The Federal Trade Commission
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism
Committee on Commerce, Science, and Transportation
United States Senate
July 17, 2002
Mr. Chairman and Members of the
Subcommittee, the Federal Trade Commission (FTC) is pleased to appear
before you to support our reauthorization request for Fiscal Years 2003 to
2005. Since our last reauthorization hearing in February 2000, the FTC has
continued to take innovative and aggressive actions to protect consumers
and promote competition.
The FTC is the only federal agency with
both consumer protection and competition jurisdiction over broad sectors
of the economy.(1) We enforce laws that
prohibit business practices that are anticompetitive, deceptive, or unfair
to consumers. We also promote informed consumer choice and public
understanding of the competitive process. The work of the FTC is critical
in protecting and strengthening free and open markets in the United States
and, increasingly, the world.
The FTC is a small agency, but one with a
large mission. The FTC has shouldered an ever-increasing workload as the
economy becomes more global and more high tech. The agency has met its
broad responsibilities with only modest increases in resources. Highlights
of recent accomplishments include:
- Enhancing consumer privacy and security.
Since April 2001, the FTC has brought 22 cases involving privacy and
security issues, ranging from "pretexting" (obtaining personal
information under false pretenses) and children's privacy to "spam"
(unsolicited commercial e-mail). The agency also has held three
workshops to address privacy issues such as financial privacy notices
and the security of consumer information.
- Recovering as much as $60 million for
nearly 18,000 consumers who were victims of fraudulent lending under the
terms of a proposed settlement that requires court approval. Working
with the AARP, six states, and individual plaintiffs, in March 2002 the
FTC settled charges against a mortgage company and its CEO for
misleading consumers about fees they would be charged, which amounted to
10 to15 percent of the loans.
- Attacking fraud. Since June 2001, the
FTC has filed 98 federal court actions and obtained judgments for more
than $160 million.
- Stopping branded drug manufacturers from
eliminating competition from cheaper generic equivalents. Recent cases
addressing conduct allegedly stifling generic competition have involved
drugs for high blood pressure, anxiety, and angina and other cardiac
- Preventing anticompetitive effects of
mergers in the petroleum industry. Last year, the FTC reviewed three
multi-billion dollar oil mergers and, where necessary, required
divestitures in two of the proposed mergers to ensure continued
competition in refining, distribution, and retail sales of gasoline in
markets across the United States.
- Ensuring competition among health care
providers. The FTC is challenging as illegal agreements among providers
to fix fees and boycott health plans that resist paying higher fees. The
FTC's goal is helping to insure the existence of a competitive health
care industry that consistently delivers high-quality care at
In accomplishing these goals, there is a
high degree of unity among the five Commissioners. In fact, there is near
unanimity in voting patterns, particularly with respect to votes
concerning law enforcement matters. The near unanimity of voting patterns
reflects both a broad consensus among the Commissioners about the types of
cases the Commission should pursue, and the careful and deliberate process
by which the Commissioners consider matters, consulting with the staff to
address the issues and concerns of individual Commissioners. As Chairman
Muris has stated,(2) through the efforts of
a talented, dedicated, and professional staff, the current Commission is
building on the extraordinary work of former Chairman Robert Pitofsky.
II. MISSION FOCUS
In the next few years, the FTC will focus
its resources in significant areas of the economy through law enforcement
actions, consumer and business education campaigns, and continuing
assessment of ongoing developments in the marketplace. As we explain in
detail below, the FTC's activities fulfill its mission on behalf of
American consumers by:
- Continuing emphasis on critical areas of
law enforcement - stopping and preventing consumer fraud and deception
as well as stopping anticompetitive mergers;
- Enhancing consumer privacy and security;
- Preventing deceptive and anticompetitive
health care practices;
- Promoting and maintaining competitive
- Keeping pace with technology and the
- Targeting special initiatives to
specific groups of consumers; and
- Advancing efficient law enforcement.
A. CONTINUING EMPHASIS ON CRITICAL
AREAS OF LAW ENFORCEMENT
Two areas in the FTC's jurisdiction have
become staples of its law enforcement agenda - (1) fighting consumer fraud
and deception, and (2) preventing anticompetitive mergers. Since 1995, the
FTC has attacked fraud and deception by bringing 1,052 federal court and
administrative actions, and obtaining orders for more than $825 million in
consumer redress.(3) During the same time
period, the FTC reviewed over 26,000 proposed mergers worth a total of
nearly $10 trillion, opened about 1,600 formal investigations (issuing
"Second Requests" in more than 300 matters), and took enforcement action
in over 230 transactions. Over the next
few years, the FTC plans to devote
significant resources to build on its solid record of achievement in these
1. Consumer Fraud and Deception
The FTC targets both traditional types of
fraud and deception and those types that capitalize on new technologies.
Simply stated, our mission is to identify the most egregious forms of
fraud and deception; to bring cases, on our own and with our law
enforcement partners across the country and around the globe; and to
educate industry about complying with the law, consumers about how to
protect themselves from fraud and deception, and ourselves about emerging
The FTC has two toll-free telephone
numbers and an online form available to consumers who have questions or
complaints. Consumer complaints are entered into a number of FTC
databases, which are accessible to increasing numbers of domestic and
foreign law enforcement partners. To identify the most pervasive forms of
fraud and deception, and to target wrongdoers for law enforcement actions,
we analyze the information collected through the following data systems:
- Consumer Response Center.
The FTC's Consumer Response Center (CRC) fields complaints and inquiries
on a wide variety of consumer protection issues. Consumers can use a
toll-free number (1-877-FTC-HELP), as well as an online form and the
mail, to contact the CRC with complaints and inquiries. The CRC now
responds to more than 55,000 inquiries and complaints a month.
Established by the FTC in 1997,
is a fraud database available online to law enforcement agencies across
the U.S. and Canada. It receives complaints from the FTC's CRC and from
a growing number of other organizations in the U.S. and Canada.
Sentinel now contains more than 680,000 complaints, and is the
richest source of consumer fraud data available to law enforcement
agencies. Since June 2001, the FTC has recruited 115 new Sentinel
members, bringing the total number of Sentinel users to more
than 460 law enforcement agencies. Law enforcement agencies can use this
centralized database to identify trends and target companies that have
received a large number of consumer complaints. Consumers also can
access publicly available sections of this Web site for statistics about
fraud, including the schemes that garner the most consumer complaints,
the location of companies subject to complaints, and tips on how to
- Identity Theft. Another
FTC toll-free number, 1-877-ID-THEFT, is a central clearinghouse and a
critical source of consumer complaint data on ID theft. Calls have
increased from 2,200 calls per week one year ago to over 3,000 today.
Building on its experience with Consumer Sentinel, the FTC
began making the data available to its law enforcement partners through
an online database. More than 350 law enforcement agencies - 46 separate
federal agencies and 306 state and local agencies - now can access the
data. Among the agencies represented are more than half of the state
Attorneys General, as well as law enforcement authorities from a number
of major cities including Baltimore, Dallas, Los Angeles, Miami, San
Francisco, and Philadelphia. To encourage even greater participation, we
have conducted law enforcement training and outreach since April of this
year to demonstrate the efficacy of the clearinghouse. As one example of
positive results from these efforts, within three weeks after our most
recent training seminar in Chicago, approximately a third of the
participating agencies without prior access to the clearinghouse had
signed up. We will continue to focus resources and to devise new methods
to expand law enforcement access to the database. Finally, FTC
investigators, working with the Secret Service, have started to prepare
preliminary investigative reports based on clearinghouse data, which are
referred to Financial Crimes Task Forces for possible prosecution.
- Spam Database. Since
1998, the FTC has maintained an electronic mailbox (email@example.com)
to which Internet customers can forward unsolicited commercial e-mail,
commonly known as "spam." This database currently receives, on average,
42,000 new pieces of spam every day. The total number of spam e-mails
has grown from 700,000 in the first year to more than 10 million today.
The FTC staff searches the database to identify trends and select law
- Surf Days. The FTC
ferrets out online fraud and deception through "Surf Days." First used
in 1996 to look for online pyramid schemes, the law enforcement surf is
now a staple of FTC online scheme identification, usually conducted with
other law enforcement agencies. It provides both a window to learn about
online practices and a way to alert new Web site providers - some of
whom are new entrepreneurs unaware of relevant laws - that their sites
appear to violate the law. Since May 2001, the FTC has conducted six
surfs with more than 140 partners, focusing on claims about
unsubscribing from spam, remedies or preventive products for anthrax and
other serious diseases, bioterror protection devices, e-tailer holiday
shipping, and ultrasonic pest-control devices.
Drawing on consumer complaint data and
information gathered from Surf Days, the FTC targets fraudulent and
deceptive practices. The FTC's cases reflect a broad range of illegal
activity, including telemarketing fraud, franchise fraud, business
opportunity and work-at-home schemes, advance fee loan and credit loss
protection schemes, and false and unsubstantiated claims for health and
weight loss products. The FTC also has continued to bring deceptive
advertising cases, focusing in particular on cases that involve health or
safety issues, or significant economic injury. Recent cases include:
- Project Busted Opportunity.
In June 2002, the FTC, the Department of Justice, and 17 state law
enforcement agencies announced law enforcement actions against 77
targets engaged in the sale of business opportunities or work at home
schemes. The targets allegedly used deceptive earnings claims and paid
"shills" to promote their schemes or otherwise violate consumer
- Operation Dialing for Deception.
In April 2002, the FTC announced the filing of 11 federal district court
complaints challenging "in-bound" telemarketing fraud - situations in
which consumers call companies based on classified ads, Internet
banners, or other promotions. Among those charged were the purveyors of
advance-fee loans and credit cards, at-home medical billing programs,
work-at-home envelope stuffing schemes, and a "consumer protection"
agency that was, in reality, no more than a shill for a vending machine
- Magazine Telemarketing.
A federal court ordered a group of magazine subscription
telemarketers to pay $39 million in consumer redress for violating the
terms of a 1996 FTC settlement. Among other provisions, the FTC's 1996
order barred the defendants from misrepresenting the cost of
subscriptions, charging consumers' accounts without authorization, and
threatening to harm consumers' credit ratings. To facilitate the redress
process, the FTC established a special hotline for consumers who think
that defendants may have billed them improperly.(7)
- "Miss Cleo." The FTC
obtained a federal court order against the promoters of "Miss Cleo"
psychic services after charging that defendants misrepresented the cost
of services, billed for services never purchased, and engaged in
deceptive collection practices. Among other provisions, the court's
order enjoins the defendants from any future misrepresentations about
the cost of psychic readings and from making harassing telemarketing
calls. The FTC estimates that the defendants billed consumers $360
million in connection with this alleged illegal scheme.(8)
- Ab Devices. In "Project
ABsurd," the FTC challenged widely advertised "ab" devices. In suits
against three marketers of electronic abdominal exercise belts, the FTC
charged that infomercials falsely advertised that users would get "six
pack" or "washboard" abs without exercise. The 30-minute infomercials
were heavily aired on national cable television stations, such as USA,
TNN, Lifetime, E!, FX, and Comedy Central, and were among the ten most
frequently aired infomercials in weekly U.S. rankings. The FTC's action
seeks a permanent injunction to stop future false or deceptive claims
and the payment of redress to consumers who bought the devices.(9)
- Wonder Bread. In March
2002, the FTC announced a settlement with the marketers of Wonder Bread
concerning allegedly deceptive ads claiming that Wonder Bread could
improve children's brain function and memory.(10)
- Palm, Inc. Palm, the
leading manufacturer of Personal Digital Assistants (PDAs), agreed to a
settlement concerning its claims that its PDAs come with built-in
wireless access to the Internet and e-mail, as well as other common
business functions - claims that the FTC alleged were not true for many
models of the popular PDAs. Announced in March 2002, the settlement
requires Palm to disclose, clearly and conspicuously, when consumers
have to buy add-ons to perform advertised functions.(11)
2. Anticompetitive Mergers
Merger enforcement also continues to be a
staple of the FTC's enforcement agenda. Stopping mergers that
substantially lessen competition ensures that consumers pay lower prices
and have greater choice in their selections of goods and services than
they otherwise would. The level of merger activity in the marketplace,
along with other factors, affects the FTC's merger workload. During the
1990s, record-setting levels of mergers, both in numbers and in size,
required extraordinary efforts by the FTC staff to manage the necessary
reviews within statutory time requirements. Recent economic conditions
have reduced merger activity, and amendments to the Hart-Scott-Rodino Act(12)
have cut the number of proposed mergers reported to the government. Even
so, FTC merger enforcement remains a significant challenge for the
- The size, scope, and complexity
of mergers have increased. The number of mergers still remains
relatively high by historic standards, and mergers also continue to grow
in size, scope, and complexity. The dollar value of last year's reported
mergers was about 82 percent higher, in nominal terms, than the 1995
total, even without any adjustment for the different filing thresholds.
In fact, the $1 trillion total in 2001 exceeded the average annual total
dollar value of reported transactions during the booming 1991-2000
decade. The size of mergers affects the FTC's workload because mergers
among large diversified firms are likely to involve more products than
mergers among smaller firms, and thus generally involve more markets
requiring antitrust investigation. In addition, larger firms are more
likely to be significant players in the markets in which they compete -
increasing the need for antitrust review. Finally, as new technologies
continue to grow and as the economy becomes more knowledge-based, the
resulting complexity of many mergers requires more extensive inquiry.
- Large numbers of mergers still
require scrutiny. The number of proposed mergers raising
competitive concerns remains significant. Despite fewer reported
transactions, the FTC's level of enforcement activity remains at a high
level. Through the first eight months of this year, for example, we
opened well over 100 merger investigations and issued 20 requests for
additional information under the HSR Act (Second Requests), numbers only
slightly below those during the peak merger wave years 1996 through
2000. Thus far in FY 2002, the FTC has taken enforcement action in 21
mergers. Thus, despite a drop in the number of merger filings, our
merger enforcement workload remains high because the workload derives
mostly from the number of transactions raising antitrust concerns, not
from the overall number of filings.
- Non-reportable mergers now
require greater attention. Although fewer proposed mergers
remain subject to the reporting requirements of the HSR Act, the
standard of legality under Section 7 of the Clayton Act remains
unchanged.(13) Consequently, we need to
identify through means such as the trade press and other news articles,
consumer and competitor complaints, hearings, and economic studies,
those unreported, usually consummated, mergers that could harm
consumers. So far this fiscal year, the FTC has challenged two
- Resource-intensive litigation is
more frequently needed. While the FTC resolves most merger
challenges through settlement, it is sometimes necessary to litigate,
particularly when the merger at issue already has been consummated.
Merger litigation requires enormous resources. At the height of
preparation, a single merger case requires the full-time attention of
numerous staff members - not only lawyers, but also economists,
paralegals, and support staff. To counter arguments and evidence
presented by merging parties, these cases also require analysis and
testimony by outside experts with specialized knowledge, which can be
extremely costly. Since the fiscal year began, the FTC has filed two
administrative actions,(15) and has
authorized federal court challenges to five proposed mergers involving
products including rum,(16) food service
glassware,(17) pigskin and beef hide
and cervical cancer screening products.(20)
B. PROTECTING CONSUMER PRIVACY AND
A major focus of the FTC for the next
several years will be the protection of consumer privacy and security.
Consumers are deeply concerned about the privacy and security of their
personal information, both online and offline. Although privacy concerns
have been heightened by the rapid development of the Internet, concerns
are by no means limited to the cyberworld. This fiscal year, we have
substantially increased resources dedicated to privacy protection. The
agency has undertaken several major privacy initiatives to reduce the
serious consequences to consumers that can result from the misuse of
1. Do Not Call Initiative
The FTC has proposed amending the
Telemarketing Sales Rule (TSR)(21) to
create a national do-not-call list that would be binding on telemarketers
and allow consumers to make one call to remove their names from most
telemarketing lists. The proposal also would restrict the use of "preacquired
account information" - lists of names and credit card numbers of potential
telemarketing customers - to ensure that these lists are not used to bill
consumers for unwanted goods or services. To date, the FTC has received
over 40,000 comments on the TSR proposal, reflecting a high degree of
2. Public Workshops
In December 2001, the FTC co-hosted, with
seven other federal agencies, a public workshop titled Get Noticed:
Effective Privacy Notices under Gramm-Leach-Bliley, which assessed
the impact of GLB privacy notices, identified successful privacy notices,
discussed strategies for communicating complex information, and encouraged
industry "best practices" and consumer and business education.(22)
In May 2002, the FTC hosted a two-day public workshop to explore issues
related to the security of consumers' computers and the personal
information stored in them or in company databases.(23)
3. ID Theft
In 2001, identity theft was the number one
consumer complaint made to the FTC. To help stamp out this growing
consumer problem, the FTC has undertaken a number of initiatives:
- Identity Theft Law Enforcement
Training. Last March, the FTC, the U.S. Secret
Service, and the Department of Justice kicked off a series of nationwide
training seminars to provide hundreds of local and state law enforcement
officers with practical tools to enhance their efforts to combat
- ID Theft Affidavit. In
October 2001, the FTC joined with several companies and privacy
organizations to create a universal identity theft affidavit for victims
of identity theft to submit to creditors. Available online, the form
helps victims recoup their losses and restore their legitimate credit
records more quickly.
- Identity Theft Education.
The FTC has coordinated with other government agencies and organizations
to develop and disseminate comprehensive consumer education materials
for victims of identity theft and those concerned with preventing this
crime. Since its publication, the FTC has distributed more than 850,000
hard copies of its best-selling publication, "Identity Theft: When Bad
Things Happen to Your Good Name," and has logged over 700,000 visits to
its Web version. The FTC also launched an outreach effort to
Spanish-speaking victims of identity theft, releasing Spanish versions
of the identity theft booklet (Robo de Identidad: Algo malo puede
pasarle a su buen nombre) and the ID Theft Affidavit. We have added
Spanish-speaking phone counselors to our hotline staff and will soon
launch a Spanish version of our online complaint form.
The FTC brings law enforcement actions when
it has reason to believe that laws protecting privacy have been violated.
Recent FTC privacy enforcement actions include:
- Children's Privacy.
Over the past year, the FTC brought six cases involving the rule
implementing the Children's Online Privacy Protection Act (COPPA) for
alleged violation of the requirement that commercial Web sites give
notice of their information practices and obtain parental consent before
collecting, using, or disclosing personal information about children
under 13. As part of these settlements, the companies agreed to pay
civil penalties totaling $175,000.(24)
- •Eli Lilly.
The FTC settled charges that Eli Lilly & Company unintentionally had
disclosed the e-mail addresses of users of its Prozac.com and Lilly.com
Web sites by failing to take reasonable steps to protect the
confidentiality and security of that information. The settlement
requires Lilly to establish a security program to protect consumers'
personal information against any reasonably anticipated threats or
hazards to its security, confidentiality, or integrity.(25)
- Pretexting Cases. The
FTC has taken its first steps to enforce prohibitions against "pretexting"
- the use of false pretenses to obtain customer financial information -
which is prohibited under the Gramm-Leach-Bliley Act.(26)
FTC staff found apparent violations after a surf of 1,000 Web sites and
a review of 500 publications. The FTC sent warning notices to 200 firms
and settled three actions in federal court involving the most egregious
- Preacquired Account Information.(28)
A group of "buying clubs" has agreed to pay $9 million to settle charges
by state Attorneys General and the FTC that they deceptively enticed
consumers into accepting free trial memberships and deceptively obtained
billing information from the consumers, which they used to bill
consumers for membership in the "buying clubs" without the consumers'
knowledge or authorization.(29)
- Spam. In February 2002,
the FTC announced federal court settlements with seven individuals who
allegedly were disseminating deceptive chain-letter e-mails involving
pyramid schemes with "get rich quick" schemes.(30)
In April 2002, the FTC announced a law enforcement action challenging
"spam" e-mail messages that deceptively claimed that consumers had won a
free Sony PlayStation 2 or other prize through a promotion purportedly
sponsored by Yahoo, Inc. When consumers responded to the e-mail message,
they were routed to an adult Internet site via a 900-number modem
connection that charged them up to $3.99 a minute.(31)
C. PREVENTING DECEPTIVE AND
ANTICOMPETITIVE HEALTH CARE PRACTICES
The cost of health care has become
increasingly significant to both the economy and the American family.
Health-related products and services account for over 13 percent of gross
domestic product, up from 10.9 percent in 1988.(32)
A major FTC objective is to root out deceptive practices that waste
consumer dollars on ineffective or bogus remedies, and to stop collusion
and other anticompetitive practices that drive up health care costs and
1. Internet Health Fraud and Deception
The Internet has become the newest venue
for marketing snake oil. Promoters of fraudulent products and services
continue to use the Internet to plague consumers searching for cures for
various diseases and preventative treatments to manage their health. The
FTC has in place several program to protect consumers from scam artists
who prey upon consumers' fears and concerns about their health.
- Bioterrorism Project.
Following the tragedies of September 11 and the anthrax attacks, the FTC
targeted purveyors of phony products related to bioterrorism diseases.
Last October, staff from the FTC, the Food and Drug Administration
(FDA), and the offices of 30 state Attorneys General conducted a surf
and followed it up with warning letters to 121 Web sites. These sites
were exploiting bioterrorism fears by marketing ineffective products,
ranging from oregano oil to gas masks. To date, over 70 of the 121
warned sites have eliminated their objectionable claims. In February,
the FTC announced settlements with marketers of an ineffective anthrax
home test kit(33) and an on-line seller
of a colloidal silver product advertised to treat anthrax.(34)
- "Teaser" Web Sites. One
of the principal challenges facing the FTC is reaching consumers
before they fall victim to a fraudulent scheme. Knowing that many
consumers use the Internet to shop for information, agency staff have
developed 14 different "teaser" sites that mimic fraudulent sites and
that are found easily by consumers who conduct research on the Internet
with popular search engines. Within three clicks, the teaser sites link
back to the FTC's site, where consumers can find practical, plain
language information on recognizing fraudulent claims on a range of
topics, including health care products. Feedback from the public on FTC
teaser sites has been overwhelmingly positive.(35)
- "Operation Cure.All."
In June 2001, the FTC, in cooperation with the FDA, Health Canada, and
various state Attorneys General, announced "Operation Cure.All," the
latest round of enforcement actions against online purveyors of health
products that purported to cure serious diseases. The FTC challenged
allegedly unfounded claims regarding a DHEA hormonal supplement, St.
John's Wort, various multi-herbal supplements, colloidal silver, and a
variety of electrical therapy devices.
Commissioner Sheila Anthony recently
discussed Operation Cure.All before the Food and Drug Law Institute's 45th
Annual Educational Conference in a speech titled "Combating Deception in
Dietary Supplement Advertising" (April 16, 2002).(36)
This speech discussed the FTC's recent law enforcement actions and
proposed a strengthened self-regulatory response and more media
responsibility to address the widespread problem of deceptive and
unsubstantiated health claims for dietary supplement products.
2. Collusion and Other
During the past year, the FTC has placed
renewed emphasis on stopping collusion and other anticompetitive practices
that raise health care costs and decrease quality.
(a) Antitrust Investigations
Involving Pharmaceutical Companies. The growing cost of
prescription drugs is a significant concern for patients, employers, and
government. Drug expenditures doubled between 1995 and 2000.(37)
In response, the FTC dramatically has increased its attention to
pharmaceutical-related matters in both merger and non-merger
investigations. The agency now focuses one-quarter of all competition
mission resources on this industry. We also have opened increasingly more
pharmaceutical-related investigations. In 1996, less than 5 percent of new
competition investigations involved pharmaceuticals, while in 2001, the
percentage of new investigations involving pharmaceutical products was
almost 25 percent.
- Mergers Affecting the
Pharmaceutical Industry. Last year, the FTC took action to
restore competition in the market for integrated drug information
databases in a case involving violations of both Sections 7 and 7A of
the Clayton Act. This case marked the first time the FTC sought
disgorgement of profits as a remedy in a merger case. The case resulted
from the 1998 acquisition by Hearst Corporation of the Medi-Span
integratable drug information database business. Pharmacies, hospitals,
doctors, and third-party payors rely on such databases for information
about drug prices, drug effects, drug interactions, and the eligibility
for drugs under various payment plans. At the time of the acquisition,
Hearst already owned First DataBank, Medi-Span's only competitor. The
FTC alleged that the acquisition created a monopoly in the sale of
integratable drug information databases, causing prices to increase
substantially to all database customers.(38)
We negotiated a settlement requiring Hearst to divest the Medi-Span
database and to disgorge $19 million in illegal profits, which will be
distributed to injured consumers.(39)
- Pharmaceutical Firms' Efforts to
Thwart Competition from Generic Drugs. In its non-merger
enforcement cases, the FTC focused on efforts by branded drug
manufacturers to slow or stop competition from lower-cost generic drugs.
While patent protection for newly developed drugs sometimes limits the
role of competition in this industry, competition from generic
equivalents of drugs with expired patents is highly significant. The
Congressional Budget Office reports that consumers saved $8 to 10
billion in 1994 alone by buying generic versions of branded
pharmaceuticals.(40) The first generic
competitor typically enters the market at a significantly lower price
than its branded counterpart, and gains substantial share from the
branded product. Subsequent generic entrants typically bring prices down
even further.(41) Anticompetitive
"gaming" of certain provisions of the Hatch-Waxman Act(42)
to forestall generic entry has been a major focus of FTC enforcement
actions. FTC Hatch-Waxman abuse cases have fallen into three categories:
Agreements Not to Compete. The first category involves
agreements between manufacturers of brand-name drugs and manufacturers
of generics in which the generic firm allegedly is paid not to
compete. The FTC has settled three such cases, including a recent
settlement with American Home Products (AHP). That settlement resolved
charges that AHP entered into an agreement with Schering-Plough
Corporation to delay introduction of a generic potassium chloride
supplement in exchange for millions of dollars. The FTC had alleged
that an AHP generic would have competed with Schering's branded K-Dur
20, used to treat low potassium conditions, which can lead to cardiac
- (ii) Fraudulent "Orange Book" Listings.
The second category deals with unilateral conduct by branded
manufacturers to delay generic entry. Pursuant to the Hatch-Waxman
Act, a branded drug manufacturer must list any patent claiming its
branded drug in the FDA's "Orange Book." Companies seeking FDA
approval to market a generic equivalent of that drug before patent
expiration must provide notice to the branded manufacturer, which then
has an opportunity to file a patent infringement action. The filing of
such an action within the statutory time frame triggers an automatic
30-month stay of FDA approval of the generic drug. Certain branded
manufacturers have attempted to "game" this regulatory structure by
listing patents in the Orange Book improperly. Such a strategy permits
the company to abuse the Hatch-Waxman's stay provision to block
generic competition without advancing any of the Act's procompetitive
objectives. The FTC recently filed an action against Biovail
Corporation (Biovail), alleging that it had illegally acquired a
license to a patent and engaged in such an anticompetitive patent
listing strategy with respect to its high blood pressure drug, Tiazac.
The matter was resolved through a consent order, which requires
Biovail to: (1) transfer certain rights in the acquired patent back to
their original owner; (2) terminate its infringement suit against the
generic competitor, thereby terminating the 30-month stay; (3) refrain
from any action that would trigger another 30-month stay; (4) refrain
from future improper Orange Book listing practices; and (5) provide
the FTC with prior notice of the acquisitions of any patents it
intends to list in the Orange Book.(44)
- The FTC also recently filed an amicus
brief in pivotal private litigation involving allegations of
fraudulent Orange Book listing practices.(45)
In re Buspirone - which is the subject of continuing
litigation - involves allegations that Bristol-Myers Squibb Co.
("BMS") violated the antitrust laws by fraudulently listing a patent
on its branded drug, BuSpar, in the FDA's Orange Book, thereby
foreclosing generic competition. BMS argued that the conduct in
question was covered by the Noerr-Pennington doctrine - a
legal rule providing antitrust immunity for conduct that constitutes
"petitioning" of a governmental authority. In its amicus
brief opposing Noerr immunity, the FTC argued that submitting
patent information for listing in the Orange Book did not constitute
"petitioning" the FDA and that, even if it did, various exceptions to
Noerr immunity applied. The district court subsequently
issued an order denying Noerr immunity and adopting much of
the Commission's reasoning.(46) The
Court's ruling does not mean that all improper Orange Book filings
will give rise to antitrust liability. An antitrust plaintiff must
still prove an underlying antitrust claim. The Buspirone
decision merely establishes that Orange Book filings are not
automatically immune from the antitrust laws or exempt from their
- (iii) Agreements Between Generic
Manufacturers. The third category of
cases involves agreements among manufacturers of generic drugs. In our
recent complaint against Biovail and Elan Corporation, plc (Elan), the
FTC alleged that the companies violated the FTC Act by entering into
an agreement that provided substantial incentives not to compete in
the market for the 30 mg and 60 mg dosage forms of generic Adalat CC.
Biovail and Elan are the only companies with FDA approval to
manufacture and sell 30 mg and 60 mg generic Adalat products. In
October 1999, Biovail and Elan entered into an agreement involving
both companies' generic Adalat products. Under their agreement, in
exchange for specified payments, Elan would appoint Biovail as the
exclusive distributor of Elan's 30 mg and 60 mg generic Adalat
products and allow Biovail to profit from the sale of both products.
Our complaint alleged that the companies' agreement substantially
reduces their incentives to introduce competing 30 mg and 60 mg
generic Adalat products. The proposed order, which has a ten-year
term, remedies the companies' alleged anticompetitive conduct by
requiring them to terminate the agreement and barring them from
engaging in similar conduct in the future.(47)
Commissioner Thomas B. Leary has written and spoken in
depth about the issues that we must confront as we proceed with these
cases at the intersection of intellectual property rights and antitrust
- Generic Drug Study.
The FTC currently is conducting an industry-wide study focused on
certain aspects of generic drug competition under the Hatch-Waxman
Amendments. The study has examined whether the Commission's enforcement
actions against alleged anticompetitive agreements, which relied on
certain Hatch-Waxman provisions, were isolated examples or
representative of conduct frequently undertaken by pharmaceutical
companies. The study also has examined more broadly how the process that
Hatch-Waxman established to permit generic entry prior to expiration of
a brand-name drug product's patents has worked between 1992 and 2000.(49)
(b) Antitrust Investigations Involving Health
Care Providers. So far this year, the
agency has reached settlements with three groups of physicians for
allegedly engaging in collusive practices that drove up consumers' costs.
In May, the FTC announced a settlement with two Denver-area physician
organizations to resolve charges that they entered into agreements to fix
fees and to refuse to deal with health plans. According to the complaints,
primary care doctors - who compete with each other as internists,
pediatricians, family physicians, or general practitioners - formed groups
to negotiate contracts for higher fees and other terms more advantageous
than they could obtain by bargaining separately. The FTC's proposed orders
put a stop to further anticompetitive collusive conduct.(50)(51)
Earlier this year, the FTC settled charges that a group of Napa County,
California, obstetricians and gynecologists agreed to fix fees and other
terms of dealing with health plans and refused to deal with health plans
except on collectively determined terms. The FTC's complaint further
alleged that the physicians' actions harmed employers, individual
patients, and health plans by depriving them of the benefits of
competition in the purchase of physician services. To resolve the matter,
the physicians agreed to refrain from engaging in similar conduct in the
future, and to dissolve the organization through which they conducted
their allegedly anticompetitive activity.
Workshop on Health Care and Competition Law and Policy. On
September 9-10, 2002, the Commission will hold a public workshop focusing
on the impact of competition law and policy on the cost, quality, and
availability of health care, and the incentives for innovation in the
field. Given the significance of health care spending in the United
States, it is important that competition law and policy support and
encourage efficient delivery of health care products and services.
Competition law and policy should also encourage innovation in the form of
new and improved drugs, treatments, and delivery options. Developing and
implementing competition policy for health care raises complex and
sensitive issues. The goal of this workshop is to promote dialogue,
learning, and consensus building among all interested parties (including,
but not limited to, the business, consumer, government, legal, provider,
insurer, and health policy/health services/health economics communities).
D. PROMOTING AND MAINTAINING COMPETITIVE ENERGY
Representing a significant portion of total U.S.
economic output, energy is vital to the entire economy. The FTC focused
considerable resources on energy issues, including conducting in-depth
studies of evolving energy markets and investigating numerous oil company
1. Oil Merger Investigations
In recent years, the FTC has investigated numerous oil
mergers. Last year, the agency reviewed three large oil mergers and
analyzed the competitive effects in a host of individual
product/geographic market combinations. When necessary, the agency has
insisted on remedial divestitures to cure potential harm to competition.
In Chevron/Texaco, the FTC accepted a consent agreement that allowed the
proposed $45 billion merger to proceed but required substantial
divestitures to cure the possible anticompetitive aspects of the
transaction in 10 separate relevant product markets and 15 sections of the
country comprised of dozens of smaller relevant geographic markets.(52)
In Valero/Ultramar, the FTC obtained a settlement requiring Valero to
divest a refinery, bulk gasoline supply contracts, and 70 retail service
stations to preserve competition.(53) In
Phillips/Tosco, applying the same standards, the Commission concluded that
the transaction did not pose a threat to competition and voted unanimously
to close the investigation.(54)
Study of Refined Petroleum Prices
Building on its enforcement experience in the petroleum
industry, the FTC is studying the causes of the recent volatility in
refined petroleum product prices. During an initial public conference held
in August 2001, participants identified key factors, including increased
dependency on foreign crude sources, changes in industry business
practices, restructuring of the industry through mergers and joint
ventures, and new governmental regulations. This information assisted the
agency in structuring a second public conference in May 2002, focusing in
greater depth on those factors identified as most important in the earlier
conference. The information gathered through these public conferences will
form the basis for a report to be issued later this year.
3. Gasoline Price Monitoring
The FTC also recently announced a project to monitor
wholesale and retail prices of gasoline. FTC staff will inspect wholesale
gasoline prices for 20 U.S. cities and retail gasoline prices for 360
cities. Anomalies in the data will prompt further inquiries and likely
will alert the agency to the possibility of anticompetitive conduct in
certain parts of the country. It will also increase our understanding of
the factors affecting the price of gasoline.
Consumer Gas-Savings Tips
In addition to focusing resources on protecting
competition to keep the family gasoline budget down, the FTC developed a
series of consumer education publications to help families fuel up wisely:
Gas-Saving Products: Facts or Fuelishness?; The Low-Down on
High Octane Gasoline; How To Be Penny Wise, Not Pump Fuelish;
and Gas-Saving Products: Proceed with Caution. Two of the
publications were produced in cooperation with the American Automobile
Association. To date, distribution totals for the four publications exceed
E. KEEPING PACE WITH TECHNOLOGY AND THE CHANGING
As an agency with a history of studying marketplace
developments,(55) the FTC is
well-positioned to take a leading role in assessing the impact of high
technology and globalization on domestic and world markets. In 1995, the
agency held 23 days of hearings on these twin phenomena, which culminated
in a comprehensive, two-volume Staff Report.(56)
Building on this base, the FTC continues to study the impact of technology
in general and specific innovations, such as the Internet, and to work
increasingly with foreign government agencies and international bodies to
promote competition and protect consumers both at home and around the
globe. The FTC organizes numerous task forces, workshops, hearings, and
conferences to gather information.
- Internet Lab.
To keep pace with rapidly changing Internet technology, the FTC
established an Internet Lab in 1999. Equipped with state-of-the-art
personal computers, the lab is a resource for ongoing efforts to
understand the medium and to search for fraud, deception, and
anticompetitive practices in a secure environment. It provides the
necessary equipment and software to capture Web sites and preserve them
as evidence. The lab also provides the latest tools for staff to track
the manner in which technology is changing the way that commercial
information is transmitted to consumers. Unlike advertising in
traditional media, for example, advertising in electronic media may vary
in content and appearance depending on the appliance and Web browser
used by the consumer. FTC Internet enforcement cases reflect the broad
range of illegal activity carried out online, from traditional scams
like pyramid schemes, health fraud, and bogus investments to high-tech
frauds that take advantage of the technology itself to scam consumers.
Since June 2001, the FTC has brought over 51 cases involving fraudulent
or deceptive Internet marketing practices, bringing the total number of
Internet cases filed since 1994 to 236.
- Internet Task Force.
In August 2001, an Internet Task Force began to evaluate
potentially anticompetitive regulations and business practices that
could impede e-commerce. The Task Force grew out of the already-formed
State Action Task Force, which had been analyzing potentially
anticompetitive state regulations generally, and out of the FTC's
longstanding interest in the competition aspects of e-commerce. Over the
past year, the Task Force has met with numerous industry participants
and observers, including e-retailers, trade associations, and leading
scholars, and reviewed relevant literature. The Task Force discovered
that many states have enacted regulations, ostensibly for other
purposes, that have the clear effect of protecting existing
bricks-and-mortar businesses from new Internet competitors. The Task
Force also is considering whether private companies may be curtailing e-commerce
by employing potentially anticompetitive tactics, such as by
collectively pressuring suppliers or dealers to limit sales over the
Internet. To date, three advocacy filings have resulted in large part
from the Task Force's efforts: (1) a joint FTC/DOJ comment before the
North Carolina state bar expressing concerns about the impact on
consumers of ethics opinions requiring that an attorney be physically
present for all real estate closings and refinancings; (2) a joint
FTC/DOJ comment before the Rhode Island legislature on similar
requirements in a real estate bill; and (3) an FTC staff comment before
the Connecticut Board of Opticians, which is considering additional
restrictions on out-of-state and Internet contact lens sellers.(57)
- Internet Competition Workshop. In
October, the Commission will hold a public workshop on possible efforts
to restrict competition on the Internet. The workshop will include panel
discussions to address certain specific industries that are important to
consumers and that have experienced some growth in commerce via the
Internet, but that may have been hampered by potentially anticompetitive
state regulations or business practices. For example, the workshop will
include panels on some or all of the following industries: retailing,
automobiles, cyber-charter schools, real estate, health care, wine
sales, auctions, contact lenses, and caskets. The Internet Task Force
expects that the workshop will (1) enhance the Commission's
understanding of these issues, (2) help educate policymakers about the
effects of possibly protectionist state regulations, and (3) help
educate private entities about the types of business practices that may
or may not be viewed as problematic.
- Standards Setting.
As technology advances, there will be increased efforts to establish
industry standards for the development and manufacture of new products.
While the adoption of standards is often procompetitive, the standards
setting process, which involves competitors' meeting to set
product specifications, can be an area for antitrust concern. In a
complaint filed last month, the FTC charged that Rambus, Inc., a
participant in an electronics industry standards-setting organization,
failed to disclose - in violation of the organization's rules - that it
had a patent and several pending patent applications on technologies
that eventually were adopted as part of the industry standard.(58)
The standard at issue involved a common form of computer memory used in
a wide variety of popular consumer electronic products, such as personal
computers, fax machines, video games, and personal digital assistants.
The FTC's complaint alleges that once the standard was adopted, Rambus
was in a position to reap millions in royalty fees each year, and
potentially more than a billion dollars over the life of the patents,
all of which would be passed on to consumers through increased prices
for the downstream products.(59) Because
standard-setting abuses can harm robust and efficiency-enhancing
competition in high tech markets, the FTC will continue to pursue
investigations in this important area. (60)
- Intellectual Property Hearings.
In February 2002, the FTC and the DOJ commenced a series of hearings on
"Competition and Intellectual Property Law and Policy in the
Knowledge-Based Economy."(61) The
hearings respond to the growth of the knowledge-based economy, the
increasing role in antitrust policy of dynamic, innovation-based
considerations, and the importance of managing the intersection of
intellectual property and competition law to realize their common goal
of promoting innovation. During the hearings, business persons, consumer
advocates, inventors, practitioners, and academics are focusing on:
- (a) what economic learning reveals, and does not
reveal, regarding the relationships between intellectual property and
innovation, and between competition and innovation;
- (b) "real-world" experiences with patents and
- (c) procedures and substantive criteria involved in
prosecuting and litigating patent claims;
- (d) issues raised by patent pools and
cross-licensing and by certain standard-setting practices;
- (e) the implications of unilateral refusals to
deal, patent settlements, and licensing practices;
- (f) international comparative law perspectives
regarding the competition/intellectual property interface; and
- (g) jurisprudential issues, including the role of
the Federal Circuit.
A public report that incorporates the results of the
hearings, as well as other research, will be prepared after the hearings.
- Wireless Workshop.
In March, FTC staff released a summary and update of the proceedings of
its December 2000 workshop, "The Mobile Wireless Web, Data Services and
Beyond: Emerging Technologies and Consumer Issues."(62)
The workshop addressed five topics: (1) an overview of the relevant
technologies; (2) privacy issues raised by these technologies; (3)
security issues; (4) advertising and disclosures in the wireless area;
and (5) self-regulatory programs. The FTC will continue to monitor the
development of wireless technologies, along with the privacy, security,
advertising, and other consumer protection issues they raise.
Protection. The number of consumer protection cases with an
international component continues to rise. Consumers now increasingly
participate in a global marketplace, often receiving telemarketing or
e-mail solicitations from vendors outside the U.S. Increasingly, the FTC
is called upon to lead or participate in international organizations.
Last year, Commissioner Swindle became head of the U.S. delegation to
the OECD Experts Group for Review of the 1992 OECD Guidelines for the
Security of Information Systems. The revised guidelines will be released
in early September and will promote a "culture of security" in which we
all have a role to play. This spring, Commissioner Thompson was elected
Chair of the OECD's Committee on Consumer Policy.
- International Antitrust.
Because competition increasingly takes place in a worldwide market,
cooperation with competition agencies in the world's major economies is
a key component of our enforcement program. Given differences in laws,
cultures, and priorities, it is unlikely that there will be complete
convergence of antitrust policy in the foreseeable future. Areas of
agreement far exceed those of divergence, however, and instances in
which our differences will result in conflicting results are likely to
remain rare. The agency has increased its cooperation with agencies
around the world, both on individual cases and on policy issues, and is
committed to addressing and minimizing policy divergences.
- ICN and ICPAC. Last
fall, the FTC, the DOJ, and twelve other antitrust agencies from around
the world launched the International Competition Network (ICN). The ICN
is an outgrowth of a recommendation of the International Competition
Policy Advisory Committee (ICPAC) that competition officials from
developed and developing countries convene a forum in which to work
together on competition issues raised by economic globalization and the
proliferation of antitrust regimes. ICN provides a venue for antitrust
officials worldwide to work toward consensus on proposals for procedural
and substantive convergence on best practices in antitrust enforcement
and policy. Sixty-one jurisdictions already have joined the ICN, and we
are working on initial projects on mergers and competition advocacy.
- Free Trade Agreement of the
Americas. The FTC is working with the nations of our hemisphere
to develop competition provisions for a Free Trade Agreement of the
- OECD. The FTC is
participating in the continuing work of the OECD on, among other things,
merger process convergence, implementation of the OECD recommendation on
hard-core cartels (e.g., price-fixing agreements), and
- Technical Assistance.
For the past ten years, the FTC has been able to participate in
assisting developing nations that have made the commitment to market and
commercial law reforms. With funding principally from the U.S. Agency
for International Development, and in partnership with the DOJ, about
thirty nations have received technical assistance with development of
their competition and consumer protection laws. Currently, the technical
assistance program is active in South and Central America, South Africa,
and Southeastern Europe. The program emphasizes the development of
investigative skills, and relies on a combination of resident advisors,
regional workshops, and targeted short term missions. These activities
have enabled a large number of career staff to share their expertise,
although great care is taken to avoid any intrusions on the time and
planning for domestic enforcement projects. Future plans are focused on
expanding this reimbursable program to the former Soviet Union and to
The FTC is increasing its efforts to counter fraud that transcends
borders. In particular, our partnerships with Canadian officials allow
the FTC to respond more effectively to telemarketing scams emanating
from Canada. The FTC has forged two city-specific partnerships to
coordinate our law enforcement efforts: the Ontario Strategic
Partnership, in which the FTC's Midwest Regional Office has worked with
Canadian law enforcers to focus on Toronto-based telemarketing; and
Project Emptor, in which the Northwest Regional Office has partnered
with British Columbia officials to target Vancouver boiler rooms.
Drawing on these partnerships, in June 2002 the FTC and 17 Canadian and
U.S. law enforcement and consumer protection agencies announced a
coordinated criminal and civil law enforcement initiative to stop
fraudulent cross border schemes and recover money for victims, many of
whom are elderly. Fraudulent schemes targeted by the initiative included
illegal international lottery scams, phony advance-fee credit card
offers, and bogus credit card loss-protection schemes.(63)
The FTC has brought seven actions and obtained nine final orders in
cases involving cross-border fraud between the U.S. and Canada in 2002.
IMSN Findings on Cross-Border Remedies.
Last spring, the International Marketing Supervision Network - an
organization of consumer protection agencies from 29 countries - under
the leadership of the FTC, issued "Findings on Cross-Border Remedies,"
which outlines obstacles to cross-border enforcement of consumer
protection laws and suggestions for overcoming these obstacles.
econsumer.gov. In April 2001, 13 countries and the
OECD launched econsumer.gov
, a public Web site where consumers can file cross-border e-commerce
complaints with law enforcement agencies around the world, access
education materials about e-commerce, and contact consumer protection
agencies. The site is available to consumers in English, French,
Spanish, and German. Since its launch, three additional countries have
joined the project. To date, we have received over 1,700 complaints from
consumers in six continents about companies in more than 68 countries.
Next steps for this project include adding additional members,
increasing outreach and publicity, adding consumer education materials,
and adding information about alternative dispute resolution for e-commerce
complaints on the site.
F. TARGETING SPECIAL INITIATIVES TO SPECIFIC
The FTC has initiated a variety of programs that seek to
assist specific consumer groups. Among these groups are children,
minorities and non-English speaking sections of the U.S. population, and
homeowners who may be special prey for fraudulent lenders.
1. Children and Violent Media
In response to Congressional requests, the FTC continues
to monitor violent media directed toward children. An FTC September 2000
report concluded that the entertainment industry targeted advertising of
violent video games, movies, and music to children.(64)
Subsequently, Congress directed that the FTC continue its efforts through
three related initiatives: consumer research and workshops, an underage
shopper retail compliance survey, and marketing and data collection.(65)
In response, the FTC released a follow-up report, in April 2001, outlining
improvements in the movie and electronic game industries but finding no
appreciable change in the music industry's target marketing practices.(66)
The FTC's second follow-up report, in December 2001, found that the movie
and electronic game industries had made continued improvements, and that
although the music industry had made progress in disclosing parental
advisory label information, it had not altered its marketing practices.(67)
The FTC's third follow-up report, released in June 2002, found continued
progress by the movie and electronic game industries and improvement by
the music industry in including rating information in advertising that
would help parents identify material that may be inappropriate for their
children. This most recent report also showed compliance by the movie and
electronic games industries with industry promises to limit ad placements,
although the report found advertisements by all three industries continue
to appear in some media popular with teens.(68)
The report concludes that the music industry continues to advertise music
with explicit content on television shows and in print magazines popular
2. Children and Gambling
The FTC also is assessing the marketing of online
gambling sites to children. In June, the FTC announced the results of an
informal survey of web sites to determine the access and exposure that
teens have to online gambling.(69) The FTC
visited over 100 popular gambling web sites and found that minors can,
indeed, access these sites easily, and that minors often are exposed to
ads for online gambling on non-gambling web sites. The FTC staff has met
with representatives of the online gambling industry to seek voluntary
corrective action, and with interested consumer advocates. The FTC, in
conjunction with industry representatives, has launched a consumer and
business education campaign warning about the dangers of underage online
gambling. Online gambling industry representatives have advised FTC staff
that they will devise a "Guide to Best Practices" regarding clear and
conspicuous warnings about prohibited underage gambling, effective
blocking methods, and restricted placement of industry advertisements.
3. Spanish-Speaking Consumers
To reach the expanding population of Spanish-speaking
consumers in the United States, the FTC instituted an Hispanic Outreach
Program in January 2002. This effort includes the creation of a dedicated
page on the FTC Web site, Proteccion para el Consumidor, that
will mirror the English page, and translation of 14 consumer publications,
printed or posted to the Web. We also translated the FTC Consumer
Complaint Form into Spanish. In addition, the FTC is conducting media
outreach and providing interviews in Spanish.
4. Native Americans
The FTC has partnered with the Indian Arts and Crafts
Board, the Alaska State Council on the Arts, and the Alaska Attorney
General's office in developing and distributing more than 100,000
postcards and brochures to assure the authenticity of Alaskan Native art
and help prevent fakes. The materials provide numerous tips - mostly
centered on a "Silver Hand" certification program - on how to be confident
that Alaskan Native art is truly Native.
The FTC also has focused its consumer protection efforts
on homeowners, especially those in poorer urban areas, who sometimes are
the victims of deceptive lending practices. Since 1998, the FTC has
brought 15 cases involving a variety of deceptive lending practices. This
past March, the FTC, six states, AARP, and class action and individual
plaintiffs settled claims against First Alliance Mortgage Company and its
chief executive officer. The complaint alleged that the defendants misled
consumers about the existence and amount of origination fees for their
loans (which typically constituted 10 to 25 percent of the loan) and the
interest rate and monthly payments of their adjustable rate mortgage
loans. Consequently, according to the complaint, consumers believed they
were borrowing less money at lower interest rates than they actually were.
The settlement, which requires court approval, creates a consumer redress
fund that will include all of the remaining assets of First Alliance and
its affiliates, now under liquidation in bankruptcy court, as well as a
payment of $20 million from the company's principals. Nearly 18,000
borrowers could receive as much as $60 million in redress, making this one
of the FTC's largest cases ever.
G. ADVANCING EFFICIENT LAW ENFORCEMENT
The FTC has undertaken a variety of efforts to
streamline its practices, leverage its resources, and minimize the burden
on the public. These ongoing "good government" initiatives share a common
theme: they represent efforts to go beyond the regular, ongoing work of
the agency and to find ways to make the FTC's work more effective, more
efficient, and less costly for businesses and consumers. We seek to use
our limited resources wisely, because each day or dollar saved can be
applied to additional activities that benefit consumers.
1. Sweeps and Partnerships with Enforcement
The FTC leverages its resources through coordinated
enforcement actions with other law enforcement agencies, both state and
federal. In particular, the FTC conducts "sweeps" to investigate and bring
actions against specific types of frauds and deceptions. In the past 12
months, the FTC and 12 partners have participated in sweeps covering
Internet health fraud, cold-call telemarketing, Internet scams, and
business opportunities, resulting in over 170 separate law enforcement
2. Training Staff from Other Agencies
Another way that the FTC promotes efficient law
enforcement is to train staff from other law enforcement agencies in new
technologies or techniques pioneered by the FTC. One example is the FTC's
ongoing Internet fraud training program. The FTC has created a series of
regional "Netforces" made up of law enforcement agencies that have
participated in our training. On April 2, 2002, the FTC began the first of
these efforts by joining eight state agencies in the northwest United
States and four Canadian agencies in an initiative targeting deceptive
spam and Internet fraud. Together, these agencies have brought 63 law
enforcement actions against Web-based scams ranging from alleged auction
fraud to bogus cancer cure sites, and have sent more than 500 letters
warning of the illegality of deceptive spam.
3. Streamlining Merger Review
A major focus of FTC efficiency efforts is the merger
review process. The FTC is working on a number of reforms to speed the
process and reduce the burden on merging parties without sacrificing the
sufficiency of information required by the agency.
- Electronic Premerger Filing. As part
of an overall movement to make government more accessible
electronically, the FTC, working with the DOJ, will accelerate its
efforts in FY 2003 to develop an electronic system for filing HSR
premerger notifications. E-filing will reduce filing burdens for both
businesses and government, and also will create a valuable database of
information on merger transactions to inform future policy
- Burden Reduction in Investigations.
The agencies have taken steps to reduce the burden in document
productions responsive to Second Requests. In response to legislation
amending the HSR Act, the FTC amended its rules of practice to
incorporate new procedures. The rule requires Bureau of Competition
staff to schedule conferences to discuss the scope of a Second Request
with the parties and also establishes a procedure for the General
Counsel to review the request and rule promptly on any remaining
unresolved issues. Measures adopted include a process for seeking
modifications or clarifications of Second Requests, and expedited
senior-level internal review of disagreements between merging parties
and agency staff; streamlined internal procedures to eliminate
unnecessary burdens and undue delays; and implementation of a systematic
management status check on the progress of negotiations on Second
Merger Investigation Best Practices.
The FTC is conducting a series of national public workshops regarding
modifications and improvements to the merger investigation process. The
FTC will solicit input from a broad range of interest groups, including
corporate personnel, outside and in-house attorneys, economists, and
consumer groups, on topics such as using more voluntary information
submissions before issuance of a Second Request, reducing the scope and
content of the Second Request, negotiating modifications to the Second
Request, and focusing on special issues concerning electronic records
and accounting or financial data.(70)
Other "best practices" workshops will solicit comments on merger
remedies. Among the issues to be addressed are structuring asset
packages for divestitures, timing of divestitures (i.e., up
front or after consummation), evaluating the competitive adequacy of
proposed buyers, and assessing the preservation of competition after
Consumer and Business Education
Yet another way the FTC seeks to make law enforcement
more efficient is by disseminating information about deceptive practices
in the marketplace. The less often consumers are victimized by deceptive
practices, the fewer enforcement actions the FTC must bring. Further, the
more that businesses, especially small businesses, understand their
obligations, the more readily they can comply. Thus, consumer and business
education is the first line of defense against fraud and deception.
With each major consumer protection enforcement
initiative, the FTC launches a comprehensive and creative education
campaign. Between May 2001 and May 2002, the FTC issued 108 consumer
protection publications: 94 for consumers and 14 for businesses. Of those
publications, 67 are new and 41 are revisions; 23 are translations into
Spanish, and six are joint efforts between the public and private sectors.
The FTC continues to exceed previous distribution records. In the last
year, the FTC distributed more than 5.6 million printed publications to
the public, and received more than 12.5 million "hits" on publications
posted on the consumer protection portion of the FTC's Web site. Special
FTC educational undertakings include:
www.consumer.gov. The FTC continues to manage
www.consumer.gov and to
recruit new members to participate in the site, which offers one-stop
access to federal consumer information. In the past year, the number of
members has grown from 135 to 178.
- National Consumer Protection Week.
For the fourth consecutive year, the FTC took the lead in organizing
National Consumer Protection Week. This year, the event focused on
privacy. Other participants were the National Association of Consumer
Agency Administrators, AARP, the National Consumers League, the Council
of Better Business Bureaus, the Consumer Federation of America, the U.S.
Postal Service, the U.S. Postal Inspection Service, the National
Association of Attorneys General, and the DOJ.
Response to 9/11. In the wake of
September 11th, the FTC worked with other groups to alert consumers to
possible fund-raising fraud. The FTC released a Consumer Alert,
Helping Victims of the Terrorist Attacks: Your Guide to Giving Wisely
on September 21, at a press conference held by the FTC's Northeast
Regional Office in conjunction with the New York Attorney General and
the New York Better Business Bureau.
III. LEGISLATIVE RECOMMENDATIONS
To improve the FTC's ability to implement its mission
and to serve consumers, we make the following recommendations for
legislative changes. We would be happy to work with the Committee to
develop appropriate language.
A. ELIMINATE THE FTC ACT'S EXEMPTION FOR
COMMUNICATIONS COMMON CARRIERS
The FTC Act exempts common carriers subject to the
Communications Act from its prohibitions on unfair and deceptive acts or
practices and unfair methods of competition. This exemption dates from a
period when telecommunications were provided by government-authorized,
highly regulated monopolies. The exemption is now outdated. In the current
world, firms are expected to compete in providing telecommunications
services. Congress and the Federal Communications Commission (FCC) have
dismantled much of the economic regulatory apparatus formerly applicable
to the industry. Telecommunications firms also have expanded into numerous
non-common carrier activities. Oversight by the FTC of telecommunications
firms' activities thus has become increasingly important.
The FTC Act exemption has proven to be a barrier to
effective consumer protection, both in common carriage and in other
telecommunications businesses. The exemption also has prevented the FTC
from applying its legal and economic expertise regarding competition to
mergers and other possible anticompetitive practices, not only involving
common carriage, but in other high-tech fields involving
telecommunications. We believe that Congress should eliminate the special
exemption to reflect the fact that competition and deregulation have
replaced comprehensive economic regulation.
FTC efforts to halt fraudulent or deceptive practices by
telecommunications firms have sometimes been stymied by the common carrier
exemption. While common carriage has been outside the FTC's authority, we
believe that the FTC Act applies to non-common carrier activities of
telecommunications firms, even if the firms also provide common carrier
services.(71) Continuing disputes over the
breadth of the FTC Act's common carrier exemption hamper the FTC's
oversight of the non-common carrier activities. These disputes have arisen
even when the FCC does not have, or does not exercise, jurisdiction over
the non-common carrier activity. These disputes may increase the costs of
pursuing an enforcement action, or may cause the agency to narrow an
enforcement action - for example, by excluding some participants in a
scheme - to avoid protracted jurisdictional battles and undue delay in
providing consumer redress.
The FTC has the necessary expertise to address these
issues. The FTC is the federal agency with broad consumer protection and
competition experience covering nearly all fields of commerce. The FTC has
extensive expertise with advertising, marketing, billing, and collection,
areas in which significant problems have emerged in the telecommunications
industry. In addition, the FTC has powerful procedural and remedial tools
that could be used effectively to address developing problems in the
telecommunications industry if the FTC were authorized to reach them.
The common carrier exemption also significantly
restricts the FTC's ability to engage in effective antitrust enforcement
in broad sectors of the economy. The mix of common carrier and non-common
carrier activities within particular telecommunications companies
frequently precludes FTC antitrust enforcement for much of the
telecommunications industry. Further, because of the expansion of
telecommunications firms into other high-tech industries and the growing
convergence of telecommunications and other technologies, the common
carrier exemption increasingly limits FTC involvement in a number of
industries outside telecommunications.
B. TECHNICAL CHANGES
The FTC also requests two new limited grants of
authority: (1) the ability to accept reimbursement for expenses incurred
by the FTC in assisting foreign or domestic law enforcement authorities,
and (2) the ability to accept volunteer services, in-kind benefits, or
other gifts or donations. Both new authorities would be useful as the FTC
tries to stretch its resources to meet its statutory responsibilities.
The authority to accept reimbursement for expenses incurred in assisting
foreign or domestic law enforcement authorities would be especially
useful, since the FTC has been working closely with domestic and foreign
law enforcement authorities to address possible law violations. Partnering
with these law enforcement authorities has resulted in enhanced law
enforcement efforts and greater sharing of significant information. In
some of these situations, our foreign or domestic partner is interested in
reimbursing the FTC for the services it has provided or in sharing some of
the costs of investigating or prosecuting the matter. Without specific
statutory reimbursement authority, however, the FTC cannot accept and keep
such reimbursements because of constraints under appropriations law.(72)
In addition, the FTC requests authority to accept
donations and gifts, such as volunteer services and in-kind benefits.
Congress has conferred this authority by statute on various agencies,
including the Office of Government Ethics, the FCC, and the Consumer
Product Safety Commission.(73) Without
this authority, the FTC cannot accept services or keep items because of
appropriations law constraints. This broad restriction on acceptance of
gifts sometimes limits the FTC's ability to fulfill its mission in the
most cost-effective manner. For example, the FTC cannot accept volunteer
services from individuals wishing to provide such services to the agency.
In addition, agency officials must sometimes refuse donated items that
could otherwise be useful in carrying out the agency's mission, such as
books and similar mission-related items.
IV. CONCLUDING REMARKS
Mr. Chairman and Members of the Subcommittee, we
appreciate this opportunity to provide an overview of the Commission's
efforts to maintain a competitive marketplace, free of deceptive and
unfair practices, for American businesses and consumers. We believe that
the Commission's antitrust and consumer protection enforcement has
demonstrable benefits for consumers and the American economy - benefits
that far outweigh the resources allocated to maintaining our mission. We
would be pleased to respond to any questions you may have.
The FTC has broad law enforcement responsibilities
under the Federal Trade Commission Act, 15 U.S.C. § 41 et seq.
The statute provides the agency with jurisdiction over the most of the
economy. Certain entities, such as depository institutions and common
carriers, are wholly or partially exempt from FTC jurisdiction, as is the
business of insurance. In addition to the FTC Act, the FTC has enforcement
responsibilities under more than 40 statutes.
2. Timothy J. Muris, Chairman Robert Pitofsky:
Public Servant and Scholar, Remarks Before the American Antitrust
Institute, Second Annual Conference (Washington, D.C., June 12, 2001),
available at <http://www.ftc.gov/speeches/muris/muris010612.htm>.
3. Much of what the FTC challenges in its consumer
protection mission is hard-core fraud, and given the transient nature of
many of these illegitimate operations, we frequently are unable to collect
the full amount of the monetary judgment ordered. The judgment amount,
however, gives some indication of the extent of fraud and deception
stopped by the FTC.
4. This web site is available at <http://www.sentinel.gov>.
Press Release, State, Federal Law Enforcers Launch
Sting on Business Opportunity, Work-at-Home Scams (June 20, 2002),
available at <http://www.ftc.gov/opa/2002/06/bizopswe.htm>.
6. Press Release, FTC Sweep Protects Consumers
from "Dialing for Deception" (Apr. 15, 2002), available at <http://www.ftc.gov/opa/2002/04/dialing.htm>.
7. FTC v. H.G. Kuykendall, Jr., No.
CIV-96-388-M (W.D. Okla. Mar. 4, 2002).
8. FTC v. Access Resource Servs., Inc., No.
02-60226 (S.D. Fla. Feb. 20, 2002).
9. FTC v. Electronic Products Distribution,
L.L.C., No. 02CV0888 H(AJB) (S.D. Cal. May 7, 2002); FTC v. United
Fitness of America, LLC, No. CV-S-02-648-KJD-LRL (D. Nev. May 7,
2002); FTC v. Hudson Berkley Corp., No. CV-S-0649-PMP-RJJ (D.
Nev. May 7, 2002).
10. Interstate Bakeries Corp., Docket No.
C-3402 (Apr. 16, 2002) (consent order).
11. Palm, Inc. Docket No. C-4044 (April 18, 2002)
12. 15 U.S.C § 18a, as amended, Pub. L. No
106-553, 114 Stat. 2762 (2000).
13. See 15 U.S.C. § 18a, as amended,
Pub. L. No. 106-553, 114 Stat. 2762 (2000).
14. MSC Software Corp., Docket No. 9299
(Oct. 10, 2001) (complaint issued)
(alleging that two MSC acquisitions violated Clayton Act).
15. MSC Software Corp., Docket No. 9299
(Oct. 10, 2001) (complaint issued)
(involving engineering software); Chicago Bridge Iron Co., Inc.,
Docket No. 9300 (Oct. 25, 2001) (complaint issued) (pertaining to
field-erected specialty industrial storage tanks).
16. Press Release, FTC Authorizes Suit to Block
Joint Acquisition of Seagram Spirits and Wine by Diageo PLC and Pernod
Ricard S.A. (Oct. 23, 2001), available at <http://www.ftc.gov/opa/2001/10/diageo.htm>.
17. FTC v. Libbey, Inc., Civ. Act. No.
02-0060 (RBW) (Memorandum Opinion) (D.D.C. Apr. 22, 2002) (granting FTC's
request for a preliminary injunction).
18. Press Release, FTC to Challenge DGF
Stoess's Proposed Acquisition of Leiner Davis (Jan. 15, 2002),
available at <http://www.ftc.gov/opa/2002/01/gelatin.htm>.
19. Press Release, FTC Authorizes Injunction to
Pre-empt Meade Instruments' Purchase of All, or Certain Assets, of Tasco
Holdings, Inc.'s Celestron International (May 29, 2002), available at
20. Press Release, FTC Seeks to Block Cytyc
Corp.'s Acquisition of Digene Corp. (June 24, 2002), available at <http://www.ftc.gov/opa/2002/06/cytyc_digene.htm>.
21. Telemarketing Sales Rule, 67 Fed. Reg. 4492
(Jan. 30, 2002) (proposed Rule amendments).
22. Press Release, Workshop Planned To Discuss
Strategies for Providing Effective Financial Privacy Notices (Sept
24, 2001), available at <http://www.ftc.gov/opa/2001/09/glbwkshop.htm>.
23. Press Release, FTC to Host Public Workshop
on Consumer Information Security (Mar. 12, 2002), available at <http://www.ftc.gov/opa/2002/03/security.htm>.
24. United States v. The Ohio Art Co., No.
3:02CV7203 (N.D. Ohio filed Apr. 19, 2002); United States v. American
Pop Corn Co., No. C02-4008DEO (N.D. Iowa Feb. 28, 2002) (consent
decree); United States v. Lisa Frank, Inc., No. 01-1516-A (E.D.
Va. Oct. 3, 2001) (consent decree); United States v. Looksmart, Ltd.,
No. 01-606-A (E.D. Va. Apr. 23, 2001) (consent decree); United States
v. Bigmailbox.com, Inc., No. 01-605-A (E.D. Va Apr. 23, 2001)
(consent decree); United States v. Monarch Servs., Inc., No. AMD
01 CV 1165 (D. Md. Apr. 20, 2001) (consent decree).
25. Eli Lilly & Company, Docket No.
C-4047, (May 10, 2002) (final order).
26. 15 U.S.C. § 6801.
27. FTC v. Information Search, Inc., No.
AMD-01-1121 (D. Md. Mar. 15, 2002); FTC v. Guzzetta, No.
CV-01-2335 (E.D.N.Y. Feb. 25, 2002); FTC v. Garrett, No. H
01-1225 (S.D. Tex. Mar. 26, 2002).
28. The cases challenging the misuse of preacquired
account information and deceptive spam also involved issues of fraud.
TechnoBrands, Inc., and Charles J. Anton,
Docket No. C-4041 (Apr. 15, 2002) (decision and order), available at <http://www.ftc.gov/os/2002/04/technobranddo.pdf>;
FTC v. Technobrands, Inc., No. 3:02-CV-86 (E.D. Va. filed Feb.15,
2002); FTC v. Ira Smolev, No. 01-8922 CIV ZLOCH (S.D. Fla. filed
Oct. 23, 2001).
FTC v. Boivin, No. 8:02-CV-77-T-26 MSS (M.D.
Fla. Jan. 15, 2002) (consent decree); FTC v. Estenson, No.
A3-02-10 (DND Feb. 5, 2002) (consent decree); FTC v. Larsen, No.
8:02-CV-76-T-26MAP (M.D. Fla. Jan. 16, 2002) (consent decree); FTC v.
Lutheran, No. 02 CV 0095 K (RAB) (S.D. Cal. Jan. 18, 2002) (consent
decree); FTC v. Va, No. 02-60062-Civ-Zloch (S.D. Fla. Jan. 18, 2002)
(consent decree); FTC v. Pacheco, No. 02-CV-31L (D.R.I. Jan. 22,
2002) (consent decree).
31. FTC v. BTV Industries, No.
CV-S-02-0437-LRH (PAL) (D. Nev. filed Mar. 7, 2002).
32. Katharine Levit et al., Inflation Spurs
Health Spending in 2000, 21 Health Affairs 172 (Jan. - Feb. 2002).
33. FTC v. Vital Living Products, Inc.,
No. 3:02CV74-MU (W.D. N.C. Mar. 13, 2002).
34. FTC v. Pletschke, Docket No. C-4040
(Feb. 22, 2002) (decision and order).
The titles of the teaser sites are: Looking for
Financial Freedom?; The Ultimate Prosperity Page; Nordicalite Weight Loss
Product; A+ Fast Ca$$h for College; EZTravel: Be an Independent agent;
EZTravel: Certificate of Notification; EZToyz Investment Opportunity; HUD
Tracer Association; CreditMenders Credit Repair; NetOpportunities:
Internet is a Gold Mine; National Business Trainers Seminars; VirilityPlus:
Natural Alternative to Viagra; ArthritiCure: Be Pain-Free Forever.
36. Commissioner Sheila F. Anthony, Remarks Before
the Food & Drug Law Institute, 45th Annual Educational
Conference, Combating Deception in Dietary Supplement Advertising
(Apr. 16, 2002), available at <http://www.ftc.gov/speeches/anthony/dssp2.htm>.
37. See National Health Expenditures, by
Source of Funds and Type of Expenditures, Health Care Financing
Administration, available at <http://www.hcfa.gov/stats/nhe-oact/tables/t3.htm>
38. FTC v. The Hearst Trust, The Hearst Corp.,
and First DataBank, Inc., Civ Act. No.1:01CV00734 (D.D.C. Apr. 5,
2001) (complaint) (Commissioner Leary and Commissioner Swindle
39. FTC v. Hearst, Civ. Act. No.
1:01CV00734 (D.D.C. Nov. 9, 2001) (Stipulation for Entry of Final Order
and Stipulated Permanent Injunction).
40. Congressional Budget Office, How Increased
Competition from Generic Drugs Has Affected Prices and Returns in the
Pharmaceutical Industry (July 1998), available at <http://www.cbo.gov>.
42. See Federal Food, Drug, and Cosmetics
Act, 21 U.S.C. § 301 et seq. The Hatch-Waxman amendments were
contained in the Drug Price Competition and Patent Restoration Act of
1984, Pub. L. No. 98-417, 98 Stat. 1585 (codified at 15 U.S.C. §§ 68b,
68c, 70b; 21 U.S.C. §§ 301 note, 355, 360cc; 28 U.S.C. § 2201; 35 U.S.C.
§§ 156, 271, 282 (1984)).
43. Schering-Plough Corp., Dkt. 9297 (Apr.
2, 2002) (consent order as to American Home Products).
In an initial decision filed on June
27, 2002, an FTC Administrative Law Judge (ALJ) dismissed all allegations
of anticompetitive conduct in a March 2001 Federal Trade Commission
complaint against pharmaceutical manufacturers Schering-Plough Corporation
(Schering) and Upsher-Smith Laboratories (Upsher-Smith).
Schering-Plough Corp., Dkt. 9297 (June 27, 2002) (initial decision)
(available at <http://www.ftc.gov/os/2002/07/scheringinitialdecisionp1.pdf,
http://www.ftc.gov/os/2002/07/scheringinitialdecisionp2.pdf . An
appeal is pending with the Commission.
Biovail Corp., File No. 011-0094 (Apr. 23,
2002) (proposed consent order accepted for placement on public record for
45. In re Buspirone Patent Litigation/In re
Buspirone Antitrust Litigation,
Memorandum of Law of Amicus Curiae
the Federal Trade Commission in Opposition to Defendant's Motion to
Dismiss available at <http://www.ftc.gov/os/2002/01/busparbrief.pdf>.
46. In re Buspirone, 185 F. Supp. 2d 363 (S.D.N.Y.
47. Biovail Corp., File No. 011-0132 (June
27, 2002) (proposed consent order accepted for placement on public record
48. See Thomas B. Leary, Commissioner,
Antitrust Issues in Settlement of Pharmaceutical Patent Disputes, Part II,
Remarks Before the American Bar Association's Antitrust Healthcare
Program, Washington, D.C., (May 17, 2001) <http://www.ftc.gov/speeches/leary/learypharmaceuticalsettlement.htm>;
Thomas B. Leary, Commissioner,
Antitrust Issues in Settlement of
Pharmaceutical Patent Disputes, Address Before the Sixth Annual
Antitrust Healthcare Forum, Northwestern University School of Law,
Chicago, Illinois (Nov. 3, 2000), available at <http://www.ftc.gov/speeches/leary/learypharma.htm>.
The Commission also submitted testimony this Spring on competition in the
pharmaceutical industry before the Committee on Commerce, Science, and
Transportation, U.S. Senate. The testimony is available at <http://www.ftc.gov/os/2002/04/pharmtestimony.htm>.
49. See 65 Fed. Reg. 61334 (Oct. 17,
2000); 66 Fed. Reg. 12512 (Feb. 27, 2001).
50. Physician Integrated Servs. of Denver,
Inc., Michael J. Guese, M.D., and Marcia L. Brauchler, File No.
011-0173 (May 13, 2002) (proposed consent order accepted for placement on
public record for comment); Aurora Associated Primary Care Physicians,
L.L.C., Richard A. Patt, M.D., Gary L. Gaede, M.D., and Marcia L.
Brauchler, File No. 011-0174 (May 13, 2002) (proposed consent order
accepted for placement on public record for comment).
Obstetrics and Gynecology Med. Corp. of Napa Valley,
File No. 011-0153 (May 14, 2002) (final order).
Chevron Corp./Texaco Inc., Docket No. C-4023
(Jan. 2, 2002) (consent order).
53. Valero Energy Corp./Ultramar Diamond
Shamrock Corp., Docket No. C-4031 (Feb. 19, 2002) (consent order).
54. Phillips Petroleum Corp./Tosco Corp.,
File No. 011-0095 (Sept. 17, 2001) (Statement of the Commission).
55. For example, an FTC study of the broadcasting
industry influenced passage of the Radio Act of 1927 (a predecessor to the
Federal Communications Act of 1934), and the FTC's disclosure of
securities abuses played a role in heightening Congressional recognition
of the need for securities regulation and led to the Securities Act of
56. Staff of the Federal Trade Commission,
Anticipating the 21st Century: Competition Policy in the New
High-Tech, Global Marketplace (May 1996).
57. Letter from Timothy J. Muris, Chairman, Federal
Trade Commission and Charles A. James, Assistant Attorney General
(Antitrust), Department of Justice, to The Honorable John B. Harwood,
Speaker of the Rhode Island House of Representatives (regarding proposed
bill H. 7462, Restricting Competition From Non-Attorneys In Real Estate
Closing Activities) (Mar. 29, 2002); Letter from Timothy J. Muris,
Chairman, Federal Trade Commission and Charles A. James, Assistant
Attorney General (Antitrust), Department of Justice, to Ethics Committee,
North Carolina State Bar (regarding North Carolina State Bar Opinions
Restricting Involvement of Non-Attorneys in Real Estate Closings and
Refinancing Transactions) (Dec. 14, 2001); and Comments of The Staff of
the Federal Trade Commission, Intervenor, In Re: Declaratory Ruling
Proceeding On the Interpretation and Applicability of Various Statutes and
Regulations Concerning the Sale of Contact Lenses (Ct. Bd. Of
Examiners for Opticians, Mar. 27, 2002).
58. Rambus Inc., Docket No. 9302 (June 18,
2002) (complaint), available at <http://www.ftc.gov/os/2002/06/rambuscmp.htm>.
60. In 1996, the FTC brought a similar case against
Dell Computer, alleging that Dell had failed to disclose that it had an
existing patent on a personal computer component that was adopted as the
standard by a video electronics group. Dell Computer Co., Docket
No. C-3658 (May 20, 1996) (consent order) (Commissioner Azcuenaga
61. See 66 Fed. Reg. 58146 (Nov. 20,
62. Federal Trade Commission, Public Workshop: The
Mobile Wireless Web, Data Services and Beyond: Emerging Technologies and
Consumer Issues (Feb. 2002), available at <http://www.ftc.gov/bcp/reports/wirelesssummary/pdf>.
63. Press Release, U.S., Canadian Law Enforcers
Target Cross-Border Telemarketing (June 10, 2002), available at <http://www.ftc.gov/opa/2002/06/crossborder.htm>.
64. Federal Trade Commission, Marketing Violent
Entertainment to Children: A Review of Self-Regulation and Industry
Practices in the Motion Picture, Music Recording & Electronic Game
Industries (Sept. 2000), available at <http://www.ftc.gov/reports/violence/vioreport.pdf>.
Conf. Rep. No. 107-278, at 162 (Nov. 9, 2001).
66. Federal Trade Commission, Marketing Violent
Entertainment to Children: A Six-Month Follow-Up Review of Industry
Practices in the Motion Picture, Music Recording & Electronic Game
Industries (Apr. 2001), available at <http://www.ftc.gov/reports/violence/violence010423.pdf>.
67. Federal Trade Commission, Marketing Violent
Entertainment to Children: A One-Year Follow-Up Review of Industry
Practices in the Motion Picture, Music Recording & Electronic Game
Industries (Dec. 2001), available at <http://www.ftc.gov/os/2001/12/violencereport1.pdf>.
68. Federal Trade Commission, Marketing Violent
Entertainment to Children: A Twenty-One Month Follow-Up Review of Industry
Practices in the Motion Picture, Music Recording & Electronic Game
Industries (June 2002), available at <http://www.ftc.gov/reports/violence/mvecrpt0206.pdf>.
69. Press Release, FTC Warns Consumers about
Online Gambling and Children (June 26, 2002), available at <http://www.ftc.gov/opa/2002/06/onlinegambling.htm>.
70. See Press Release, FTC Initiates
"Best Practices Analysis" for Merger Review Process (Mar. 15, 2002),
available at <http://www.ftc.gov/opa/2002/03/bcfaq.htm>.
71. See, e.g., FTC v. Verity Int'l,
Ltd., 194 F. Supp. 2d 270 (S.D.N.Y. 2002).
72. The Securities and Exchange Commission (SEC)
currently has authority to accept payment and reimbursement for
investigative or other assistance that it provides to a foreign securities
authority. See 15 U.S.C. § 78d(f). If Congress were to grant the
FTC similar authority, that would permit the agency to accept
reimbursement from foreign or domestic law enforcement authorities for
services provided or for cooperative investigative or law enforcement
73. See 5 U.S.C. App. 4, §403(b); 47
U.S.C. § 154(g)(3); and 15 U.S.C. § 2076(b)(6).