Three Options for Reforming Part III Administrative Litigation at the FTC

By: Keith Klovers, Wilson Sonsini Goodrich & Rosati

Today there are several proposals to reform the way the U.S. Federal Trade Commission (FTC) handles antitrust cases. Under the current system, the FTC may choose to litigate either in federal court or in its own “Part 3” administrative tribunal. The Part 3 system has been the subject of significant controversy, including in the case Axon Enterprises v. FTC, because it allows the same Commissioners who voted to issue the complaint to adjudicate it on the merits. Critics of this process point to the Commission’s very high win rate as evidence of a due process problem and advocate for the elimination of the Part 3 process. While increasing due process protections is a laudable goal, it is not clear that policymakers have considered the full range of alternatives that would achieve the desired result.

This article attempts to fill in some of the tierra incognita by considering three other reforms that would retain some of the specialized features that Congress intended when it created the FTC in the first place. First, the Commission could revise its Rules of Practice so that it reviews the ALJ’s findings of fact for clear error, rather than de novo. Second, the Commission could both adopt the clear error standard of review and elevate the role of the ALJ by reforming the way that ALJs are selected and ensuring that an ALJ presides over each administrative trial. Third, Congress could convert the Commission’s present administrative litigation process into a specialized Article III antitrust tribunal. Each of these alternatives already exists elsewhere in the American federal legal system, thereby offering some insight into how each reform may perform in practice.

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