FTC Issues Policy Statement on Use of Monetary Remedies in Competition Cases

The Federal Trade Commission has issued a unanimous policy statement on the use of monetary equitable remedies such as disgorgement and restitution in competition cases – specifically, those involving violations of the Hart-Scott-Rodino (HSR) Premerger Notification Act, the FTC Act, and the Clayton Act. Disgorgement is a monetary remedy “designed to deprive the wrongdoer of his unjust enrichment and to deter others from future violations” and restitution “is intended to restore the victims of a violation to the position they would have been in without the violation.” According to the statement, while the decision to seek such remedies will be determined on a case-by-case basis, “disgorgement and restitution can play a useful role in some competition cases.” In general, however, the FTC “will continue to rely primarily on more familiar, prospective remedies, and seek disgorgement and restitution in exceptional cases.”

The Commission’s statement was developed after reviewing comments filed in response to a Federal Register notice (http://www.ftc.gov/os/2001/12/disgorgefrn.shtm), relevant case law and literature, information gathered from discussions in public forums, and the FTC’s own experience.
 

As the statement points out, the Commission has sought and received monetary disgorgement in two recent cases, the first involving alleged illegal anticompetitive conduct by the pharmaceutical firm Mylan Labs, Inc. (FTC v. Mylan Labs, Inc., No. 1:98CV03114 (TFH), D.D.C. Feb. 9, 2001) and the second involving alleged HSR Act violations by The Hearst Trust (FTC v. The Hearst Trust, No. 1:01CV00734 (TJP), D.D.C. Nov. 9, 2001).

The Commission’s statement identifies and explains three factors that will be considered in determining whether to seek disgorgement or restitution. First, the Commission will ordinarily seek monetary relief only where the underlying violation is clear. Second, there must be a reasonable basis for calculating the amount of remedial payment. Third, the FTC will consider the value of seeking monetary relief in light of other remedies available in the matter, including private actions and criminal proceedings. A strong showing in one area “may tip the decision whether to seek monetary remedies.”

The policy statement discusses each of these factors in more detail, noting that the FTC “is sensitive to . . . duplicative recoveries by injured persons or ‘excessive’ multiple payments by defendants for the same injury.”

(FTC File No. P859907)