A Farsighted FTC Commissioner Breaks Down the Barriers Between Independent and Executive Branch Agencies Without Sacrificing Their Independence

 For decades there has been a controversy within the regulatory community as to whether “independent” agencies should remain independent. In terms of the economic formulation and evaluation of  regulations independent agencies have frequently been criticized by the Executive Branch, academicians and the courts as not attaining the degree of accuracy in their evaluations as is the case with Executive Branch agencies.

 However there is a middle road as explained by FTC Commissioner Maureen K. Ohlhausen in an article in the Journal of Antitrust Enforcement, (2013), pp. 1–24 namely to adopt the guiding principles in Executive Order 12866 and apply them to FTC proceedings.

TThe Commissioner does so in a forceful presentation regarding FTC actions to prohibit unfair methods of competition, see the attachment hereto.

 The Commissioner states:

 “Accordingly, in developing a UMC framework, this author proposes looking to the principles and underlying philosophy expressed in Executive Order 12866 (EO 12866 or the Order).[1]  EO 12866 established a regulatory philosophy and 12 principles of regulation for use by federal agencies in deciding whether and how to regulate.”[2]

Interestingly Commissioner Ohilhausen discusses a Supreme Court decision Phoebe Putney in which the FTC prevailed due to the existence of a retrospective review of hospital mergers directed by FTC Chairman Tim Muris, a former OMB official  well versed in the principles which govern the OMB review of regulations.

 The Obama Administration stands above all others in the progress it is making on addressing the retrospective review of regulations. Soon the FTC may be undertaking another retrospective review of hospital mergers. CRE notes that FTC remedies appear to be shifting from structural remedies to behavioral remedies. To this end CRE is of the opinion that if such analyses are going to migrate from “market concentration” to “market clout” then the attendant retrospective review should reflect this change.

 In particular the existing techniques which rely heavily on static interpretations of market share should be augmented, if not supplanted, by the use of dynamic game theory to assess the relative bargaining strength of the participants.

 Accordingly CRE will be presenting its views on this important matter to the FTC and DOJ  within the next week.

Commissioner Ohlhausen

See the  CRE  Interactive Public Docket on Hospital Consolidation.

[1] Executive Order 12866, Regulatory Planning and Review, 58 Fed Reg 51735 (30 September 1993), supplemented by Executive Order 13563, 76 Fed Reg 3821 (18 January 2011).

[2] Elements of these regulatory principles have been present in various parts of the federal government since the 1960s. See Jim Tozzi, ‘OIRA’s Formative Years: The Historical Record of Centralized Regulatory Review Preceding OIRA’s Founding’ (2011) 63 Admin L Rev 37, 41.

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