S. HRG. 115–541 FTC STAKEHOLDER PERSPECTIVES: REFORM PROPOSALS TO IMPROVE FAIRNESS, INNOVATION, AND CONSUMER WELFARE HEARING BEFORE THE SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT SAFETY, INSURANCE, AND DATA SECURITY OF THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION SEPTEMBER 26, 2017 Printed for the use of the Committee on Commerce, Science, and Transportation ( Available online: http://www.govinfo.gov U.S. GOVERNMENT PUBLISHING OFFICE 35–459 PDF WASHINGTON : 2019 VerDate Nov 24 2008 07:37 Mar 18, 2019 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\GPO\DOCS\35459.TXT JACKIE SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION JOHN THUNE, South Dakota, Chairman ROGER F. WICKER, Mississippi BILL NELSON, Florida, Ranking ROY BLUNT, Missouri MARIA CANTWELL, Washington TED CRUZ, Texas AMY KLOBUCHAR, Minnesota DEB FISCHER, Nebraska RICHARD BLUMENTHAL, Connecticut JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts DEAN HELLER, Nevada CORY BOOKER, New Jersey JAMES INHOFE, Oklahoma TOM UDALL, New Mexico MIKE LEE, Utah GARY PETERS, Michigan RON JOHNSON, Wisconsin TAMMY BALDWIN, Wisconsin SHELLEY MOORE CAPITO, West Virginia TAMMY DUCKWORTH, Illinois CORY GARDNER, Colorado MAGGIE HASSAN, New Hampshire TODD YOUNG, Indiana CATHERINE CORTEZ MASTO, Nevada NICK ROSSI, Staff Director ADRIAN ARNAKIS, Deputy Staff Director JASON VAN BEEK, General Counsel KIM LIPSKY, Democratic Staff Director CHRIS DAY, Democratic Deputy Staff Director RENAE BLACK, Senior Counsel SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT SAFETY, INSURANCE, AND DATA SECURITY JERRY MORAN, Kansas, Chairman RICHARD BLUMENTHAL, Connecticut, ROY BLUNT, Missouri Ranking TED CRUZ, Texas AMY KLOBUCHAR, Minnesota DEB FISCHER, Nebraska EDWARD MARKEY, Massachusetts DEAN HELLER, Nevada CORY BOOKER, New Jersey JAMES INHOFE, Oklahoma TOM UDALL, New Mexico MIKE LEE, Utah TAMMY DUCKWORTH, Illinois SHELLEY MOORE CAPITO, West Virginia MAGGIE HASSAN, New Hampshire TODD YOUNG, Indiana CATHERINE CORTEZ MASTO, Nevada (II) VerDate Nov 24 2008 07:37 Mar 18, 2019 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\35459.TXT JACKIE C O N T E N T S Page Hearing held on September 26, 2017 ..................................................................... 1 Statement of Senator Moran .................................................................................. 1 Prepared statement .......................................................................................... 2 Statement of Senator Blumenthal .......................................................................... 3 Letter dated September 25, 2017 to Hon. Richard Blumenthal from Paul Zurawski, Senior Vice President, External Affairs, Equifax ..................... 61 Statement of Senator Inhofe ................................................................................... 63 Statement of Senator Capito .................................................................................. 64 Statement of Senator Young ................................................................................... 66 Statement of Senator Hassan ................................................................................. 68 Statement of Senator Klobuchar ............................................................................ 70 Statement of Senator Markey ................................................................................. 72 Statement of Senator Cortez Masto ....................................................................... 74 WITNESSES William MacLeod, Partner, Kelley Drye & Warren LLP ..................................... 5 Prepared statement .......................................................................................... 7 Lydia Parnes, Esq., Partner, Wilson Sonsini Goodrich & Rosati PC .................. 12 Prepared statement .......................................................................................... 14 Jessica Rich, Vice President, Consumer Policy and Mobilization, Consumer Reports .................................................................................................................. 18 Prepared statement .......................................................................................... 19 Berin Szo´ka, President, TechFreedom ................................................................... 23 Prepared statement .......................................................................................... 25 APPENDIX Joshua D. Wright, Professor, George Mason University School of Law and Director, Global Antitrust Institute, prepared statement ................................ 79 Scott Smith, President, Precious Metals Association of North America, pre- pared statement ................................................................................................... 94 Report dated May 2016 from Berin Szo´ka and Geoffrey A. Manne entitled, ‘‘The FTC Trade Commission: Restoring Congressional Oversight of the Second National Legislature—An Analysis of Proposed Legislation ............... 96 Presidential Transition Report: The State of Antitrust Enforcement dated January 2017 from the American Bar Association Section of Antitrust Law . 162 Comments dated September 11, 2017 from Cory L. Andrews and Richard A. Samp of the Washington Legal Foundation to the Federal Trade Com- mission concerning Proposed Consent Agreements and Request for Public Comments in Zero-VOC Paint Claims Cases ..................................................... 205 Letter dated September 26, 2017 to Hon. Jerry Moran and Hon. Richard Blumenthal from Marc Rotenberg, EPIC President; Caitriona Fitzgerald, EPIC Policy Director; and Christine Bannan, EPIC Policy Fellow ................. 213 (III) VerDate Nov 24 2008 07:37 Mar 18, 2019 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\35459.TXT JACKIE VerDate Nov 24 2008 07:37 Mar 18, 2019 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\35459.TXT JACKIE FTC STAKEHOLDER PERSPECTIVES: REFORM PROPOSALS TO IMPROVE FAIRNESS, INNOVATION, AND CONSUMER WELFARE TUESDAY, SEPTEMBER 26, 2017 U.S. SENATE, SUBCOMMITTEE ON CONSUMER PROTECTION, PRODUCT SAFETY, INSURANCE, AND DATA SECURITY, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. The Subcommittee met, pursuant to notice, at 2:20 p.m. in room SR–253, Russell Senate Office Building, Hon. Jerry Moran, Chair- man of the Subcommittee, presiding. Present: Senators Moran [presiding], Blumenthal, Inhofe, Capito, Young, Hassan, Klobuchar, Markey, Cortez Masto, Booker, and Fischer. OPENING STATEMENT OF HON. JERRY MORAN, U.S. SENATOR FROM KANSAS Senator MORAN. The hearing will come to order. Good afternoon, and welcome to today’s hearing on FTC Stakeholder Perspectives: Reform Proposals to Improve Fairness, Innovation, and Consumer Welfare. This is our second attempt at this hearing, and many of our pan- elists have been polite and kind enough to return. In fact, last Sep- tember, the full Committee heard testimony from the FTC’s three sitting Commissioners at the time: Chairman Ramirez, Commis- sioner Ohlhausen, and Commissioner McSweeny. We had planned to convene a Subcommittee hearing on that same day, but had to cancel due to scheduling conflicts. The canceled hearing would have consisted of a panel of stakeholders offering their own perspectives about the Commission. Today we will hear from Berin Szo´ka, President of TechFreedom, one of the witnesses who was scheduled to testify last September, as well as three former directors of the FTC’s Bureau of Consumer Protection: William MacLeod, Lydia Parnes, and Jessica Rich. We thank these former FTC officials for their public service and all the witnesses for appearing today to offer their insights on how we can improve the work of the Commission. For over a century, the FTC has been protecting competition and consumers by enforcing the Nation’s antitrust laws and combating deception and unfairness in a wide variety of industries. Through its efforts, the FTC has often helped to prevent anticompetitive practices that stifle innovation, lower quality, or raise prices. It has (1) VerDate Nov 24 2008 07:37 Mar 18, 2019 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\GPO\DOCS\35459.TXT JACKIE 2 also helped to ensure that consumers can make informed decisions based on accurate advertising and avoid injury from fraud and un- fair trade practices, such as unauthorized credit card charges. Although the FTC’s efforts have produced many benefits for con- sumers and the economy, this Committee and others have ques- tioned the way it sometimes exercises its authority under Section 5 of the FTC Act, which addresses unfair and deceptive acts in commerce. Others have argued that the FTC sometimes conducts investigations and issues orders that impose unnecessary costs, and it does not always provide adequate guidance to businesses seeking to comply with the laws the FTC enforces. These concerns have sparked numerous proposals for reforming the FTC. For example, last December, the House Energy and Com- merce Committee reported H.R. 5510, the FTC Process and Trans- parency Reform Act of 2016, a bill incorporating eight separate re- form bills designed to clarify the FTC’s unfairness authority, im- prove the way the FTC operates, foster greater transparency, and reduce unnecessary costs. Similarly, in January 2017, earlier this year, the American Bar Association Antitrust