Startup Community’s Questions for the FTC’s Khan Before the House Judiciary Committee

By SBE Council at 13 July, 2023, 8:59 am

NEWS

FOR IMMEDIATE RELEASE

Washington, D.C. – Today, the U.S. House Judiciary Committee will conduct an oversight hearing of the Federal Trade Commission (FTC) under the leadership of Chairperson Lina Khan, who is expected to appear before the committee. Over the course of her tenure, the Small Business & Entrepreneurship Council (SBE Council) has expressed serious concerns about Chair Khan’s agenda and actions, specifically how they impact the startup and small business ecosystem, the broader U.S. economy and our innovative leadership.  SBE Council president & CEO Karen Kerrigan said the oversight hearing is timely and important, as the agency under Chair Khan’s leadership has run amok and poses serious threats to U.S. competitiveness and our renowned startup ecosystem, which is the envy of the world.

“Chair Khan’s activism and ideology are a significant threat to the U.S. startup ecosystem. The FTC under her leadership is erecting costly barriers that undermine competitive markets and healthy U.S. innovation and investment. Rather than consulting and engaging with U.S. startups and entrepreneurs, her team is consulting with U.S. competitors abroad for designing regulatory systems that actually impose more costs on American startups and small businesses. This is wholly inappropriate and misguided,” said Kerrigan.

Kerrigan adds that she looks forward to the hearing, and hopes that committee members will get answers from the following questions that she and SBE Council chief economist Raymond Keating posed for Chair Khan:

● How often have you engaged and met with the startup and small business community during your FTC tenure? Is it the practice, under your leadership, to understand how proposed FTC actions and your agenda would impact or potentially disrupt the startup and small business community? Give us some examples of these meetings or engagements and what your key takeaways were from these discussions.

● In the FTC’s revamp of the newly proposed filing rules for mergers, which experts say will add a minimum of 2-3 months to the deal-review timetable, and your own agency expects will add 100 hours in time for firms to prepare their filings, did you consider the high costs of these new requirements on small businesses and startups and how the complexity and costs will negatively impact competition and the U.S. economy, and the ability of startups to acquire the capital and resources they need to grow and bring their innovations to the marketplace?

● On the above-mentioned new merger rules, why did the FTC consult with the EU, UK, Canada and other jurisdictions? What is the purpose of consulting with U.S. competitors and their regulators? Do you understand that entrepreneurs and startups in these countries look to U.S. leadership to improve and streamline government rules and processes to strengthen the startup and M&A ecosystems, not mimic what these other countries are doing that prevent a healthy startup and business growth environment?

● How do you explain your losing legal record to date? Why does the FTC keep pursuing cases blocking specific mergers, which are clear losing cases from the get-go? Has your agency calculated the cost to taxpayers of fighting these losing legal battles. How much has each losing case cost taxpayers?

● FTC actions under your leadership presume that you know how dynamic, fast-changing technology and other markets are going to develop. Such things are largely unknown to entrepreneurs, businesses, investors and even industry analysts or experts in such sectors (hence the high levels of uncertainty and risk faced by startup entrepreneurs and their investors). Why do you believe you have this special insight and ability to predict future markets, and foretell “consumer harm” and market power when no others can predict such things?

● As an advocate for moving antitrust regulation beyond the basic standard of consumer harm, are you simply arguing that antitrust actions be guided by nothing more than opposition to all businesses when they reach what you deem to be an inappropriate level of “bigness”?

● Do you understand that the only way that a business in the private marketplace can achieve higher levels of market share is by providing products that consumers find of value? Can you clarify the guiding principles of the FTC under your leadership when it comes to determining if a market is competitive and whether consumers are harmed or well-served?

Related SBE Council content:

FTC Chair Lina Khan: Startup Spoiler, Small Business Insider, December 2022.

Collateral Damage in Khan’s FTC War on Big Business: Entrepreneurship, Innovation, and Consumers, Small Business Insider blog post, December 16, 2022.

The Future of U.S. Startups on Trial: FTC vs Meta Acquisition of Within, December 2022.

FTC’s Antitrust Crusade Against Microsoft Acquisition of Activision-Blizzard is No Game, Small Business Insider, January 11, 2023.

Innovation and Startup Ecosystem at Risk: Revamping the U.S. Regulatory Framework, Summary of SBE Council M&A Revamp Event.

Coalition Comments Opposing FTC’s Total Ban of Noncompete Agreements, March 2023.

FTC Comments Filed: “Business Practices of Cloud Computing” and Small Business June 2023.

CONTACT: 

Karen Kerrigan, kkerrigan@sbecouncil.org

Raymond Keating, rkeating@sbecouncil.org

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For nearly 30 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth.

Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

###