Federal Trade Commission shake-up: Pres. Trump fires 2 Democratic commissioners

Key Concepts:

• FTC Commissioners: Appointed officials overseeing the Federal Trade Commission.
• Humphrey's Executor: A 1935 Supreme Court case limiting the President's power to remove members of independent regulatory agencies.
• Good Cause: Justification required for removing officials in certain regulatory agencies, typically involving inefficiency, neglect of duty, or malfeasance.
• Antitrust Enforcement: Government actions to prevent monopolies and unfair business practices.
• Vertical Issues: Concerns arising when a company acquires a supplier or customer, potentially reducing competition.
• Google-Wiz Merger: Google's acquisition of Wiz, a cybersecurity company, for over $32 billion.

1. Presidential Authority and FTC Commissioners

• President Trump fired two Democratic commissioners from the Federal Trade Commission (FTC), leaving three out of five seats vacant.
• The White House claims authority to do so, but this action potentially contradicts a 90-year-old Supreme Court ruling.
• This situation may lead to a legal battle, potentially reaching the Supreme Court.

2. Supreme Court Precedents: Humphrey's Executor

• Two Supreme Court cases are relevant: one from 1926 and Humphrey's Executor (1935).
• The 1926 case affirms the President's ability to dismiss Senate-confirmed executives within the executive branch.
• Humphrey's Executor stipulates that the President needs "good cause" to dismiss officials from hybrid regulatory agencies.
• "Good cause" is defined as "inefficiency, neglect of duty, or malfeasance," as specified in the agency's authorizing statute.
• The Department of Justice, under the current administration, believes Humphrey's Executor was wrongly decided.
• The White House may be seeking an opportunity to have the Supreme Court reevaluate the precedent set by Humphrey's Executor.

3. Bipartisanship vs. Political Influence in Regulatory Agencies

• The question arises whether regulatory agencies will reflect the political party in power or maintain a bipartisan approach.
• Executive agencies typically experience turnover every four years with a new administration.
• Most decisions at the FTC are unanimous (90% or higher), even with commissioners from different parties.
• Republican commissioners, including Chair Ferguson and Commissioner Holyoak, have often voted with Democrats on major enforcement actions.
• While dissenting opinions exist, consensus is common, especially in merger enforcement actions.

4. Google's Acquisition of Wiz: A Litmus Test for Antitrust Enforcement

• Google's acquisition of Wiz, a cybersecurity company, for over $32 billion is a significant deal.
• The market views this merger as a test of the current antitrust enforcement approach by the Department of Justice (DOJ) and the FTC, particularly concerning Big Tech.
• The DOJ is expected to review the merger, given its recent involvement in Google-related matters and its expertise in cybersecurity and tech.
• Assistant Attorney General Slater's team at the DOJ is considered enforcement-minded.
• The size of the deal and Wiz's market position, including serving Google's competitors, will likely trigger a close examination.
• The review will likely focus on "vertical issues" arising from the acquisition.

5. Conclusion

The firing of FTC commissioners raises questions about presidential power and the independence of regulatory agencies. The Supreme Court may revisit the Humphrey's Executor precedent. Meanwhile, Google's acquisition of Wiz will be a closely watched case, serving as an early indicator of the current administration's approach to antitrust enforcement in the tech sector. The DOJ's review will likely focus on potential vertical issues and the impact on competition.