2024, it's a long time. Now, do you have any concerns or general thoughts about continuing to bring big Section 2 cases, monopolization cases, or more generally new unilateral conduct cases?
PHILLIPS: Let me say two things. I have voted for a number of Section 2 cases in my tenure and we actually achieved a court victory in the Viera case just a few weeks ago. That was heartening. I think there continues to be a role for sensible legally and economically supported Section 2 litigation, I hope that continues. Not every case that anyone can conceive of in their head necessarily meets that test. It may be bad in terms of its conception, it may be bad in terms of the facts as they ultimately come out.
History is littered with case after case after case. You can think of IBM or Microsoft. There was a victory ultimately for the government but the government did not get the remedy it saw. These cases take a lot of time and a lot of energy. The story of these cases is not necessarily a good one, and resources that could be better put toward enforcing clearer violations of the law where consumers are more harmed may be the better path. At the end of the day depends on the case.
There is of course the role for big Section 2 cases, but that doesn't mean that every big case anyone can conceive of is a good Section 2 case. That doesn't mean that there is a violation of the law.
ABBOTT: Right. I just noticed in passing perhaps one of the most famous big Section 2 cases, the AT&T case which resulted in the settlement. Really a lot of the competitive harm stemmed from the regulated industry nature of the industry and the history of settlements. It's interesting, but that’s a different topic.
PHILLIPS: One of the things about the computer market is that AT&T was not allowed to participate in it. Perhaps as a result, we saw the government bring the monopolization cases it did in that market. At least in one instance, there was an antitrust intervention that prevented competition.
ABBOTT: Very interesting. Let me jump to privacy, which is technically many people view as a consumer protection issue. Of course, for those who don't know, the FTC has authority to deal with unfair or deceptive acts and practices. That's certainly been covered privacy, various states have enacted privacy statutes. There's a lot of talk about inconsistencies and perhaps harm to interstate commerce, should Congress pass a federal privacy law? should law empower the FTC to in effect, be the enforcer? If there's no federal law, preempting state law, should the FTC think of enacting privacy rules?
PHILLIPS: I think Congress should pass a privacy law. What you have seen at the state level is a proliferation of individual laws, some of which have some consistency, but between which there is a great deal of inconsistency. Commerce in data, commerce, and consumer data is interstate commerce. There's clearly a federal role here. When you're talking about efficiencies, you've got to be concerned about the small firm that would rather invest in engineers than lawyers, and having a multiplicity of legal rules for conduct that is necessarily going to cross state lines, to me are used for national privacy law.
I do think protecting privacy also is important. To the extent, we can do it on an even basis that protects consumers and allows companies to do their work across state lines. That's a good thing. I'd also add that a lot of what you hear when you talk to people about privacy concerns is a sense of not knowing what's going on in terms of data that is gathered from them. To the extent one of the things you're trying to solve for is a lack of consumer understanding, having a variety of different state laws, that clouds consumer understanding of what's allowed and what isn't; it clouds expectations.
That's counterproductive from that perspective. We do need a law, I think the FTC is the obvious place to enforce it. We enforce privacy statutes today. We've long used as you know, our authority to police unfair and deceptive acts and practices under organic statutes, under Section 5, to get at privacy harms. That's good work. We have the best privacy lawyers in America here at the FTC. I do think we are the right agency to do it.
ABBOTT: Okay, that's very helpful. What about competition advocacy, or the FTC has a long, distinguished record of filings, often at the state-level legislatures, for example, discussing the potential anti-competitive effects of laws and regulations. Now the Biden Executive Order calls for a whole of government approach to competition policy. Should the FTC play a key advocacy role, not just with regard to the States, but with regard to federal agencies?
PHILLIPS: The answer to that is yes. I was very pleased to see that in the Biden Executive Order because I think for some on the Neo-Brandeis side of antitrust, competition advocacy runs up against their real desire for regulation, just as I said before, is sometimes called competition but isn't. Competition advocacy is some of the best work we do. I was glad to see it in the President's executive order. You may have seen recently that we put in some advocacy with respect to hearing aids. I was glad we did that. That was a pro-competitive regulatory process.
We should be there to help other agencies along in those processes. Regrettably, we continue to see attempts at the state law to stop businesses from operating, to stop hospitals from being built. Where those laws are protecting incumbents. Sometimes they're even legalizing in effect cartels. We need to be on the other side of that issue. I'm very proud of the competition advocacy that the FTC has done. It's one of our best traditions, and I hope it continues.
ABBOTT: Great, great. I certainly agree with that. Very quickly, should the FTC have new bureaus dealing with data privacy and technology they were or should stay in the traditional bureaus?
PHILLIPS: There is a need for people who are smart on technology at the agency, I like calls for additional technologists. Technology describes a lot of different things. With regard to a bureau, the question is what is its separate operation? What I would rather see is technologists embedded in everything we do, from economics to consumer protection to antitrust, and I'd like to see them working together. The fear I have with the bureau is that it becomes something of a separate opinion on I could have designed that better. I don't think that's where we need to be viz a viz the market.
ABBOTT: Integrated approach. In other words, very interesting. Great. Now, time is short. I have one last big picture question. Do you have any additional remarks about your role as a sometimes dissenting minority commissioner and any crystal ball predictions about the future of FTC?
PHILLIPS: Oh, goodness. Look, we have seen a very aggressive and progressive vision from new management at FTC, they take a very capacious view of the antitrust laws, they take a very capacious view of their regulatory power. I'm not sure those things lie either as a matter of law and a matter of policy. I hope they resist the temptation to take words that are not-so-clearly defined in the statute and assert their will and their view of how markets ought to operate without regard to the effect of market operation, or consumers. Should they not, you will see more dissents.
We may see court intervention as well. It will be interesting to watch. The agency is definitely at a critical point in history. The plan is roughly that adopted in the Carter administration, that was not a period that ended well for the agency. I hope we avoid both of those goals and that same fate.
ABBOTT: I agree with you, Commissioner, I’m so old I was actually a very junior lawyer at the end of the Carter administration in the FTC. I remember those days.
PHILLIPS: I don't blame you alone, Alden. [laughter]
ABBOTT: Don't blame me for all the problems. Great. Well, Commissioner Phillips is certainly one of the most thoughtful, articulate experts on competition antitrust, and consumer protection. He's already issued tremendous opinions and wise advice and speaking personally, I hope that a lot of people at the commission, listen to his advice, and we very much enjoyed this conversation. Thanks again, Commissioner Phillips
PHILLIPS: Alden, thank you so much. It's great to be with you and see you soon.
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