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US Federal Agencies Commit to Regulatory Enforcement of AI Systems

A recent announcement by multiple federal agencies has highlighted their intention to enforce their separate regulations against developers, deployers and users of AI systems. Federal Trade Commission (FTC) Chair Lina Khan and officials from the US Department of Justice (DOJ), the Consumer Financial Protection Bureau (CFPB) and the US Equal Employment Opportunity Commission (EEOC) each reinforced their worries about automated systems, citing civil rights, fair competition, consumer protection and equal opportunity concerns. Their serious language, joint public commitment and previous enforcement actions in this area make this statement no simple theater.

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Heard at the 2023 Spring Meeting: Part 2

The American Bar Association’s Antitrust Law Section held its annual Spring Meeting in Washington, DC, on March 29–31, 2023. The Spring Meeting sessions featured updates from federal, state, and international antitrust enforcers and thought-invoking discussions on leading antitrust issues facing the business community today. Following Part 1, this post summarizes key takeaways from the second portion of the Spring Meeting, including updates regarding premerger notification filings, labor markets, state antitrust enforcement, compliance programs, national security, consumer protection, interlocking directorates, and remedies.

FTC Zeros in on Missing Material in HSR Filings

  • Federal Trade Commission (FTC) Bureau of Competition Director Holly Vedova underscored the consequences of failing to submit Item 4 material in HSR filings. She noted the FTC will bounce filings found to have missing Item 4 documents. If the waiting period has not expired and newly surfaced documents change the scope of the request, the FTC may issue a Second Request. If the waiting period has expired when consequential missing material is realized, the FTC will require a corrective filing for the original transaction and may impose “significant” civil penalties.
  • Vedova also reminded practitioners that changes in a merger agreement can require an additional HSR filing. If material changes are made before the waiting period expires, parties should proactively reach out to the FTC to inquire as to whether further action is needed. Parties may need to amend their original filing or submit a new one entirely.

Labor Markets Remain High Priority

  • The antitrust enforcement agencies have promised continued, fervent action in labor markets. In keeping with this promise, this January, the FTC issued a proposed rule that would make it illegal to enter into or maintain noncompete agreements with employees or independent contractors.
    • FTC Chair Lina Khan emphasized that noncompetes impede business dynamism, innovation, and entry, and eliminating noncompetes is estimated to return $300 billion back into the pockets of American workers.
    • FTC Commissioner Rebecca Kelly Slaughter pointed to California as an innovator in labor market enforcement, citing its prohibition on noncompetes. FTC enforcers encouraged the continued submission of public comments on the proposed rule. The comment period is set to close on April 19, 2023.
    • Wisconsin Assistant Attorney General Gwendolyn Cooley also noted that enforcing noncompetes has been a hallmark of state enforcement, especially in New York and Washington, and additional states are considering legislation that would ban noncompetes.
  • The Department of Justice (DOJ) Antitrust Division’s Acting Director of Criminal Enforcement Emma Burnham and the Chief of DOJ’s Criminal II Section James Fredericks noted practitioners should expect an uptick in criminal cases in the labor and employment space. DOJ Antitrust Division’s Deputy Assistant Attorney General Jonathan Kanter stressed that antitrust crimes focused on workers are just as important as those focused on consumers.
  • New York’s antitrust chief, Elinor Hoffman, indicated that New York is focused on labor issues, including no-poach agreements and noncompete clauses that may arise during merger reviews. [...]

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THE LATEST: Rohit Chopra, Progressive Student Loan Watchdog, Recommended for FTC Commissioner

The Federal Trade Commission (FTC) is composed of five Commissioners each with terms of seven years. The Commissioners are appointed by the President with the advice and consent of the Senate. At any given time, no more than three Commissioners may be members of the same political party. Currently, Acting Chairman Ohlhausen (R) and Commissioner McSweeny (D) are the only FTC Commissioners. President Trump, therefore, can nominate two republican Commissioners and a democrat or independent commissioner. On May 9, United States Senate Minority Leader Charles Schumer (D-NY) formally recommended to President Donald Trump that Rohit Chopra fill the empty Democratic FTC Commissioner position. It is not clear how President Trump will proceed following the recommendation. Prior presidents have typically relied on recommendations from opposition leaders when deciding on a nominee for a minority commissioner.

WHO IS ROHIT CHOPRA?
  • Chopra is a Harvard University (BA) and Wharton School (MBA) graduate who has focused his career on consumer protection; specifically, advocacy for student loan forgiveness and better student loan servicing, and criticism of for-profit universities.
  • Chopra was one of the initial employees of the Consumer Financial Protection Bureau (CFPB), founded in July 2010 and proposed in 2007 by Elizabeth Warren (D-MA) in response to the Great Recession. There, Chopra served as Assistant Director and Student Loan Ombudsman, where he worked to improve student loan servicing and sued ITT Tech and Corinthian Colleges Inc. for consumer fraud.
  • In 2015, Chopra became a Senior Fellow at progressive think tank the Center for American Progress.
  • He then joined the Obama Administration as Special Advisor to the Secretary of Education, after having been critical of the Obama Administration’s work on student loan issues while at the CFPB. In particular, he encouraged the Secretary of Education to combat data showing that student loan debt doubled under the Obama Administration and the amount of student loans in default continued to increase.
  • Currently, Chopra serves as a Senior Fellow of the Consumer Federation of America, a non-profit consumer protection organization founded in 1968.
WHAT THIS MEANS?
  • If appointed, Chopra would be a non-lawyer FTC Commissioner without significant experience in antitrust issues, having worked solely in the consumer protection arena.
  • Chopra would replace former FTC Chairman Edith Ramirez, another progressive, who resigned her position effective February 10, 2017.



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