FTC Chair Lina Khan Testifies Before The House Appropriations Committee

4 months ago

The House Appropriations Committee held a hearing to receive testimony about the FTC's FY2025 budget request.

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Transcript

00:00:00 Financial services and general government will come to order. I'd like to welcome Federal Trade Commission Chair

00:00:04 Lina Khan. I appreciate your participation in today's hearing to give the members of the subcommittee the opportunity to

00:00:10 discuss your Federal Trade Commission's fiscal year 2025 budget request and conduct and conduct oversight over the commission.

00:00:18 In my new role as the chairman, I'm eager to work with all the members of the subcommittees

00:00:22 and all the agency heads under our jurisdictions.

00:00:25 We work to fund the government in a timely responsible way for the fiscal year 2025.

00:00:30 I also look forward to conducting oversight of the agencies under our jurisdiction, including the FTC.

00:00:35 It is for these purposes that we are gathered here to hear testimony and ask questions today.

00:00:41 The fiscal year 2025 budget request for the Federal Trade Commission is 535 million dollars.

00:00:47 That would be a nearly 35 percent plus up from the fiscal year 2024 enacted levels.

00:00:53 Although funding for the FTC is partially offset by fees, the commission's fiscal year 2025 proposed budget is once again a

00:01:00 request for a dramatic increase in funding for an agency whose work continues to raise concern among many many members of Congress

00:01:07 and the public, including individuals, families, and businesses in Ohio's 14th congressional district where I represent.

00:01:12 Now I'll be honest. It'll be difficult to support a 35 percent increase at the FTC or any agency under our jurisdiction.

00:01:19 Current government spending levels are unsustainable.

00:01:23 We have seen record deficits in recent years in part due to COVID and we have to reduce our spending.

00:01:28 Under this administration, the FTC has prioritized the issuance of many polarizing regulations that push the legal boundaries of a commission's mission

00:01:36 as established by Congress. While the FTC has the responsibility alongside the Antitrust Division of the United States Department of Justice

00:01:43 to promote competition, it also bears the responsibility to do so in a way that respects the rule of law and due process.

00:01:51 It must ensure that its regulations are well developed and accurately evaluated before their issuance.

00:01:56 Yet over the last several years, there have been repeated instances of rulemaking while purporting to benefit consumers

00:02:01 and competition clearly exceed the statutory authority. Some of these rules, such as the recently

00:02:06 issued rule on non-competes, could be well intentioned, but in reality it goes too far and has the potential to stifle economic growth.

00:02:15 Other rules, such as the CARS rule, claim to protect consumers, but the rule lacks a clear justification and adds unnecessary burdens to consumers.

00:02:23 Even the FTC decided to pump the brakes on this rule while a legal challenge against it is pending.

00:02:28 Similarly, last summer the FTC proposed changes to the pre-merger filing forms and notifications.

00:02:34 As you know, fees from those forms fund much of FTC's work.

00:02:38 I'm concerned that the burden with this new proposal will have on businesses. By the commission's own estimates, under the new rules,

00:02:45 the time required for each filing will rise from the average of 37 hours to an average of 144 hours.

00:02:50 The FTC expects some filings may take

00:02:53 222 hours to prepare.

00:02:56 With such large-scale filings we'd likely manage by larger corporations that have a supportive experience attorneys,

00:03:01 it is inevitable that some of the increased burden will also apply to small businesses and startups.

00:03:06 The constitutional statutory foundation for these and other rules that the commission has

00:03:12 issued is severely lacking and I look forward to discussing that further today.

00:03:16 While I expect that much of the dialogue today will focus on the work produced by the FTC,

00:03:20 I'm also concerned with the work environment within it.

00:03:22 Shortly after the change in leadership at FTC, staff reported their lack of trust in senior leadership's honesty and integrity at an alarming level.

00:03:29 Reports also indicated that senior leaders did not generate high levels of motivation or commitment in the workforce.

00:03:35 While those surveys have shown that some improvement in 2023,

00:03:39 it is my expectation that the chair and all those working at senior levels of the FTC will continue to take necessary steps

00:03:45 towards promoting and demonstrating workplace integrity.

00:03:48 Particularly within an agency tasked with combating deception, honesty should be a core pillar.

00:03:53 The subcommittee has a jurisdiction over the federal workforce and with that in mind, I will remain watchful of the level's employee satisfaction

00:03:59 and trust within the FTC. I look forward to today's dialogue to discuss these topics and other pertinent topics.

00:04:06 I now turn this over to my friend and Ranking Member, Mr. Hoyer, for his opening remarks. Thank you very much.

00:04:11 And welcome,

00:04:16 Ms. Khan, to the hearing room and thank you very much for your service to our country.

00:04:22 Promoting competition,

00:04:25 from my perspective, was central to some of the historic bills we enacted last Congress,

00:04:30 from the bipartisan infrastructure law, the Chips and Science Act, to the Inflation Reduction Act.

00:04:35 We all want competition.

00:04:37 Those of us who are supportive of the free market know that competition is absolutely essential to keep it free and to keep it a market.

00:04:45 We want growth and we want development, which come with it.

00:04:49 Justice Brandeis once cautioned, however, that unless there be regulation of competition, its excesses

00:04:56 will lead to the destruction of that very competition.

00:05:00 That's the goal of the FTC, of course, to promote fair competition and to protect American consumers.

00:05:07 We've seen the detrimental effects of anti-competitive business practice on American consumers just recently.

00:05:13 Whether it's the grocery store or at the pump, many families have had to contend with higher prices.

00:05:18 Recent inflation is largely a product of the COVID-19 pandemic,

00:05:22 Putin's invasion of Ukraine, and other disruptions to the global economy.

00:05:27 But anti-competitive business tactics have also played a role.

00:05:30 The oil cartel is a specific example of that.

00:05:33 Recent FTC reports have found that there has been a lot of consolidation among grocery stores and supermarket chains,

00:05:40 which I know in my own community would be the case, which has allowed their profit margins to grow even higher than before the pandemic

00:05:48 at the expense of the American consumer. They can charge their customers a whole lot more than those customers don't have

00:05:55 anywhere else to shop.

00:05:57 FTC research has also found similar trends in the meatpacking industry, with monopolies driving up grocery prices to turn a larger profit.

00:06:05 Oil and gas companies, which I mentioned, have also engaged in price

00:06:09 gouging, raking in record profits despite many Americans struggling to afford to refill their tanks to get to

00:06:16 schools, to get to work,

00:06:19 to get to recreation. The FTC is also

00:06:23 playing a leading role in ensuring that health care services nationwide are affordable,

00:06:28 accessible, and of high quality by closely scrutinizing mergers, both vertical and horizontal,

00:06:33 throughout the industry.

00:06:36 Although inflation continues to go down and our economy continues to outcompete our G7 peers,

00:06:41 we need to keep working to bring down costs even further.

00:06:45 The FTC is crucial, in my opinion, to that effort by helping promote competition.

00:06:52 The FTC is also vital to protecting American consumers. Rules

00:06:56 help defend Americans against everything from scam calls to the health care data breaches. A few weeks ago, for example,

00:07:03 the FTC issued a rule

00:07:05 banning non-compete clauses. That means that if you're flipping burgers for the last

00:07:13 or fast food chain,

00:07:15 your employer can't prevent you from going to work for another restaurant across the street

00:07:20 if it's offering better wages. The FTC needs federal funding to conduct this essential work.

00:07:25 That's why I strongly

00:07:28 support the FTC's fiscal year 2025 request of $535 million, which is partially offset, of course, by fees.

00:07:36 Enforcement

00:07:39 is a critically important effort in anything in life.

00:07:43 If you don't have a referee on the field, people break the rules and the game is not played fairly.

00:07:49 That's essentially what you do. If you're opposed to these predatory businesses practices, as most Americans are,

00:07:54 then you ought to support this funding. If you believe, as I do, that capitalism depends on fair competition, as I said earlier,

00:08:01 then work with us to fulfill the FTC's request. Thank you again to Chair Kahn for joining us, and I look forward to hearing

00:08:09 why these resources are so crucial to the American people. Thank you, Mr. Chairman.

00:08:16 Thank you very much, Mr. Hoyer, and I will now recognize my friend and the ranking member of the full committee,

00:08:22 Mrs. DeLauro, for any comments you might have.

00:08:24 Thank you so much, Mr. Chairman. I want to say thank you

00:08:31 to you and to Ranking Member Hoyer for holding this hearing, and a thank you to Chairwoman Kahn for being here today.

00:08:37 But so much thanks for your public service, for your dedication to protecting American consumers

00:08:43 from anti-competitive and unfair business practices across our country, across our economy.

00:08:49 Your agency is critical in combating the corporate greed that has led to the biggest companies making record profits

00:08:58 at a time

00:09:00 when hard-working Americans are living paycheck to paycheck.

00:09:04 They struggle to make ends meet while facing exorbitant price increases on things that they buy every day.

00:09:13 All the while,

00:09:14 corporations are taking every opportunity to expand their power through mergers, acquisitions of both competitors and suppliers,

00:09:22 tightening their grip

00:09:24 on everything from grocery aisles to gas pumps and solidifying their ability to raise prices on a whim.

00:09:31 There is no food shortage in the United States.

00:09:35 There is no reason for the exorbitant prices.

00:09:40 They do it because they can.

00:09:42 While inflation has cooled from its peak, there is still much to be done to lower the cost of living,

00:09:47 make the economy work for more people, and your agency has a critical role to play

00:09:52 in that effort. Just recently, the Federal Trade Commission expanded economic freedom for all Americans

00:09:58 by banning non-compete contract clauses nationwide,

00:10:02 allowing workers to seek the

00:10:05 compensation they are worth on the open market without being handcuffed by employers. This action alone will put an estimated

00:10:13 $524 in the average worker's pocket annually, will lower health care costs by nearly $200 billion

00:10:20 over the next decade, and lead to 8,500 new businesses every year.

00:10:26 I also applaud your agency's recent report highlighting the hyper-consolidation

00:10:30 of the U.S. infant formula market.

00:10:34 I look forward to working with you to address the industry's fragility and to build a more diverse and resilient infant formula market.

00:10:42 And at the beginning of this month, you uncovered disturbing evidence

00:10:47 of a big oil executive colluding with the OPEC to inflate oil prices,

00:10:53 leading to pain at the gas pump and at the airport for millions of American families, all for the sake of higher profits.

00:11:03 This right here is exactly what we mean when we talk about corporate greed driving inflation.

00:11:09 Big energy companies would rather collude with a cartel of

00:11:13 authoritarian states that let the free market truly determine the price at the pump, and we do not have a shortage

00:11:22 of gasoline and oil.

00:11:25 It's a no shortage. It's shameless profiteering at every opportunity.

00:11:29 That shows why we must do everything that we can to support the FTC.

00:11:33 In last year's bill, House Democrats defeated a Republican poison pill rider

00:11:40 that would have tied the commission's hands and allowed for expensive add-on fees at car dealerships.

00:11:46 Soaring new and used car prices have been a painful driver of inflation,

00:11:51 and the majority's measure would have made it easier for dealerships to bait and switch price gouge consumers with junk fees,

00:11:59 I'm delighted we defeated this wrongheaded rider,

00:12:02 but we have much more to do. To help ensure fairness across the economy, to protect consumers,

00:12:08 the FTC must have the resources it needs to support its staff,

00:12:12 infrastructure, and litigation efforts, and President Biden's request for a 26% budget increase would enable just that.

00:12:20 The FTC is up against the full might of American corporations and their expansive legal teams,

00:12:27 so we must ensure the commission has the capacity to take on this mission in full and fight back on behalf

00:12:34 of the American consumers.

00:12:37 Many thanks to you for appearing before the subcommittee and for your public service to our country. I yield back.

00:12:43 Thank you, Ms. DeLauro.

00:12:47 Chair Kahn,

00:12:49 without objection, your full written testimony will be entered into the record. With that in mind,

00:12:54 I ask you to please summarize your opening statement in five minutes.

00:12:58 Good morning, everybody.

00:13:02 Chairman Joyce, Ranking Member Hoyer, and members of the subcommittee, thank you for inviting me to testify today.

00:13:08 Chairman Joyce, congratulations on your appointment as chair, and I look forward to working together.

00:13:13 I'm happy to share with you all some of the critical work that the Federal Trade Commission has advanced this past year

00:13:20 and to discuss with you the commission's budget request for fiscal year 2025.

00:13:24 For every $1 that the FTC receives in funding, we provide $14 in benefits to the public.

00:13:33 For the American people, there is no doubt that resourcing the FTC is an excellent return on investment.

00:13:40 Of course, none of this work would be possible without the talented and dedicated staff of the FTC,

00:13:47 whose hard work and fidelity to the FTC's mission protect Americans' pocketbooks, privacy, and economic liberty.

00:13:54 As American families continue to struggle with higher prices for daily necessities,

00:14:00 the FTC's work helps ensure that Americans keep more of their paychecks.

00:14:05 By protecting fair competition and preventing unlawful business practices,

00:14:10 our work improves families' bottom lines and lowers costs,

00:14:15 be it at the grocery store, the pharmacy counter, or the gas pump.

00:14:18 As part of that work, the FTC has initiated the largest crackdown on illegal telemarketing in our history,

00:14:26 and consumer complaints have plummeted nearly 60%

00:14:29 since 2021,

00:14:32 as AI turbocharges scams or shutting down fraud affecting older Americans, veterans, and other underserved populations,

00:14:40 including those recovering from opioid addiction.

00:14:44 The Commission is bringing all of its tools to bear to protect Americans' privacy.

00:14:49 Over the last year, we have taken on unscrupulous data brokers and issued bans on firms who exploit or

00:14:57 endanger people's sensitive health or geolocation data,

00:15:00 including by selling it to entities in China.

00:15:03 We've also proposed a rule to strengthen kids' privacy online and to limit companies' ability to sell kids' data for profit.

00:15:13 The Commission has issued rules to address some of the most widespread consumer scams.

00:15:18 We proposed a rule to protect Americans from hidden deceptive junk fees that cheat them out of tens of billions of dollars each year,

00:15:26 and finalized a rule requiring clear upfront pricing for cars, one of the biggest purchases that Americans make.

00:15:34 We proposed a click-to-cancel rule that will make it as easy to cancel a subscription as it is to sign up for one,

00:15:42 freeing people from subscription traps.

00:15:44 And we finalized a rule to protect Americans from government and business impersonation scams, which are becoming ever more sophisticated

00:15:52 with the adoption of AI.

00:15:54 We have been just as active in our competition work.

00:15:57 Earlier this year, we challenged Kroger's acquisition of Albertson's, the largest supermarket merger in U.S. history,

00:16:04 because, as our complaint alleges, we believed it would lead to higher grocery prices for millions of Americans.

00:16:12 When we investigated Exxon's proposed merger with Pioneer,

00:16:15 we found evidence that Pioneer's former CEO attempted to organize anti-competitive

00:16:20 coordinated output reductions between U.S. oil producers and OPEC+,

00:16:26 potential collusion that could contribute to Americans paying more for gas.

00:16:31 We also sued U.S. Anesthesia Partners for monopolizing anesthesiology services in Texas,

00:16:38 a private equity-driven scheme that costs Texans tens of millions of dollars a year.

00:16:44 We are paying close attention to anti-competitive practices that harm American consumers, workers, and our economy.

00:16:51 In September, the commission and a bipartisan group of 17 state attorneys general filed a lawsuit against Amazon,

00:16:59 alleging that it is engaged in monopolistic conduct that inflate costs for families and businesses.

00:17:07 We are also continuing to litigate a monopolization case against Facebook, brought by my predecessor during the Trump administration.

00:17:14 We have challenged improper patents listed by pharmaceutical companies,

00:17:19 prompting several to take down these junk listings and open up the market to free competition.

00:17:25 Because of the FTC's work, three of the four major inhaler manufacturers

00:17:30 are now slashing the price of inhalers from hundreds of dollars down to just $35

00:17:37 for the millions of Americans who need them.

00:17:40 The commission also recently finalized a rule to ban non-compete clauses, which prevent one in every five Americans

00:17:47 from freely taking jobs and starting their own businesses.

00:17:50 Our rule would raise workers' wages and restore their economic liberty, while also creating thousands of new businesses and spurring innovation.

00:17:59 We received a tremendous public response to this effort, including more than 26,000 comments from everyday Americans.

00:18:08 Over the last year, I've had the great privilege of traveling across the country to hear from people from all walks of life

00:18:15 share how unchecked corporate power can undermine their core economic liberties.

00:18:20 I've learned from family farmers in Iowa, gig drivers in New York, community pharmacists in Philadelphia,

00:18:27 grocery workers in Phoenix, and tech entrepreneurs in Silicon Valley.

00:18:31 They all came from different backgrounds and political persuasions, but they all have the same goal.

00:18:37 To do an honest day's work on a level playing field with the freedom to succeed on the merits of their talent and efforts.

00:18:44 I'm incredibly proud of the FTC's work to help make good on that fundamental promise of America to its citizens,

00:18:51 particularly when we face down deep-pocketed opponents who can wield near infinite resources against us.

00:18:58 Unfortunately, the FTC's enacted budget for FY 2024 of $425 million

00:19:06 represented a 1% reduction from the previous year.

00:19:09 The effect of this reduction alongside a statutorily mandated 5% pay raise and higher non-pay costs

00:19:17 resulting from inflation means significantly less to support the FTC's mission.

00:19:23 To support our efforts in FY 2025, the Commission is requesting

00:19:28 $535 million and

00:19:31 $543 FTE, an increase of $109 million and $55 FTE.

00:19:36 This adjustment would fund mandatory pay increases and anticipated increases for FY 2025, as well as other

00:19:44 inflationary non-pay expenses and critical IT investments that we need to maintain our enforcement work.

00:19:51 Our economy has evolved tremendously since Congress created the FTC more than a century ago.

00:19:58 From Teddy Roosevelt to FDR, our leaders have long recognized that safeguarding economic liberty

00:20:04 requires checking private monopolies.

00:20:07 Thank you for the opportunity to appear before you today. I'm happy to answer any questions.

00:20:12 Thank you, Chair Khan. We'll now begin questions. Each member will have five minutes to ask their question, ask you to

00:20:20 engage in five minutes. Watch the yellow light.

00:20:24 We'll tell you there's one minute left and start to wrap up from there. First, I'll recognize myself.

00:20:29 Chair Khan, on April 23rd, the FTC issued a final rule that essentially prohibits and eliminates all non-compete agreements.

00:20:37 Well, I agree that there are many and were many businesses who use non-compete agreements in a way that wrongfully harmed employees and

00:20:44 stifled competition and growth. Not all non-compete agreements are created equally.

00:20:48 Under what statutory authority did the FTC issue the final rule prohibiting non-compete agreements?

00:20:54 And essentially nullifies such contracts between employees and employers across the country.

00:20:59 So the FTC promulgated this rule

00:21:02 under Section 6g of the FTC Act, which says that the FTC can issue rules

00:21:09 as part of its work.

00:21:12 Section 5 of the FTC Act prohibits unfair methods of competition and the FTC has determined that non-compete clauses

00:21:20 constitute unfair methods of competition. And so that was the authority that we did this under.

00:21:24 Would you agree that the rule carries economic and political significance? And if so, is this rulemaking not subject to the major questions doctrine?

00:21:33 Congressman, we followed some of those developments in the Supreme Court quite closely and in our final rule

00:21:39 we lay out why we do not believe that this runs into the major questions doctrine. I'll say just stepping back,

00:21:47 you know, as we undertook this work, we weren't confident on the front end what necessarily the scope of this rule should be.

00:21:54 But it was because we ended up receiving

00:21:57 26,000 comments from people across our economy, across our country, from bartenders and janitors

00:22:04 who've had non-competes vigorously enforced against them, to small businesses and

00:22:10 entrepreneurs who shared with us how non-competes have prevented them from launching their new businesses and

00:22:16 contributing to economic growth. And so we concluded that this was the right place to land.

00:22:20 Fair enough. Last year we had a little dialogue about the CARS rule.

00:22:25 I mentioned in my opening statement, it is my understanding that the FTC has decided to delay the implementation of that rule

00:22:31 while a legal challenge against it is pending.

00:22:33 Seems to me that this rule is misguided and clearly burdensome from the beginning. Instead of delaying the effective date,

00:22:39 why not just withdraw the rule?

00:22:41 Thanks for the question. So just to step back, the CARS rule is pretty simple.

00:22:46 It basically prohibits auto dealers from lying to car buyers about costs and prices.

00:22:52 So the rule says you can't engage in bait-and-switch tactics and you can't impose junk fees.

00:22:58 So, you know, charge people for say nitrogen-filled tires when really the tires just have regular air.

00:23:05 So these are pretty simple principles. And the reason we did this is because despite a decade of

00:23:12 enforcement, the complaints about deception at the auto dealer have not gone down significantly.

00:23:18 We know that buying a car is one of the most expensive

00:23:21 purchases that a lot of Americans make and we need to protect them. A lot of the complaints

00:23:26 we've gotten have actually been from service members. And so members of our military who require buying a car to

00:23:33 navigate the sprawling bases have been especially subject to these predatory deceptive tactics.

00:23:39 And so we felt an enormous urgency to do this work.

00:23:42 Thank you. Mr. Hoyer?

00:23:44 Turn on your mic, Hoyer.

00:23:53 You point out that one in five Americans are subject to a non-compete rule.

00:24:03 That's right. So that's 20% of the American workforce.

00:24:08 That's right. And your point is, which I take, is that

00:24:13 having such a broad spread non-compete rule stifles competition,

00:24:19 raises prices, and

00:24:21 prevents people from using their own ingenuity in perhaps another way, notwithstanding the fact they're at a very or

00:24:30 relatively low level of

00:24:33 employee. Is that accurate? All of that? All of that's accurate, Congressman. It seems to me in that respect,

00:24:39 we all understand that there are certain

00:24:42 non-compete agreements that are legitimate.

00:24:46 If you work in a big plant and you learn technology and you get

00:24:51 experience, etc., etc., and you find out competitive

00:24:58 skills and

00:25:01 processes that are used in that company, that they don't want you taking it someplace else to compete against them.

00:25:08 That seems to me to be a legitimate use, but to be used—you made a very low-level

00:25:14 analogy in your opening statement—

00:25:17 to prevent a worker from

00:25:20 either going into business themselves or improving their salaries and working conditions

00:25:26 seems to me clearly a objective that is within your responsibility and very good for the American people.

00:25:32 That's another question that's an observation.

00:25:35 I have raised—Mr. Womack also raised with the IRS Commissioner—

00:25:42 the companies that are saying that they can

00:25:45 save your tax money if you owe taxes or didn't pay taxes,

00:25:49 they can come in and they can make a very good deal, and you don't pay them anything

00:25:54 unless they save you money, which means obviously other taxpayers are going to pay a little more

00:26:00 because some taxpayers

00:26:03 pay much less.

00:26:05 Have you looked into that

00:26:07 in the FTC?

00:26:09 It's on our radar because of engagement with your office, and any time that a company is making certain

00:26:15 representations that don't accurately reflect the services they offer, that can be deceptive and is relevant to the FTC.

00:26:24 Can you briefly tell me

00:26:26 what you won't be able to do if we do not approve the budget level that you requested that will then in turn

00:26:33 harm the American people? And maybe in the process discuss a little more—

00:26:38 I made the point—IRS at the higher end, millionaires and above of income,

00:26:45 oversight

00:26:48 results $1 spent by the IRS in enforcement

00:26:52 results in $12 of savings. You used a higher figure. Can you explain that to us?

00:26:58 So for every $1 that the FTC receives, we return $14 in consumer benefits,

00:27:05 which is pretty stunning.

00:27:07 The FTC's budget, basically 70% of that, covers our people.

00:27:14 So the overhead cost beyond that is pretty low as an overall portion.

00:27:19 And so when we have, you know, 5% pay increases that are not funded, that hits us hard.

00:27:25 And so if we are not able to get funding to fully support our mission, that's going to mean fewer

00:27:32 investigations, fewer lawsuits stopping

00:27:35 lawbreaking by data brokers, fewer lawsuits stopping unlawful surveillance of kids,

00:27:42 fewer lawsuits stopping illegal practices by health care monopolies,

00:27:46 fewer actions to support elder—to cut back on elder fraud or made in USA fraud or fraud targeting veterans.

00:27:54 And so all of this is a core part of the FTC's work. And if we're not adequately funded,

00:27:59 it's going to come at the expense of that. Thank you very much. And I'm going to pursue that further with you and your office.

00:28:05 Also, two things. Junk fees.

00:28:08 The president's made a real point of that. The administration has. There are a lot of junk fees and people don't know about them

00:28:14 and perhaps don't need them

00:28:17 more

00:28:19 pointedly. I'd like to look into that further.

00:28:23 And also,

00:28:25 I would like to discuss with you more

00:28:28 in more in-depth the car rule,

00:28:33 because I have some very reputable car dealers who have talked to me about this and indicated this is

00:28:39 more make work and doesn't get to a more honest result, which you have

00:28:44 opined. So I'm going to look at that further. I don't have time to question you about it in depth,

00:28:49 but I do want to look at that further. Thank you.

00:28:52 Thank you, Mr. Hoyer. Chair will now recognize Mrs. DeLauro for any questions she may have.

00:28:59 Thank you, Mr. Chairman. Chairman Kahn, I wanted to ask you about a price gouging in the food market

00:29:10 and the FTC's role in alleviating the pressure that families are feeling here.

00:29:15 Over the last four years, food prices have risen over 25 percent.

00:29:20 That's according to the Consumer Price Index. Large corporations like to blame

00:29:25 inflation on supply chain shocks. A report after report shows that the price increases have been driven by large corporations,

00:29:32 taking advantage of an outsized market to raise prices on the backs of working people. And again, there was no food shortage in the U.S.

00:29:41 So FTC released a report finding that large grocery retailers, quote,

00:29:47 "seem to have used rising costs as an opportunity to further raise prices to increase their profits,

00:29:54 which remain elevated today," end quote.

00:29:57 I know your agency and the administration have been trying to address the financial pressures consumers are feeling.

00:30:04 What actions has the FTC taken to date to rein in high food prices?

00:30:10 So the FTC earlier this year sued to block the Kroger Albertsons merger because we alleged that

00:30:17 that would result in higher prices for American consumers.

00:30:21 As you noted, we also have done a study looking at supply chains in the grocery sector and trying to understand both

00:30:29 what happened when these supply chains seized up

00:30:33 and what's happened now that those stresses have been relieved. What we found was that

00:30:38 consolidation and concentration can contribute to severe supply chain disruptions.

00:30:44 Because if you concentrate production, if you put all of your eggs in one basket, a

00:30:49 single disaster or a single

00:30:52 outbreak can lead to all sorts of cascading problems and the entire supply chain can seize up.

00:30:58 And so promoting competition is good for more resilient supply chains. We also found that

00:31:05 when these supply shortages hit, big companies were able to get special discounts, special access from big suppliers, and

00:31:14 independent grocers got shut out. And so there can be an asymmetric impact where good big corporations get out ahead and smaller

00:31:21 corporations get left behind.

00:31:24 We're also hearing a lot of concerns from independent grocers about some of that

00:31:28 discrimination and how it could be leading to higher costs. So all of that is on our radar and we're scrutinizing it closely.

00:31:33 So again, is there a way in which to-

00:31:36 You've talked about what's on the radar.

00:31:39 USDA and DOJ,

00:31:43 working with them to deal with lowering food prices.

00:31:46 Yeah, absolutely. We work with both of them. We also have a lawsuit pending right now taking on practices by the two big

00:31:54 pesticides manufacturers. We allege that their anti-competitive practices result in farmers

00:32:00 overpaying by billions of dollars and then farmers inevitably pass on those costs to consumers. So we have a lawsuit pending. We got a great

00:32:09 victory at the motion to dismiss stage and we're hoping if we're successful that'll contribute to lower food prices as well.

00:32:14 Just that we wrote a letter, several of us,

00:32:18 to the president. This is an action on high food prices and, you know,

00:32:23 prohibiting exclusionary contracting by dominant firms in the industry, guidance on potential

00:32:30 violations of the right, the Robinson-Patman Act and Section 5 of FTC Act,

00:32:37 cross-agency collaboration. That really is what you're referring to. So I hope you'll consider all of these options.

00:32:43 I look forward to working with you on

00:32:45 this issue. It is the biggest

00:32:49 concern that the American people have that they've gone to the grocery store and they're getting priced out and that shouldn't happen.

00:32:58 Let me move to infant formula where you've done a report that examines

00:33:04 some of the factors that led to the nationwide shortage of infant formula in 2022.

00:33:09 Concerning for WIC participants who purchased more than half of infant formula in the United States.

00:33:17 And that infant formula crisis talked to really demonstrated the fragility and the hyper

00:33:24 consolidation of the US infant formula market. Three companies controlling upwards of 97% of the market.

00:33:32 You mentioned several policy changes at FDA, USDA to improve

00:33:37 access to safe

00:33:40 infant formula for families in my state and across the country.

00:33:44 In addition to the actions taken by FDA and USDA, what additional actions can FTC take to promote competition

00:33:52 in the infant formula market?

00:33:55 Address WIC if you can for a moment. Does that mechanism create large savings for the government?

00:34:02 Allows WIC to provide more benefits within budget restraints.

00:34:06 But do you believe that single supplier contracts will be a long-term problem in addressing the

00:34:12 consolidation in the infant formula market?

00:34:15 So there's no doubt that WIC is such an essential program.

00:34:19 When we looked at the infant formula market, we did see some suggestions that the current approach to WIC

00:34:26 contracting, which are basically the single source contracts, can encourage

00:34:31 consolidation and harm competition in ways that locks out some of these smaller

00:34:36 formula manufacturers from the market. And also means that if you have a single contamination in a single factory,

00:34:43 that can create shortages across the country. And so there's no doubt that, you know, there are benefits from the current approach,

00:34:50 but there are also downsides when it comes to creating a more fragile system.

00:34:54 And so I think we need to figure out what's a better and more optimal balance there so that we're not,

00:35:01 we don't have such a fragile market that really hurts American families.

00:35:05 Well, we saw the effect of what happened in the, with infant formula, which was an enormous crisis.

00:35:10 We shouldn't let that crisis just pass without trying to address some of the issues.

00:35:15 What I would love to do is to work

00:35:17 with you and to look at how we're going to promote that competition in the market and how,

00:35:23 without disrupting the flow of WIC benefits, because they are needed, but how we can have a different approach

00:35:30 to not further

00:35:32 encouraging

00:35:34 consolidation. So thank you. And Mr. Chairman, thank you for indulging the additional time. I appreciate it.

00:35:40 I appreciate the question, Mr. Laurel. Now recognize Mr. Womack for any questions he may have.

00:35:46 Thank you, Mr. Chairman, and welcome Chair Kahn

00:35:49 to the committee. I know my friend, Cindy Hoyer, is going to talk a little bit more about CARS. The CARS rule, we'll

00:35:56 dig into that too a little bit.

00:35:59 And in your opening comments, you talked about the work that you've done on robocalls, on

00:36:05 unwanted telephone traffic coming into

00:36:08 the homes of everyday Americans.

00:36:11 And

00:36:13 congratulations on that,

00:36:15 but you haven't fixed the problem,

00:36:17 right?

00:36:19 That's right. We have seen a significant drop in complaints, but obviously, you know, robocalls are still a scourge.

00:36:26 Is it possible that the reason you don't have as many complaints is people have just given up?

00:36:30 It's possible. I mean, we have been... I think it's probable.

00:36:35 Because I used to hear a lot from people, and in conversations, I still get comments. They're still getting this. So I would,

00:36:44 on one hand, I would congratulate you for bringing the enforcement actions that you've brought on

00:36:49 people

00:36:51 performing this unwanted service into America's homes. But the problem is not fixed.

00:36:57 And we still get a lot of

00:36:59 concerns about that. So I'd be careful not to make that your calling card.

00:37:05 You're asking for a 25% increase over the enacted 24 level,

00:37:10 from 425 and change to 535,

00:37:14 in just a few seconds, because I got a limited amount of time.

00:37:19 What's the justification there?

00:37:21 So the justification is that there are unfunded pay increases.

00:37:26 There are higher costs we face because of inflation unrelated to pay. And then we also have to make critical investments.

00:37:33 25%?

00:37:35 We also have to make critical investments in some of our tech upgrades.

00:37:39 Sometimes, you know, we now have to analyze huge amounts of data. Right now,

00:37:43 we don't always have the capacity to analyze that data in-house.

00:37:47 We also need to do modernization of our complaint database. And so all of those costs are included.

00:37:53 Again, 70% of the FTC's budget is our people. And so those pay increases, especially when they're not funded, do hit pretty hard.

00:38:02 Fair enough.

00:38:06 We'll,

00:38:08 we'll have a lot more debate about

00:38:11 the size of that increase.

00:38:14 To another line of questioning,

00:38:17 before you were confirmed in '21, your background was in academia,

00:38:20 where you've argued in support of dramatically expanding the FTC's regulatory and enforcement powers.

00:38:27 From being the only regulator to challenge the merger of two luxury fashion firms, Tapestry and Capri,

00:38:33 to blocking Aluminum's acquisition of cancer startup, Grail,

00:38:37 it's clear, clear to us, that you continue to hold this view by blocking countless mergers.

00:38:44 Are there any mergers that are good for the economy, in your view?

00:38:48 So 98% of all mergers go through without even a second question being asked by the government.

00:38:55 It's because you don't have enough staff to come after, right? Is that, is that the problem?

00:39:00 Look, there are a whole bunch of mergers that pose legal issues,

00:39:04 and we have an obligation to protect the American people from illegal consolidation.

00:39:09 That's the job Congress has given us, and we do that job without fear or favor.

00:39:13 One of the transactions you mentioned, the Alumina-Grail merger, that was unanimously voted out before I arrived.

00:39:20 The Commission unanimously issued an opinion, believing that deal was illegal,

00:39:24 and we got a resounding win in the Fifth Circuit last year, saying that the FTC was right.

00:39:30 This was an anti-competitive deal. So, I think we're getting it right.

00:39:33 Well, it's often been said that a broken clock is right twice a day,

00:39:39 and so I'm not going to dispute the fact that there are things that the FTC is doing that strike the right balance.

00:39:46 I think the challenge for us is,

00:39:48 where is there too much government?

00:39:53 I mean, you talked about the, you gave the example on cars, nitrogen-filled tires versus regular air tires.

00:40:00 Do we need the government to tell us that? Is that what the purpose of government is?

00:40:08 I struggle with too much government. As a matter of fact, academia has reported that,

00:40:14 because of your background, that you've openly admitted,

00:40:17 in someone's words, preferring to err on the side of overly aggressive enforcement,

00:40:23 rather than too passive enforcement.

00:40:27 Do you admit to that?

00:40:30 Well, Congressman, I do think that over the last 40 years, we've seen huge amounts of consolidation

00:40:36 that has resulted in a more centralized economy, right?

00:40:39 I mean, one of the contributors of America's economic success has been open, competitive markets and free enterprise.

00:40:47 And if we allow too much centralization, that's going to set us back.

00:40:51 And so I believe, and Congress has charged the FTC with vigorously enforcing the antitrust laws

00:40:57 to ensure we have free enterprise and fair competition, and that's what we do.

00:41:03 Well, we'll hold some of these questions for a little bit later.

00:41:08 But suffice it to say, the challenge for the members of this committee,

00:41:12 given the pressure on the discretionary budget of the U.S. government,

00:41:16 is to how much of this government can we actually afford?

00:41:20 And where is there too much government?

00:41:25 And that debate, I think, is still alive and well. I yield back.

00:41:30 Thank you, Mr. Womack.

00:41:35 We will now recognize Mr. Molinar for any questions he may have.

00:41:38 Chair Kahn, thank you for being with us today.

00:41:45 My understanding is you're supportive of EU digital economy policies like the Digital Markets Act.

00:41:55 You've used taxpayer dollars to support and assist in the implementation of European law

00:42:00 against American companies by sending staff to Brussels.

00:42:03 And as you may know, European policy compels the forced sharing of intellectual property

00:42:10 and proprietary data that only makes U.S. companies weaker and advantages Chinese firms.

00:42:16 Have you considered how the European laws that you support provide an advantage to Chinese competitors

00:42:24 and undermine U.S. competitiveness in European markets?

00:42:27 Congressman, I'm focused on enforcement of the U.S. antitrust and consumer protection laws.

00:42:34 And we hear a lot of concern about how allowing too much consolidation,

00:42:39 allowing unchecked monopoly power is what could risk America falling behind,

00:42:45 since entrepreneurship and innovation is what's allowed us to get ahead from having strong free markets.

00:42:51 And so that's what the antitrust laws are about.

00:42:54 But do you agree that you sent staff to Brussels

00:42:58 to assist with the implementation of the Digital Markets Act?

00:43:02 So I was fortunate to inherit a really vibrant international office at the FTC

00:43:07 that was launched during the Bush administration.

00:43:09 There are also various agreements that would enter during the Bush administration

00:43:15 that allow for and invite cross-border cooperation.

00:43:20 The business community has actually been a big vociferous supporter

00:43:25 of greater harmonization across the globe.

00:43:28 And so that's work that's been long preceding me, and it's been continuing since I joined.

00:43:33 Do you agree with Commerce Secretary Gina Raimondo when the DMA was being crafted?

00:43:41 She said that we have serious concerns that these proposals will disproportionately impact U.S.-based tech firms

00:43:49 and their ability to adequately serve U.S.-EU customers and uphold security and privacy standards.

00:43:56 Look, each jurisdiction has the prerogative of passing its own laws.

00:44:01 I'm focused on the U.S. antitrust laws.

00:44:04 I know there's been significant discussion in Congress about the outsized power of some of the tech giants

00:44:10 and how that can result in censorship, in undermining people's economic liberties,

00:44:15 and how that can undermine entrepreneurship.

00:44:17 And so it'll be interesting to see where in the U.S. we end up with that as well.

00:44:22 Okay, it's my understanding, though, that late last year, your team was working on a federal register notice

00:44:27 that would help assess the ways in which Europe's digital agenda was helping Chinese companies.

00:44:33 This includes potential disclosure of source code and IP, forced transfer of data,

00:44:38 and increasing security vulnerabilities that could be exploited by Chinese actors.

00:44:44 Why has this effort not moved forward?

00:44:48 I'm not familiar with that federal register notice, but we're happy to take a look and get back to you.

00:44:52 So your team was not working on a federal register notice?

00:44:56 Not that I'm aware.

00:44:58 Okay.

00:44:59 But would you agree that there are serious national security concerns associated with that?

00:45:05 With what specifically?

00:45:06 Well, the idea that we're going to empower Chinese companies

00:45:11 and requiring the forced disclosure of source code and IP of American companies.

00:45:17 I'd want to take a closer look at the specifics before answering,

00:45:21 but happy to take a question for the record on that.

00:45:23 Okay.

00:45:25 Are you aware that China is actively pursuing digital negotiations with some of our key trading partners,

00:45:30 such as the Digital Economy Partnership Agreement with New Zealand, Singapore, South Korea, and Chile?

00:45:39 I assume that's true.

00:45:41 You're not familiar with that?

00:45:43 We're not deep in kind of on the front lines of the trade negotiations.

00:45:47 We defer to USTR on that.

00:45:49 Okay.

00:45:52 But in some areas, you seem to be speaking out on labor, environmental issues,

00:46:00 where you're pushing for higher standards internationally, but not in this area.

00:46:05 You'd be allowing China to set the standards in this digital world.

00:46:11 Do you see an inconsistency with that?

00:46:14 The FTC is not weighing in on Chinese trade agreements.

00:46:18 There may be other parts of the administration that are doing that.

00:46:20 I'm referring to setting standards, international standards.

00:46:23 You've been involved setting standards on environmental issues and labor issues,

00:46:30 but not on digital ones?

00:46:34 We have not been involved in setting environmental standards.

00:46:38 I've been very clear that ESG claims and commitments actually are not relevant to antitrust analysis.

00:46:45 They can't rescue a legal deal.

00:46:46 So maybe there's a misunderstanding about some of that.

00:46:48 Well, thank you.

00:46:49 I will submit for the record on the questions.

00:46:51 Thank you.

00:46:53 Thank you, Mr. Chairman.

00:46:54 Thank you, Mr. Molinar.

00:46:55 We will now recognize Mr. Cartwright for any questions he may have.

00:46:59 Thank you, Chair Joyce.

00:47:01 And to our witness, welcome.

00:47:03 And let me say on behalf of Americans all over this country and consumers,

00:47:10 thank you for your efforts at enforcing the antitrust laws that protect consumers

00:47:16 against anti-competitive behavior, against unfair collusion,

00:47:22 against an excessive amount of consolidation of American companies.

00:47:30 You are following up an American tradition started by Teddy Roosevelt,

00:47:35 that great progressive, and I thank you for it.

00:47:39 Last week, well, two weeks ago, May 2nd, you blew the lid off of an amazing scandal

00:47:48 of a Texas oil executive who was caught attempting to collude and conspiring to collude

00:47:57 with other Texas oil companies, other American oil companies, and officials at OPEC,

00:48:05 the Saudi Arabian and the Middle Eastern conglomeration of oil producing countries,

00:48:11 oil producing and exporting companies, countries.

00:48:17 You caught this man colluding.

00:48:19 You caught this man conspiring to collude with other companies,

00:48:25 with OPEC, and this was his plan.

00:48:29 Because oil prices were dropping during the pandemic, he wanted to prop up oil prices

00:48:37 by reducing output, reducing output by American oil producers,

00:48:43 reducing output by international oil producers.

00:48:46 In fact, according to the FTC's complaint, by the way, you did file a complaint May 2nd,

00:48:53 and Mr. Chairman, I ask unanimous consent to enter this complaint into the record.

00:48:58 This is the public version of the complaint, without objection.

00:49:05 In your complaint, you quoted this executive from Texas.

00:49:10 He said, "If Texas leads the way, maybe we can get OPEC to cut production.

00:49:16 Maybe Saudi and Russia will follow."

00:49:19 That is our plan.

00:49:21 That was in your complaint.

00:49:24 Madam Chair, this is not news to Americans.

00:49:28 We saw during the pandemic, as price per barrel of oil leveled off,

00:49:36 price at the pump per gallon of gas continued to rise and rise and rise.

00:49:42 Everybody knew that we were being gouged.

00:49:46 Everybody knew that record profits were being scored by the oil companies, the gas companies.

00:49:54 Everybody knows that they're continuing to make very handsome profits.

00:49:59 And people know that this executive that you singled out, that you caught conspiring with OPEC,

00:50:05 is worth over $200 million.

00:50:08 It isn't enough that American consumers are struggling to pay their bills, to make ends meet,

00:50:15 as prices remain high after the pandemic.

00:50:19 And prices are driven by oil prices and gas prices.

00:50:23 Everything we buy has oil and gas prices baked in, because it has to be delivered.

00:50:31 It has to be transported.

00:50:33 We knew this.

00:50:34 Americans understand about the record profits of the oil companies.

00:50:39 And it isn't enough that the gas prices are killing people.

00:50:43 It isn't enough that the prices of everything continue to stay high.

00:50:47 It isn't enough that these oil companies and multi-millionaires and billionaires

00:50:54 are still enjoying the fruits of the tax cuts they got in 2017.

00:50:59 None of that's enough.

00:51:00 Now they have to conspire with OPEC and with other oil companies

00:51:06 to keep prices high at the pump by limiting production.

00:51:10 What I want to ask you about this complaint is, would you explain to us

00:51:15 why that's illegal, what I just described?

00:51:20 So the U.S. antitrust laws prohibit collusion, they prohibit price fixing,

00:51:26 they prohibit coordinated output reductions.

00:51:29 And so if we find executives publicly signaling, or as we found here as well,

00:51:35 privately communicating with other executives, or in this case also

00:51:40 with OPEC officials from countries like Saudi Arabia, saying effectively,

00:51:45 hey, wouldn't it be great if we all collectively cut back production

00:51:49 so that prices would stay high and we could pad our profits,

00:51:53 that's something that's concerning.

00:51:56 Well, it concerns all of us here.

00:51:58 I commend your work.

00:51:59 Keep going, Chair Kahn.

00:52:00 Get after it.

00:52:02 I yield back, Mr. Chairman.

00:52:04 Thank you.

00:52:05 Thank you for that statement, Mr. Cartwright.

00:52:08 We now recognize Ms. Hinson for any questions she may have.

00:52:11 Thank you, Mr. Chairman and Ranking Member Hoyer

00:52:13 for holding the hearing today.

00:52:14 And Chair Kahn, I appreciate you coming before us today

00:52:17 to talk about the FTC's mission.

00:52:20 I want to go back to a topic that several of my colleagues

00:52:24 have already brought up, and that's the CARS rule.

00:52:26 Back in January, obviously, you issued that it would exclusively

00:52:29 regulate motor vehicle dealers.

00:52:32 And according to the commission, the rule is aimed at protecting consumers.

00:52:35 But it does specifically exempt purchases of motorcycles, scooters,

00:52:40 electric bicycles, and several other types of vehicles,

00:52:43 all of which are bought by everyday consumers.

00:52:46 And from conversations with my constituents,

00:52:48 there remains a little bit of a lack of clarity on this rule,

00:52:51 whether or not it applies to heavy duty trucks, which I think we can all agree

00:52:54 are not bought by your everyday consumer.

00:52:56 There's a big difference between buying a cement mixer and a minivan

00:53:00 that you're going to cart your kids around in, right?

00:53:02 I think we can all agree those are two different types of customers.

00:53:05 But under one reading of your rule, America's over 3,800 medium

00:53:09 and heavy duty truck dealers, including 92 in my home state of Iowa,

00:53:14 would incur all the costs of that new regulation,

00:53:16 despite only selling to other businesses and not direct to consumers.

00:53:20 So nowhere in this regulation does it mention heavy duty trucks,

00:53:24 how they differ significantly from light duty vehicles.

00:53:27 So was it the FTZ's intention to regulate commercial truck dealers

00:53:32 who are selling to business customers in this rule?

00:53:35 Let me take that back to our team.

00:53:36 There really should not be any confusion about the scope of coverage here.

00:53:40 So let us follow up with you to be very clear about that.

00:53:43 Because this rule is absolutely silent.

00:53:46 So I would like clarification on whether this applies to the purchase

00:53:50 of heavy duty vehicles specifically, along with you've got all these other

00:53:54 vehicles that you've exempted.

00:53:55 There are seven other types that are exempted in the rule.

00:53:58 So I think, while I'm pleased that there's a little pause on it right now,

00:54:02 I'd like to see it go away entirely.

00:54:04 But at the very, very least, we need clarification

00:54:07 because a lot of these businesses are kind of caught in that silence on the rule.

00:54:11 So will you commit to me to follow up with clarification on the rule?

00:54:14 Yes, happy to do that.

00:54:15 And just so you know, the way that we determined what's covered and what's not

00:54:20 is basically based on our record, where we see complaints,

00:54:24 where we've seen persistent issues with deceptive conduct.

00:54:27 And so for the types of vehicles that were exempted,

00:54:31 that was in part because we didn't have as robust a record.

00:54:34 And so I'm happy to follow up with you on this.

00:54:37 Because as I'm looking at the Federal Register, there is wording here,

00:54:41 other commenters, including Vehicle Association commenters,

00:54:44 claimed that they should be excluded from coverage generally,

00:54:47 contending such dealerships operate differently.

00:54:49 So I would argue this is one of those cases.

00:54:51 And so we definitely need the clarification there.

00:54:54 Another concern for my constituents, and one that I know you and I discussed

00:54:57 before, is the telework policy of federal agencies.

00:55:01 And that includes the FTC.

00:55:03 I think it's critically important that employees

00:55:05 who are in charge of regulating American businesses

00:55:08 are consistently showing up to work.

00:55:11 Can you confirm that the FTC's current policy

00:55:13 is for staff to come into the office twice per pay period

00:55:17 or the equivalent of once per week?

00:55:19 That's right.

00:55:20 The current OPM guidance recommends twice the pay period.

00:55:24 And so we're conforming to that.

00:55:26 What is the occupancy rate for FTC facilities right now?

00:55:30 So for headquarters, it's around 22%, 23%.

00:55:34 Across the federal government, the average for headquarters is around 25%.

00:55:39 So we're just a little below that.

00:55:41 Well, we had the IRS commissioner in here last week.

00:55:43 And I thought 50% was bad.

00:55:46 And I'd like to see that number go higher.

00:55:47 Because as you're looking at the raises that you're asking for for people,

00:55:52 $30 million in increase to support salaries at the commission,

00:55:57 do you believe that that's a good value for taxpayers

00:56:00 when those folks are not in the office?

00:56:01 Does it have a bottom line effect on the quality of work

00:56:04 that people are doing if they're not in the office?

00:56:07 So I think that's an important question.

00:56:09 So far, we haven't seen any compromise of productivity.

00:56:13 In fact, productivity is sky high.

00:56:17 People are working around the clock.

00:56:19 I know we owe you all a report on our telework policies

00:56:23 and how that's affecting productivity and recruitment and retention.

00:56:27 And so we'll be happy to get that back to you.

00:56:30 But honestly, so far, productivity has been off the charts.

00:56:34 What are your metrics for measuring that?

00:56:36 So we look at a range of metrics, including how much money

00:56:39 we're getting back to people, including how many investigations we're doing,

00:56:43 how many lawsuits we're filing.

00:56:45 For me, a big priority has been, let's not just

00:56:48 focus on net number of lawsuits, but let's

00:56:51 make sure each of these lawsuits is actually effective.

00:56:54 And so we're going after bigger players whose practices affect

00:56:57 more Americans.

00:56:59 We're looking upstream to make sure we're

00:57:01 targeting the root culprits rather than just playing whack-a-mole.

00:57:05 And so by all of those metrics, we're having an impact.

00:57:09 And we hear businesses, including in the M&A space,

00:57:12 note that we are achieving deterrence.

00:57:15 Illegal deals are not being proposed.

00:57:17 And from an enforcement perspective, that's a good thing.

00:57:21 Well, I'll just close, Mr. Chairman, by saying that as I was flying out

00:57:24 the other day, I was approached by Cedar Rapids police officer

00:57:27 at the airport who was complaining about federal government employees not

00:57:30 showing up to work when they have to be on the job to do that.

00:57:33 So I think that we need to get that number up.

00:57:35 We'd like to see a good return on investment for taxpayers.

00:57:38 And I think that means showing up to the office

00:57:39 if we're paying for those buildings as well.

00:57:41 So thank you, Chairwoman.

00:57:42 And I look forward to following up.

00:57:44 Mr. Chair, thank you.

00:57:45 Thank you for your questions, Ms. Hinson.

00:57:47 Chair now recognizes Mr. Pocan for any questions he may have.

00:57:50 Thank you, Mr. Chair.

00:57:51 And thank you, Chair Cahn, for being here.

00:57:53 I really appreciate the work that you and your agency

00:57:55 are doing on behalf of my constituents, saving them from price gouging.

00:58:00 I just did a bunch of town halls over the last four to eight weeks.

00:58:03 And one of the biggest things that kept coming up

00:58:05 is the cost of living still is very elevated,

00:58:08 specifically in two areas, gas prices and food.

00:58:11 I want to piggyback on what Mr. Cartwright said.

00:58:14 I just did a little napkin math.

00:58:16 I'm a small business owner for 37 years.

00:58:18 I do a lot of napkin math.

00:58:19 But just if it was 40 to 60 cents a gallon,

00:58:22 we're paying more because of this collusion.

00:58:24 For the average person filling their tank, that's $8 or $10 a week.

00:58:28 That's $500 a year of added cost.

00:58:31 Times that by half of the people in my district,

00:58:34 assuming you have a car, that's $175 million a year

00:58:39 just to people in my district.

00:58:40 Times 435 districts, that's $7.6 billion.

00:58:46 That's a billion with a B that we're being gouged

00:58:49 because of someone like this who's trying to price collude

00:58:52 with, quite honestly, foreign companies on oil.

00:58:56 And all I can say is if $30 million is the increase

00:59:00 to have qualified staff just in one area to save taxpayers $7.6 billion,

00:59:05 I think that's a pretty good investment.

00:59:07 I would say, though, I looked at what you're doing.

00:59:10 They can't be on the board for a while, what we're doing to this oil exec.

00:59:14 But honestly, if you commit theft, the average sentence in Wisconsin--

00:59:18 in the United States is 23 months.

00:59:21 $7.6 billion is more than grand varsity theft, right?

00:59:27 What else can we do to these oil companies that are ripping us off?

00:59:33 So price fixing and output reduction in a coordinated way

00:59:37 can be criminal violations of the antitrust laws.

00:59:41 As enforcers, we can't specifically speak to what we're referring

00:59:44 and what we're not.

00:59:45 But as a general matter, it's been a priority of mine

00:59:47 to make sure we are referring more criminal candidates to the Justice

00:59:51 Department because we need to make sure that companies and executives aren't

00:59:56 just treating fines as a cost of doing business

00:59:59 and that they take seriously the rule of law.

01:00:02 I would recommend Orange is the New Black.

01:00:05 If we need to make a point, it would be helpful

01:00:08 because we're feeling it at the pumps.

01:00:10 And clearly, this kind of behavior we know isn't isolated.

01:00:13 Let me talk about grocery prices, too.

01:00:15 Looking at some of the stats that you all provided to us,

01:00:17 it's pretty startling.

01:00:18 Four food companies control more than 60% of the sales in some grocery

01:00:23 categories.

01:00:24 You look at their profits, the fact that corporate profits account

01:00:27 for more than 50% of food prices increases between 2020 and '21,

01:00:32 far more than 11% of increases in four decades prior.

01:00:36 So look, I understand.

01:00:37 I'm a small business owner, 37 years.

01:00:40 We had increased prices when everything opened up post-COVID.

01:00:44 But companies are keeping those prices artificially high

01:00:48 and, again, ripping off my constituents on things, groceries.

01:00:53 And when you look at the profits, I saw you also

01:00:55 provided that the increased profits, 6% over total costs in 2021,

01:01:00 higher than their peak in 2015.

01:01:02 And right now, first three quarters of 2023, they're over 7%.

01:01:07 So what can we do about this?

01:01:10 You mentioned some of the mergers of supply chains and others.

01:01:14 But what else can we do?

01:01:15 Because this is something that average person in Wisconsin

01:01:18 is feeling on a real weekly basis, just like getting ripped off

01:01:21 on gas by big oil.

01:01:23 What can we do about big food?

01:01:25 So the FTC does not have authority to go after just unilateral price

01:01:30 hikes and price gouging unless it's connected

01:01:32 to some type of coordinated scheme or collusion

01:01:35 or anti-competitive conduct.

01:01:36 So we are a bit limited.

01:01:38 We are stepping back and understanding, how did these markets get

01:01:42 so consolidated in the first place?

01:01:44 What can we do to make sure the problem, A, doesn't get worse,

01:01:48 but, B, if we are starting to see anti-competitive conduct

01:01:52 in the supply chain, that we're going after that.

01:01:54 And so the lawsuit against the two pesticide giants is part of that.

01:01:58 We have other investigations underway.

01:02:00 I know our partners at the antitrust division

01:02:02 are scrutinizing this as well.

01:02:04 Great.

01:02:04 Anything you can do in this area.

01:02:05 I mean, high costs are clearly, I think,

01:02:09 coming from corporate price gouging right now

01:02:12 in two main areas of gasoline and food.

01:02:14 And I know my constituents will appreciate it.

01:02:17 Finally, right now, chemo, drugs.

01:02:20 I know you've done some work in this area.

01:02:22 Can you just talk a little bit about it?

01:02:23 We're hearing a lot about shortages on drugs, particularly in chemo.

01:02:26 Can you talk about that?

01:02:28 Yeah, we are hearing a lot of concerns.

01:02:30 I mean, I meet regularly with market participants in health care,

01:02:33 including doctors, and they've shared just some horror stories

01:02:35 about not being able to provide their patients chemo,

01:02:39 even just basic antibiotics because of some of these shortages.

01:02:43 We've heard a lot of concerns about these middlemen called the GPOs,

01:02:47 the group purchasing organizations,

01:02:49 and how these opaque middlemen may be contributing

01:02:53 to the problem of shortages.

01:02:54 And so we're working closely with the FDA

01:02:57 to try to get to the bottom of that.

01:02:59 Anything in this area would be much appreciated.

01:03:01 Thank you. I yield back, Mr. Chair.

01:03:03 Thank you, Mr. Polk.

01:03:03 And the chair now recognizes Mr. Carl for any questions he may have.

01:03:08 Thank you, Mr. Chair.

01:03:09 Welcome, Chairwoman Kahn.

01:03:11 I appreciate you being here.

01:03:12 As someone that has owned several pharmacies,

01:03:16 I would highly encourage you to look into those organizations.

01:03:19 They truly are driving prices up across this nation in untold amounts.

01:03:25 And as a small pharmacy owner, it is hard to compete with that.

01:03:30 So I encourage you to do that.

01:03:32 And my friends that are pouncing on the petroleum industry,

01:03:35 I'd like to do a little quick rebuttal on that.

01:03:39 I think our fuel prices really started up when Biden took office

01:03:43 and shut down a pipeline.

01:03:45 That's where it truly started.

01:03:46 And it's been-- excuse me.

01:03:49 Is it your time or my time?

01:03:52 Thank you.

01:03:54 And it truly has reflected-- it's been a domino effect in this country,

01:03:59 and it will remain to be that way.

01:04:01 I am a staunch advocate for our environment.

01:04:07 I've always been that way.

01:04:09 But the way we're treating these things these days,

01:04:11 it's really become a problem.

01:04:14 As someone that has started--

01:04:16 I don't know.

01:04:17 One of these days, I'm going to stop and do the addition.

01:04:19 But 10 or more companies, we'll leave it at that.

01:04:21 And I've employed hundreds of people by myself as an independent.

01:04:26 I've never seen a regulation that helped me as a small business.

01:04:30 So I know you feel like regulations help.

01:04:34 But in true fact, they hamper the small businesses.

01:04:37 They may help us with the large corporations,

01:04:40 but it does trickle down into the small businesses' pockets.

01:04:43 So please keep that in mind.

01:04:45 I think you've truly got your heart in the right place

01:04:47 and you're trying to do the best job you can with what you have to work with.

01:04:51 I don't have a Harvard or Yale or University of Alabama education,

01:04:55 but I do have an education in hard knocks and 35 plus years of business

01:05:01 for myself.

01:05:02 With that said, my question is this.

01:05:05 FTC has proposed a rule, so-called junk fee,

01:05:09 that would require all businesses, including

01:05:12 state-regulated finance companies, to provide new disclosures.

01:05:19 Chairwoman Kahn, for companies that are already

01:05:22 complying with this Federal Truth in Lending Act, which I hope you agree

01:05:28 offers a robust disclosure for consumers,

01:05:33 and which is also already requiring much of the information

01:05:37 that the FTC is seeking to have displayed through your junk fee rules.

01:05:42 In order to limit customer confusion and cost on businesses

01:05:48 to comply with the essential two similar rules,

01:05:51 will the FTC exempt lenders who are already

01:05:56 complying with the Truth in Lender Act from your junk fee?

01:06:01 So, Congressman, the problem that the junk fees proposal is designed

01:06:05 to address is deceptive fees.

01:06:08 So if you're going online and looking to buy a concert ticket and it's $34,

01:06:13 but when you go to check out, all of a sudden

01:06:15 there is this $17.99 facility fee or service fee,

01:06:19 you can't escape that fee.

01:06:21 You don't really know what you're paying for.

01:06:23 Those are the types of pain points that we're trying to solve for.

01:06:27 We've heard a lot of complaints from consumers about these,

01:06:30 but we've actually also heard concerns from honest businesses who say,

01:06:34 we want to be honest with our customers,

01:06:36 but when there are deceptive players in the market that

01:06:39 are able to get away with deceptive pricing

01:06:42 and advertise one price that lures people,

01:06:45 but then quietly and sneakily on the back end add all sorts of junk fees,

01:06:49 that's not an honest market.

01:06:51 And so we think this would help consumers, but also honest businesses.

01:06:54 But again, you're passing more regulations down to a group

01:06:57 that's already doing what you're asking them to do twice now.

01:07:01 That's what I'm getting at.

01:07:03 Your regulations.

01:07:03 So are you willing to drop the Federal Truth in Lending Act?

01:07:07 I mean, you can't, we're going to ask them to do it twice?

01:07:10 So, so far it's a proposal.

01:07:13 We haven't made final decisions about who's in and who's out,

01:07:16 but if anybody's complying with a final rule,

01:07:19 that should be sufficient.

01:07:20 And if there are other rules that complying with them

01:07:23 achieves the same goals as what the junk fees rule is achieving,

01:07:27 I would imagine that that's sufficient.

01:07:28 But I'm happy to take a closer look at some of these issues.

01:07:32 Pleased to.

01:07:33 Mr. Chairman, I yield.

01:07:34 Thank you.

01:07:35 Thank you very much, Mr. Carl.

01:07:36 Chair would ask that members refrain from making any noises.

01:07:41 Mr. Bishop, any questions you may ask?

01:07:44 Thank you very much, Mr. Chairman.

01:07:45 And thank you, Chair Cobb, for appearing this morning.

01:07:49 And thank you so much for the work

01:07:52 that your agency is undertaking on behalf of consumers

01:07:55 and the American people.

01:07:58 I've got three areas I'd like to touch on briefly.

01:08:01 I've been hearing from my constituents

01:08:04 many complaints about the practices of pharmacy benefit

01:08:08 managers, which is they're driving up the prices of drugs

01:08:11 while making it harder for small independent pharmacies

01:08:15 like those my friend on the other end of the aisle

01:08:21 referred to, particularly in rural areas

01:08:24 where pharmacies are few and farther between.

01:08:27 Over the past couple of decades, FTC

01:08:30 has allowed certain vertical integrations

01:08:34 within health care, leaving only a few companies that

01:08:37 not only own PVMs, but also own pharmacies and other health

01:08:42 care facilities.

01:08:44 These companies have become big and powerful,

01:08:47 and they often threaten small independents

01:08:49 with contract termination if they

01:08:52 don't conform to the reimbursement models

01:08:55 and the rules that they set for.

01:08:57 Two years ago, the FTC announced that it

01:08:59 would look into this industry and the impact

01:09:01 of vertically integrated pharmacy benefit managers

01:09:04 on the access and affordability of prescription drugs.

01:09:08 Can you let us know the status of the inquiry

01:09:10 and whether or not you have sufficient resources

01:09:13 to address what appears to be a pretty big issue

01:09:15 for the affordability of prescription drugs?

01:09:18 Secondly, I'd like to ask if you would address briefly

01:09:27 the non-compete agreements.

01:09:29 I want to commend you for your work

01:09:31 on addressing the pitfalls of non-compete agreements.

01:09:35 And I've heard stories of how non-competes

01:09:37 can have devastating unintended consequences.

01:09:41 I remember a physician in my district

01:09:43 who was barred from practicing in a very

01:09:46 rural and impoverished county in my district

01:09:49 due to a non-compete with a hospital that doesn't even

01:09:52 serve his county.

01:09:55 Your agency's new non-compete rule

01:09:57 will help not just employees, but also the communities

01:10:01 that they serve.

01:10:02 So can you highlight for us possible benefits

01:10:05 to the non-compete rule?

01:10:06 Can you describe what the agency's

01:10:08 done to ensure that the rule survives legal challenges?

01:10:12 And just in case you have any time left,

01:10:17 would you, in addition to the complaint described

01:10:20 by Mr. Cartwright and Mr. Pocan with criminal referrals,

01:10:25 how the FTC has used its authority

01:10:28 to help lower prices for consumers?

01:10:32 Yeah, happy to touch on all of those, Congressman.

01:10:35 So I've heard a ton of complaints

01:10:38 from pharmacies and independent pharmacists

01:10:40 about how it's increasingly difficult for them

01:10:44 to stay afloat, not because their communities don't

01:10:47 benefit from them or really cherish them,

01:10:50 but because they say they're getting squeezed

01:10:52 by some of the practices of the pharmacy benefit managers.

01:10:56 And that's why we launched that market inquiry.

01:10:59 Making progress on that has been a top priority.

01:11:02 I wish it had moved even more quickly.

01:11:04 I get emails week after week from pharmacists

01:11:07 across the country just sharing how dire the situation is

01:11:11 right now.

01:11:12 And we need to make sure that independent pharmacies are not

01:11:15 getting pushed out of the market because

01:11:17 of any illegal business practices by major players

01:11:20 in the supply chain.

01:11:21 So this remains a big area of focus for us.

01:11:26 Our team is small because our agency is small,

01:11:29 but we are prioritizing it.

01:11:30 And additional resources would let us do this type of work

01:11:33 even more quickly.

01:11:35 We've heard concerns about and are looking at both the ways

01:11:39 that the potential rebates between the PBMs and the drug

01:11:42 manufacturers could either be inflating drug prices

01:11:46 or depriving Americans of access to lower cost alternatives

01:11:51 to the high price brands.

01:11:53 And then again, we're also looking

01:11:54 at the pharmacy facing side and whether the vertical

01:11:58 integration is enabling or incentivizing

01:12:01 certain practices that could be systematically disfavoring

01:12:05 and squeezing the independents.

01:12:07 On non-competes, we also heard a lot of concern

01:12:10 from health care workers.

01:12:12 And some of them shared exactly what you just shared,

01:12:15 which is that especially in rural communities,

01:12:18 if you're governed by a non-compete,

01:12:20 switching employers often means leaving the state

01:12:23 and abandoning your patients.

01:12:25 And in this way, non-competes could actually

01:12:28 be contributing to some of the crises

01:12:30 that communities face in not having enough health care

01:12:32 workers locally.

01:12:33 And so we absolutely hope that eliminating these non-competes

01:12:37 will allow people to move more freely between employers, which

01:12:41 will be good for them, but also will

01:12:42 be good for patients in the communities that they serve.

01:12:45 So the rule has been challenged in court.

01:12:50 We have a terrific team working to defend that rule,

01:12:53 because we think we're squarely within our legal authority.

01:12:57 And this is exactly why Congress created the FTC

01:13:01 to prevent these types of unfair methods of competition.

01:13:05 Thank you.

01:13:06 Thank you for your questions, Mr. Sanford.

01:13:08 And the chair will now recognize Mr. Edwards

01:13:10 for any questions he may have.

01:13:12 Thank you, Mr. Chair.

01:13:13 Ms. Kahn, thanks so much for being with us this afternoon,

01:13:18 or this morning.

01:13:19 I've lost all track now.

01:13:21 I'm quite honestly shocked that there is any government agency

01:13:29 out there right now asking for a 25% increase in their budget

01:13:33 from last year.

01:13:35 Just plain and simple, this government cannot afford it.

01:13:39 We are-- we're approaching any day now $35 trillion in debt.

01:13:45 The challenge to this committee is

01:13:47 how can we lean on work with our agencies to do more with less.

01:13:56 The taxpayers just can't continue

01:13:59 to grow government at this rate.

01:14:02 Not only are you asking for a 25% increase from over last year,

01:14:09 since 2021, this would represent a 52% increase.

01:14:16 I can tell you and any other agency head out there right now

01:14:20 that the guy down here on the end of this table

01:14:22 is not going to support government growth at that rate.

01:14:27 And so let's be thinking about it.

01:14:29 And I've got a couple of questions to hopefully

01:14:32 challenge you on how we can get by without such a drastic

01:14:39 increase.

01:14:41 Let's start with the 55 people that you intend to hire.

01:14:46 Can you give us a little bit of insight

01:14:48 on why you need 55 more people to do the same job that

01:14:53 was done last year, and the year before, and the year before?

01:14:58 Just to put the FTC size in context,

01:15:00 we are smaller than we were in the 1980s by around 400 people,

01:15:06 even though the size of the American economy

01:15:08 has grown by at least six times over.

01:15:11 And so we are having to do way, way, way more with fewer

01:15:15 people.

01:15:16 We have a really fantastic team, and we punch above our weight.

01:15:19 But there is no doubt that we are not fully and faithfully

01:15:23 going after all of the law violations in our economy,

01:15:27 even with the mergers that come in.

01:15:29 We have to triage.

01:15:30 There are ones that look problematic.

01:15:32 With the 55 FTEs in particular, that

01:15:35 would help support our mission.

01:15:37 This past year, we were able to launch

01:15:39 a new Office of Technology, bringing on technologists

01:15:42 in-house.

01:15:42 Because as we see surveillance and other types of tactics

01:15:46 by these digital monopolies--

01:15:48 And so I apologize for cutting you off.

01:15:50 I think you've answered the gist of my question.

01:15:53 But you raise another real good point.

01:15:55 And the reason I've got to be blunt here and cut you off

01:16:00 is the chairman's going to cut me off here in just a minute.

01:16:05 So you referenced technology.

01:16:07 Have you looked at how you can use that new investment

01:16:10 in technology to reduce the number of people

01:16:13 that are required?

01:16:16 So the work that we do requires a lot of investigation,

01:16:21 legal work, economists.

01:16:24 We are certainly hoping to incorporate

01:16:27 more of these technological advances within our work.

01:16:30 But we are not at a place where we can let people go and have

01:16:34 AI writing the complaints.

01:16:36 I know some lawyers have tried they're out there.

01:16:38 And it hasn't gone so well.

01:16:39 Again, with all due respect, I've

01:16:41 got a couple more questions I'd like to try to get to.

01:16:44 I'd encourage you to figure out how

01:16:46 we can use technology to do the same job with less folks.

01:16:54 Next question.

01:16:54 In a December 2023 Office of Inspector General audit,

01:17:00 the inspector general found that the FTC had not yet

01:17:03 refined a complete structured program level

01:17:06 process for invoice, review, and approval, and payment

01:17:09 of high risk contracts.

01:17:12 In response to the report, the FTC

01:17:14 planned action to work with the Acquisition Office.

01:17:17 Can you give us an update?

01:17:19 And that report was due by March 30th of this year.

01:17:22 Can you give us an update on the commission's new process?

01:17:28 So any time the OIG flags certain areas that

01:17:31 require improvements, we take that extraordinarily seriously.

01:17:35 Since we got that recommendation from the OIG,

01:17:37 we've been working closely to put those process improvements

01:17:40 in place.

01:17:41 And I believe we've kind of checked the box on that.

01:17:43 But happy to follow up with you and share more specifics.

01:17:46 I would very much appreciate you updating this committee

01:17:50 on what the new process is.

01:17:53 And hopefully we'll get a second round of questions.

01:17:57 I'll come back, Mr. Chair.

01:17:58 Thank you.

01:17:59 Thank you, Mr. Edwards.

01:18:01 Now, I'll recognize Mrs. Torrey.

01:18:04 Thank you, Chairman.

01:18:06 And good morning, and thank you for being here, Chair Kahn.

01:18:10 I want to start by thanking you for your very detailed

01:18:15 responses and lengthy letters back to my office

01:18:21 as I inquired on some very important issues that

01:18:24 are critical to my district, dealing with gas gouging, gas

01:18:28 prices, gas gouging issues, as well as I can't be only one

01:18:35 of two women and not ask about an update on the issue

01:18:41 that we have been dealing with, a critical issue.

01:18:45 Companies unfair data practices that

01:18:49 allow extremists in many states to hunt down

01:18:52 women seeking health care, from those

01:18:55 who are seeking life-saving abortions to those receiving

01:18:59 in vitro fertilization and other fertility treatments.

01:19:04 Examples like Brittany Watts in Ohio,

01:19:08 who was criminally charged last year for her miscarriage.

01:19:11 Amanda Zawoski in Texas, suffer a devastating pregnancy loss

01:19:16 and laid in septic shock in her hospital bed,

01:19:19 denied an abortion.

01:19:21 Ashley Brandt in Texas was told that if she did not

01:19:25 abort one fetus, neither of her twin fetus would survive,

01:19:30 but that Texas would consider the abortion

01:19:32 an illegal procedure.

01:19:34 Gabriela Gonzalez from Texas had to go out

01:19:37 of state for an abortion, and when she returned,

01:19:40 her boyfriend shot and murdered her in the parking lot.

01:19:44 If conservative operatives, let alone stalkers

01:19:47 and abusive partners, have access to a woman's data,

01:19:51 where she goes, where they can track her,

01:19:55 where they can know if she Googled abortion,

01:19:59 know if she went to an abortion clinic,

01:20:01 and know if she missed a period through an app,

01:20:06 this is the reality of the world that we are living in.

01:20:10 And I wrote you a letter on this,

01:20:12 and thank you again for the response.

01:20:14 Can you give me an update on your announcement

01:20:19 that you were exploring new rules to address this issue?

01:20:25 -Congresswoman, there is no doubt

01:20:28 that invasive surveillance threatens core liberties.

01:20:31 That's why we have the Fourth Amendment,

01:20:33 and I think as we've seen the expansion

01:20:36 of more and more of these invasive tracking tools,

01:20:39 we're certainly living in a new environment

01:20:41 where we need to absolutely crack down

01:20:43 on any illegal collection or tracking of people's data,

01:20:47 especially when it involves their sensitive data.

01:20:50 And so the FTC has current litigation ongoing

01:20:53 against a data broker

01:20:55 that had been selling people sensitive geolocation data

01:20:59 that was revealing that people are seeking certain health care,

01:21:03 people are going to church, people are going to --

01:21:05 -This is an American company selling private data.

01:21:08 -Yeah. -Not just a Chinese company,

01:21:10 but an American company. -An American company.

01:21:13 We have also seen American companies

01:21:16 selling data to Chinese entities,

01:21:18 so we do see some of those national security concerns

01:21:21 as well.

01:21:22 So the FTC has been extraordinarily active

01:21:24 on the law enforcement front here.

01:21:26 As you mentioned, we've also been exploring some rulemaking.

01:21:29 We got thousands of comments back,

01:21:31 and so our team's been digesting

01:21:33 and seeing what more we can do there.

01:21:35 But it's pretty clear that the market signal has been sent,

01:21:39 that we are cracking down on illegal data practices

01:21:42 by these data brokers. -Thank you.

01:21:44 In 2021, the Supreme Court significantly limited

01:21:48 the Federal Trade Commission's ability

01:21:50 to seek monetary redress for consumers,

01:21:54 relief that the FTC had successfully obtained

01:21:57 for over four decades.

01:22:00 This means that the FTC has been unable to get Americans

01:22:03 their money back, a profound effect on consumers

01:22:07 and on its businesses.

01:22:09 In the last Congress, I joined my colleagues

01:22:11 in voting on a fix for this problem.

01:22:14 Unfortunately, that legislation did not become law.

01:22:18 I wrote you a letter on this issue also.

01:22:20 How can the FTC and the American consumers --

01:22:25 they have been impacted by this Supreme Court decision,

01:22:29 and what can we do to help you,

01:22:31 aside from continuing to try to pass this law?

01:22:34 -Yeah, and I really appreciate your support

01:22:35 for that legislation.

01:22:37 I mean, what this basically means

01:22:39 is that lawbreakers can profit from lawbreaking, right?

01:22:43 And if you want to be an effective law enforcer,

01:22:46 you have to make sure that if people are getting cheated

01:22:48 out of their money through illegal tactics,

01:22:50 they're able to get that money back.

01:22:52 So the loss of that authority

01:22:54 through that Supreme Court decision was a big setback.

01:22:57 The FTC has been using other statutory authorities.

01:23:01 This is also why we have been codifying so many rules,

01:23:05 because for rule violations, we can get redress

01:23:09 and we can get civil penalties.

01:23:11 And so that can help with the deterrence,

01:23:13 but there's no doubt that actually getting

01:23:15 that authority restored is absolutely paramount.

01:23:18 -Thank you, and thank you for your response.

01:23:21 And I look forward to continuing to work with you

01:23:24 and your office and to try to move your office

01:23:27 out of the 1980s status when it comes to your budget.

01:23:31 Thank you. -Thank you.

01:23:33 -In discussing this matter with my ranking member,

01:23:44 there's someone who would like a second round.

01:23:46 He indicates that he'd like to,

01:23:49 but he also has something on his calendar.

01:23:51 So why don't we engage in a second round,

01:23:54 and in doing so, let the ranking member go first.

01:23:58 If he has any questions.

01:24:00 Okay. I'd like to follow up a little bit

01:24:02 on the merger question that took place earlier

01:24:05 between both the ranking member and my friend, Mr. Womack.

01:24:10 Stepping into the role of chair at FTC,

01:24:13 how many mergers have you brought to court,

01:24:16 and how does that compare with some of your predecessors?

01:24:19 -So we've been very active on the merger front.

01:24:22 We've achieved over 19 abandonments,

01:24:26 and I think in total we've brought

01:24:28 over 60 merger enforcement actions.

01:24:32 I think the FY22 numbers were the highest we've had

01:24:36 in close to two decades

01:24:38 in terms of number of enforcement actions.

01:24:40 -How does that compare with your predecessors?

01:24:43 -So it's been the highest number of enforcement actions

01:24:46 since at least 2001 on the merger front.

01:24:50 -Do you worry about the chilling effect

01:24:52 you ever have on healthy mergers and acquisitions in doing this?

01:24:55 And would you agree that all mergers are not anti-competitive?

01:25:00 -It's certainly true that, you know,

01:25:02 there are a whole set of deals that we review

01:25:05 that we don't challenge because we don't find legal issues,

01:25:08 and those ended up going through.

01:25:11 As a general matter, I think we had been living

01:25:13 in an environment where we had too little deterrence,

01:25:17 and so there were deals being proposed

01:25:19 that were flagrantly anti-competitive.

01:25:21 The agencies were having to spend an enormous amount

01:25:24 of taxpayer resources blocking those deals,

01:25:27 and so an environment where dealmakers are saying,

01:25:31 "Five years ago when we were thinking about deals,

01:25:34 we didn't really think about antitrust risk,

01:25:36 but now it's the first part of the conversation."

01:25:39 As a law enforcer, that's good, that's healthy,

01:25:41 and we think that's ultimately going to be good

01:25:43 for taxpayers as well.

01:25:45 -Fair enough. Shifting gears to your budget request,

01:25:51 you asked for obviously an additional 25%.

01:25:56 Could you walk us through what enforcement

01:25:59 and rulemaking activities are planned

01:26:01 if you were to receive this full budget request?

01:26:04 -So, we're primarily going to be continuing with the rulemakings

01:26:08 that we currently have underway,

01:26:10 the enforcement actions that we have underway.

01:26:13 Antitrust enforcement in particular is very expensive,

01:26:17 whereas consumer protection enforcement

01:26:19 takes anywhere from two to five people

01:26:21 to bring a particular case.

01:26:23 Our antitrust cases sometimes require up to 20 people,

01:26:27 even more than that, during active litigations.

01:26:30 Antitrust litigation has also become extraordinarily expensive

01:26:34 because we have to use economic experts,

01:26:37 and so these experts routinely are charging millions of dollars,

01:26:41 and so as we've become more active on the antitrust side,

01:26:44 those expenses have gone up as well.

01:26:48 -I understand.

01:26:50 Can I take a ranking member where --

01:26:52 -Let me follow up on that if I can.

01:26:54 In dealing with the Defense Department

01:26:59 a couple of decades ago, I think,

01:27:03 a number of four-stars made the point that we had,

01:27:08 in effect, outsourced so much of our internal expertise

01:27:15 on what we were buying

01:27:17 and whether specifications were being followed

01:27:20 that we really couldn't determine.

01:27:23 Now, it seems to me when we have to spend millions

01:27:26 because we don't have enough federal employees

01:27:31 to look at things that we are, A, getting overcharged

01:27:37 in terms of services that we could perform internally.

01:27:40 Do you think that has any relevance

01:27:41 in the case that you're talking about,

01:27:43 or would it be just too expensive

01:27:46 to hire the kind of talent that are necessary

01:27:49 and therefore use expertise outside

01:27:53 from time to time when needed?

01:27:55 -As a general matter, if we had more in-house capacity,

01:27:59 we would probably be able to do some of that work in-house.

01:28:03 There has been a trend in antitrust litigation

01:28:05 for there to be this ratcheting-up arms race

01:28:08 of each side just having to get more and more experts,

01:28:11 more and more expensive experts.

01:28:14 Interestingly, we have more and more antitrust judges saying,

01:28:18 "I heard both of your smart experts,

01:28:19 and they just canceled each other out."

01:28:21 And so there's a question about why we're spending

01:28:24 so much money on these experts

01:28:26 if they're not actually helping judges

01:28:28 as part of their analysis.

01:28:29 That's probably an issue that would be fixed,

01:28:32 you know, through antitrust reforms to the legislation

01:28:35 to cut back on just how some of this analysis is done

01:28:38 and rely more on presumptions and per se rule.

01:28:42 That would actually make enforcement

01:28:44 of the antitrust laws much more efficient

01:28:46 and be a boon to taxpayers.

01:28:49 -Thank you. Thank you, Mr. Chairman.

01:28:51 -Thank you, Mr. Hoyer.

01:28:53 Now recognize Mr. Womack.

01:28:54 -Always love it when my colleagues talk

01:28:57 about their back of the envelope,

01:28:59 or in this case, Mr. Pocan's napkin math.

01:29:03 So I did a little napkin math of my own.

01:29:07 -Oh, my goodness.

01:29:08 -And here are the metrics.

01:29:10 Here are the numbers.

01:29:11 I just went back to the 2020 election.

01:29:13 There were 335,000 people that voted in my election,

01:29:18 so I'm just going to say those are 335,000 drivers

01:29:21 in my district.

01:29:23 There is easily a dollar difference a gallon in gas

01:29:26 between 2020 and where we are today.

01:29:28 I filled up just before I came back to Washington,

01:29:32 and it was over $3 a gallon, so a dollar difference.

01:29:35 Assuming somebody uses 20 gallons a week,

01:29:38 and that's just kind of a raw number I throw out there.

01:29:40 Some use a lot more.

01:29:41 Some use a lot less.

01:29:43 That's 20 bucks a week,

01:29:44 so that's costing my drivers in my district $1,000 a year more

01:29:51 just in the purchase of gasoline.

01:29:54 And when you multiply that times the 335,000 people

01:29:57 that I call my drivers,

01:29:58 and I think there's a lot more given the traffic in my district.

01:30:02 You know, that's the better part of $350 million a year.

01:30:07 That's not chump change,

01:30:10 but I find it interesting that we're lauding the effort

01:30:14 of the FTC in trying to reduce the price of gasoline.

01:30:18 Chair Khan, don't you think we just ought to go back

01:30:20 to the 2020 policies of the previous administration?

01:30:24 I mean, it seemed to be working.

01:30:26 -You know, we're focused on what's within

01:30:27 the FTC's jurisdiction,

01:30:29 which is really about market competition

01:30:31 and consumer protection.

01:30:32 I leave it to others and to members of the subcommittee.

01:30:35 -But based on this back-of-the-envelope math,

01:30:39 would you not agree -- I mean, the numbers aren't lying --

01:30:41 would you not agree that there's a lot more going on here

01:30:46 than just, you know, blaming the oil companies

01:30:51 for the fact that gasoline is higher?

01:30:54 We all agree that we're paying too much for it.

01:30:56 We all agree that we're paying too much for groceries.

01:31:00 But there's just a lot more to it,

01:31:02 and so I would suggest that the people who are too quick

01:31:07 to judge, based on the efforts right now,

01:31:09 the FTC on oil,

01:31:11 that there are a lot more input factors.

01:31:15 But I couldn't resist the temptation

01:31:17 to exercise my iPhone calculator in helping me determine,

01:31:22 because I couldn't have done this on my own.

01:31:25 I promise you that.

01:31:27 Real quickly, one more issue that I wanted to bring up,

01:31:35 and that's about the junk fees,

01:31:39 and particularly the impact --

01:31:44 this whole idea on restaurants, because I eat out a lot,

01:31:49 and my restaurant owners come and talk to me a lot.

01:31:54 The inclusion of restaurants,

01:31:57 particularly in small or rural communities,

01:32:00 that some of the fees that they --

01:32:02 surcharges, this sort of thing, called junk fees.

01:32:04 Can you explain to me why you included restaurants

01:32:07 in this notice?

01:32:09 -So, in the proposal, we included everybody.

01:32:12 We didn't slice and dice and say, "You're in and you're out,"

01:32:15 in part because we've had complaints

01:32:17 from across the economy,

01:32:18 and we didn't want to be accused of kind of arbitrarily

01:32:22 excluding some and including others.

01:32:25 We did get over 60,000 comments from the public on this,

01:32:28 so we're digesting them, and if it turns out that,

01:32:31 you know, we have a stronger basis

01:32:33 to address junk fees in some areas

01:32:35 and not in others, we'll act accordingly.

01:32:39 You know, of course, we want to make sure that restaurants

01:32:42 and honest restaurants have the chance to compete fairly.

01:32:46 -What's the difference between a restaurant

01:32:50 and an honest restaurant?

01:32:52 -So, for the FTC, we look at our businesses

01:32:56 being honest in how they're disclosing prices,

01:33:00 and a lot of the complaints we hear

01:33:02 have been from areas like ticketing

01:33:04 and accommodations where, you know, you book a hotel online,

01:33:08 you see one price, and then when you go to the hotel,

01:33:10 you see all sorts of service fees, resort fees,

01:33:14 again, fees that you don't know what you're really paying for,

01:33:17 fees you can't escape,

01:33:19 and that ends up inflating costs for people.

01:33:22 It means people are paying more.

01:33:24 It also means people -- -But if it's a delivery fee

01:33:27 or it's customary for people to have fees for large parties,

01:33:31 large gatherings in their bigger rooms,

01:33:34 would you consider those junk fees?

01:33:37 -So, if it's a fee that's discretionary

01:33:39 and a fee that's actually providing a real service,

01:33:43 those are not junk fees.

01:33:45 -Okay. I yield.

01:33:48 -Thank you. Mr. Womack, the chair would now recognize

01:33:51 Mr. Cartwright for any questions he may have.

01:33:53 -Thank you, Mr. Joyce.

01:33:57 I have a high regard for Chairman Womack,

01:34:00 and whether he does his calculations on a napkin

01:34:03 or on his iPhone, I have no reason to dispute them,

01:34:07 but I do want to give you a chance to weigh in,

01:34:09 Chair Khan, about why gas prices were down during the pandemic.

01:34:17 Of course, we saw that oil executive complaining

01:34:20 about how oil prices were down during the pandemic.

01:34:25 Why would something like the COVID pandemic

01:34:29 cause prices to go down?

01:34:31 -I mean, as we saw, you know, demand fall,

01:34:34 that resulted in prices falling.

01:34:38 People were not driving around as much

01:34:39 because they were told to stay home and not get sick.

01:34:43 -That's right, and I would say, more generally,

01:34:46 what's been pretty striking about the last few years

01:34:48 is, for decades, OPEC and OPEC+

01:34:52 have controlled global oil prices,

01:34:55 but over the last few years,

01:34:56 we've seen American producers

01:34:59 be able to get a lot of oil to market,

01:35:01 and that's allowed America to be a competitive check

01:35:05 on OPEC and OPEC+ and not be as much at the whims

01:35:09 of what those producers do.

01:35:11 That's why, when you see messages and communications

01:35:15 suggesting that, instead of vigorously competing,

01:35:20 some of these oil executives

01:35:21 were instead trying to coordinate or collude,

01:35:24 that's why that's troubling, is because these producers --

01:35:26 -It's incredibly troubling, and I thank you for addressing it.

01:35:29 I want to switch gears.

01:35:31 The other thing Mr. Womack talked about

01:35:34 was fraudulent phone calls coming into homes.

01:35:39 In 2022, seniors were scammed out of $186 million

01:35:44 by fraudsters impersonating government officials,

01:35:49 many of whom were impersonating workers

01:35:51 in the Social Security Administration.

01:35:54 In my district, over 190,000 seniors

01:35:57 depend on Social Security to stay alive,

01:36:00 and that means 190,000 people are potential targets

01:36:05 of this kind of predatory, fraudulent behavior.

01:36:08 Now, the FTC has taken up this challenge

01:36:11 by finalizing its new government

01:36:13 and business impersonation rule,

01:36:15 which went into effect last month under your tenure.

01:36:19 How will this new rule help protect seniors in my district?

01:36:23 -The rule will help protect seniors

01:36:25 because it prohibits impersonation

01:36:28 of legitimate businesses or of the government,

01:36:32 and so we've also heard concerns about people making calls

01:36:35 pretending to be IRS agents,

01:36:37 saying, "You owe the American government thousands of dollars,

01:36:41 and unless you hand that over, we're going to arrest you,"

01:36:44 right, pretty terrifying claims

01:36:45 for unsuspecting people to be getting.

01:36:48 Because we finalized the rule,

01:36:50 that means that if we find these types of impersonation scams,

01:36:54 we'll be able to get the money back for consumers

01:36:57 and also we'll be able to levy civil penalties,

01:37:00 which add up pretty quickly

01:37:01 and can also deter this illegal behavior in the first place.

01:37:06 -Another scam that has come into vogue

01:37:09 is the grandparent scam.

01:37:13 Fraudsters prey on elderly grandparents'

01:37:16 love of their grandchildren

01:37:18 by pretending to ask for money

01:37:20 immediately needed by a grandchild,

01:37:24 and they fall into that.

01:37:25 Last year, elderly parents and grandparents

01:37:27 lost $2.

01:37:28 3 million to grandparent scams.

01:37:31 Is there a way to expand this new rule,

01:37:33 this FTC government and business impersonation rule,

01:37:37 to ensure protection and financial relief

01:37:40 from victims of grandparent scams?

01:37:42 -And these grandparent scams are now even more on the rise

01:37:45 because of voice-cloning technology,

01:37:48 where people can actually mimic the precise voice

01:37:51 of the grandkid.

01:37:53 And we're already seeing an uptick in our complaint database

01:37:56 of the voice-cloning fraud.

01:37:58 So we have actually proposed an expansion

01:38:01 of the impersonation rule

01:38:02 that would also cover impersonation of individuals,

01:38:06 and that would, again, allow us to go

01:38:07 after these individual impersonators,

01:38:10 charge them with civil penalties.

01:38:12 -And that expansion will go through the normal rulemaking.

01:38:17 -Yes, exactly.

01:38:18 We're currently collecting comments.

01:38:20 We've also been trying to invite from the public ideas

01:38:24 for how can we detect in real time

01:38:27 whether a voice on the phone is a real voice or a voice clone.

01:38:31 And we just announced some winners of that competition

01:38:34 and are hoping to get those ideas out in the market

01:38:37 to make sure we can enforce the law more effectively

01:38:40 and people can help police some of those, as well.

01:38:43 -Thank you for protecting our seniors.

01:38:45 I yield back, Mr. Chairman.

01:38:48 -Thank you, Mr. Cartwright.

01:38:49 Now recognize Ms. Henson for any questions she may have.

01:38:51 -Thank you, Chairman Joyce.

01:38:53 A recent FOIA request by the U.S.

01:38:55 Chamber of Commerce revealed that FTC staff

01:38:58 were heavily involved in correspondence

01:39:00 with the Office of the U.S.

01:39:01 Trade Representative, USTR,

01:39:03 ultimately leading to broad departures

01:39:05 from bipartisan support for domestic digital trade rules

01:39:08 that protect U.S. exports.

01:39:10 So, Mr. Chairman, I would request unanimous consent

01:39:13 to insert this FOIA document into the record.

01:39:17 Thank you, Mr. Chair.

01:39:19 The FOIA does appear to be heavily redacted,

01:39:21 as you can see here,

01:39:23 providing very little transparency

01:39:25 into the decision-making process

01:39:27 that resulted in the USTR abandoning rules

01:39:29 that protect $626 billion worth of digitally-enabled exports

01:39:34 that the United States generates in just a year.

01:39:36 So, Chairwoman, my question is, did you or your staff

01:39:40 specifically instruct the U.S.

01:39:42 Trade Rep to abandon these longstanding

01:39:45 bipartisan digital trade rules?

01:39:47 -The short answer is no.

01:39:48 We at the FTC were not involved in that decision-making.

01:39:52 -What specific provisions in these longstanding agreements

01:39:56 and rules did the FTC object to?

01:39:58 Because, obviously, with this, we can't tell.

01:40:02 -So, the FTC was not involved in that specific decision.

01:40:05 We do get asked by the Trade Representative

01:40:08 to weigh in when there are questions

01:40:11 relating to FTC equities.

01:40:14 So, if there are trade agreements

01:40:15 that are gonna have competition chapters,

01:40:17 consumer protection chapters, privacy chapters,

01:40:21 the FTC has a lot of expertise in those areas,

01:40:23 and so we bring that expertise to bear on those discussions.

01:40:26 -Would you agree there was quite a bit of coordination

01:40:28 between your agency and the Trade Rep, though?

01:40:31 Based on these e-mails, it appears that way.

01:40:34 -So, when the USTR asks for our views on issues

01:40:37 relating to competition and privacy and consumer protection,

01:40:41 we provide that expertise.

01:40:42 I think it's good government for there

01:40:44 to be a whole-of-government approach in that way.

01:40:46 -And it appears you were coordinating

01:40:48 on statements, as well.

01:40:49 Have you seen this document of coordinating

01:40:51 on statements to the press?

01:40:53 -I personally have not.

01:40:55 I don't think the FTC was involved in that.

01:40:57 -Okay. Well, I'd encourage you to go through this document

01:40:59 that I have submitted for the record.

01:41:01 Would you commit today to ensuring that the FTC

01:41:03 will protect US interests from digital trade rules abroad

01:41:07 that do hurt the US economy?

01:41:09 -So, we're squarely focused on making sure

01:41:11 that we allow American businesses to get ahead,

01:41:14 and we do that by making sure

01:41:16 they're not being muscled out by illegal practices

01:41:18 in the marketplace, by monopolies,

01:41:21 that if you're an innovator,

01:41:22 you're able to bring your product to market,

01:41:24 rather than getting trampled

01:41:26 by one of the existing digital giants.

01:41:27 So, our work is squarely in line with that goal.

01:41:30 -Thank you. Thanks for coming today.

01:41:32 Mr. Chair, I yield back.

01:41:34 -Thank you very much, Ms. Henson.

01:41:36 Chair would now recognize Ms. Torres

01:41:38 for any questions she may have.

01:41:39 -Thank you, Chairman.

01:41:41 Chair Khan, I know that you have covered this topic extensively,

01:41:45 but I cannot let you leave without weighing in on this issue,

01:41:50 and that is -- it's so important.

01:41:53 Your role in protecting people from scams is so important.

01:41:58 I hear from many constituents on how they invest

01:42:02 their hard-earned dollars in a safe way,

01:42:06 only to fall victims to a scam later.

01:42:11 One constituent from my home city of Pomona, Wendy,

01:42:16 she came to my office

01:42:17 because she was the victim of identity theft

01:42:20 and was unable to access her hard-earned

01:42:23 Social Security benefits as a result.

01:42:27 Another constituent, Crystal, from my district,

01:42:31 also came to my office this year

01:42:33 because she was a victim of fraud and identity theft

01:42:37 that caused Bank of America to limit her financial options.

01:42:42 Obviously, cheats are preying

01:42:44 on these very vulnerable communities,

01:42:47 some of them, you know, English is their second language.

01:42:51 If you use a credit card,

01:42:53 you can get your money back after a scam,

01:42:57 but if you use a debit card or Venmo or Zelle,

01:43:00 you don't have any recourse at getting your money back.

01:43:05 We know that scams are underreported,

01:43:08 often because the victim is afraid or ashamed

01:43:11 and just don't want to admit that they fell for this trick.

01:43:15 Can you share with us more about what you are doing

01:43:19 specifically to help victims of identity theft?

01:43:24 -So, we have a robust program in place

01:43:26 to help people who've been subject to identity theft,

01:43:29 and a pretty significant percentage of the complaints

01:43:32 we get are about identity theft.

01:43:34 So, you know, we have FTC resources

01:43:36 that kind of walk you through what are the steps to be taking.

01:43:39 We also send out regular market alerts

01:43:42 to put the public on notice about various scams

01:43:45 and frauds that are becoming more prevalent.

01:43:48 We've seen, for example, that elderly Americans

01:43:51 get subject to tech support scams

01:43:55 or lottery or prize scams at higher rates,

01:43:59 and so, you know, we put them on notice.

01:44:02 We also have a program in place to actually be able

01:44:05 to reach communities in the languages

01:44:07 that are most accessible to them.

01:44:10 So, we have programming in Spanish.

01:44:12 We've actually been expanding our availability

01:44:15 so we can do complaint intake in now up to 12 languages,

01:44:19 and our teams work closely with local communities,

01:44:22 with local media to make sure that we're putting

01:44:25 as many people on alert to know their rights

01:44:28 and beware of some of these frauds.

01:44:31 -And what can we do, what can Congress do to help you

01:44:34 and your staff spend more resources on this issue?

01:44:39 -So, I think just generally continuing to support

01:44:41 the FTC's mission by resourcing us adequately.

01:44:46 I think we're also seeing some claims by companies

01:44:50 that they are immune.

01:44:52 We see what are known as Section 230 arguments made

01:44:55 when we're going after, for example,

01:44:58 some of the telemarketing scams.

01:45:00 So, there was this decision that came down recently

01:45:03 suggesting that some of the upstream players

01:45:06 that are enabling some of the illegal calls

01:45:08 may actually be not reachable under the law,

01:45:11 and so Congress clarifying that could be useful.

01:45:15 -Great. Thank you so much, and I yell back.

01:45:18 -Thank you, Ms. Torres.

01:45:19 Chair now recognizes Mr. Edwards for any questions he may have.

01:45:23 -Thank you, Mr. Chair.

01:45:25 Ms. Cahn, I have a keen interest in the occupation

01:45:32 and leases of our federal buildings.

01:45:34 That's why I introduced the Federal Use It

01:45:39 or Lose It Leases Act, or the FULL Act.

01:45:43 We've had reports that many federal agencies

01:45:49 might occupy as little as 17% of their office space,

01:45:53 and so I noticed in your budget

01:45:56 you're asking for $32 million for a new office to downsize,

01:46:03 and I applaud the effort to downsize.

01:46:07 I'm just curious to better understand the rationale

01:46:12 and methodology that you used to get to the point

01:46:16 that a new building was the answer,

01:46:19 particularly because you're suggesting

01:46:22 a downsize of the building,

01:46:23 yet you're hiring 55 more people.

01:46:26 So can you give me just a little bit of an overview

01:46:29 to some of the logic and rationale that you used

01:46:33 and maybe some of the options that you eliminated

01:46:36 in making the decision to ask for $32 million

01:46:40 for a brand-new, shiny building?

01:46:42 -Yeah, happy to. So we have two buildings in D.C.

01:46:45 One is our headquarters building,

01:46:47 and then we have a second building

01:46:48 that houses a huge portion of our staff.

01:46:52 That lease for that second building is now expired.

01:46:55 We've just been in a kind of holdover status,

01:46:58 and so we've been working with GSA to figure out,

01:47:02 you know, what does it look like to renew this lease.

01:47:05 As part of that process, we are requesting less space.

01:47:09 It's around a 25% cutback,

01:47:11 and GSA has recommended to us that we budget

01:47:15 around $32 million just to help navigate

01:47:18 that whole process of going through this,

01:47:21 you know, releasing and figuring out what's going to happen.

01:47:26 But, you know, we're definitely in the posture

01:47:29 of cutting back on space.

01:47:30 -So with other buildings being occupied as much as --

01:47:36 or as little as 17%, did you give any consideration

01:47:39 to moving into another building and sharing it with an agency

01:47:43 that doesn't need all of their space?

01:47:46 -So all options are on the table,

01:47:48 and I know GSA is thinking expansively and creatively

01:47:51 about, especially in the current environment,

01:47:55 how do we make sure we're being

01:47:56 maximally efficient with our space?

01:47:58 And so we're in close contact with GSA,

01:48:02 working hand-in-hand with them to figure out

01:48:03 what's the best place to land.

01:48:05 -So am I to understand $32 million

01:48:08 would build the new building and buy the new site,

01:48:12 wherever it is that you're going,

01:48:13 or is this some installment to a bigger plan?

01:48:17 -So that amount is basically designed

01:48:20 to cover the relocation and the releasing.

01:48:24 It's a number that GSA recommended to us

01:48:27 when we told them what some of our spacing needs were.

01:48:31 It's not about, you know,

01:48:32 creating a new building from scratch.

01:48:33 It's about we're expired in our current lease,

01:48:36 and we need to figure out where do we go from here.

01:48:39 -All right. You've effectively confused me.

01:48:42 So now you want $32 million to do what?

01:48:48 -So GSA, when federal agencies

01:48:52 have basically run out the lease on their space,

01:48:56 GSA works with them to go through the process,

01:48:59 again, of either renewing that lease,

01:49:01 but even if you renew that lease, you have to re-compete.

01:49:04 -So the $32 million, is it to build a building

01:49:07 or to go lease another building?

01:49:09 -So it could be basically to get more space,

01:49:14 a different space, and GSA recommends

01:49:17 that we basically ballpark that amount

01:49:21 to make sure that as we have to go through relocation,

01:49:24 as we have to, you know, expect to have another space

01:49:27 if we don't get this lease again,

01:49:29 that that's the amount that we should budget for.

01:49:32 -And so back to one of my previous questions,

01:49:36 the $32 million would get a new lease

01:49:40 or build a new building for what period of time,

01:49:44 and what might this committee expect to see

01:49:47 as a request in the future?

01:49:50 -So we're certainly in the posture of cutting back

01:49:52 on the space that we need,

01:49:54 and we're even figuring out can we shed that more quickly.

01:49:57 Even those gains and savings would not really kick in

01:50:01 until the end of FY 2025.

01:50:04 These leases can be from, you know,

01:50:06 seven years, nine years, 10 years,

01:50:08 and so we would be following that regular process

01:50:12 and figure out, you know,

01:50:13 what is the next stage of this look like.

01:50:15 -Thank you, Mr. Chair.

01:50:16 I'd suggest we, before we appropriate $32 million,

01:50:20 we should have a much better understanding

01:50:22 of how it would be used.

01:50:23 So with that, I yield back.

01:50:25 Thanks.

01:50:26 -Thank you very much, Mr. Edwards.

01:50:29 I know all good things must come to an end.

01:50:32 Chair Goddard, but there may be some members here

01:50:36 who would like to submit questions for the record.

01:50:39 Those that have been, please submit those members

01:50:41 and members who have been here,

01:50:42 please submit their questions for you for review,

01:50:45 and I'd ask for 15 business days for your people

01:50:49 to respond to those questions.

01:50:51 And again, I'd like to thank you for your time here today

01:50:53 and your testimony and the work that you do.

01:50:55 With that, this hearing is now adjourned.

FTC Chair Lina Khan Testifies Before The House Appropriations Committee

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