A Report on Recent Antitrust Developments at the Federal Trade Commission

The American Bar Association's Antitrust Law Section

Chicago, Illinois

Date:
By: 
William J. Baer, Former Director

Good morning. I'm pleased to be here representing the Bureau of Competition. It's also good to be back at the Commission after a 15-year absence. It was interesting to find that, after 15 years, many things have not changed. There still is a tradition at the Bureau that each incoming Bureau Director is given custody of a book, signed by all his other predecessors, that is designed to provide a blueprint for managing the place. On my arrival, I was given that book. It is entitled "If I Ran the Zoo," by Dr. Seuss. It still fits.

While some things have remained the same, other things have changed. We still have the "Top of the Trade" -- that well known dining room on the top floor of the FTC Building. But we also now have tony restaurants where you can get a great meal and a fine bottle of wine. Some of the staff might argue the relevance of that on a government salary, but its nice to have a choice. Fifteen years ago the best you could do in the neighborhood was a hot dog and the kind of wine you covered with a brown paper bag and drank while sitting on the curb.

One other thing that has changed, and for the better, is the sophistication of the analysis that goes into the examination of competition issues, both at the Commission and the Antitrust Division. In the last decade and a half, government antitrust enforcement has become more analytically sound, more closely aligned with mainstream industrial organization economics, and more predictable.

Many people can properly claim a share of the credit for the increased sophistication of antitrust analysis. But a lion's share goes to one of our co-panelists -- my friend and former antitrust professor, Bill Baxter.

It was Bill Baxter's Antitrust Division that issued the 1982 Merger Guidelines, which revolutionized the way we think about and analyze mergers. The 1982 Guidelines explained new concepts and methodologies for defining relevant markets, for measuring potential market power, and for analyzing competitive effects. The Guidelines reflected a recognition that most mergers are not anticompetitive, and that they may well be procompetitive. The 1982 Guidelines also recognized the significance of world markets and import competition -- issues that are increasingly important today.

Moreover, the concepts underlying the 1982 Merger Guidelines had implications for numerous other areas of antitrust. Conduct such as attempted monopolization, for example, cannot be analyzed without considering many of the same kinds of issues, such as market definition, market power and potential entry, that one would examine in a merger.

Finally, the 1982 Merger Guidelines provided an ingredient too often lacking in antitrust enforcement -- predictability. They gave the business community and private antitrust practitioners a roadmap as to how we look at competition issues and provided a framework for discussions between government enforcers and practitioners.

Antitrust enforcement has built on that effort, with several new guidelines and enforcement statements from the antitrust agencies in the last three years alone. In 1992, for example, the Commission and the Department of Justice jointly issued a revised set of horizontal merger guidelines. In 1993 and 1994 we issued statements of antitrust enforcement policy in the health care area. In April of this year we issued new guidelines for international operations and intellectual property.

NonMerger Enforcement

Let me now turn to the matters on which we in the Bureau have been focusing during my first few months on the job. A good part of that time has been spent on substantive case generation and assessment. We are in the process of sifting through some older investigations, trying to decide whether there is enough there to warrant continuing, and we have closed a number of major nonmerger matters where we don't think our investigation to date leaves us very confident of where we are heading. I am aware that a persistent criticism of both the Commission and the Division is that nonmerger investigations have a tendency to go through long unexplained periods of dormancy, leaving private parties uncertain about whether the matter is alive or dead and causing endless debate between clients and lawyers about whether to call the agencies about the status and risk "kicking the sleeping dog." I am hopeful that, with some aggressive management and some realistic enforcement timetables, we can begin to address that problem.

We also are trying to restore something of the historical balance between mergers and nonmerger enforcement at the FTC. The merger wave of the last three years has nearly doubled HSR filings, requiring a diversion of resources away from nonmerger investigations, delaying some ongoing investigations and the start of new ones. We cannot let that continue. Our effort to address that imbalance doesn't mean that we intend to de- emphasize merger enforcement, however; mergers will continue to be an important enforcement priority. We simply need to do more in the nonmerger area with the resources we have by eliminating some layers of middle management review, by imposing strict but realistic deadlines on the staff and on parties, and by monitoring closely the progress of investigations and being willing to make a judgment call earlier in the process as to whether the investigation is worth continuing.

Where is our non-merger investigative focus going to be placed? It is a little early to discuss specifics. I am a firm believer in waiting until our ideas have been field-tested before talking about them. But in general terms, in addition to the familiar kinds of horizontal restraints, we are looking at potentially anticompetitive forms of organization among health care and pharmaceutical providers. We are looking at efforts by firms to abuse the standard setting process. We are also looking at vertical price restraints in a number of areas and at certain non-price vertical restraints that appear to be a vehicle for coordinated behavior by competing firms. My hope is that in the next few months I will be in a position to talk some more about these ideas.

Issues Regarding Merger Enforcement

With that thumbnail sketch of where we are in nonmerger enforcement, let me turn to some issues in merger enforcement that lately have received a lot of attention. A number of you have expressed concerns about the way in which the antitrust agencies have investigated and brought merger cases in recent years. It is interesting that the criticism has not been so much focused on the substantive merits of cases but rather on the HSR merger process itself. As a private practitioner, I shared at least some of those concerns, and part of my early effort at the agency has been to push for reforms where they seem justified. I think we have made substantial progress.

Commissioner Varney touched on several of these subjects on Monday. At the risk of some repetition, I'd like to add my own remarks. Our interest in these subjects demonstrates the great importance that all of us at the Commission attach to the continuing process of ensuring that antitrust enforcement is kept on the right track, not only substantively but also procedurally.

HSR Reforms

Some of these efforts were underway before Bob Pitofsky and I moved to the Commission in mid-April. As you know, in late March Janet Steiger and Anne Bingaman announced a series of reforms in the HSR program. Those reforms included the following:

  • Issuance of a joint FTC/DOJ model second request Adoption of procedures to expedite the clearance process Implementation of uniform procedures to review the burden of second requests and to examine disputes as to substantial compliance
  • Adoption of a joint "quick look" policy Development of proposals to increase the number of transactions exempt from HSR requirements

As you can see, the reforms are designed to reduce the costs and burdens of complying with the merger review process, to make it faster, and to make the process agency-neutral -- that is, companies would face the same requirements regardless of which agency reviews the transaction.

I am pleased to report that those reforms are being implemented successfully. There has been wide praise for the annotated, uniform second request model. Clearance times are down dramatically under the new procedures. Previously it took an average of more than 17 days out of the 30 day waiting period to resolve clearance disputes. That clearly was not acceptable. Since April, we have shortened the time period to half that, or less than 9.8 calendar days. Thus the new procedures are clearly working. Those procedures don't completely avoid the occasional clearance dispute, but we are resolving those issues in a timely manner.

We also carried through on our commitment to consider amending the HSR rules to exempt more transactions. After receiving informal comment on some ideas for increased HSR exemptions, on July 21 the Commission announced five proposed rules that would define or create exemptions to the requirements of the HSR Act. One proposed rule clarifies, defines and broadens the kinds of acquisitions exempt from HSR requirements as transfers of goods or realty in the "ordinary course of business." That exemption has been a focus of frequent questions. Other rules would exempt the acquisition of certain categories of real property assets, the acquisition of carbon-based mineral reserves valued at $200 million or less, and the acquisition of securities whose underlying value is represented solely by those kinds of exempt assets. Those acquisitions are unlikely to violate the antitrust laws, and so the reporting requirement is an unnecessary burden. The fifth rule exempts acquisitions by certain investors of rental real property. Those transactions likewise are not likely to violate the antitrust laws.

There was considerable skepticism among some as to whether those rule changes would ever get proposed given their potential impact on revenue for the Antitrust Division and the FTC. As you may know, HSR fees represent a substantial part of the funding for our budgets. Well, we did it anyway. And we are prepared to consider further exemptions for categories of transactions that can be shown to pose no serious antitrust risk.

Another complaint I have heard voiced is that the antitrust agencies are not judicious in their use of Second Requests and allegedly issue a high percentage of Second Requests in matters where the likelihood of finding a violation is low. We looked at that carefully since I arrived and I am pleased to report that the facts do not bear out the concern. It is true that second requests have doubled in the last two years. But so did HSR filings. The real test for me is looking at what percentage of second requests result in a finding of a violation. There the statistics are revealing. For example, out of the 29 second request investigations that were opened during the first nine months of fiscal 1995 and completed by June 30, twenty of them -- 69% -- revealed competitive problems that led us to seek relief that would resolve our concerns. In twelve of the matters the parties entered into a consent agreement rather than face an injunction action; the Commission authorized and filed an injunction action in one of the cases; in one case the parties entered into a hold-separate agreement pending the completion of the investigation, with a binding consent agreement if the Commission finds the relief to be necessary; and in six cases the parties abandoned the transaction rather than face enforcement action. This shows that we are pretty efficient in focusing our second request efforts. We have looked at the statistics for fiscal 1994, and they show that a similar percentage of second request investigations in that year revealed competitive problems.

Pros and Cons of Quick Merger Settlements

Another complaint making the rounds is that the agency sometimes has accepted consent orders too quickly in response to parties' exhortations to conclude matters, and has shortened HSR investigations in order to do so. We all understand the motivations that underlie efforts to conclude merger investigations quickly, but I am convinced that short circuiting the investigation is not the right way to achieve the right substantive result. Such concerns arose in a recent acquisition by Nestle in the cat food market.

In late 1994 the Commission negotiated a consent agreement with Nestle in connection with its acquisition of Alpo Pet Foods from Grand Metropolitan, requiring divestiture of a major cat food facility. Because the parties had legitimate business reasons for closing by year-end, and offered divestiture of a major production facility, the Commission went ahead without concluding its second request investigation. We made the judgment based on limited facts and abiding faith that we had the market right and the relief well tailored to the antitrust concerns.

Faith sustains us spiritually, but it may not be an adequate substitute for due diligence in the antitrust arena. In the Nestle matter, public comment raised a number of questions about whether there was a violation and, if there was, whether divestiture of cat food manufacturing capacity would resolve those concerns. So we took another look. Ultimately we concluded that there was significant doubt about whether there had been a violation in the first place and we dropped the case.

Because of our effort to accommodate Nestle's interest in closing the transaction by year-end, our investigation was less thorough than would normally be the case and our settlement negotiations may have been premature. The outcome obviously was less than desirable. We can learn and benefit from the experience. The obvious lesson to be learned is the importance of conducting a thorough investigation. It does not mean we need to insist on full Second Request compliance in all cases. We still have and continue to use the quick look procedure in merger investigations. We simply need to make sure that an appropriate level of due diligence is undertaken before we ask the Commission to act.

Obviously, there will be times when there are legitimate and substantial reasons for wanting to close a transaction early. Can the Commission accommodate those interests without compromising its investigation? A recent case tests one way of doing that. In June of this year the Commission accepted a "hold separate" agreement with Hoechst AG, Marion Merrell Dow, and The Dow Chemical Company, under which Hoechst was permitted to proceed with the acquisition of Marion Merrell Dow's stock on condition that it could not exert control over its operations pending the completion of the investigation. Moreover, as part of the agreement, Hoechst committed itself to a broad settlement that provided relief in every market that might be affected by the acquisition. At the conclusion of the investigation, depending on the results, the Commission could accept the settlement, accept parts of it, or conclude that no relief is necessary.

The Hoechst agreement accommodates the parties' desire to close the transaction early, while still assuring that the staff has an adequate opportunity to conduct a full investigation and preserving the opportunity to obtain all the relief necessary. It differs from the Nestle matter in that the Commission did not actually accept a consent agreement, but simply preserved a full opportunity to obtain all the relief it might eventually deem necessary. Consequently, if the investigation reveals that the merger is not anticompetitive, the Commission will not have to reverse a previous decision.

The Hoechst case demonstrates the Commission's willingness to be flexible in its enforcement procedures and to permit early consummation of a transaction in appropriate circumstances. The Antitrust Division has used a similar procedure on a couple of occasions, and we are prepared to consider it in the future. But there are some tough standards that must be met for the procedure to be appropriate.

The essential requirements are that the parties must be willing to provide acceptable assurances that competition will be adequately protected in the interim, and that the Commission will not forego any opportunities for meaningful relief. That means that at least three conditions have to be satisfied to make it feasible. First, the relevant markets must be easily defined. The reason is obvious. If we can't define the markets, we can't determine where the relief should be directed. Second, we must be able to determine with a high degree of specificity the kind of relief that would be appropriate for whatever kind of competitive harm we may find, as well as the maximum relief that might be necessary. If we cannot do that, we may compromise our ability to obtain such relief later. Third, the parties must be willing to give us something approaching a blank check for such remedies. In other words, you have to leave your negotiating leverage at the door. (We promise not to cash the remedy check if we conclude that relief is not required.) Obviously these are tough conditions, so we don't expect that the procedure will be used often. However, it is available for the proper case if the parties are willing to trade off an earlier closing for giving us the right to insist upon broad antitrust relief.

Administrative Litigation in Merger Cases

We have also looked at criticisms regarding the Commission's use of administrative litigation following the denial of a preliminary injunction. Some have asserted that the Commission invariably goes into administrative litigation when it loses a PI. Some have questioned why the Commission should use its administrative forum at all. The Commission has addressed these issues in a policy statement that it issued on June 21 of this year. The Commission's policy is that it decides on a case-by-case basis whether to pursue administrative litigation if a court denies a preliminary injunction. The Commission's statement also describes the factors it may consider in making that determination. The point of all this is that a case is not on automatic pilot once the Commission decides to challenge the transaction. Obviously, the findings of a district court judge and the litigation record developed in a PI hearing are relevant to whether the public interest is well served by further proceedings.

The Commission also stated that it would adopt new procedures to facilitate the reconsideration of the public interest in an administrative proceeding if a complaint has already been issued when a preliminary injunction is denied. The Commission recently added a new rule to its Rules of Practice to do precisely that. The new rule is applicable to any administrative case brought by the Commission -- both competition and consumer protection -- in which the complaint was issued prior to the denial of a preliminary injunction. Respondents would have the option of either moving for dismissal of the complaint for lack of public interest, and briefing the issues on the public record, or moving to have the case withdrawn from adjudication so that the parties can discuss the case with the Commission without the constraints of adjudicatory rules. The process will ensure that the Commission pursues administrative litigation in merger cases only where it is confident that the public interest will be well served.

I recognize that some have questioned why the Commission should ever be allowed to burden a respondent with further litigation after losing a preliminary injunction. Let me begin my answer by asking whether merger law should be developed in the courts solely on the basis of preliminary injunction proceedings? I frame the issue in that manner because that is a likely outcome, and I think it would be an undesirable result. When the government wins a PI action, that is usually the end of the case. The parties typically abandon the transaction, and there is no opportunity for court of appeals review of the district court decision or a subsequent Commission administrative decision. When the government loses a PI action and appeals (or when a respondent appeals the entry of a PI), the absence of a full record limits the court of appeals' ability to take a hard look at the issues in full context. The result can be an important precedent based on a thin record. Baker Hughes is one such case.

The Court of Appeals in Baker Hughes rendered one of the most important judicial decisions on merger law in recent years. Yet it did so on the basis of a fairly skimpy district court record and some factual findings that may well have been different if there had been a full-blown hearing on the merits. I question whether this is the best way to advance merger law. Let me try to illustrate some of the kinds of problems presented by that kind of case on appeal.

The district court's opinion in that case indicates that the denial of a preliminary injunction was based in large part on the court's assessment that potential entry "sometime in the future" would lessen the likelihood of competitive harm, although some immediate lessening of competition was likely. The court did not assess how long it likely would take to achieve competitively significant entry, and it stated that the impact on competition from new entry is "not readily ascertainable."

On appeal, the government contended that, to rebut a prima facie case on the basis of potential entry, there must be a showing that entry into the market would be quick and effective. This is a standard now familiar to us all from the 1992 Horizontal Merger Guidelines. As demonstrated by its successful use in many merger investigations since then, it is a standard that not only is analytically correct in capturing the competitive effect of entry, but also is practical to apply to real facts in real cases.

In the context of an appeal from district court findings on a thin record, however, it met with considerable, and I believe unwarranted, skepticism. The court of appeals seemed to view it as a clever lawyer's attempt to disguise disagreement with the district court's findings of fact as an issue of law. Said the court:

  • Doubtless aware that this court will set aside the district court's findings of fact only if they are clearly erroneous, see Fed.R.Civ.P. 52(a), the government frames the issue [on appeal] as a pure question of law, which we review de novo. The government's key contention is that the district court, which did not expressly state the legal standard that it applied in its analysis of rebuttal evidence, failed to apply a sufficiently stringent standard.
  • [W]e have carefully reviewed the court's thorough analysis of competitive conditions in the . . . market, and we are satisfied that the court effectively applied a standard faithful to section 7.

I am convinced that if a more complete trial record had been available, the court of appeals would have seen the wisdom of requiring a more developed showing of the likelihood, timeliness, and sufficiency of entry, and the folly of allowing a defendant to escape with ethereal claims of entry "sometime in the future."

Therefore, I think it is important to preserve the opportunity to follow up a PI denial with a full trial, so that the competitive implications of an acquisition can be examined more fully and the implications of alternative legal standards can be explored in an appropriate context. Otherwise, district court or court of appeals decisions on a thin record will stand as the last word even though there may be reason to believe that the court did not adequately explore the implications of the legal standard that it adopted. Court of appeals decisions based on a thin record are particularly troublesome because decisions by those courts have taken on greater significance in the absence of substantive merger decisions by the Supreme Court in over 20 years.

In contrast to decisions rendered on the basis of a preliminary injunction record, the Commission's administrative forum provides an important vehicle for developing sound merger law and policy at the Commission. It also provides an important vehicle for appellate courts to review developments in merger law on a record that fully reflects both the facts and the law. The Seventh Circuit's decision in Hospital Corporation of America is a prime example. It is an important precedent for contemporary merger analysis, and it is based on a Commission decision that the Seventh Circuit called "a model of lucidity." In reaching its decision, the Seventh Circuit noted that it was an important part of the Commission's role to serve as principal fact finder and to decide, on an initial basis, important questions of merger law. (I should note here that the Commission, the Antitrust Division and private practitioners will continue to welcome the opportunity to appear before the Seventh Circuit as that court has just added another antitrust luminary -- Diane Wood -- to its already impressive list of antitrust scholars.)

The Commission's recent pronouncement on administrative litigation recognized the benefits of the administrative forum for developing both merger and nonmerger antitrust law. At the same time, the policy statement makes it clear that the Commission does not anticipate pursuing cases administratively in all circumstances where it has lost a preliminary injunction. It will use its administrative litigation authority where it believes the facts, law or policy implications of a particular case warrant further proceedings. At the same time respondents will be given an opportunity to state their views as to why administrative litigation is not appropriate, before the Commission acts. I think that is a sensible and responsible approach to the issue.

Information Sharing

Let me turn now to the Commission's new policy permitting a greater sharing of information with states. Under the previous policy, the Commission could share certain limited categories of information (not including HSR submissions) with states pursuant to the Program for Federal- State Cooperation in Merger Enforcement. In cases where the parties submit waivers of confidentiality, that program permitted the Commission to provide copies of second requests, the expiration dates of HSR waiting periods, copies of redacted third party subpoenas (but not responses) and limited assistance in analyzing a merger. That excluded a lot of substantive information such as third party responses to subpoenas and CIDs, and investigational hearing transcripts.

Under the new policy, such materials could be provided to states with the submitter's consent, or in the absence of consent, in redacted form with the submitter's identity protected. This is consistent with Antitrust Division policy, and it simply makes good sense. It avoids duplication of effort from multiple investigations, and it promotes the rationalization of state and federal merger enforcement by enabling each enforcement agency to understand the legal and economic thinking of the other.

Merger Remedies

Another area of focus for the Chairman and the Bureau involves merger remedies. There are three developments to report on here: first, our elimination of prior approvals in most circumstances; second, conditional approval in the Lilly case; and third, a retrospective look at merger remedies.

Prior Approval. On June 21, the Commission issued a statement that set forth a new policy regarding the use of prior approval requirements in Commission orders. Previously, whenever the Commission found reason to believe that the respondent had attempted (or completed) a merger transaction that was anticompetitive, the Commission routinely included in its orders a requirement that the respondent obtain the Commission's prior approval for future transactions in the same market, usually for a period of 10 years. In some cases, the Commission also required prior notice of transactions that would not be reportable under HSR. Under the new policy, that is no longer the case. The general rule is that the Commission will not use prior approval or prior notice requirements except in special cases. First, if there is a credible risk that the respondent may renew its acquisition attempt, the Commission will require a narrow prior approval requirement limited to such a transaction. Second, if there is a credible risk that the respondent may attempt a non-HSR-reportable transaction that would be anticompetitive, the Commission will impose a prior notice requirement for non-reportable transactions. And in both situations, there must be significant evidence suggesting such a risk.

The Commission arrived at this new policy after taking a hard look at its previous practice and deciding that prior approval was no longer necessary as a routine matter. Prior approval does have some benefit in facilitating the review of proposed acquisitions, and in some cases it may save the Commission the costs of re-litigating certain issues. But a prior approval requirement also has some private and public costs. The Commission concluded that in light of our accumulated experience with the HSR premerger notification program, which would still enable the Commission to review most transactions before they occur, a general policy of requiring prior approval was no longer needed.

Conditional Approval. Another new approach in remedies is illustrated by the Eli Lilly transaction. The transaction involved the acquisition by Eli Lilly and Company, a major pharmaceutical manufacturer, of the pharmacy benefit management business ("PBM") of McKesson Corporation. Bob Pitofsky spoke on Monday about our approach to a remedy in this case, as did Commissioner Varney. I'll describe it briefly, in case you missed their presentations. In the Lilly case the Commission initially accepted a consent agreement that permitted the merger to proceed subject to certain restrictions, but during the subsequent public comment period a number of concerns were raised that the consent agreement did not go far enough. The comments were quite legitimate and raised substantial issues, but we were uncertain whether the current state of the evidence supported the additional relief that was requested. A particular difficulty was that the markets involved were undergoing rapid structural change. In light of that uncertainty, the Commission stated that it would make the order final in essentially its original form, but would monitor the markets and reopen the case if further review indicated that the merger had anticompetitive effects. Under this so called "conditional approval," the Commission could seek further relief, including post- acquisition divestiture if appropriate. The Commission has a right to reopen judgments in appropriate circumstances, but saying that it might do so in a particular case is rather unusual, and it certainly sends a signal.

This is an approach we might use in future cases where we encounter fast-changing markets that are in the process of restructuring. In times of market transition, the effectiveness of particular remedies, and their future implications, may be difficult to determine. We may not have enough information to pin that down. Rather than impose a remedy that may turn out to be unnecessary, it may be preferable to use a restrained hand, and seek additional relief later if necessary.

Divestiture Retrospectives. Also in connection with remedies, Jon Baker and I have agreed that the Bureau of Competition and the Bureau of Economics should put some of our scarce resources into looking at some divestiture orders to determine what worked, and what hasn't worked so well. That effort is already underway. We have looked at nine orders thus far, interviewing the buyers of the divested assets in each case. We intend to examine more cases, but our results thus far have produced some interesting observations, if not firm conclusions. The early returns indicate that some of the divestitures have been spectacularly successful, and others have been spectacular in a different sense -- i.e., they didn't work so well. We found universally that even the most sophisticated and experienced buyers encountered surprises and problems that they did not anticipate.

One tentative observation is that the divestiture of a going concern reduces the likelihood of substantial problems with the divestiture. Also, the divestiture to a person with experience in the industry, although not in the relevant market, is likely to encounter fewer problems than divestiture to someone who is new to the industry. A third observation is that continuing relationships between the respondent and the purchaser, such as a supply relationship, can cause problems if the parties' assumptions in entering into the relationship are not clearly spelled out.

Fourth, and not surprisingly, we have found that transfers of technology appear to raise unique issues and pose great potential pitfalls. This is obviously critically important as we structure relief in innovation markets. In some instances, buyers have found it difficult to obtain some necessary information because they do not always know enough to frame their questions precisely. We are looking at ways of drafting the orders to address these problems.

Given the small number of orders we have examined to date, these observations are necessarily tentative. However, we are encouraged that our effort thus far has provided some useful insights. We believe that a more thorough, detailed examination of past orders would result in valuable information for the Commission. So we are looking at our initial results and deciding how we will approach a broader review of divestiture orders. I also hope to build on a 1992 study by the Bureau of Economics and spend some resources looking at what happened in markets where we decided not to bring an enforcement action against a transaction that we had examined closely. I think it may be useful in some cases to go back and try to assess whether we made the right decision.

Sunset Policy

My last remedy topic concerns the Commission's recent modifications to its Sunset policy. As you know, since last year the Commission has been following a policy that the "core" provisions of its competition orders -- prohibitions on unlawful conduct will terminate, or "sunset," after twenty years. (The non-core provisions, such as order publication, records retention and resale price-list disclaimer requirements have had shorter terms for quite some time, and that approach wasn't changed last year.) When the Commission announced its policy, it also invited public comments, including suggestions for how to deal with its consumer protection orders.

There are three new developments to report regarding that policy. First, the Commission has decided that the sunset policy should apply to all its administrative orders, both competition and consumer protection. Second, the sunsetting of old orders will be automatic; respondents need not file a petition to make it happen. As announced this week, the Commission will issue a rule that will automatically terminate all existing agency orders that are 20 years old or more (and all newer existing orders when they reach 20 years). Third, however, those who violate a Commission order will have to serve additional time, so to speak. If the FTC has to file a complaint for a violation of the order, then the order will run for twenty years from the date of that filing. This is an important safeguard to prevent recidivists from avoiding their responsibilities under our orders. The newly announced policy will also apply to all orders that the FTC issues from now on.

We believe that the automatic nature of the procedure the FTC has adopted will streamline our termination of old orders -- while preserving our remedies in the face of non-compliance -- and will also afford a simpler way of writing orders in the future.

Finally, let me wind up with a few words about the hearings scheduled for this Fall on antitrust and consumer protection enforcement in a global economy. I am looking forward to those hearings. They will deal with extremely important issues that affect us all. Issues such as whether the traditional antitrust approach to measuring market power fully accounts for global or innovation-based competition; whether we should revise our approach to claims of efficiency and to claims of corporate failure and distressed industry conditions; whether competition policy needs to be adjusted when applied to industries that compete more directly through innovation, rather than price.

Many of us deal with these issues on an every day basis. They are complex and difficult, and while many of us think we have developed sensible and responsible approaches to deal with them, still there can be questions about whether we can and should do something more, or different. The hearings will be an excellent opportunity to address those questions. It will be an opportunity for those who claim that current antitrust policy is on the wrong track, to come forward with evidence and data showing that to be the case. And it will be an opportunity for those who claim that antitrust has basically got it right, to demonstrate that to be the case. It promises to be a challenging debate, and one that could well lead to some modifications in how we do our work.

In closing, I would just like to say that my first few months at the Bureau have been extremely rewarding. I think we have made substantial progress on several fronts. The merger program was extremely busy when I arrived, and it remains extremely busy. There is active non-merger enforcement, and we are beefing it up further. And we are taking steps to streamline the enforcement process to make it more efficient, to make it faster, and to make it as fair as possible.

Thank you for giving me the opportunity to speak to you today.