The Federal Trade Commission’s (FTC) rulemaking machinery is humming again. Is it being tuned for optimal performance—or revved for another trip into the ditch?
Most of the current action has to do with consumer protection. That’s par for the course, really. Apart from issuing the ill-fated noncompete rule, since vacated—comments here if anyone wants a recap—FTC rulemaking has been almost wholly on the consumer-protection side for as long as there’s been FTC rulemaking and a consumer-protection side to the agency. “Unfair or deceptive acts and practices,” or the FTC’s UDAP authority, were added to Section 5 in 1938 via the Wheeler-Lea Amendments, so it’s been a while.
For one thing, there’s no controversy over whether Congress has granted the commission substantive rulemaking authority over consumer-protection matters. It has—both a general authority under Section 18 of the FTC Act to prescribe rules against specific acts or practices that violate Section 5’s UDAP prong, and authority under various statutes that charge the FTC with adopting and enforcing particular restrictions addressing specific issues or practices. These include, among others, the Fairness to Contact Lens Consumers Act, the Children’s Online Privacy Protection Act, and the Fair Credit Reporting Act, later amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, under which most—but not all—regulatory authority shifted to the Consumer Financial Protection Bureau.
But some competition-adjacent rulemaking remains under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).
Rulemaking under the HSR Act is not exactly competition rulemaking. It doesn’t directly regulate which mergers are lawful and which are not. Still, it regulates the process by which mergers are screened and imposes affirmative obligations on firms contemplating mergers and acquisitions—at least for transactions above the filing threshold. Hence, these are competition-adjacent rules, and HSR rulemaking is competition-ish.
HSR Rulemaking Gets a Do-Over
That brings us to a joint FTC/Department of Justice (DOJ) request for information (RFI) “on the effectiveness of the Hart-Scott-Rodino Antitrust Improvements Act (‘HSR Act’)’s premerger reporting requirements.” That’s about as preliminary as rulemaking gets, as it’s neither a notice of proposed rulemaking (NPRM) nor even an advance notice of proposed rulemaking (ANPRM)—a more preliminary stage required by statute for the FTC’s consumer-protection rulemaking under Section 18 of the FTC Act, but not a stage exclusive to Section 18 rulemaking or the FTC.
Well, it is and it isn’t all that preliminary. As the RFI recounts, the commission published an NPRM on revisions to the HSR reporting requirements and form in June 2023, followed by a final rule in November 2024, both under the energetic—if not so process-oriented, or consumer-welfare-oriented—leadership of former Chair Lina M. Khan. Side note: yes, it’s an FTC/DOJ rule, but the FTC takes the lead on HSR rule revisions, in consultation with DOJ. HSR NPRMs and final rules are published in the Federal Register by the FTC “with the concurrence of the Assistant Attorney General, Antitrust Division, Department of Justice.” As per Congress, this is the way.`
As I pointed out in another post, there was nothing odd, in the abstract, about updating the HSR reporting requirements—something the FTC, with DOJ concurrence, had done many times before. Indeed, there might have been a rough consensus across antitrust law and economics that some updates to the form and process were warranted.
At the same time, the 2023 NPRM shot for the moon, and then some. Some of the proposals were downright ludicrous. As I said at the time:
In a nutshell, the proposed revisions are controversial because they promise to make pre-merger filing more cumbersome and, not incidentally, more costly, and it’s not at all clear what the payoff is likely to be.
The International Center for Law & Economics’ (ICLE) formal comments on the NPRM’s overreaching motley provide more detail, and ICLE was hardly alone in its critique (see also Gus Hurwitz, Alden Abbott, the Global Antitrust Institute, Bilal Sayyed on behalf of TechFreedom, the Information Technology and Innovation Foundation, and the U.S. Chamber of Commerce.)
The final rule was at least somewhat responsive to comments and, no doubt, to haggling among the commissioners. The latter was noted in concurring statements by then-commissioners Melissa Holyoak and Andrew Ferguson, with Holyoak providing a useful summary table of deletions and other adjustments made to the initial proposal. To be fair, the final rule was considerably better than the NPRM.
Questions remained, however. Among them was a quick-and-dirty—and dubious—cost-benefit analysis. The U.S. Chamber of Commerce, among others, brought suit successfully, and on Feb. 12, 2026, Judge Jeremy D. Kernodle of the U.S. District Court for the Eastern District of Texas issued an order of vacatur. Kernodle found that the rule exceeded the FTC’s statutory authority because the commission had failed to show that “the Rule’s claimed benefits will ‘reasonably outweigh’ its significant and widespread costs,” and that the rule was arbitrary and capricious for “much the same reason.” The 5th U.S. Circuit Court of Appeals subsequently denied the FTC’s motion for a stay pending appeal.
So now we’re back to the prior version of the rule, including the pre-2025 form and, not incidentally, the RFI. Inquiry seems an appropriate first step, and the RFI reasonably proposes various topics of interest and poses various reasonable questions. Both Ferguson and Holyoak had remarked on lingering doubts about certain provisions in the now-vacated final rule. Taking a beat and asking additional questions makes more sense than rushing to another NPRM.
The RFI notes that the updated HSR form was in use for more than a year—from the final rule’s publication to the order of vacatur. Further:
During that period, practitioners prepared, and the Agencies’ staff reviewed, over 3,000 filings for a wide range of transactions. Commission staff have also answered many questions from practitioners about complying with the Updated Form. Based on this experience, the Agencies’ staff and practitioners have obtained insights about what aspects of the Updated Form may be improved.
My First Very Modest Proposal: Agencies share what they learned during that period. That might include, at least, informal observations from enforcement staff about which information was more—or less—useful. As I noted in November 2024:
…new requirements regarding submission of information on “non-horizontal” or supply relationships still seem excessive. Not because such information couldn’t be pertinent to a merger investigation, but because it is not typically useful to a preliminary screen and can be obtained in those cases where it’s more likely to be pertinent—likewise for required submissions about, e.g., private-equity acquisitions, “roll-up” strategies, and interlocking directorates.
What new information—if any—made a material difference, either in generating second requests or avoiding them? In decisions to file complaints? How often?
In addition, how does the agencies’ research staff—notably, staff in the FTC’s Bureau of Economics—analyze information gathered during that year, and previously? That information is not necessarily confined to matters at the enforcement margin. It could help show what new information is not just possibly useful, but likely to be most useful to the screening process.
The RFI sensibly asks about the time, labor, and financial costs associated with HSR notification requirements. That is no small matter, not least because the rule’s failure to show that its “claimed benefits will ‘reasonably outweigh’ its significant and widespread costs,” as required by the HSR Act itself, proved fatal to the rule. Gathering better information on compliance costs is a start, even if an open RFI has limits as a means of data gathering. Still, it’s hard to balance benefits and costs without a clear sense of the benefits. More focused reflection on the agencies’ learning up front might well lead to a more focused and productive RFI.
Getting this right may take a bit of time, but it will produce a more useful rule, and a more durable one, to the benefit of both competition and enforcement.
But mostly, it’s been about consumer-protection regulation.
A Premature Delivery
There’s also the recent ANPRM on unfair and deceptive fee practices in online food and grocery-delivery services. For the very, very short version, ICLE’s recently submitted comments recognize the potential for Section 5 violations and the need for vigorous enforcement of the FTC Act.
We also recognize that an ANPRM is a preliminary stage in rulemaking—one that doesn’t even require the FTC to propose specific regulatory requirements. At the same time, it is a distinct statutory requirement, and one of several process restrictions expressly imposed on such rulemaking in Section 18 through the Magnuson-Moss Warranty Act and related amendments to the FTC Act.
Based on those restrictions, among other things, we argue that the ANPRM is premature. The FTC has relatively limited enforcement experience in this area. There also remains room for continued federal and state law enforcement against harmful fee practices, new legislative initiatives at the state level, and wide variation among the practices and businesses that might be subject to such regulations.
No Room for a Sectorwide Rule
Similarly, Eric Fruits and I submitted comments on behalf of ICLE in response to the FTC’s ANPRM on “Unfair or Deceptive Rental Housing Fee Practices.” There, too, we noted real consumer-protection concerns, the potential for Section 5 violations, and enforcement efforts by the FTC and the states.
But we raised substantive concerns about the breadth of the inquiry and, again, both substantive and process concerns about the misfit between the agency’s enforcement experience and the requirements for Section 18 rulemaking. We concluded, in brief, that “the record does not justify a sector-wide Magnuson-Moss rule.”
At least one question seemed at odds with prior FTC policy positions on price and cost disclosures. For example, in comments addressing a New York State bill that would have regulated contractual relationships between health plans and pharmacy benefit managers, FTC staff noted that certain disclosure requirements were “analogous to requirements that firms reveal aspects of their cost structures to customers.” Staff recognized the importance of consumer access to truthful and non-misleading price information. At the same time, the comments noted that “[t]here is no theoretical or empirical reason to assume that consumers require sellers’ underlying cost information for markets to achieve competitive outcomes.”
Further, some cost disclosures might tend to undermine price competition, to consumers’ detriment. Indeed, the RFI itself cautions against submitting “competitively sensitive information, such as costs ….”
Rules mandating cost-reflective pricing do not merely regulate how firms present price information; they govern the relationship between firms’ costs and prices. In that regard, they can function as cost-of-service ratemaking—a form of price regulation historically applied to public utilities under distinct statutory authority.
There was an added wrinkle in the RFI’s consideration of “unfair” practices. Section 5(n) of the FTC Act expressly links the competition and consumer-protection missions charged to the FTC. Under Section 5(n), nothing is unfair under the FTC’s UDAP authority:
…unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.
By statute, that restriction applies equally to Section 18 rulemaking that is supposed to address such unfair practices. In effect, the substantive and procedural restrictions of Sections 5(n) and 18 are bundled when it comes to unfairness regulation.
Click to Cancel Gets Cancelled
Building an appropriate record, and paying attention to process more generally, are no small matters. That should be clear from the order vacating the HSR amendments and, not incidentally, the commission’s 2025 loss in the 8th U.S. Circuit Court of Appeals in Custom Communications Inc. v. FTC. There, the 8th Circuit vacated the FTC’s 2024 Negative Option Rule, or “Click-to-Cancel” Rule, holding that the commission had failed to meet the procedural requirements for rulemaking under Section 22 of the FTC Act. Specifically, the FTC had failed to conduct the preliminary regulatory analysis the act requires for Section 18 rulemaking.
The 2024 rule had been adopted on a 3-2 party-line vote, with Andrew Ferguson and Melissa Holyoak voting no. As it happens, I joined a group of former enforcers in a TechFreedom letter on the rule, but I’d especially recommend dissents by sitting commissioners—Holyoak’s dissenting statement on the rule’s adoption and Christine Wilson’s 2023 dissenting statement on the preceding NPRM. As Wilson pointedly put it:
I might have supported a tailored rule to address the negative option marketing abuses prevalent in our law enforcement experience that consolidated various legal requirements. This proposal instead attempts an end-run around the Supreme Court’s decision in AMG to confer de novo redress and civil penalty authority on the Commission for Section 5 violations unrelated to deceptive or unfair negative option practices.
Holyoak would echo and expand on Wilson’s complaints a full year and a half later:
I respectfully dissent, for three reasons. First, this rulemaking did not follow the FTC Act’s Section 18 requirements for rulemaking because: (1) the Rule is much broader than the “area of inquiry” proposed by the advance notice of proposed rulemaking (“ANPR”); (2) the Rule fails to define with specificity acts or practices that are unfair or deceptive, improperly generalizing from narrow industry-specific complaints and evidence to the entire American economy; and (3) the Rule fails to demonstrate that the unfair or deceptive acts or practices related to negative option billing are “prevalent.” Second, the Rule’s breadth incentivizes companies to avoid negative option features that honest businesses and consumers find valuable. Third, the Rule represents a missed opportunity to make useful amendments to the preexisting negative option rule within the scope of the Commission’s authority.
In brief, neither Wilson nor Holyoak suggested, as Gertrude Stein did of 1935 Oakland, that “[t]here is no there there.” Rather, they raised both substantive and procedural objections to the Khan majority’s rush to issue overbroad regulations.
Notice a pattern? Of course—it’s not as if I’ve been subtle in citing the comments my colleagues and I submitted in response to the food-delivery fee NPRM and, not incidentally, orders of vacatur issued by the U.S. District Court for the Eastern District of Texas for the HSR notice amendments, the 8th Circuit for Click-to-Cancel, and the U.S. District Court for the Northern District of Texas for the noncompete rule.
But Wait, There’s More
Fear not—or not so much—I’ve skipped over the 5th U.S. Circuit Court of Appeals’ January 2025 order vacating the CARS Rule; the 2025 final rule on “unfair or deceptive fees,” narrowed to cover fees in live-event ticketing and short-term lodging; various regulatory activities surrounding multilevel marketing; ongoing rule review—much of it business as usual—and more.
What we’ve covered is, in any case, rather a lot of rulemaking for an agency that has traditionally considered itself more of an enforcement agency than a regulator.
Another Modest Proposal: Stop Cutting Corners
I’m hardly the first to note that scrupulous attention to process was not exactly the Khan commission’s forte. Neither was regulatory humility. Perhaps it’s no surprise that the FTC’s more recent regulatory setbacks in federal court can be traced to those shortcomings.
Back in March 2025, I had a post called “What Changes Might, and Should, a New FTC Majority Bring?” All of it was hopeful; some of it was right; and some of it was premature, if not just wrong. This March, I was fortunate to moderate an ICLE-sponsored panel discussion with Noah Phillips—a former FTC commissioner—and Chris Mufarrige—director of the FTC’s Bureau of Consumer Protection—on “The Competition and Consumer Protection Year in Review: A Panel on Enforcement Policy at the FTC.”
There, Phillips observed several salutary changes at the FTC in its first year under new leadership. One was the suspension of general hostility to mergers, which should not be confused with a diminution of enforcement vigor. Another was attention to process. A third, on the consumer-protection side, was a renewed focus on consumer welfare and, in enforcement, on anti-fraud efforts aimed at real consumer harm. All three have application to the current regulatory program. That brings us to..
My Second Modest Regulatory Proposal: The commission should rescind the revisions to the Section 18 rulemaking process that it adopted in July 2021. These were changes to internal process rules. if reminiscent of substantive rulemaking by the agency under the Biden administration in that they were adopted on a strict party-line vote. Commissioners Christine Wilson and Noah Phillips issued a joint dissenting statement.
As I wrote at the time, their dissenting statement is instructive. Also:
I suppose I also recommend the commission’s (majority) statement on the rule change, in which it said that the changes would “modernize the way it issues Trade Regulations rules under Section 18 of the FTC Act.” Wilson and Phillips pointed out that the changes diminished both the transparency of the rulemaking process and the opportunity for independent input, and eliminated the requirement of an expert staff report (and for Bureau of Economics review of a preliminary staff report), as we noted in ICLE’s comments on the commission’s Advance Notice of Proposed Rulemaking on Commercial Surveillance and Data Security.
The majority statement provides a bit of selective history:
In 1975, Congress passed the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act laying out specific procedures for the promulgation of “Trade Regulation Rules” to protect consumers in a dynamic and changing economic landscape. Indeed, the Commission rightfully responded to this grant of authority by initiating more than a dozen rulemakings in the few months and years after its passage.
Strike the word “rightfully,” and it’s true enough, if incomplete. Congress did enact Magnuson-Moss in 1975. The act’s amendments to the FTC Act granted the FTC consumer-protection rulemaking authority and set out procedures for such rulemaking—that is, what is now Section 18 of the FTC Act. And the FTC did engage, enthusiastically, in rulemaking.
But as Wilson and Phillips pointed out, Congress “imposed significant procedural obligations on the Commission to cabin its discretion” in adopting such rules. And for good reason: the rulemaking flurry in the wake of Magnuson-Moss followed hot on the heels of what was widely regarded—not least by Congress—as excessive FTC rulemaking during the 1960s and early 1970s.
Tim Muris, a former FTC chairman, and Howard Beales, former director of the Bureau of Consumer Protection, have reflected on “the disastrous decade of the 1970s.” Maureen Ohlhausen, a former FTC commissioner and acting chair, observed that “[t]he backlash against this sweeping regulatory agenda was fierce. Ultimately, even the Washington Post criticized the Commission for being a ‘National Nanny.’” And here’s Muris again, for good measure.
It is well known that the flurry of late-1970s Magnuson-Moss rulemaking cheered by Khan, Rebecca Kelly Slaughter, and Alvaro Bedoya in amending the agency’s rules of process was widely condemned. Wilson and Phillips trod no new ground in observing that “[b]acklash from the agency’s sweeping regulatory efforts culminated in the Federal Trade Commission Improvements Act of 1980, which imposed additional procedural obligations on Section 18 rulemaking efforts.” Ohlhausen recalls that Congress even “demonstrated its disapproval of the FTC’s overreach by refusing to fund the agency, causing the Commission to close its doors for a brief time.” Here’s the Washington Post’s April 30, 1980, coverage of the shutdown.
As former FTC Chairman William Kovacic testified before Congress while a commissioner, there are good reasons to be cautious in rulemaking under Section 18, given the breadth of issues that may be swept under the FTC’s UDAP authority and its sectoral range, “reaching broadly across the economy, except for specific carve-outs.” These are also reasons to prefer acting on congressional mandates that identify “specific consumer protection issues” that call for regulation.
The lack of a more focused mandate and direction from Congress, reflected in legislation with relatively narrow tailoring, could result in the FTC undertaking initiatives that ultimately arouse Congressional ire and lead to damaging legislative intervention in the FTC’s work. This is precisely what occurred toward the end of the Carter administration. Ongoing Commission initiatives led Congress to turn against the Commission in 1979 and 1980, enacting significant legislative constraints (while individual members proposed even more significant cutbacks in Commission authority).
In brief, finally, the regulatory streamlining adopted under Lina Khan’s leadership was ill-advised. And overhasty attempts to promulgate rules as workarounds to the Supreme Court’s decision in AMG Capital are liable to founder in the courts, at least. As they have.
Rescinding those revisions would be consistent with the greater focus on process seen under current FTC leadership. And it need not require anything so involved as issuing new substantive—or “legislative”—regulations.
