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The Federal Trade Commission at 100: Into Our 2Nd Century

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The Federal Trade Commission at 100: Into Our 2Nd Century The Federal Trade Commission at 100: Into Our 2nd Century The Continuing Pursuit of Better Practices January 2009 A Report by Federal Trade Commission Chairman William E. Kovacic This Report represents the views of FTC Chairman Kovacic and does not necessarily represent the views of the Commission or any individual Commissioner. ACKNOWLEDGMENTS I would like to acknowledge the invaluable help of the several members of the FTC staff for this project. First, I sincerely thank Maureen Ohlhausen, who took the lead on this project from beginning to end. I also thank Greg Luib, James Cooper, Gus Chiarello, Paul Pautler, and Maria Coppola Tineo for their superb drafting work. Alden Abbott, Andrew Heimert, Stacy Feuer, Yael Weinman, and Carol Jennings also made significant contributions to this project. The following FTC staff members also helped bring this project to fruition: Hui Ling Goh, Dina Kallay, Russ Damtoft, Michael Shore, Richard McKewen, Hugh Stevenson, Elizabeth Kraus, John Parisi, Pablo Zylberglait, Deirdre Shanahan, Deon Woods-Bell, and Cynthia Lagdameo in the Office of International Affairs; Eileen Harrington, Lois Greisman, Betsy Broder, Callie Ward, Deborah Clark, and Erin Malick in the Bureau of Consumer Protection; David Wales and Ken Glazer in the Bureau of Competition; Dennis Murphy in the Bureau of Economics; Jeanne Bumpus in the Office of Congressional Relations; Steve Baker in the Midwest Regional Office; Len Gordon in the Northeast Regional Office; Chris Grengs in the Office of Policy Planning; and paralegals Jessica Chen, Andrew Hasty, Sage Graham, Rajan Trehan, and Vishwa Banker. I also greatly appreciate the work of Henry Butler, Andreas Reindl, and Michael Salinger in coordinating and participating in our roundtables in Chicago, New York, and Boston, respectively. I also thank all of the people who participated in our roundtables and external consultations. A complete list of roundtable participants appears in Appendix 1, and Appendix 2 lists the agencies, organizations, and individuals participating in the external consultations. Finally, thank you to our counterparts around the world, from governmental ministries, consumer protection agencies, competition authorities, privacy authorities, criminal enforcement agencies, sectoral regulators, and international organizations, who shared with us the many innovations and ideas that they are using to protect consumers and promote competition, and who used their comparative knowledge to provide key assessments of the FTC’s international role and operations. FTC Chairman William E. Kovacic TABLE OF CONTENTS EXECUTIVE SUMMARY .............................................................................................. i PART 1: INTRODUCTION BY CHAIRMAN KOVACIC ………….................................. 1 PART 2: INSTITUTIONAL FOUNDATIONS OF SUCCESSFUL FTC PERFORMANCE .................................................................................. 10 I. Agency Mission ............................................................................................. 11 A. Clearly Articulating the Mission ........................................................ 12 B. Measuring Outcomes Rather than Outputs ........................................ 16 C. Internal and External Support for the Mission ................................... 19 II. Agency Structure .......................................................................................... 24 A. Current Agency Design ...................................................................... 24 B. Looking Ahead: Significant Issues Involving the FTC’s Structure and Operations .................................................................... 32 III. Agency Resources ......................................................................................... 46 A. Personnel ............................................................................................ 46 B. Capital Resources ............................................................................... 49 C. Information ......................................................................................... 51 IV. The Agency’s Relationships ........................................................................ 58 A. Congress ............................................................................................. 59 B. Other Federal Agencies ...................................................................... 60 C. State Agencies .................................................................................... 65 D. Foreign Enforcement Agencies .......................................................... 68 E. Consumers and Consumer Groups ..................................................... 72 F. Market Participants ............................................................................ 76 G. Academia ........................................................................................... 77 V. Agency Leadership, Strategic Planning, and Policy R&D ....................... 81 A. Leadership .......................................................................................... 81 B. Strategic Planning .............................................................................. 83 C. Policy Research and Development .................................................... 91 VI. Deployment of Agency Resources ............................................................... 110 A. General Issues Involving Resource Allocation .................................. 110 B. The FTC’s Many Resource Deployment Options .............................. 112 1. Law Enforcement/Litigation .............................................................. 112 2. Policy Research and Development .................................................... 120 3. Advocacy ........................................................................................... 121 4. Rulemaking ........................................................................................ 124 5. Guidelines, Guides, and Advisory Opinions ...................................... 128 6. Consumer and Business Education .................................................... 133 7. Encouragement of Appropriate Industry Self-Regulation ................. 136 8. Partnership and Outreach with Domestic Agencies ........................... 138 9. International Partnerships and Outreach ............................................ 139 10. Other Innovative Approaches to Addressing Specific Problems ....... 141 11. Using Multiple Tools to Address a Problem ……………………...... 141 PART 3: MEASURING THE EFFECTIVENESS OF FTC ACTIONS ................................ 144 VII. Measuring Agency Effectiveness ................................................................ 144 A. Direct Measurements of Welfare ....................................................... 146 B. Proxies for Direct Welfare Measurements ......................................... 153 C. Responsiveness to Core Constituencies ............................................. 174 PART 4: CHAIRMAN’S RECOMMENDATIONS …………............................................ 178 APPENDIX 1 – LIST OF FTC AT 100 ROUNDTABLE PARTICIPANTS .......................... 184 APPENDIX 2 – LIST OF AGENCIES, ORGANIZATIONS, AND INDIVIDUALS PARTICIPATING IN FTC AT 100 EXTERNAL CONSULTATIONS .......... 199 EXECUTIVE SUMMARY PART 1: INTRODUCTION BY CHAIRMAN KOVACIC A few years from now, the FTC will reach the one hundredth anniversary of the statute that gave it life. How well is the agency fulfilling the destiny that Congress foresaw for it in 1914? What type of institution should the FTC aspire to be when the agency’s second century begins in 2014? Over the past seven months, the FTC has conducted a self-assessment to consider these and other basic questions about the agency’s future direction. Two aims motivated this initiative. The first is to ask what we must do to continue the valuable work that the agency performs today and to identify steps we must take to do still better in the future. The focus of this exercise is an agency that is one of the great success stories in the modern history of public administration. The progress of the Federal Trade Commission in its modern era has built heavily upon the willingness of its people to assess their work critically and explore possibilities for improvement. The FTC at 100 self-assessment is the latest element of that tradition, and the exercise has yielded valuable insights about strengthening the agency. Several areas stand out. The inquiry has helped identify what resources – personnel, facilities, equipment – the FTC will need to perform its duties in the future. Nothing is more vital to the success of the Commission than its human capital. A second result is to suggest how the FTC might improve its approach for choosing strategies for exercising its powers. No task of administration is more important than selecting priorities. A third product of this self-assessment has been to identify how the FTC can strengthen its processes for implementing its programs. The manner in which an agency organizes its operations deeply shapes the quality of its substantive initiatives and affects the costs that firms bear in complying with the agency’s commands. Finally, the inquiry has pointed to how the FTC can better fulfill its duties by improving links with other government bodies and nongovernment organizations. The consultations for this project have identified seven general characteristics of good administrative practice that the FTC should strive
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