This week, the US House of Representatives Judiciary Committee added to its budget reconciliation package a proposal that would transfer the Federal Trade Commission's (FTC) antitrust work to the Department of Justice. A few days later, the proposal, known as the One Agency Act, was stripped out of the package. However, it is unlikely that we have seen the last of the One Agency Act. Below we look at the pros and cons of merging the FTC with the DOJ.
The One Agency Act, which would consolidate federal antitrust enforcement within the DOJ's Antitrust Division, is not new; Senator Mike Lee first introduced it in 2020. Indeed, lawmakers and antitrust professionals have been discussing consolidating the agencies since at least 1980. The argument in favor of combining the agencies seems straightforward enough, why have two agencies doing what they see as essentially the same work? Proponents of the Act argue the current "two-headed approach to antitrust enforcement . . . has led to growing inefficiency, waste, delays, and confusion." However, the two agencies have shared federal antitrust jurisdiction for more than 100 years, and both play a unique role in promoting competition.
Overlapping Jurisdiction Can Be Inefficient
According to the FTC, although their authority overlaps with that of the DOJ's, "in practice the two agencies complement each other." But because of this overlapping authority, it is not always clear which agency will handle an investigation. Before the agencies can begin an investigation, they must consult with each other and "clear" the matter with one another. In some instances, it is undisputed which agency has authority over the matter. The DOJ is the only agency that handles criminal matters and cases regarding banking, railroad, and airline industries. The agencies have also developed expertise in certain industries over time. For example, the FTC handles many investigations into health care, pharmaceuticals, professional services, food, and certain high-tech industries, while DOJ handles defense, agriculture, and (most importantly) beer. However, sometimes the division is not so clear, and both agencies may seek to investigate the same matter, leading to a disagreement between the agencies. These clearance disputes take time and resources to resolve, this is especially true in new industries. For example, after much debate about which agency would cover Big Tech cases, the agencies decided to split responsibility down the middle, with the FTC investigating Meta and Amazon, while the DOJ investigated Google and Apple. The is a similar split regarding AI, with FTC investigating OpenAI, and DOJ looking into Nvidia. But all that wrangling over clearance takes time, sometimes valuable days or even weeks during the thirty-day statutory review of an HSR premerger filing, and sometimes weeks or months for a conduct case. Those in favor of the bill believe that these clearance debates between the FTC and DOJ are "pointless turf battles" that waste government resources and cause unnecessary delay and uncertainty for parties who do not know which agency will handle their mergers.
The FTC and DOJ Have Unique Structures and Authority
Congress established the FTC as an independent bipartisan agency. The idea was that the FTC would not be influenced by the politics of the time. Indeed, the bipartisan nature of the agency is baked into the structure of the FTC: of the five commissioners, only three can be from the same political party and the commissioners can only be removed for cause. The DOJ on the other hand is a traditional executive agency, where the president has the authority to remove political appointees without cause.
Those in favor of the One Agency Act argue that, because the president has more power over the DOJ, it is more accountable to the American people. Those opposed to the Act argue that although it may seem like a distinction without a difference right now, the FTC's independent nature has historically been an important aspect of its work. When creating the FTC, Congress could have simply expanded the DOJ's antitrust authority, but instead, it chose to establish an independent agency. However, the Trump administration believes this independence is unconstitutional, as demonstrated by President Trump firing the two Democratic commissioners and current FTC Chairman Andrew Ferguson openly supporting the president's ability to remove FTC commissioners at will.
The FTC also has several tools that are not available to the DOJ: Section 5 of the FTC Act and an internal administrative adjudication system. Section 5 of the FTC Act, in pertinent part prohibits unfair methods of competition, and is viewed by some (such as former FTC Chair Lina Khan) as more expansive than the Sherman and Clayton Acts. The One Agency Act would remove the FTC's "unfair methods of competition" authority.
Lastly, the FTC has the option to bring a case before its internal administrative court, whereas the DOJ always files cases in federal court. The FTC's internal system has been the subject of many lawsuits recently, with plaintiffs alleging that its structure is biased and unconstitutional. However, others believe that the internal administrative system is an "important tool that has historically yielded new legal doctrines and methodologies that have been subsequently endorsed by the courts."
But if FTC's proponents are right that the bipartisan leadership, political independence, potentially broader mandate, and internal administrative court system make it superior to the DOJ's Antitrust Division, then why shouldn't the FTC handle all antitrust matters? That is, have one agency, but with the FTC and not the DOJ as the surviving institution? It seems unfair for some parties to be subject to the FTC (for better or worse) while others are subject to the DOJ, with different processes, procedures, and authorities, all depending on the outcome of the clearance battle between the agencies.
Theoretically, Congress could consolidate antitrust authority into one agency and reassign the best attributes of each to the new, surviving agency. But that isn't what the One Agency Act does. Instead, it simply folds the FTC's antitrust cases and employees into DOJ as is.
The "Byrd Bath" Washes Away the One Agency Act
As mentioned above, Chairman Jim Jordan ultimately stripped the One Agency Act from the Judiciary Committee's reconciliation bill. News reports cited concerns from Senators over the application of the Byrd Rule to provisions of the One Agency Act, and that there was a lack of confidence that the One Agency Act would survive the reconciliation process.
The budget reconciliation process (which we have explained in detail in our piece entitled "Opportunities and Challenges: Navigating the Upcoming Reconciliation Process") is a pathway by which certain budget-related legislation can enjoy expedited debate in both the House and Senate. This expedited debate also means that the bill is not subject to the Senate's 60-vote rule to end debate (otherwise known as invoking cloture), it only needs a majority. To qualify, however, the bill must comply with certain restrictions, outlined in the "Byrd Rule." For instance, the provisions in the bill all must have a budgetary impact that is not merely incidental to the non-budgetary changes.
During the consideration process, it is common for the drafters to analyze the provisions and even, at times, consult with the Senate Parliamentarian to get her opinion on whether certain provisions would survive the process if subject to a point of order under the Byrd Rule (cleverly named a "Byrd Bath"). Chairman Jordan stated that, "We don't want to do anything that could maybe make it more difficult" for the Bill to pass, according to Punchbowl News, accepting the argument that the One Agency Act would run afoul of the Byrd Rule. He later said however, the One Agency Act would not go away and that, "We'll just do it in a standalone bill."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
