UNITED STATES OF AMERICA
A BRIEF OVERVIEW OF THE FEDERAL TRADE COMMISSION'S
INVESTIGATIVE AND LAW ENFORCEMENT AUTHORITY(1)
Revised, July 2008
I. INVESTIGATIVE AUTHORITY
A. In General
The Commission may" prosecute any inquiry necessary to its duties in any part of the United States" (FTC Act Sec. 3, 15 U.S.C. Sec. 43) and may"gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, excepting banks, savings and loan institutions * * * Federal credit unions * * * and common carriers * * *." (FTC Act Sec. 6(a), 15 U.S.C. Sec. 46(a)).(2) Pre-complaint investigations are generally non-public and, thus, are not identified on this site. On occasion the existence of an investigation may be identified in a press release.(3)
B. Specific Investigative Powers
The Commission's specific investigative powers are defined in Sections 6, 9, and 20 of the FTC Act, 15 U.S.C. Secs. 46, 49, and 57b-1, which authorize investigations and various forms of compulsory process. In addition, the premerger notification provisions in Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a, prohibit consummation of covered acquisitions until the requested information is provided, thus effectively enabling the Commission to obtain information regarding such acquisitions.
1. Sections 9 and 20 of the FTC Act
Section 9 of the FTC Act authorizes the Commission to "require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation" (15 U.S.C. Sec. 49). Any member of the Commission may sign a subpoena, and both members and "examiners" (employees) of the agency may administer oaths, examine witnesses, and receive evidence (Id., 16 C.F.R. Sec. 2.5).
Under Commission Rule 2.7 (16 C.F.R. Sec. 2.7), a party may raise objections to a subpoena by filing a petition to limit or quash. Such petitions may be resolved by a designated Commissioner, and the designated Commissioner's ruling may thereafter be appealed to the full Commission.
If a party fails to comply with a subpoena (either without filing a petition to quash, or after a duly filed petition is denied), the Commission may seek enforcement of the subpoena in "[a]ny of the district courts of the United States within the jurisdiction of which such inquiry is carried on" (15 U.S.C. Sec. 49). After the Commission files its petition to enforce a subpoena, and following receipt of any response from the subpoena recipient, the court may enter an order requiring compliance. Refusal to comply with a court enforcement order is subject to penalties for contempt of court.
The subpoena provisions of Section 9 are used routinely by the Bureau of Competition to investigate alleged unfair methods of competition and other antitrust violations. Prior to 1980, the Bureau of Consumer Protection also used subpoenas for investigations. However, as the result of the FTC Improvements Act of 1980, which added a new Section 20 of the FTC Act, 15 U.S.C. Sec. 57b-1, the Bureau of Consumer Protection may now use only "civil investigative demands" ("CIDs") to investigate possible"unfair or deceptive acts or practices." By virtue of the FTC Act Amendments of 1994, the Bureau of Competition also may use CIDs (in addition to subpoenas) for investigations of possible antitrust violations.
The scope of a civil investigative demand is different from that of a subpoena. Both subpoenas and CIDs may be used to obtain existing documents or oral testimony. But a CID may also require that the recipient "file written reports or answers to questions" (15 U.S.C. Sec. 57b-1(c)(1)). In addition, Section 20 expressly authorizes the issuance of CIDs requiring the production of tangible things and provides for service of CIDs upon entities not found within the territorial jurisdiction of any court of the United States (15 U.S.C. Sec. 57b-1(c)(7)(B)).
As with subpoenas, the recipient of a civil investigative demand may file a petition to limit or quash. Likewise, the Commission may petition a federal district court to enforce the CID in the event of noncompliance, although permissible venue is narrower in a CID enforcement action than in a subpoena enforcement case.
2. Section 6 of the FTC Act
Another investigative tool, this one available in both competition and consumer protection matters, appears in Section 6 of the FTC Act, 15 U.S.C. Sec. 46. Section 6(b) empowers the Commission to require the filing of "annual or special * * * reports or answers in writing to specific questions" for the purpose of obtaining information about "the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals" of the entities to whom the inquiry is addressed. As with subpoenas and CIDs, the recipient of a 6(b) order may file a petition to limit or quash, and the Commission may seek a court order requiring compliance. In addition, the Commission may commence suit in Federal court under Section 10 of the FTC Act, 15 U.S.C. Sec. 50, against any party who fails to comply with a 6(b) order after receiving a notice of default from the Commission. After expiration of a thirty-day grace period, the defaulting party is liable for a penalty of $110(4) for each day of noncompliance.
The Commission's 6(b) authority enables it to conduct wide-ranging economic studies that do not have a specific law enforcement purpose. (An example is the "Line-of-Business" study conducted in the 1970's, which required corporations to report line of business profitability and other data on a yearly basis.) Section 6(b) enables the Commission to obtain answers to specific questions as part of an antitrust law enforcement investigation, where such information would not be available through subpoena because there is no document that contains the desired answers. Section 6 also authorizes the Commission to "make public from time to time" portions of the information that it obtains, where disclosure would serve the public interest (15 U.S.C. Sec. 46(f)) (An example here is the Commission's July 2002 report on "Generic Drug Entry prior to Patent Expiration.").
The "Undertaking Spam, Spyware, And Fraud Enforcement With Enforcers beyond Borders Act of 2006" (or the "U.S. SAFE WEB Act of 2006" or "Safe Web") (Pub. L. No. 109-455, codified to the FTC Act, 15 U.S.C. §§ 41 et seq.) amended Section 6(f) to allow the Commission to share confidential information in consumer protection matters with foreign law enforcement agencies subject to appropriate confidentiality assurances. Safe Web also added a new section (j) to Section 6 allowing the Commission to conduct investigations and discovery to help foreign law enforcement agencies in appropriate cases. Amended Section 6(j)(4) authorizes the Commission, with the approval of the Secretary of State, to negotiate and conclude international agreements in the name of the United States or the Commission if foreign law requires an agreement as a condition for reciprocal assistance or information sharing.
3. Section 21 of the FTC Act
Within Section 21(15 U.S.C. Sec. 57b-2), Safe Web amended Section 21(f) to protect information provided by foreign enforcers from public disclosure if confidentiality is a condition for providing it. Section 21(b) was amended in the same fashion as Section 6(f) to allow the Commission to share confidential information in its files in consumer protection matters with foreign law enforcement agencies subject to appropriate confidentiality assurances.
4. Section 21b of the FTC Act
Safe Web amended Section 21b (15 U.S.C. Sec. 57b-2b) to protect certain entities (for example, internet service providers and consumer reporting agencies) from liability for voluntary disclosures to the Commission about suspected fraud or deception, or about recovery of assets for consumer redress.
5. Premerger Notification
In merger investigations, the Commission also relies on Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a, which was added by the Hart-Scott-Rodino Act of 1976. Under Section 7A, if either of the parties is a certain size or if the proposed transaction is of requisite size, the parties must report the transaction to the government and wait a specified number of days before consummation. Should the Commission or the Department of Justice decide that further examination is warranted, they may seek additional information by issuing a "second request" to the parties. When such a request is issued, the waiting period is extended and the subject acquisition may not be consummated until the conclusion of a specified period following the parties' compliance with the request. Although parties are not technically obligated to comply with a second request, as they are with a subpoena, the price of noncompliance is that consummation of the transaction would be illegal. Thus, the premerger notification provisions of the Clayton Act are a powerful incentive for companies to submit information that the government needs to evaluate corporate acquisitions. Should the parties merge without observing the requirements of the Clayton Act, the Commission may seek both injunctive relief and civil penalties, as appropriate, under Section 7A(g) of the Clayton Act. The Commission may also grant an early termination of a waiting period. Notices of early termination are available on this site.
6. Pharmaceutical Agreement Filings
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires that brand name drug manufacturers and generic drug applicants file certain agreements with the Federal Trade Commission and the Assistant Attorney General of the Antitrust Division of the Department of Justice within 10 business days of execution of the agreement. Information about what types of agreements must be filed, filing deadlines, and where to file, is set forth at http://www.ftc.gov/os/2004/01/040106pharmrules.pdf. Unlike the merger review process under the Hart-Scott-Rodino Act, there is no prescribed timetable for the FTC's review. The FTC neither approves nor denies approval to the filed agreements.
7. International Antitrust Enforcement
Under the International Antitrust Enforcement Assistance Act ("IAEAA"), 15 U.S.C. § 6201 et seq.,the FTC may invoke all of its investigative tools to obtain materials or information from domestic sources for the use of foreign antitrust authorities, and may seek investigative assistance from those authorities, pursuant to mutual or bilateral assistance agreements established under the IAEAA. FTC Act Sections 6(I) and 20(a)(8)(c) incorporate the IAEAA investigative authority into the FTC Act.
II. ENFORCEMENT AUTHORITY
Following an investigation, the Commission may initiate an enforcement action if it has "reason to believe" that the law is being or has been violated. The Commission uses certain of its statutory powers to enforce both consumer protection and antitrust laws, but there are also important differences that merit separate discussion of the two missions.
A. Consumer Protection
The basic consumer protection statute enforced by the Commission is Section 5(a) of the FTC Act, which provides that "unfair or deceptive acts or practices in or affecting commerce...are...declared unlawful." (15 U.S.C. Sec. 45(a)(1)). Safe Web amended Sec. 5(a) "unfair or deceptive acts or practices" to include such acts or practices involving foreign commerce that cause or are likely to cause reasonably foreseeable injury within the United States or involve material conduct occurring within the United States.
"Unfair" practices are defined as those that "cause or [are] likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition" (15 U.S.C. Sec. 45(n)). In addition, the Commission enforces a variety of specific consumer protection statutes (e.g., the Equal Credit Opportunity Act, Truth-in-Lending Act, Fair Credit Reporting Act, the Cigarette Labeling Act, the Do-Not-Call Implementation Act of 2003, the Children's Online Privacy Protection Act, Fair and Accurate Credit Transactions Act of 2003, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 and others)) that prohibit specifically-defined trade practices and generally specify that violations are to be treated as if they were "unfair or deceptive" acts or practices under Section 5(a). Summaries of the statutes giving the Commission enforcement powers are available on this site.
The Commission enforces the substantive requirements of consumer protection law through both administrative and judicial processes, as described below.
1. Administrative Enforcement
In the administrative process, the Commission makes the initial determination that a practice violates the law in either an adjudicative or rulemaking proceeding.
- (a) Adjudication
Under Section 5(b) of the FTC Act, the Commission may challenge "unfair or deceptive act[s] or practice[s]" (or violations of other consumer protection statutes) through maintenance of an administrative adjudication. When there is "reason to believe" that a law violation has occurred, the Commission may issue a complaint setting forth its charges. If the respondent elects to settle the charges, it may sign a consent agreement (without admitting liability), consent to entry of a final order, and waive all right to judicial review. If the Commission accepts such a proposed consent agreement, it places the order on the record for thirty days of public comment (or for such other period as the Commission may specify) before determining whether to make the order final.
- Administrative Trials
If the respondent elects to contest the charges, the complaint is adjudicated before an administrative law judge ("ALJ") in a trial-type proceeding conducted under the Commission's Rules of Practice. The prosecution of a consumer protection matter is conducted by FTC "complaint counsel," who are staff from the Bureau of Consumer Protection or a regional office. Upon conclusion of the hearing, the ALJ issues an "initial decision" setting forth his findings of fact and conclusions of law, and recommending either entry of an order to cease and desist or dismissal of the complaint. Either complaint counsel or respondent, or both, may appeal the initial decision to the full Commission.
Upon appeal of an initial decision, the Commission receives briefs, holds oral argument, and thereafter issues its own final decision and order. The Commission's final decision is appealable by any respondent against which an order is issued. The respondent may file a petition for review with any court of appeals within whose jurisdiction the respondent resides or carries on business or where the challenged practice was employed (FTC Act, Section 5(c), 15 U.S.C. Sec. 45(c). If the court of appeals affirms the Commission's order, the court enters its own order of enforcement. The party losing in the court of appeals may seek review by the Supreme Court. Commission decisions and orders since July 1949 are available.
- Enforcing Final Commission Orders
A Commission order (except an order to divest assets) becomes final (i.e., binding on the respondent) 60 days after it is served, unless the order is stayed by the Commission or by a reviewing court. If a respondent violates a final order, it is liable for a civil penalty of up to $11,000 for each violation. The penalty is assessed by a district court in a suit brought to enforce the Commission's order. The court may also issue "mandatory injunctions" and "such other and further equitable relief" as is deemed appropriate. (FTC Act, Section 5(1), 15 U.S.C. Sec. 45(1)). Pending enforcement actions are identified in the Federal Court Litigation Status Report.
- Redress After an Administrative Order is Entered
In addition (after all judicial review of its order is complete), the Commission may seek consumer redress from the respondent in district court for consumer injury caused by the conduct that was at issue in the administrative proceeding. In such a suit, which lies under Section 19 of the FTC Act, 15 U.S.C. Sec. 57b, the Commission must demonstrate that the conduct was such as "a reasonable man would have known under the circumstances was dishonest or fraudulent."
- Civil Penalty Enforcement against Non-Respondents
Where the Commission has determined in a litigated administrative adjudicatory proceeding that a practice is unfair or deceptive and has issued a final cease and desist order, the Commission may obtain civil penalties from non-respondents who thereafter violate the standards articulated by the Commission. To accomplish this, the Commission must show that the violator had "actual knowledge that such act or practice is unfair or deceptive and is unlawful" under Section 5(a)(1) of the FTC Act. (FTC Act, Section 5(m)(1)(B); 15 U.S.C. Sec. 45(m)(1)(B)). To prove "actual knowledge," the Commission typically shows that it had provided the violator with a copy of the Commission determination in question, or a "synopsis" of that determination. Section 5(m)(1)(B) limits wrongdoers to only a "single bite of the apple" before they are subject to monetary penalties.
- (b) Rulemaking
In lieu of administrative adjudications against individual respondents, the Commission may use trade regulation rules to remedy unfair or deceptive practices that occur on an industry-wide basis. Under Section 18 of the FTC Act, 15 U.S.C. Sec. 57a, the Commission is authorized to prescribe "rules which define with specificity acts or practices which are unfair or deceptive acts or practices in or affecting commerce" within the meaning of Section 5(a)(1) of the Act. The statute requires that Commission rulemaking proceedings provide an opportunity for informal hearings at which interested parties are accorded limited rights of cross examination. Before commencing a rulemaking proceeding the Commission must have reason to believe that the practices to be addressed by the rulemaking are "prevalent" (15 U.S.C. Sec. 57a(b)(3)). Commission rules are published in Title 16 of the Code of Federal Regulations.
Once the Commission has promulgated a trade regulation rule, anyone who violates the rule "with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule" is liable for civil penalties of up to $11,000 per violation.(5)) The Commission obtains such penalties by filing a suit in district court under Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. Sec. 45(m)(1)(A). In addition, any person who violates a rule (irrespective of the state of knowledge) is liable for injury caused to consumers by the rule violation. The Commission may pursue such recovery in a suit for consumer redress under Section 19 of the FTC Act, 15 U.S.C. Sec. 57b.
Various special statutes that authorize Commission rulemaking provide for promulgation in accordance with section 553 of title 5, United States Code. Examples include the Do-Not-Call Implementation Act of 2003 (15 U.S.C. § 6101 note), the Children's Online Privacy Protection Act (15 U.S.C. §§ 6501-6506), Fair and Accurate Credit Transactions Act of 2003 (15 U.S.C. §§ 1681 et seq.), and the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (15 U.S.C §§ 7701-7713).
2. Judicial Enforcement
As the preceding section illustrates, even where the Commission determines through adjudication or rulemaking that a practice is unfair or deceptive, the Commission must still seek the aid of a court to obtain civil penalties or consumer redress for violations of its orders to cease and desist or trade regulation rules. In this section, we discuss the Commission's ability to challenge a practice directly in court, without first making a final agency determination that the challenged conduct is unlawful.
Section 13(b) of the FTC Act, 15 U.S.C. Sec. 53(b), authorizes the Commission to seek preliminary and permanent injunctions to remedy "any provision of law enforced by the Federal Trade Commission." Under the first proviso of Section 13(b), whenever the Commission has "reason to believe" that any party "is violating, or is about to violate" a provision of law enforced by the Commission, the Commission may ask the district court to enjoin the allegedly unlawful conduct, pending completion of an FTC administrative proceeding to determine whether the conduct is unlawful. Further, under the second proviso of Section 13(b), "in proper cases," the Commission may seek, and the court may grant, a permanent injunction.
Section 13(b) was added to the FTC Act as part of amendments to the Trans-Alaska Pipeline Act of 1973. At the time, the provision was expected to be used principally for obtaining preliminary injunctions against corporate acquisitions, pending completion of FTC administrative hearings. During the 1970s, Section 13(b) was used by the Commission mainly in this way, and the Commission continues to make frequent use of the provision in its merger enforcement program. However, on occasion in the 1970s, the Commission also used the "preliminary injunction" provision of Section 13(b) to obtain injunctions against ongoing campaigns of deceptive advertising, pending a final FTC adjudication (Section 13(a) of the Act (15 U.S.C. Sec. 53), passed in 1938, had previously authorized the Commission to seek injunctive relief in cases of false advertisements for "food, drugs, devices, services or cosmetics."). See Sec. 15 U.S.C. Sec. 52(a) as referenced in 15 U.S.C. Sec. 53(a)(1).
In the early and mid-1980s, the Commission began to make widespread use of the permanent injunction proviso of Section 13(b) in its consumer protection program to challenge cases of basic consumer fraud and deception. Further, the Commission argued that the statutory reference to "permanent injunction" entitled the Commission to obtain an order not only permanently barring deceptive practices, but also imposing various kinds of monetary equitable relief (i.e., restitution and rescission of contracts) to remedy past violations. The Commission also argued that, to preserve the possibility of ultimate monetary equitable relief, it should be able to obtain a freeze of assets and imposition of temporary receivers in appropriate cases.
The courts have uniformly accepted the Commission's construction of Section 13(b), with the result that most consumer protection enforcement is now conducted directly in court under Section 13(b) rather than by means of administrative adjudication. See, e.g., FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1024-28 (7th Cir. 1988); FTC v. U.S. Oil & Gas Corp., 748 F.2d 1431, 1432-35 (11th Cir. 1984) (per curiam); FTC v. H.N. Singer, 668 F.2d at 1110-13. A suit under Section 13(b) is preferable to the adjudicatory process because, in such a suit, the court may award both prohibitory and monetary equitable relief in one step. Moreover, a judicial injunction becomes effective immediately, while a Commission cease and desist order takes effect only 60 days after service. Pending Section 13(b) cases are identified on the Federal Court Litigation Status Report.
Of course, administrative adjudication offers certain advantages over direct judicial enforcement. In particular, in an adjudicatory proceeding, the Commission has the first opportunity to make factual findings and articulate the relevant legal standard. On review, the court is obliged to affirm the Commission's findings of fact if supported by substantial evidence. A reviewing court must also accord substantial deference to Commission interpretation of the FTC Act and other applicable federal laws. In a 13(b) suit, by contrast, the Commission receives no greater deference than would any government plaintiff. Thus, where a case involves novel legal issues or fact patterns, the Commission has tended to prefer administrative adjudication.
The Commission enforces various antitrust laws through its Bureau of Competition. The two most significant statutory provisions are Section 5(a) of the FTC Act and the Clayton Act. Section 5(a) of the FTC Act, 15 U.S.C. Sec. 45(a), prohibits, inter alia, "unfair methods of competition." Unfair methods of competition include any conduct that would violate the Sherman Antitrust Act. The Clayton Act prohibits corporate acquisitions that may tend substantially to lessen competition (Section 7, 15 U.S.C. Sec. 18) and also bars certain forms of price discrimination (Section 2 of the Robinson Patman Act, 15 U.S.C. Secs. 13-13b). As with its consumer protection responsibilities, the Commission uses both administrative and judicial remedies to enforce the law.
1. Administrative Enforcement
- (a) Adjudication
The Commission may challenge alleged "unfair methods of competition," as it does "unfair or deceptive acts or practices,'" by commencing an administrative adjudicatory proceeding under Section 5(b) of the FTC Act. Where a violation of the Clayton Act is alleged, the Commission proceeds under Section 11 of the Clayton Act (15 U.S.C. Sec. 21), which parallels Section 5(b) of the FTC Act in authorizing adjudicatory proceedings. Procedures for judicial review of FTC antitrust orders are the same as those for review of consumer protection orders, except that divestiture orders become final after all judicial review has been completed (or, if no review is sought, after the time for seeking review has expired). Violations of antitrust orders are subject to suits for civil penalties under FTC Act Section 5(1) or Clayton Act Section 11(1), as appropriate.
- (b) Rulemaking
Section 18 of the FTC Act, which authorizes the promulgation of trade regulation rules, applies to "unfair or deceptive acts or practices." Prior to enactment of Section 18, the Commission issued substantive trade regulation rules under Section 6(g), which authorizes the Commission "to make rules and regulations for the purpose of carrying out the provisions of this subchapter." National Petroleum Refiners Assoc. v. FTC, 482 F.2d 672 (D.C. Cir. 1973), cert. denied 415 U.S. 951 (1974)(Commission has authority to require octane labels on gasoline pumps). Nearly all of the rules that the Commission actually promulgated under Section 6(g) were consumer protection rules. While Section 6(g) authority still exists, in 1975, Section 18 became the exclusive statutory provision invoked for issuing rules that specify unfair or deceptive acts or practices (15 U.S.C. Sec. 57(a)(2)).
2. Judicial Enforcement
As discussed above, Section 13(b) of the FTC Act empowers the Commission to obtain preliminary and permanent injunctive relief for violations of any provision of law that the Commission enforces. In the competition context, the Commission has used Section 13(b) primarily for the purpose of obtaining preliminary injunctive relief against corporate mergers or acquisitions pending completion of an FTC administrative proceeding. The Commission may also obtain permanent injunctive relief against an antitrust violation in an appropriate case, as well as disgorgement of unjust enrichment, restitution for injury suffered by consumers (e.g., the refund of overcharges attributable to price-fixing) or other appropriate equitable remedies. The Commission has filed several such actions, and the courts have repeatedly upheld our authority to do so. FTC v. Abbott Labs., 1992-2 Trade Cas. (CCH) ¶ 69,996 (D.D.C. filed Oct. 13, 1992), dismissed on other grounds, 853 F. Supp. 526 (D.D.C. 1994); FTC v. Mylan Laboratories, Inc. Cv. 98-3114 (TFH)(D.D.C. filed July 7, 1999).
III. LITIGATING AUTHORITY
The preceding sections have described a variety of actions that may be pursued in federal court against violators of the laws enforced by the Commission. The Commission has independent authority to litigate some of these cases in its own name, by its own attorneys. The scope of this authority is described below. Except as otherwise provided by law, the Attorney General is responsible for the conduct of all litigation in which the United States, or one of its agencies, is a party (28 U.S.C. Sec. 516). Section 16 of the FTC Act, 15 U.S.C. Sec. 56, specifically authorizes the Commission to represent itself by its own attorneys in five categories of cases: (1) suits for injunctive relief under Section 13 of the FTC Act, 15 U.S.C. Sec. 53; (2) suits for consumer redress under Section 19 of the FTC Act, 15 U.S.C. Sec. 57b; (3) petitions for judicial review of FTC rules or orders or a cease and desist order issued under Section 5 of the FTC Act, 15 U.S.C. Sec. 45; (4) suits to enforce compulsory process under Sections 6 and 9 of the FTC Act, 15 U.S.C. Secs. 46 and 49.3,(5) and (6)and suits to prohibit recipients of compulsory process from disclosing the existence of the process in certain situations, section 21a of the FTC Act, 15 U.S.C. Sec. 57b-2a.
In addition to defining five classes of cases where the Commission may automatically represent itself, Section 16 also provides that with respect to "any civil action involving this subchapter (including an action to collect a civil penalty)," the Commission may represent itself if the Attorney General does not agree to do so after 45-days notice. See 15 U.S.C. Sec. 56(a)1. This provision enables the Commission to prosecute and defend by its own attorneys a wide variety of cases that the Department of Justice declines to litigate (particularly civil penalty actions under Sections 5(1) and 5(m) of the FTC Act).
Separate rules govern representation before the Supreme Court. Section 16(a)(3), 15 U.S.C. Sec. 56(a)(3), defines certain circumstances under which the Commission may appear in the Supreme Court "in any civil action in which the Commission represented itself [in the courts below] pursuant to [15 U.S.C. 56(a)(1) or (2)]." Specifically, the Commission may represent itself if it requests authority to do so from the Solicitor General within 10 days of the lower court judgment; and the Solicitor General, within 60 days after entry of the judgment, either authorizes the Commission's appearance, declines to represent the Commission, or fails to respond to the request. (7)
In addition to these specific grants of representational authority, there are several situations in which the Department of Justice may appoint Commission attorneys as special United States Attorneys to represent the United States in litigation conducted by the Department of Justice. See Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6107, (appointment of Commission attorneys to prosecute criminal contempt); Memorandum of Agreement Between the Department of Justice and the Federal Trade Commission - Premerger Penalties, 4 Trade Reg. Rep. 1 9853 at p. 17,356 (appointment of Commission attorneys to prosecute civil penalty actions under 15 U.S.C. Sec. 18a(g)(1) for violation of premerger reporting requirements); see also 28 U.S.C. Secs. 515, 543 appointment of special United States attorneys).
ANTITRUST ENFORCEMENT AUTHORITY
|Federal Trade Commission Act (15 U.S.C. §41 et seq.)||administrative cease and desist authority [§5(b) FTCA]||prosecution [§§ 1 & 2 Sherman Act]|
|Injunctive Relief||judicially ordered injunctive relief [§13(b) FTCA; also § 5(l) FTCA (for violations of cease and orders)]|
|Redress||judicially ordered redress [§13(b) FTCA]|
judicially ordered civil penalties for violating cease and desist orders ($11,000 per violation) [§5(l) FTCA]
|Criminal Penalties||referral to U.S. Department of Justice [§16(b) FTCA]|
|Clayton Act (15 U.S.C. § 12 et seq.)||administrative cease and desist authority [§11(b) Clayton Act]|
|Injunctive Relief||judicially ordered injunctive relief [§13(b) FTCA; also §7A(g)(2) Clayton Act (for HSR reporting violations) and §11(l) Clayton Act (for violations of cease and desist orders)]||judicially ordered injunctive relief [§15 Clayton Act; also §7A(g)(2) Clayton Act (for HSR reporting violations)]||may apply to the courts as parens patriae for injunctive relief [§16 Clayton Act]||may apply to the courts for injunctive relief [§16 Clayton Act]|
|Damages||may recover for injuries sustained by the United States Government (treble damages) [§4A Clayton Act]||may apply fortreble damages as parens patriae [§4C Clayton Act]||may apply for treble damages [§4 Clayton Act]|
|Civil Penalties||judicially ordered civil penalties for violating cease and desist orders ($5,000 per violation) [§11(l) Clayton Act; also §7A(g)(1) Clayton Act ($11,000 per day for HSR reporting violations)]||judicially ordered civil penalties [§7A(g)(1) Clayton Act ($11,000 per day for HSR reporting violations)]|
|Criminal Fines||officer liability for corporate violation of penal provisions [§14Clayton Act]|
|Sherman Antitrust Act
(15 U.S.C. §1 et seq.)
|Injunctive Relief||judicially ordered injunctive relief [§4 Sherman Act]||may apply to the courts as parens patriae for injunctive relief [§16 Clayton Act]||may apply to the courts for injunctive relief [§16 Clayton Act]|
|Damages||may recover for injuries sustained by the United States Government (treble damages) [§4A Clayton Act]||may apply for treble damages as parens patriae [§4C Clayton Act]||may apply for treble damages [§4 Clayton Act]|
combinations [§1 Sherman Act]
monopolization [§2 Sherman Act]
|Miscellaneous||forfeiture [§6 Sherman Act]|
CONSUMER PROTECTION ENFORCEMENT AUTHORITY
UNDER THE FEDERAL TRADE COMMISSION ACT
State Enforcement Authorities
|Federal Trade Commission Act (15 U.S.C. §41 et seq.)||administrative cease and desist authority [§5(b) FTCA]||prosecution for violations of §12(a) FTCA [§14 FTCA]|
|Injunctive Relief||judicially ordered injunctive relief [§13(b) FTCA; also §13(a) FTCA (for violations of §12(a) FTCA) and §5(l) FTCA (for violations of cease and desist orders)]|
|Redress||judicially ordered redress [§13(b) FTCA; also §19(a)(1) FTCA (for rule violations) and §19(a)(2) FTCA (for "fraudulent or dishonest" conduct)]|
|Civil Penalties||judicially ordered civil penalties for violating cease and desist orders ($11,000 per violation) [§5(l) FTCA; also §5(m)(1)(A) FTCA (for violations of trade regulation rules) ($11,000 per violation) and §5(m)(1)(B) FTCA (for violations of adjudicatory holdings by non-parties) ($11,000 per violation)]|
|Criminal Penalties||referral to U.S. Department of Justice [§16(b) FTCA]|
Special Statutes that mandate or authorize Commission rulemakings either antitrust and/or consumer protection related:
Recent examples include the Graham-Leach-Bliley Act (15 U.S.C. §§ 6801-6809 and §§ 6821-6827), the DNC Implementation Act (15 U.S.C. § 6101 note), COPPA (15 U.S.C. §§ 6501-6506), FACTA (15 U.S.C. §§ 1681 et seq.), CAN-SPAM Act (15 U.S.C §§ 7701-7713) the Fairness to Contact Lens Consumers Act (15 U.S.C. § 7601 et seq.), the Energy Policy Act 02 2005 (Pub. L. No. 109-58) and the Energy Independence and Security Act of 2007 (Pub. L. No. 110-140)
1. This memo focuses exclusively on law enforcement by the Federal Trade Commission. Appendices A and B are charts that synopsize the allocation of antitrust and consumer protection powers under the FTC, Clayton, and Sherman Acts to the Commission and to other entities, i.e., the Department of Justice, state enforcers, and private parties. Appendix B covers only the Federal Trade Commission Act. Summaries of Commission enforcement authority under other statutes are available on this site.
2. "Corporation" is defined to include any company, trust or association, incorporated or unincorporated, "which is organized to carry on business for its own profit or that of its members (FTC Act Sec. 4, 15 U.S.C. Sec. 44).
3. Commission policies contemplate the disclosure of certain industry-wide investigations. The Commission will also publicly acknowledge that a particular merger or other transaction is being investigated under Sections 7 and 11 of the Clayton Act in situations where a party to the transaction has disclosed its existence in a press release or other public filing. In addition, the Commission permits limited disclosures about nonmerger investigations where: (1) a target has publicly disclosed the relevant information in either a press release or a filing with a government agency; or (2) the investigation or the practice has received substantial publicity and the disclosure does not identify a target that has not already disclosed its own identity.
4. The original $100 per day penalty has been adjusted to $110 under the Debt Collection Improvement At of 1996, 28 U.S.C. § 2461 note. See Commission Rule 1.98, 16 C.F.R § 1.98.
5. Id. The original $10,000 penalty for each violation has been adjusted to $11,000.
6. Section 16, added to the FTC Act in 1975, does not specifically mention suits to enforce Civil Investigative Demands, as CID authority was not added to the Commission's investigatory repertoire until 1980. However, Section 20 of the FTC Act, which governs issuance of CIDs, provides that a suit to enforce a CID may be prosecuted by the Commission "through such officers or attorneys as it may designate" (15 U.S.C. Sec. 57b-2(e)). The only other statute that expressly vests the Commission with representational authority is the Clayton Act, which provides that injunctive relief for violations of the premerger notification requirements may be granted by a district court "upon application of the Federal Trade Commission or the Attorney General" (15 U.S.C. Sec. 18a(g)(2)).
7. On three occasions, the Commission has exercised its statutory authority to file a petition for certiorari after the Solicitor General has declined to file a petition on the Commission's behalf. In two of those three cases, the Commission was successful in obtaining a grant of certiorari and in obtaining a reversal of an adverse court of appeals ruling.