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October 23, 2012

The "Wright" Choice for the FTC?

Consumer Advertising Law Blog

President Obama previously announced his choice for the next Commissioner of the Federal Trade Commission, Professor Joshua Wright of George Mason School of Law. No stranger to the FTC, Wright was the first Scholar-in-Residence of the Competition Bureau from January 2007 to July 2008 and was an FTC intern and Honors Paralegal back in his college days. Wright is an associate editor of the Antitrust Law Journal and a senior consultant with Charles River Associates.

Holding a J.D. and a Ph.D. in economics, both from UCLA, Professor Wright will be only the fourth economist to serve as a FTC Commissioner and will be the first to have a J.D./Ph.D. Wright's scholarship is largely competition-oriented, though he has written on consumer protection issues. In one recent Florida Law Review article, "Are State Consumer Protection Acts Really Little FTC Acts?," he and his co-author, Professor Henry Butler (also of George Mason Law), critiqued state consumer protection acts as overbroad supplements to the FTC Act. While we likely should not read too much into the findings of their "Shadow FTC," the authors believe that the proper FTC consumer enforcement standard would "limit consumer protection to those actions that will serve the public interest generally."

In a forthcoming Yale Law Journal article, "The Antitrust/Consumer Protection Paradox: Two Policies at War with Each Other," Wright acknowledges government regulation based "upon a demonstrable and correctable market failure" is justifiable, a category in which Wright includes such regulations as product disclosures and "exploding toasters." Wright, however, criticizes the behavioral economics bent of the current state of consumer protection law, specifically Dodd-Frank and the Consumer Financial Protection Bureau, because it breaks the link between consumers' revealed preferences and consumer welfare, in the process condemning some "consumer-welfare-enhancing business practices." Wright argues that as behavioral economics seeps into antitrust and consumer protection analysis, it will harm consumer welfare while simultaneously providing less stability and greater regulatory uncertainty.

In addition to his formal scholarship, Wright is a blogger for Truth on the Market, a collaborative law and economics blog that focuses on "antitrust, industrial organization and corporate law/corporate governance." His blogging focuses primarily on antitrust and economic scholarship or developments, but occasionally includes topics like the proper pronunciation of "Leegin" or localice cream shop regulation. Though formerly a prolific poster, Wright has not posted since his nomination.

So what could this mean for consumer advertising and protection? Given Wright's background it is hard to say, but his writings do offer a bit of insight. Wright's advocacy of evidence-based antitrust law involves an understanding that economic models and theories would only be as good as the evidence that supports them.  While this will have greater applicability in the competition context, it does suggest that Wright may approach particular consumer protection cases from a "facts on the ground" perspective rather than turning first to an economic model. This may not, however, lead to additional support for enforcement. Wright's skepticism of the more expansive state consumer protection laws (discussed in his Florida Law Review article) may translate into a stricter understanding of the FTC's mission to "serve the public interest generally." Consequently, Wright may hold the FTC's consumer protection initiatives to more stringent standards.

If confirmed, Professor Wright would replace Commissioner J. Thomas Rosch, who was appointed by President Bush in 2006 and whose term expired in September.

© Arnold & Porter Kaye Scholer LLP 2012 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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