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From Antitrust Law Daily, July 18, 2018

FTC members ask lawmakers for additional authority to handle data security, privacy

By Jeffrey May, J.D.

Lawmakers on the House Energy and Commerce Committee’s digital commerce and consumer protection subcommittee heard from the five FTC commissioners during an oversight hearing today. Rep. Bob Latta (R.-Ohio), chairman of the subcommittee, kicked off the hearing. In his opening statement, Latta said that he hoped to learn how the Commission was utilizing tax payer dollars, particularly in light of the challenging fiscal environment and the recent decision of the House Appropriations Committee to approve two million more dollars for the FTC than the agency requested for fiscal year (FY) 2019.

In addition to providing the subcommittee with written testimony, which offered short overview of the FTC’s work to protect U.S. consumers and competition, each of the commissioners delivered opening statements and responded to questions from lawmakers.

Data privacy, security. Up first was FTC Chairman Joseph Simons. He focused his opening statement on data security and privacy, noting that these issues will remain enforcement priorities at the agency. Simons called on Congress to assist the agency with these enforcement efforts by providing the agency with more authority in this area. Simons said that there was a need for data security legislation that would provide the agency with three things: (1) the ability to seek civil penalties to effectively deter unlawful conduct; (2) jurisdiction over nonprofits and common carriers; and (3) authority to issue implementing rules under the Administrative Procedure Act.

Commissioner Rohit Chopra agreed with Simons that the agency’s "existing toolkit will not do the trick." He called on Congress to take the lead on privacy protections, rather than follow new efforts by California and the European Union. He suggested that Congress build upon existing privacy laws, such as the Children’s Online Privacy Protection Act.

Robocalls. Speaking on the continued need for cracking down on illegal robocalls, Commissioner Rebecca Slaughter also joined in her fellow commissioners’ call for additional agency authority. She noted that the common carrier exemption puts much of the conduct beyond the FTC’s reach. Despite the agency’s efforts, including bringing 137 cases targeting over 800 individuals and companies, the problem of robocalls persists, she noted. Slaughter said that the agency’s budget has not kept pace with technological changes that enable these unwanted calls and reminded lawmakers that it is critical that the FTC has sufficient resources to support its work.

SAFE WEB Act. Commissioner Noah Joshua Phillips discussed the agency's enforcement efforts tied to the U.S. SAFE WEB Act in his opening statement. He called on Congress to reauthorize the Act, which sunsets in 2020 and to eliminate the sunset provision. Philips also noted the FTC’s commitment to the EU-U.S. Privacy Shield, which provides a legal mechanism for companies to transfer personal data from the EU to the United States.

Merger enforcement. In her opening statement, Ohlhausen moved away from the discussion of the agency’s consumer protection mission and touched on merger enforcement. In 2017, the FTC challenged 23 mergers and obtained remedies for consumers in 15 others, maintaining essentially the same merger enforcement pace during the beginning of this administration as it had during the previous one. She anticipates that the "brisk pace" will continue in FY 2018. In addition to noting the three merger cases in litigation, Ohlhausen highlighted two recent merger enforcement efforts involving fast-moving, high technology markets: a complaint challenging the ultimately abandoned combination of the two largest daily fantasy sports providers—DraftKings and FanDuel; and a challenge to the acquisition by CDK Global, Inc., which provides auto dealer software and integrated technology solutions to car, truck, boat, and heavy equipment dealers, of competitor Auto/Mate, Inc. That deal also was abandoned.

Ohlhausen also discussed process reforms at the agency. She noted efforts to streamline processes for civil investigative demands (CIDs). According to Ohlhausen, the CID process has been made friendlier to businesses without sacrificing the agency's effectiveness.

Energy and Commerce Committee ranking member’s remarks. Rep. Frank Pallone, Jr. (D.-N.J.), ranking member of the House Energy and Commerce Committee, appears to appreciate the commissioners’ concerns about limitations on the agency’s authority. He said in a statement that the FTC should be doing more, but that the agency "needs the support and legislative authorizations from Congress."

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