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The FTC Collaboration Act of 2021: The Relationship Between the FTC and State Attorneys General (Part Two)

Paul Singer, Beth Chun, and Abigail Stempson

The FTC Collaboration Act of 2021: The Relationship Between the FTC and State Attorneys General (Part Two)
Ruhey via Getty Images

On October 10, 2022, the FTC Collaboration Act of 2021 (Act) became law. The Act’s purpose is to enhance cooperation between the Federal Trade Commission (FTC) and state attorneys general (AGs) in combatting unfair and deceptive practices, and it requires a study to be completed and a public report issued. In part one of this series, we explored the history of collaboration between the FTC and AGs, which has deep roots in enforcement and education. In this installment, we will discuss why the Act was introduced, and recommendations and barriers to collaboration in the future. The next installment in the series will focus on best practices, quantifiable metrics, and legislative recommendations that may be included in the report.

Why was the Act introduced?

Legislation is often drafted because there is a problem that needs addressing, but the FTC and AGs have historically had a good working relationship. So, determining why this Act was introduced in March of 2021 is a bit perplexing. At that time, it was over a month before the AMG decision, and FTC Chairwoman Lina Khan had yet to be sworn in or even nominated by President Biden (however there was a lot of talk at this time that Khan was a front runner). Importantly, it should also be mentioned that a like bill was introduced in September 2020, so it seems prudent to examine potential influences prior to that time. In the months before September 2020, our lives were being reshaped by COVID-19. Therefore, it is possible that lawmakers thought that because of the consumer protection issues the pandemic brought on, Congress needed to ensure enforcement authorities were working together.

In 2020, the pandemic caused government to take stock of who was collaborating to address the multitude of issues COVID-19 brought about. For example, in March of 2020, USDOJ and the FTC put out a joint antitrust statement stating that the spread of the disease will require unprecedented cooperation between federal, state, and local governments and among private businesses to protect Americans’ health and safety. In addition, in August of 2020, the U.S. Government Accountability Office (GAO) released a report about existing opportunities to improve coordination and consultation with state and local governments, noting that responding to challenges such as COVID-19 involves all levels of government—federal, state, local, tribal, and territories.... So, the Act may have originated as another method to evaluate whether and to what extent government was working together to address issues caused or exacerbated by the pandemic, and seen as still necessary when reintroduced in March of 2021. Or maybe the Act was introduced to show that AGs and the FTC work together well and often, that consumers are better off when they do so, and to help quash any inaccurate narratives in this regard.

Fast forward to the present, and the FTC has a few months remaining (due no later than October 10, 2023) to complete the study. Meanwhile the FTC is balancing its regular duties, the effects of the AMG decision, a large drop in employee job satisfaction, and the exit of its lone Republican commissioner who announced her departure in a headline grabbing editorial.

Potential Barriers to Future Collaborations and Recommendations

Undoubtedly, the FTC and AGs will continue to collaborate into the future, and it is tempting to speculate that not much will change. However, there are two main potential barriers to forging ahead with the status quo. The first barrier, the AMG decision, has already been discussed and might actually be the impetus to AGs and the FTC bringing more joint actions together than ever before.

The second barrier is politics. The FTC has experienced a lot of change under Chair Khan, and some of that change has been met with criticism both internally and from industry onlookers. The FTC was intended as a bi-partisan agency structured by statute to have five commissioners, with no more than three from the same political party. It has a mission of protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education. Because of the departure of the last Republican Commissioner, Christine Wilson, the FTC is down to just three Democrats. While the FTC can operate with only three commissioners, the lack of viewpoints from the opposing political party can cause a lack of faith in the FTC both internally and externally, and undoubtedly with Republicans, which may affect its ability to serve its mission.

But the AGs have also had their share of ongoing political issues. For years, the national political organizations of both Democratic and Republican AGs observed an agreement not to target the other party’s incumbent office-holders in elections. This agreement ended in approximately 2017, and with this most recent election cycle, AGs even campaigned against incumbents of their same political party. The National Association of Attorneys General (NAAG), dating back to 1907, has also taken a hit, with a handful of Republican members withdrawing from the organization in 2022, stating multiple concerns, including that NAAG was left-leaning. This criticism led to significant changes in the organization in the last several months, including a new requirement that the role of president of NAAG must rotate political parties each year, allowing Republican Attorney General Dave Yost to become president last December.

In regard to consumer protection, AGs have worked together in a multistate capacity since the late 1970s, and the next year or two will show whether partisanship will affect this longstanding desire of AGs to work together across the aisle to protect consumers and ensure a fair marketplace. We continue to see states united on priority issues like holding social media companies accountable for harm to youth. An example of this unity was the recent 46 state amicus support for Tennessee in its enforcement action against TikTok over compliance with a civil investigative demand. But at the same time, states have become openly polarized over politically sensitive issues like funding for the Consumer Financial Protection Bureau, filing opposing amicus briefs with the U.S. Supreme Court. Given the willingness of AGs to increasingly put their political differences on display, it is not difficult to imagine that a Democratic-only FTC will have a hard time coordinating with Republican states.

Ultimately, collaboration will depend on the leadership of the FTC and the particular AGs in question. It will also depend on the role of NAAG and the Attorney General Alliance, as the two primary national non-partisan attorney general organizations. Both provide a platform for AGs to collaborate and find opportunities for state and federal joint enforcement, but differ in the other services provided and funding sources. If increasing pressures cause more AGs not to participate in these forums, collaboration will be much more cumbersome, but not impossible.

Watch for the next installment in this series wherein we will discuss what may be contained in the report, including best practices, quantifiable metrics, and legislative recommendations.

This article was prepared by the Antitrust Law Section's Consumer Protection Committee.