Law360, New York (March 30, 2016, 5:59 PM ET) -- On March 22, 2016, Federal Trade Commissioner Julie Brill announced her resignation from the commission as of the end of this month. Commissioner Brill has been a leader on privacy, data security and consumer protection issues at the FTC, where she has served as a commissioner since April 2010 after her appointment by President Barack Obama.
Her departure, coming after Commissioner Joshua Wright's departure in August, leaves the FTC with only three commissioners. The remaining commissioners are the Chairwoman Edith Ramirez and Commissioners Terrell McSweeny and Maureen K. Ohlhausen. In the current political climate, it is unlikely that either vacancy will be filled unless both are filled, and given the dynamics of the presidential election cycle there is little reason to believe that nominating and confirming replacements will be a high-priority item for the president or Congress. Thus, the commission can be expected to have to make do with only three members until the next president takes up the issue, which may have some impact on how the commission fulfills its antitrust, consumer protection and policy agenda.
Having only three commissioners will not prevent the FTC from taking enforcement actions. Under commission rules, a majority of the members of the commission (1) in office and (2) not recused from participating in a matter constitutes a quorum for the transaction of business in that matter. This means that the commission will be able to conduct business and take enforcement actions on 2-1 votes or even on 2-0 votes in instances where one commissioner is recused.
However, the loss of a commissioner will have an effect on commission deliberations. The FTC operates under the "Sunshine Act," which requires that any discussion among a quorum of commissioners on official business to be considered an official meeting and must follow the "open meeting" requirements of the act. This provision requires a public announcement of the meeting to be made at least one week prior to the meeting date. With only three commissioners remaining, any combination of two commissioners would now constitute a "quorum" able to take commission action, and thus any substantive discussion between the two commissioners on official business would represent a "meeting" for Sunshine Act purposes. This provision, intended to prevent three commissioners from gathering and coming to agreements outside of public view, will now operate to prevent one-on-one discussions among commissioners regarding their views on enforcement matters.
The institutional structure of the commission will limit the impact of the public meeting provision in most circumstances. Much of the work of the commission by necessity occurs at the staff level, and there is frequent, ongoing communication among the attorney advisors for the commissioners. For routine enforcement matters and the majority of consent decrees, the commissioners can easily convey their views through their attorney advisors and staff, and not be forced into calling official commission meetings just to engage in brief discussions. However, for more complex or contested matters, or matters where there is some level of disagreement among the commissioners, the Sunshine Act may preclude informal discussion of official business between two commissioners, and thus require a formal meeting notice and a one- week delay in those discussions. These rules will no doubt have some impact on the agency's deliberations, in particular during sensitive and time-consuming consent decree negotiations.
Substantively, Commissioner Brill's exit will not likely affect the outcome of votes on antitrust or consumer protection enforcement actions in most major cases. As an initial matter, many of the FTC's votes are unanimous, in particular on consent decrees, so the departure of any given commissioner should not be expected to alter the dynamics on most votes. Even for the less- frequent split votes, the current makeup of the commission dictates that Commissioner Brill's departure should not likely alter outcomes. Both Chairwoman Ramirez and Commissioner McSweeny were appointed to fill Democratic seats on the commission, and since her appointment in 2014, Commissioner McSweeny has seemed generally in sync with Chairwoman Ramirez. If the past is prologue, it can be expected that even in the relatively rare instances where the FTC commissioners do not all come to the same decision, Chairwoman Ramirez and Commissioner McSweeny more likely than not will find themselves in agreement on enforcement decisions.
But even if the commission's bottom-line enforcement decisions do not change significantly, Commissioner Brill's departure may have an impact at the margins, in particular with regard to the relief demanded by the commission in consent decrees. Commissioner Brill was known often to be the most aggressive member of the commission in antitrust cases, earning a reputation for urging her colleagues to require tougher remedies and sometimes objecting to settlements that the majority accepted. Most notably, she dissented when the commission decided not to challenge the merger of rival pharmacy benefit managers Express Scripts Inc. and Medco Health Solutions Inc. in 2012, and she also dissented when the FTC accepted a consent settlement allowing Reynolds American Inc.'s acquisition of rival cigarette manufacturer Lorillard Inc., arguing the divestiture remedy was insufficient. Even when Commissioner Brill did not dissent from commission actions, her consistently pro-enforcement approach affected the dynamic of FTC settlement discussions with respondents and parties, and without her influence any such negotiations may evolve along a slightly different path.
Enforcement decisions related to consumer protection are not expected to change significantly either. Without question, Commissioner Brill was a recognized leader on consumer protection issues and an aggressive advocate for using the FTC's broad consumer protection mandate to pursue enforcement actions relating to privacy and data security. In 2013, she led the launch of the FTC's "Reclaim Your Name" initiative, aimed at improving the transparency of consumer data collected by data brokers, and she has continually pushed Congress to enact legislation that would expand the commission's authority to collect civil penalties for data security violations as well as regulate the data collection industry. The other commissioners, however, have taken similar positions on consumer privacy and data security. In fact, the FTC just last week offered testimony to Congress reiterating a previous request for legislation that would expand the FTC's authority to regulate in this area, including health-related information technology. In light of these public statements regarding data privacy and security (and the commission's recent reports on big data and the Internet of Things), it is reasonable to expect active agency enforcement in this area to continue.
Commissioner Brill's departure may affect how the FTC approaches its policy mission. Commissioner Brill (and the other commissioners) spoke frequently at conferences and international antitrust fora on a variety of issues, notably emerging technology issues involving big data and connected devices on the Internet of Things. Her absence will be noticed with regard to those issues in particular. More generally, fewer commissioners likely will mean fewer policy speeches, fewer appearances at conferences, fewer Q&As with members of the bar on enforcement issues, and, within the FTC itself, fewer commissioners to take a leading role on any given policy initiative. Perhaps most importantly, as a matter of policy and politics, it seems likely that the FTC will shy away from any major antitrust policy statements with only three commissioners; instead, a de facto "holding pattern" on significant policy issues may persist until the vacancies are filled.
Overall, the FTC is likely to continue along the same basic path in terms of enforcement actions, though procedurally, Sunshine Act requirements may cause some delay of the commission's business in certain instances. Antitrust respondents may also notice some slight differences in the tenor of consent negotiations in the wake of Commissioner Brill's departure, and it is reasonable to expect some reluctance by the commission to launch major new policy initiatives with regard to other issues, in the short term.
Published by Competition Law360, Consumer Protection Law360, Privacy Law360, and Public Policy Law360 on March 30, 2016.