Annual Highlights 2017

Policy

The Commission works to advance government policies that promote competition and protect consumers.

Economic Liberty

open door logoThe Economic Liberty Task Force, convened by Acting Chairman Ohlhausen, expanded the FTC’s cooperation with state and federal leaders to identify and eliminate unnecessary or overbroad occupational licensing restrictions that threaten economic liberty and harm competition, which may lead to higher prices, lower quality, and reduced consumer access to services. Many state-based restrictions are particularly harmful to military spouses in licensed occupations, because their families relocate frequently across state lines. In 2017, the Task Force held two roundtables: one on initiatives to enhance occupational license portability; and another on empirical evidence on the effects of licensing. Acting Chairman Ohlhausen also testified before a House Judiciary subcommittee and hosted Voices for Liberty, a fireside chat featuring individuals who have been affected by undue occupational licensing restrictions.

Advocacy Comments

The Commission continued to provide guidance and recommendations to government bodies and lawmakers on how to incorporate competition principles into proposed laws, regulations, or policies. The majority of this year’s competition advocacy comments concerned occupational licensing issues, with many focused on scope of practice and supervision regulations for health care professionals. Staff filed comments regarding general occupational licensing requirements (Nebraska), competition for real estate appraisal services (North Carolina), dental hygienists and dental therapists (Ohio), and animal massage (Tennessee). Staff also expressed support for the Department of Veterans Affairs’ proposed rule to clarify that VA health care practitioners may provide telehealth services to beneficiaries notwithstanding any contrary state licensing laws, rules, or requirements (Department of Veterans Affairs).

health care professional holding clipboardThe FTC also continued to oppose efforts by state legislators and regulators to secure antitrust immunity for anticompetitive health care collaborations. Following advocacy in 2016, staff submitted two additional comments in Tennessee regarding the applications of Mountain States Health Alliance and Wellmont Health System for Certificates of Public Advantage (COPAs) that purportedly would allow them to merge by providing immunity from federal antitrust law (Tennessee- January and Tennessee - July). Staff also supported the reform of certificate-of-need laws that limit competition in the health care sector (Alaska and Georgia).

Finally, staff addressed the Federal Communications Commission regulation of broadband Internet access services (FCC) and the Federal Energy Regulatory Commission reform of electricity generator interconnection procedures and agreements (FERC).

Amicus Briefs

person hailing a ride from mobile phone appIn 2017, the Commission filed an amicus brief in Chamber of Commerce v. City of Seattle (Ninth Circuit). The City of Seattle enacted an ordinance that permits independent for-hire vehicle drivers to collude in negotiating their contracts with taxicab companies and companies like Uber and Lyft. Although such conduct ordinarily would be a per se violation of the Sherman Act, the district court dismissed a private-party antitrust challenge to the ordinance on the ground that it is immunized by the state action doctrine. The court held that the City had acted pursuant to a “clearly articulated and affirmatively expressed” policy by the State of Washington to displace competition in the transportation service market. Our amicus brief argued that the State had not clearly articulated its intent to displace competition in the market for hiring drivers.

Congressional Testimony

The Commission and its staff are often asked to share expertise on antitrust and consumer protection issues. In 2017, the FTC testified about the competition aspects of net neutrality, occupational licensure, and the FDA approval process. The Commission also testified about consumer protection issues related to robocalls, scams, financial fraud against seniors, and cybersecurity for small business.

Workshops and Public Forums

Hosting workshops on emerging business practices and technologies is another example of how the Commission advances its competition and consumer protection missions. The FTC convenes fellow regulators and enforcement partners, as well as industry representatives, consumer advocates, and academics for informative and often groundbreaking discussions of the challenges posed by current issues.

The FTC continued its initiative to advance competition in health care, using its full range of policy and advocacy tools. The Commission held a workshop examining competition in prescription drug markets, particularly entry and supply chain dynamics that may prevent competition from keeping prices in check. The agency convened a workshop addressing competition, innovation, and consumer protection issues in hearing health care. The FTC also announced a new project to study the impact of COPAs on prices, quality, access, and innovation for health care services.

cars on highway connected to the internetThis year, the Commission also held workshops about how technology impacts cars, students, and financial services and payment systems. For instance, modern motor vehicles increasingly include with technologies that enable them to access information via the Internet and gather, store, and transmit data for entertainment, performance, and safety purposes. The FTC and National Highway Traffic Safety Administration (NHTSA) hosted Connected Cars, a workshop that explored consumer privacy and security issues that automated and connected vehicles pose.

children in a classroom sitting in front of computersMore than half of K-12 students have access to a school-issued personal computing device, and in many school districts, online curriculum is becoming the norm. While these technologies have tremendous potential, the expanded use of technology has raised questions about children’s privacy. The FTC and the Department of Education (ED) hosted Student Privacy and Ed Tech, a workshop to help clarify how the agencies can ensure that student privacy is properly protected without interfering with the promised benefits of technology.

Finally, the Commission hosted its third FinTech Forum, Artificial Intelligence and Blockchain, bringing together representatives from industry, consumer groups, government, and academia. The event focused on the potential benefits and consumer protection implications of artificial intelligence, which can be used to provide personalized financial services and money management tools for consumers. Blockchain technology first emerged as the foundation for digital currency, and it is now being explored for other consumer-focused uses, including payment systems and “smart contracts.”

Reports

Commission and staff reports continue to shed light on a range of important topics. In February 2017, the Commission issued a landmark report on its multi-year merger remedies study, which looked back at Commission merger orders issued between 2006 and 2012. FTC staff found that the agency’s process for designing and implementing merger remedies is generally effective and that more than 80 percent of remedies ordered by the Commission maintained or restored competition that would have been lost due to the merger. The study also identified certain areas in which improvements can be made, particularly for divestitures of limited asset packages in horizontal, non-consummated mergers.

eye looking through keyholeIn consumer protection this year, the Commission produced its annual Privacy and Data Security Update, describing some of its work as the nation’s primary privacy and data security enforcer. Among other things, the report touches on the agency’s first case against the maker of connected toys for violating federal law when it collected personal information from children without telling their parents or getting their consent, and for failing to take reasonable steps to secure the data. The report also discusses the Commission case against revenge porn site, MyEx.com, for violating federal and state law by posting intimate images of people, together with their personal information, without their consent. The report also announced the Commission’s third annual PrivacyCon event in 2018.

In addition, the Bureau of Consumer Protection reviewed closed data security investigations for lessons learned to improve guidance and transparency and shared these lessons in the Stick with Security blog series for businesses. It also released Blurred Lines, a report that summarized agency-commissioned research from 2014-2015 that explored consumer recognition of paid search advertising and “native advertising” that resemble news, feature articles, product reviews, entertainment, or other non-advertising online content. The study provides insights into how consumers perceive search results and native ads and how modifications to disclosures’ language, position, text size, color, and other visual cues may enhance consumers’ recognition of these ads. The results of the study suggest that using some commonsense disclosure techniques like those discussed in existing FTC staff guidance can greatly increase the likelihood that search engine results and native ads are recognizable as ads to consumers.

Regulatory and Process Reform Initiatives

scissors cutting a red ribbonThe FTC worked to reduce excessive regulations and bureaucracy that create significant burdens on the public. The FTC streamlined the requirements under the Fur, Textile and Wool Labeling Rules, implementing web-based electronic filings of requests to obtain, update, or cancel registered identification numbers (RN) used on product labels. Use of the web-based RN system will streamline the application process for participating businesses and greatly increase the agency’s efficiency in delivering RN services to the public. The Commission also streamlined filing requirements under the Textile Fiber Products Identification Act.

This year, Acting Chairman Ohlhausen stressed the importance of reducing waste and inefficiency while streamlining processes. Several reforms are underway, including: reviewing enforcement dockets to close older investigations; identifying unnecessary regulations that are no longer in the public interest; and working to integrate economic expertise even earlier in investigations. As part of this Reform and Efficiency initiative, new groups within the Bureau of Consumer Protection have streamlined Civil Investigative Demands (CIDs) in investigations to eliminate unnecessary costs to those who receive them. The reforms include providing plain language descriptions of the CID process, developing business education materials to help small businesses understand how to comply, and adding more detailed descriptions of the scope and purpose of investigations to give companies a better understanding of the information the agency seeks. In addition, where appropriate, staff will limit the relevant time periods covered by CIDs, increase the length of time to respond, and reduce the complexity of instructions for providing data electronically.

Enforcement Policy Statements

In January 2017, the FTC and the DOJ jointly issued updated Antitrust Guidelines for the Licensing of Intellectual Property that explain how the federal antitrust agencies evaluate licensing and related activities involving patents, copyrights, trade secrets, and know-how. These revisions update the agencies’ 1995 IP Licensing Guidelines and reaffirm key principles that offer a sensible and balanced approach to the agencies’ analysis of the licensing of intellectual property rights.

International Policy Engagement

sunlight coming over the EartThe FTC promotes sound approaches to issues of mutual international interest by building relationships with counterpart agencies around the world on competition and consumer protection issues.

The FTC worked with competition authorities around the world, both bilaterally and in multilateral bodies, to promote convergence toward sound competition policy and procedures, emphasizing consumer welfare-based enforcement, and good policies and practices regarding the application of antitrust rules to intellectual property, the territorial scope of remedies, and procedural fairness. We held senior-level meetings with key counterparts, including Brazil, Canada, China, the European Union (EU), Japan, Korea, and Mexico. We also enhanced the important roles that the FTC plays to promote convergence toward sound policies in the International Competition Network (ICN) and the competition groups of the Organisation for Economic Co-operation and Development (OECD), United Nations Conference on Trade and Development, (UNCTAD), and Asia-Pacific Economic Cooperation (APEC).

In the ICN, for example, the FTC serves on the Steering Group and co-chairs the Merger Working Group through which we lead a multi-year initiative to update and expand the ICN’s Recommended Practices for Merger Notification and Review Procedures and Merger Analysis. We also continue to develop additional practical guidance on investigative techniques and procedural fairness in antitrust investigations. In the OECD, the FTC played a key role in developing the Competition Committee’s long-term projects on competition in the digital economy and market studies. The FTC also conducted and oversaw an APEC-sponsored series of workshops on procedural fairness.

Our technical assistance work plays a key role in our convergence initiatives. We expanded our program to help young agencies apply their laws to support competitive markets and compatible analysis and outcomes in cross-border matters. Over the course of the year, we conducted 38 technical assistance missions, including placing resident advisors in the competition agencies of India, the Philippines, and the Ukraine. We also worked with colleagues in other parts of the U.S. government, as appropriate, for example in dealing with issues that have arisen in the enforcement of some foreign antitrust laws and as part of the U.S. delegation negotiating the competition chapter of the North American Free Trade Agreement. In addition, the FTC and DOJ revised the agencies’ International Antitrust Guidelines, which provide guidance to businesses and practitioners on the agencies’ international enforcement policy and related investigative tools and cooperation with foreign agencies.

In the consumer protection area, the FTC’s international policy efforts concentrated on developing and promoting market-oriented policies and practices with foreign counterparts and international organizations and networks. In particular, the agency advocated for global interoperability and strong enforcement of data privacy laws in the OECD, APEC, and the International Conference of Privacy and Data Protection Commissioners. It collaborated with the Department of Commerce on three key cross-border data transfer mechanisms for the commercial sector: the EU-U.S. Privacy Shield, the Swiss-U.S. Privacy Shield, and the APEC Cross-Border Privacy Rules (CPBR) System. The Privacy Shield framework (and its counterpart Swiss Privacy Shield) provides legal mechanisms for companies to transfer personal consumer data from the EU (and from Switzerland) to the United States with strong privacy protections. The APEC CBPR system is a voluntary, enforceable code of conduct designed to enhance the privacy and security of consumers’ personal information transferred among the United States and other APEC members. The FTC plays a significant role in enforcing companies’ privacy promises as violations of Section 5 of the FTC Act.

This year, in addition to bringing its first three enforcement actions under the new Privacy Shield, the agency worked with the Department of Commerce in conducting a successful first Annual Review of the framework with the European Commission. In addition, the FTC, which serves as a co-administrator of the APEC’s cross-border privacy enforcement arrangement (CPEA), also welcomed the National Privacy Commission of the Philippines as its 11th member. The CPEA, which facilitates information sharing among members, underpins APEC’s CPBR system.

The FTC also focused policy efforts on cross-border privacy issues relating to the WHOIS system coordinated by the International Corporation for Assigned Names and Numbers (ICANN). WHOIS databases provide publicly available domain registration information. The FTC worked directly with its European counterparts and with other U.S. government agencies and ICANN’s Governmental Advisory Group to advocate for ICANN to maintain a WHOIS system that will allow the FTC and other users appropriate access to WHOIS data for a variety of important purposes consistent with European privacy laws. These purposes include consumer protection, privacy and other law enforcement investigations, crime prevention, the security and stability of the Internet’s domain name system, intellectual property rights enforcement, and consumers’ identification of online businesses.

Finally, the FTC continued to build the capacity of consumer protection and privacy agencies to develop market-oriented policies that promote consumer trust and to implement and enforce sound laws. Over the course of the year, we conducted 12 programs in countries such as Argentina, Colombia, Egypt, India, Pakistan, and the Philippines and for international and regional organizations such as UNCTAD, ASEAN (Association of Southeast Asian Nations), and COMESA (Common Market for Eastern and Southern Africa).