FTC Substantive Antitrust Rulemaking after Loper Bright

The Supreme Court's decision in Loper Bright Enterprises v. Raimondo, which overturned Chevron, raises fresh questions about the scope, if any, of the Federal Trade Commission's (FTC) antitrust rulemaking authority.

Background

Section 5 of the FTC Act prohibits "unfair methods of competition" (UMC). It is uncontested that the FTC, based on Section 5, can bring cases to stop individual companies from engaging in UMC. This is sometimes referred to as case-by-case adjudication. The more pertinent question, however, is whether the FTC Act, specifically Section 6(g) together with Section 5, provides the FTC the authority to enforce the UMC prohibition by issuing administrative rules, also called substantive antitrust rulemaking.

The FTC's current majority has taken the position that Section 6(g), indeed, authorizes it to engage in substantive antitrust rulemaking. This is clear in their 2022 Policy Statement on the scope of UMC under Section 5 and a simultaneously issued statement by Chair Khan. Finally, the recently promulgated Rule banning the use of noncompete agreements nationwide is based on this alleged authority.

Even under the law that existed prior to the Supreme Court's recent decision in Loper Bright, there were serious questions raised about that position, though. According to former FTC Commissioner Noah Phillips, these questions sound in both constitutional separation of powers concerns and basic canons of statutory interpretation. Moreover, in a 2020 law review article, the FTC's current Chair also seemed to concede that UMC rulemaking, at least in part, was dependent on what was then known as Chevron deference. This referred to a Supreme Court doctrine that said that where a statutory term was vague or ambiguous, federal courts should, generally, defer to an agency's interpretation, provided the interpretation was reasonable.

Loper Bright and the FTC

But Chevron was overruled last month. And in Loper Bright, the Court held that "[t]he Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous." That said, the Court also explicitly refused to question prior cases that had relied on the Chevron framework.

So, without Chevron, but with cases decided under its framework still in place, where does that leave FTC substantive antitrust, as well as other types of federal administrative agency, rulemaking? There is little doubt that it will take some time for the full effects of Loper Bright to be felt, and, even then, it is not clear how much it will change the way courts approach agencies' interpretations of vague statutory terms. Some think it will change little, others that the changes could be quite profound.

Below are links to a few of the comments on this important and complicated administrative law issue.

• Kim Wehle: Agencies, Schmagencies: The Future of Federal Regulation after SCOTUS Tossed Out 'Chevron', The Bulwark, July 1, 2024. Available at https://www.thebulwark.com/p/agencies-schmagencies-federal-regulation-chevron?utm_campaign=post&utm_medium=web
• Adrian Vermeule: Chevron By Any Other Name - From "Chevron Deference" to "Loper Bright Delegation," The New Digest, June 28, 2024. Available at https://thenewdigest.substack.com/p/chevron-by-any-other-name
• Steve Vladeck: The Two Fictions at the Heart of the Devastating Chevron Doctrine Ruling, MSNBC Opinion, July 3, 2024. Available at https://www.msnbc.com/opinion/msnbc-opinion/supreme-court-chevron-roberts-rcna160192

Daniel J. Gilman: After Loper Bright, FTC Awaits Its Turn At-Bat, Truth on the Market, July 2, 2024. Available at https://truthonthemarket.com/2024/07/02/after-loper-ftc-awaits-its-turn-at-bat/