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In the event of a Biden Administration, any change in enforcement policies will not occur overnight. Rather, the Federal Trade Commission (FTC) will remain Republican controlled until September 2023 – over two years after inauguration – barring the resignation of one of the three Republican commissioners. Even in the event of such a resignation, the FTC would remain divided 2-2 until the Senate confirms a third Democratic commissioner. A tie vote has the effect of stopping a proposed enforcement action, including a lawsuit or a settlement.
As a consequence, companies with pending investigations should not expect near-term changes. Likewise, companies embarking on antitrust-sensitive transactions or initiatives in industries subject to FTC review should expect a high degree of continuity well into a new administration.
1. FTC commissioners have seven year terms and cannot be removed for political or policy reasons.
The FTC is an independent agency with five commissioners appointed by the president and confirmed by the Senate for seven year terms. No more than three commissioners can be members of the same political party and the president designates the chairman.
The president can only remove a commissioner for “inefficiency, neglect of duty, or malfeasance in office.”1 The president cannot remove a commissioner for political or policy reasons.2
2. Absent a resignation, Republican commissioners will retain control of the FTC until 2023.
The FTC currently consists of three Republican and two Democratic commissioners all appointed by President Trump.
Absent a resignation by Chairman Simons, Commissioner Phillips, or Commissioner Wilson, the next opening to replace a Republican with a Democrat is September 2023 when Commissioner Phillips’ term expires.
Democratic Commissioner Chopra, whose term expired last year, may continue to serve until a successor is appointed by the president and confirmed by the Senate. The next opening at the FTC after Commissioner Chopra is Democratic Commissioner Slaughter’s term, which expires in September 2022.
3. Companies should expect a high degree of continuity well into a potential Biden Administration.
If former Vice President Biden is elected and no current commissioner resigns, he could designate Commissioner Slaughter or Commissioner Chopra as chair or acting chair, nominate Commissioner Chopra for another term as either chairman or commissioner, or nominate another Democrat (or Independent) as chair or commissioner to replace Commissioner Chopra. But none of these changes would alter the current Republican majority.
A new chair will appoint new bureau directors or alternatively acting bureau directors and this could contribute to changes in the number and scope of investigations, but, absent a resignation, Republicans will continue to maintain a majority until the fall of 2023. A majority of commissioners also has to approve all investigations authorizing the use of compulsory process for issuing subpoenas and civil investigative demands.
There are examples of newly-elected presidents designating a new FTC chairman from the legacy commissioners. In March 2009, President Obama designated an existing Democratic commissioner as chairman. There are also examples of a chairman resigning after a change in administration. In January 2017, a Democratic chairwoman announced her resignation and President Trump designated an existing Republican commissioner as acting chairwoman. The Democratic chairwoman could have continued as a holdover commissioner until a replacement had been nominated by President Trump and confirmed by the Senate. Similarly, in 2001, with a few months remaining in his term, a Democratic chairman resigned when a Republican was confirmed as chairman.
There is at least one example when a newly-elected President allowed passage of significant time before seeking to change the head of the FTC. President Clinton, inaugurated in January 1993, retained a Republican chairwoman for over two years until a Democrat was confirmed as chairman in April 1995.
Even if one of the other Republican commissioners were to resign following a Biden victory, the FTC would be split, with two Democrats and two Republicans, until the Senate confirmed a new commissioner – a process that can take several months.
1) Federal Trade Commission Act, 15 U.S.C. § 41.
2) See Humphrey’s Executor v. United States, 295 U.S. 602 (1935) (President Roosevelt’s removal of FTC Commissioner Humphrey in 1933 for not supporting New Deal policies was unlawful).