Economic Analysis
Antitrust
Consumer Protection
Consumer and Competition Advocacy
The Bureau of Economics provides economic support to the Commission's antitrust and consumer protection activities, advises the Commission and other government entities about the impact of government regulation on competition, and analyzes economic phenomena in the nation's industrial economy as they relate to antitrust and consumer protection.
The primary mission of the Commission is to enforce the antitrust and consumer protection laws. In fiscal year 1996, the Bureau continued to provide guidance and support to those activities.
In the antitrust area, economists offered advice on the economic merits of potential antitrust actions. Situations in which the marketplace performed reasonably well were distinguished from situations in which the market might be improved by Commission action. When enforcement actions were initiated, economists worked to integrate economic analysis into the proceeding, to provide expert testimony, and to devise remedies that would improve market competition.
In the consumer protection area, economists assessed the benefits and costs of alternative policy approaches. Potential consumer protection actions were evaluated not only for their immediate impact, but also for their longer-run effects on price, product variety, and overall consumer welfare.
Although the Commission is primarily an enforcement agency, it is also charged with analyzing data and publishing information about the nation's industries, markets, and business firms. Much of this work is undertaken by the Bureau of Economics. In fiscal year 1996, economists conducted studies on a broad array of topics in antitrust and consumer protection.
The Bureau of Economics also coordinates the Commission's Consumer and Competition Advocacy Program, which the agency uses to provide advice to federal, state, and other regulatory entities concerning the actual or potential economic impacts of existing and proposed trade regulations.
Antitrust
In the antitrust area, economists participated in all investigations of alleged antitrust violations and in the presentation of cases in support of complaints. Economists also advised the Commission on all proposed antitrust actions and provided economic expertise for matters in litigation. These activities consumed the bulk of the Bureau's resources assigned to directly support the Commission's antitrust responsibilities.
The Bureau also maintains a small research program in support of the Commission's antitrust activities. During the year, the Bureau released two studies: (1) The Salt Producers' Discount Practices Before and After the Robinson-Patman Act and the FTC's Challenge to Them: The Morton and International Salt Cases and (2) The Effectiveness of Collusion Under Antitrust Immunity: The Case of Liner Shipping Conferences.
Ongoing antitrust-related studies included (1) an examination of the effects of Commission divestiture orders, (2) a study of the price and output effects of franchise transfers and mergers in the carbonated soft drink bottling industry, (3) a descriptive study of the pharmaceutical industry, (4) a study of the effects of mergers and corporate downsizings on aggregate employment, (5) a study of the effects of the entry of generic drugs on the pricing and output of branded drugs, and (6) an empirical analysis of signal carriage for cable TV systems.
Consumer Protection
In the consumer protection area, economists evaluated proposals for full-phase investigations, consent negotiations, consent settlements, and complaints. In addition, economists routinely provided day-to-day guidance on individual matters, provided litigation support services, and made policy recommendations directly to the Commission.
In addition to the Bureau's direct support for individual consumer protection case matters, staff economists worked on consumer protection topics of interest to the Commission. During fiscal year 1996, the Bureau released one study: Disentangling Regulatory Policy: The Effects of State Regulations on Trucking Rates. The Bureau also continued work on two other projects: (1) the effects of advertising on the consumption of fats and cholesterol by U.S. consumers and (2) the content of advertising for oils and margarines.
Consumer and Competition Advocacy
The interests of consumers are not always well represented in some legislative and regulatory forums. Consequently, laws or regulations are sometimes promulgated that harm consumers by restricting entry, limiting competition, chilling innovation, raising prices, or reducing the quality of goods and services. The goal of the Commission's advocacy activities is to limit such harm to consumers by informing appropriate governmental and self-regulatory bodies about the potential effects on consumers, both positive and negative, of proposed legislation, rules, or industry guides or codes. The advocacy program in the Bureau of Economics is the central source of planning, coordination, review, and information for the staff's work in this area. During fiscal year 1996, the Commission staff submitted 12 comments to federal agencies, such as the Federal Energy Regulatory Commission and the Federal Communications Commission, and various state agencies. Comment submissions covered subject areas such as electric utility mergers, economic claims about prescription drugs, allocation of video system capacity, and various occupational regulation issues, among others.