Regulators are in overdrive. We’ll see them in court.

It’s spring in an election year and the Biden administration’s regulatory ambitions are in full bloom. On April 24, the Federal Trade Commission became the latest to finalize a long-awaited rule: banning employment-based non-compete agreements. It’s one of them 2,500 regulatory actions The government plans to take action by the end of its first term.

Like many of the rules, the FTC’s blanket ban on non-compete agreements defies the FTC’s constitutional and statutory authority, shifting power from Congress to the hands of three unelected commissioners. The FTC only has the authority to identify specific, individual cases of unfair competition on a case-by-case basis, but Chairwoman Lina Khan has done just that. belittled this approach as “a slap on the wrist” and instead promised to establish prescriptive, often one-size-fits-all rules, without the Constitution standing in the way.

The American Chamber of Commerce archived a lawsuit challenging the FTC’s rule. One doesn’t have to imagine what the agency would do next if the ban were upheld. In a 2022 policy statement in which the FTC dramatically reinterpreted its authority to control “unfair methods of competition,” laying out its intentions to target a litany of other actions companies take to stay competitive, from loyalty discounts to entire types of mergers and acquisitions.

The Chamber’s lawsuit against the FTC is our latest attempt to challenge the government’s aggressive campaign to micromanage business decisions. It follows our victories against the Securities and Exchange Commission about its share buyback rule, the National Labor Relations Council about the joint employer rule, and the Consumer Financial Protection Bureau about its rule on “unfair, deceptive or abusive acts or practices.”

In both cases, the courts agreed that the agency in question had exceeded its regulatory authority, but this has not stopped the agencies from continuing to impose ideological mandates.

Examples abound. The SEC is venturing into climate regulation by micro-managing environmental impact disclosure. The Occupational Safety and Health Administration has proposed a rule to allow union organizers, activists and others to enter workplaces under the guise of “assisting” OSHA inspectors. An FTC rule targeting “unfair and deceptive compensation” would threaten entire business models that include variable or dynamic pricing.

Each rule is couched in the typical consumer and worker protection standard, but it is a thin disguise for the real purpose: to establish sweeping new powers that can be weaponized whenever and against whomever these agencies choose. The thesis behind the power grab is that the government knows better than the markets, which is a costly idea for every American – including consumers and workers.

By the end of last year, the Biden administration had imposed $447 billion in net regulatory costs on the economy.(i) and this sum pales in comparison $616 billion already proposed for 2024. These costs are borne by companies of all sizes, although smaller companies are struggling the most, and they are inevitably passed on to consumers in the form of higher prices and reduced economic growth. Glenn Hubbard argued recently arrived The Wall Street Journal how the attack on growth is damaging every aspect of society, from individual livelihoods to public finances.

The business community has rightly denounced over-regulation for years, prompting some critics to accuse us of ‘crying wolf’. Today there is no doubt that the wolf is here. Regulators are redefining the relationship between business and government, without regard to elected representatives or the Constitution. The U.S. House will see these agencies in court.

(i) $201 billion in 2021 +$117 billion in 2022 +$129 billion in 2023 = $447 billion

About the Authors

Suzanne P. Clark

As president and CEO of the U.S. Chamber of Commerce, Suzanne Clark leads strategy, government relations and market innovation to support member companies and businesses.

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