Economic Analysis
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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 on consumers and competition of various regulatory reform initiatives, 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 1997, 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 1997, economists conducted studies on selected topics in antitrust and consumer protection.
The Bureau of Economics also coordinated 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. Ongoing antitrust-related studies included (1) a study of the price and output effects of brand ownership consolidation and vertical integration in local markets for carbonated soft drink bottling, (2) a descriptive study of the pharmaceutical industry, (3) an examination of the effects of Commission divestiture orders, (4) a study of the effects of the entry of branded generic drugs on the pricing and output of branded drugs, and (5) an examination of the price and output effects of previous hospital mergers.
Consumer Protection
In the consumer protection area, economists provided important assistance to law enforcement activities. Also, 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 1997, the Bureau released one study: Information and Advertising Policy: A Study of Fat and Cholesterol Consumption in the United States, 1977-1990, which examines the effects of various types of information on the dietary choices of the public. The Bureau also continued studies on (1) the effects on consumer perception of various nutrient disclosures and cautionary disclosures in ads for food products that make health or nutrition claims and (2) the rent-to-own industry.
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 1997, the Commission staff submitted six comments to the Federal Communications Commission and various state agencies, covering subject areas such as telecommunications licensing, collision damage waivers in car rentals, optometrists' business operations, and real estate closings. Staff also submitted a report in response to requests from a Congressional Task Force that addressed the Tobacco Industry Settlement.
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