In a recent New York Times op-ed, former Federal Trade Commission (FTC) Chair Lina Khan praises Zohran Mamdani’s primary campaign for New York City mayor, attributing his success to his focus on small businesses.
Khan believes that Democrats can be the political party that reclaims the trust of small businesses in the years to come by modeling this example and adopting her “Big is Bad” antitrust philosophy. However, one crucial element is missing from her argument: the truth.
During her tenure, American small businesses suffered from overregulation that hampered investment, growth and innovation. A closer examination of the Khan era reveals it is not as favorable as she portrays.
In the early months of President Trump’s second term, many of the rules championed under Khan were reversed, reflecting the long-held understanding that overregulation disproportionately harms small businesses – a burdensome reality that got worse during the Biden administration.
For example, take the noncompetes ban that Khan touts in her op-ed as an example of her purported success. Since its introduction, the rule has faced several legal setbacks. Last August, a federal judge blocked the noncompetes ban, finding that the FTC lacked the statutory authority to issue it, labeling it “arbitrary and capricious.” In March, the FTC, under Chair Andrew Ferguson, asked the courts to pause all appeals while it reconsidered defending the rule. It appears likely that the agency will withdraw the rule, and it has a good reason for doing so. Small businesses use non-competes for a range of appropriate business purposes, such as to protect their intellectual property and guard sensitive company information. An outright ban on these agreements would disproportionately affect small businesses and startups.
Under Khan, outdated statutes like the Robinson-Patman Act were invoked despite long-standing consensus that the policy stifles innovation and raises entry barriers, ultimately harming small businesses trying to compete in the marketplace. For example, the FTC invoked this policy in its lawsuit against Southern Glazer, which could reduce wholesale discounting overall and raise costs for all retailers, leading to higher consumer prices.
The FTC’s changes to the Hart-Scott-Rodino (HSR) premerger notification rules introduced in October 2024 also impose significant new disclosure requirements on businesses seeking to merge, which stifle the efforts of startups to scale and compete.
Another egregious disregard for small businesses was the updated merger guidelines introduced under the FTC and DOJ Antitrust Division in 2023. The guidelines significantly lowered the threshold for mergers to be considered potentially harmful, undermining opportunities for innovative startups and small businesses to be acquired, a key goal for many entrepreneurs. Ultimately, it is U.S. small businesses that bear the weight of unnecessary or poorly crafted regulations, and when startups and small businesses are undermined, the entire U.S. economy suffers.
This is the legacy that Khan advocates continuing - even intensifying - despite the consequences for American small businesses and their growth opportunities. Her endorsement of Mamdani underscores this point.
The radical New York candidate has proposed raising New York City corporate taxes to ~11.5% from ~7% and adding a 2% surtax on personal incomes over $1 million to fund social programs. As public policy analyst Dr. Michael Busler, Ph.D., points out, this would effectively erode the city’s tax base and economic vitality, harming local businesses that rely on consumer spending.
Additionally, his proposal for municipally operated grocery stores that would sell basic goods at low cost by eliminating rent or profit margins would put bodegas and independent grocers out of business. His support for a $30/hour minimum wage would lead to employment losses and a relocation of businesses to lower-cost areas.
Lawmakers need to think carefully about whether this is the legacy they want to perpetuate. The FTC is finally free of Lina Khan – which means startups and small businesses are more free - and our economy cannot afford her policy ideology, especially when her perspective on supporting small businesses is so uninformed and misguided. Policymakers on both sides of the aisle should steer clear of Khan and Mamdani, their unworkable economic policies, and their “new” vision that abandons decades of sound U.S. competition law.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.
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