House Republicans Rail Against FTC’s Khan Over ‘Bully’ Tactics, Ethics

Lina Khan, Chair of the Federal Trade Commission, testifies before the House Judiciary Committee in Washington on July 13, 2023. Madalina Vasiliu/The Epoch Times

House Republicans accused Federal Trade Commission (FTC) Chair Lina Khan of engaging in “bully” behavior as the agency’s merger-enforcement court case losses continue to mount.

The FTC appealed a court decision that allowed Microsoft’s $96 billion acquisition of Activision Blizzard to move forward.

U.S. District Judge Jacqueline Scott Corley ruled against the federal agency’s request to impose a preliminary injunction that would have prevented the merger from closing before a July 18 deadline. The FTC then asked the 9th Circuit Court of Appeals in San Francisco on July 13 to overturn the lower-court judge’s decision, arguing that the corporate merger would reduce competition in the video game market, including consoles, cloud gaming, and subscriptions.

This case became a focal point of the July 13 House Judiciary Committee hearing.

Ms. Khan defended the agency’s actions because it believes that “there is a law violation.”

“When we get an adverse ruling, our teams look closely at the text of opinion and see if there are errors on matters of law that warrant an appeal,” she said.

Republican lawmakers concentrated on what they say is mismanagement of the FTC, aggressive and unproductive efforts to halt corporate mergers and acquisitions, politicized rulemaking, and targeted harassment of companies.

Rep. Kevin Kiley (R-Calif.) noted that the FTC is “losing quite a bit,” pointing out its 0-for-4 record in corporate merger trials.

“So, I have to ask, why are you losing so much?” Mr. Kiley asked. “Why is your track record so poor when it comes to actually winning cases?

“Are you bringing cases that you expect to lose?”

Ms. Khan responded, “Absolutely not.”

Mr. Kiley said, “Well, your track record seems to suggest otherwise.”

Rep. Darrell Issa (R-Calif.) described Ms. Khan as “a bully,” while Committee Chair Jim Jordan (R-Ohio) called her tenure so far “a disaster.”

“My problem here today is that you’re a bully. You run this organization, and its left turn came when you took over,” Mr. Issa said at the hearing. “You have half a billion dollars to spend, and you choose to spend it promoting a policy that every merger has to be somehow bad for the company and good for the consumer, a standard that cannot be met.”

Some Republican lawmakers said the FTC is “losing on purpose” to encourage Congress to approve additional antitrust legislation.

Ethics Concerns

Internal FTC documents published by Bloomberg News last month show that Ms. Khan refused to recuse herself from the agency’s 2022 review of Meta’s proposed merger with Within Limited, a virtual reality app maker.

An ethics official recommended that Ms. Khan step away from the case to “avoid an appearance of partiality.”

“From a federal ethics perspective, I have strong reservations with Chair Khan participating as an adjudicator in this proceeding where—fairly recently, before joining the Commission—she repeatedly called for the FTC to block any future acquisition by Facebook,” wrote Lorielle Pankey, a designated ethics official, in the August 2022 memo.

Rep. Harriet Hageman (R-Wyo.) slammed Ms. Khan for ignoring advice from the ethics officer.

The Federal Trade Commission (FTC) building in Washington on Sept. 19, 2006. Paul J. Richards/AFP via Getty Images

“It is unbelievable to me that you would not ask for written ethics advice on this particular topic,” Ms. Hageman said. “You admit that you have received written ethics advice on other topics, but on this topic, you claim you did not see the written memo. Instead, you want us to believe that you only received oral advice and not specific oral advice, but only general advice on ‘understanding the legal framework’ today to give you advice that is different than what was written in the memoranda.”

But Ms. Khan reiterated that she adhered to all ethical guidelines and maintained that she acted appropriately.

Earlier this year, the FTC failed to stop Meta, the parent company of Facebook, from purchasing Within, the maker of the popular virtual reality app Supernatural.

Tensions Come to a Boil

There were several tense moments during the FTC oversight hearing.

Rep. Steven Cohen (D-Tenn.) accused some Republican lawmakers of “hypocrisy” and not having enough integrity, prompting one GOP lawmaker to interrupt.

“Is the gentleman accusing us of a lack of integrity?” the Republican congressman asked.

Mr. Cohen shouted, “Mr. Chairman, if you would ask whoever it is to shut up?”

“I’m sure [Mr. Jordan] will rule when he comes back,” the lawmaker said.

Rep. Hank Johnson (D-Ga.) suggested that Republicans were attacking Ms. Khan because of her ethnicity.

“When we treat a witness who looks like you with the politics of personal destruction, and when we only attack witnesses who look like you with allegations of incompetence and a lack of ability to lead their agency, it’s indicative of the need for this committee to reflect what the American people look like,” Mr. Johnson said.

The FTC chief is a British-born American with Pakistani parents.

Mr. Issa demanded that his colleague’s remarks be stricken from the record.

“I would ask that that portion of his testimony be taken down as inappropriate and argumentative to and making a racial slur against myself and other members of the Congress, who, by the way, yesterday treated what I would call a very white man of a greater age very similarly,” Mr. Issa said.

Mr. Jordan tried to cool down the committee hearing.

“We should all engage in proper decorum, not disparage colleagues, not disparage people in the government, not disparage anyone,” he said.