A Tribute to FTC Commissioner Noah Phillips
Federal Trade Commissioner Noah Phillips informed President Biden on August 8 that he intends to resign his post this fall. He cited his desire to prioritize his family, but another factor driving his decision was his fellow commissioners’ unwillingness to compromise on key issues such as the role of the consumer welfare standard in antitrust, the use of rulemaking authority by the FTC, the positive aspects of mergers, and the need to preserve a bipartisan approach to antitrust matters. “I have always tried to bring to light the tradeoffs the commission faces in doing the work we do,” said Phillips, “and the conversation lately has not accounted for the serious discussion of counterargument.”
During his four years of service, Commissioner Phillips proved himself to be a tremendously kind and knowledgeable person, making extraordinary contributions to the FTC’s work, as I learned recently when I had the opportunity to sit down with him to discuss his experiences there. Our conversation ranged from his views about free enterprise, liberty, and the process of creative destruction, to what the life of a federal trade commissioner is like, his personal background, and what his future might hold.
Prior to our conversation, which we videotaped as part of the Schumpeter Project’s “Dynamic Antitrust” discussion series, Commissioner Phillips’ last recorded statement had been a joint statement with FTC Chair Lina K. Khan and Democratic Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya on the notice of proposed rulemaking on a motor vehicle dealers trade regulation addressing unfair and deceptive practices. In June 2022, Commissioner Phillips concurred with Khan on the need to study pharmacy benefit managers despite his fundamental disagreements with much of Khan’s Neo-Brandeisian philosophy. These instances, among others, demonstrate Commissioner Phillips’ strong desire to reach compromises and engage in open discussions to move the FTC forward in a way that protects instead of unintentionally harming consumers.
Commissioner Phillips’ disagreements with Khan are grounded first in his commitment to due process and belief in complying with procedural rules. For instance, when the newly instituted Chair Khan withdrew the bipartisan 2015 policy statement on Section 5 of the FTC Act, Commissioner Phillips not only lamented the FTC unleash[ing] “unchecked regulatory authority” but also regretted that:
“[The] proposal was announced just a week ago, the bare minimum notice permitted by law, diminishing the public’s opportunity to give input. And the members of the public we will hear from today will speak after the vote, so that the FTC cannot consider their views. That is inconsistent with rhetoric we have heard about opening up the policy-making process.”
Procedural disregard for due process substantively undermines the quality of regulatory rules, as Commissioner Phillips was fully aware. For the same procedural safeguards, Commissioner Phillips, together with Commissioner Christine Wilson, opposed the issuance of 15 omnibus resolutions designed to remove from the FTC’s considerable investigative power the need to have a decision by all commissioners, instead concentrating the leadership’s power by requiring a mere unilateral approval from the chair or a chosen commissioner. The new FTC’s lack of collegiality and disdain for bipartisanship sparked Commissioner Phillips’ disapproval and forced his resignation.
Commissioner Phillips resisted the populist turn of antitrust currently en vogue in the FTC and, more broadly, nationally and internationally. Commissioner Phillips has been at the forefront of a healthy pushback against the current Luddite environment that Neo-Brandeisians too often champion. For instance, when the FTC delivered a congressionally mandated report last June about the online harms artificial intelligence can generate, Commissioner Phillips dissented, saying, “the report reads as a general indictment of the technology itself.”
Commissioner Phillips defended the idea of FTC guidelines that “stand the test of time” by ensuring agency guidelines are administrable and grounded in incremental changes to reflect validated learning and changes in legal precedent. Sweeping changes disconnected from legal and economic evidence may harm, not benefit, consumers. For this reason, Commissioners Phillips and Wilson recommended that FTC and the Justice Department’s Antitrust Division update merger guidelines with “care and caution.” This care and caution meant ensuring that agency actions benefit consumers by continuing to navigate by the consumer welfare standard as the north star of antitrust enforcement, contrary to the Neo-Brandeisians’ determination to depart from it as the well-accepted standard.
In that regard, Commissioner Phillips championed the consumer welfare standard writ large, including quality and innovation considerations. Indeed, while antitrust does not affect inflation at the macroeconomic level, the consumer welfare standard is even more relevant in today’s high inflation times. This is Commissioner Phillips’ warning to those eager to irresponsibly ditch it in antitrust enforcement. He warned that “to change the law of predatory pricing without consumer welfare as our guide is to court or even encourage a truly perverse outcome: chilling price competition—or, put differently, higher prices.” This aligns with ITIF’s view that the consumer welfare standard should remain a bedrock of antitrust, irrespective of economic conjectures. Commissioner Phillips reasoned that “inflation was high around the time that antitrust law gained its present focus on consumer welfare, and it should remind us today of why we would do well to maintain that focus. Adopting policies that lead to higher prices, or that prevent markets from working, is not the solution.” One of Noah Phillips’ first comments as FTC Commissioner, on October 17, 2018, set the tone of his tenure. He said then:
“I want to focus today on an essential aspect of the current antitrust debate: the consumer welfare standard. Through it, antitrust law aims to protect the competitive process, not individual competitors. This fundamental principle, which protects consumers’ interests in low prices, product quality, service, variety and innovation, anchors not only U.S. law but antitrust regimes around the world—no small feat, given the nearly 130 jurisdictions with active antitrust regimes.”
This strong belief in antitrust grounded in economic knowledge whereby the consumer welfare standard acts as a legitimate brake on harmful governmental interventions remained essential to Commissioner Phillips’ tenure at the FTC.
Noah Phillips has been a powerful voice during his four-year tenure at the FTC, advocating for rational antitrust enforcement and against populist antitrust that derails the fair yet disruptive process of competition.
But beyond Commissioner Phillips’ contributions as a sound and rational voice at the FTC, he is also personally formidable, as I have had the pleasure to learn in the course of multiple meetings. He is highly accessible and humble, always keen to engage in intellectual debates and work across ideological lines to improve U.S. institutions while being committed to the fundamental principles of liberty, free enterprise, and well-functioning markets.
