Federal Trade Commission

Fulfilling the Original Vision: The FTC at 90

April 2004

Federal Trade Commission

Timothy J. Muris, Chairman Mozelle W. Thompson, Commissioner Orson Swindle, Commissioner Thomas B. Leary, Commissioner Pamela Jones Harbour, Commissioner The FTC at 90 Federal Trade Commission Cover graphicsobtained underlicensefromMicrosoftCorporation andDynamicGraphics,Inc. Federal Trade Commission

Fulfilling the Original Vision The FTC at 90 Federal Trade Commission Reflecting on Past Achievementsand ConsideringtheFuture Chapter 4:International Activities Chapter 3:SpecialPolicyInstrumentsfor Assisting andComplementingLawEnforcement Chapter 2:ConsumerProtectionLawEnforcement,Rulemaking,andGuidance Chapter 1:CompetitionLawEnforcementandGuidance Introduction Contents C. B. A. B. A. B. A. D. C. B. A. B. A.

International Technical Assistance 3. 2. 1. Consumer Protection 3. 2. 1. Competition 5. 4. 3. 2. 1. Consumer ProtectionPolicy 4. 3. 2. 1. Competition Policy 2. 1. Consumer Privacy 2. 1. Fraud andDeception Transparency andPolicyGuidance 3. 2. 1. Merger Enforcement 2. 1. Nonmerger Enforcement 3. 2. 1. Administrative Adjudication Highlights of Accomplishments Goals

. Other PendingPart3Matters New Part3Complaints Commission DecisionsandPending Appeals International Cooperation onSpam Cross-Border Telemarketing Fraud/CanadianPartnerships Five-Point PlantoFight Cross-BorderFraud Trade/Competition Fora Multilateral CompetitionCooperation Cooperation inEnforcementandPolicyDevelopment Consumer andBusinessEducationOutreach Amicus Briefs Advocacy Hearings andWorkshops Research andReports Amicus Briefs Advocacy Hearings andWorkshops Research andReports Rulemaking Law Enforcement Law Enforcement Tools toIdentifyFraudandDeception Other MergerEnforcement Continued EmphasisonKeyMarketSegments Administrative Adjudication ofConsummatedMergers Seeking toRemovePublicRestraintsonCompetition Focus onHealthCare ...... Federal Trade Commission ...... 46 45 45 45 43 43 43 41 40 40 40 38 38 36 36 34 34 33 31 30 28 27 27 27 25 25 19 17 17 16 13 13 12 10 11 11 8 8 7 6 5 4 4 2 1 1

Fulfilling the Original Vision The FTC at 90 Federal Trade Commission Federal Trade Commission

Fulfilling the Original Vision - 1 The FTC at 90 Federal Trade Commission coming years. of theagendathatFTCwillpursuein Many activitiesareongoingandconstitutemuch priorities thatmotivatetheuseofitsresources. of initiativesandtodescribethepolicies aims toexplainthebasisforFTC’s choice of cases,conferences,andstudies,thereport through March2004.Morethanamerelist activities andaccomplishmentsfrom April 2003 latest chapterintheagency’s work,coveringits inspired itscreation. This reportreviewsthe thevisionthat consider howitcanbestfulfill to reflectontheagency’s pastworkandto economy. This milestoneisanoccasion ofamarket consumers realizethebenefits hopes thatthefederalgovernmentwouldhelp legislation thatgavelifetotheFTCandstirred the peoplebywayofaregulationcommerce.” the UnitedStatesthatCongresshasevergiven be themostefficientprotectiontopeopleof the Federal Trade Commission“willbefoundto of thelegislation’s chief sponsors, predictedthat bill’s enactment,Senator Albert Cummins,one consumer interests.Intheweeksbefore would beasingularlyeffective meansforserving the visionofCongressthatnewagency and enforcementpowers,thestatuteembodied array ofadjudication,advocacy, investigation, Act. Initssubstantivemandateandunique Wilson signedtheFederal Trade Commission Introduction This yearmarksthe90 On September26,1914,PresidentWoodrow th anniversaryofthe information inthemarketplacefacilitatesfree forconsumers–accurate and maximizebenefits Thus, thesemissionscomplementeachother informed choicesintheirpurchasingdecisions. information, allowingconsumerstomake fosters theexchangeofaccurate,non-deceptive services. The consumerprotectionmission innovation, andchoiceamongproducts markets, bringingconsumerslowerprices, competition missionpromotesfreeandopen aim: enhancingconsumerwelfare. The and consumerprotectionserveacommon l l l consumer protectionauthority, theFTCshould: for consumers.Inexercisingitscompetitionand guide thedevelopmentofagency’s agenda supplemented inlaterlegislation.Fiveprinciples that CongressfirstgavetheFTCin1914and application ofthedistinctiveinstitutionaltools overall objectiveswithanappreciationforand expected theFTCtoberequirespursuingthese that SenatorCumminsandhiscolleagues and robustcompetition.

The FTC’s twinmissionsofcompetition A. and addressingserious misconduct,with Employ asystematicapproach foridentifying practices; agreements andfraudulentdeceptive welfare, suchasanticompetitivehorizontal Stop conductthatmostthreatensconsumer focused advocacy; information throughstrongenforcementand exchange ofaccurate,non-deceptive Promote competitionandtheunfettered Progress toward becoming the type of agency

Goals Federal Trade Commission

Fulfilling the Original Vision - 1 The FTC at 90 - 2 l of theagency’s recentaccomplishmentsinclude: address criticalconsumerconcerns.Highlights its arrayoflawenforcementandpolicytoolsto l l Federal Trade Commission

yield detailedantitrust analysesthroughthe markets. Iffullylitigated, thecaseswill mergers involvinghospitals andhigh-tech Pennington the standard-settingprocessand of theState Action defense,alleged abuseof the householdmovingindustryandrole physician services,collectiveratesettingin in involve, amongotherissues,pricefixing adjudication. Casescurrentlyonthedocket the FTChad11 casesatsomestageof time inrecenthistory. As oflateMarch2004, 3 administrativeadjudicationthanatany the FTChasmorecompetitioncasesinPart broad rangeofperceivedcompetitiveharms, Bringing MorePart3Cases. During thepast12months,FTCapplied B. policies areformulatedandapplied. which competitionandconsumerprotection Improve theinstitutionsandprocessesby and competition andconsumerprotectionissues; businesses andconsumers–toaddress other governmentbodies,andeducating workshops, engaginginadvocacybefore performing research,holdinghearingsand – prosecutingcases,conductingstudies, distinctive portfolioofpolicyinstruments Apply allelementsoftheagency’s economic sectors; special attentiontoharmfulbehaviorinkey

Highlights ofAccomplishments doctrine,andconsummated Tackling a Noerr- l l l

the courts,DoNotCallRegistryhas 58 millionnumbers. Although attackedin million telephonenumbersandnowtops in October, theRegistrycontainedover53 telephone numbers.Byitseffective date consumers hadenrolledovertenmillion the first72hoursofRegistry’s operation, FTC’s NationalDoNotCallRegistry. Within President announcedtheopeningof Garden ceremonyonJune27,2003,the Launching “DoNotCall.” and thepublic. and provideguidancetobusinesses,thebar, opinions oftheCommissionandcourts 2003 releasedastaff reportonthereach a two-yearstudy, theFTCinSeptember Clarifying theState Action Doctrine. upheld. of questionablepatentsthatareissuedand recommendations forreducingtheproportion can harminnovation. The reportmadeten competitiveconcernand are asignificant report concludedthatquestionablepatents with theothertoachievethatgoal. The but eachpolicyrequiresaproperbalance patents forinventorscanpromoteinnovation, and policy. Both competitioninmarketsand balance betweencompetitionandpatentlaw the agencyreleasedareportonproper In October2003,afterextensivehearings, Balancing CompetitionandPatentPolicy. a reductionintelemarketingcalls. percent ofparticipatingconsumersreporting be “remarkablysuccessful,”withover90 2004 HarrisPoll withstood alllegalchallenges. A February ® found theRegistryto At aRose After

Federal Trade Commission

Fulfilling the Original Vision - 3 The FTC at 90 - 2 Federal Trade Commission l l

a comprehensive surveyofconsumers’ complaints, theFTCthis yearundertook obtained throughdatabases ofconsumer Building uponthewealth ofinformation Surveying ConsumersonIdentityTheft. clarification. on existingmergerpolicyandanyneedfor the businesscommunity, andacademia a discussionamongtheagencies,bar, that hadnot.Bothefforts aimtopromote been challengedbytheagencyandthose proposed mergers,onboththosethathad released yearsofdetailedmergerdataon February. Before theworkshop,FTC (DOJ), heldathree-dayworkshopthispast Antitrust DivisionoftheDepartmentJustice Guidelines, theFTC,togetherwith the effectiveness oftheHorizontalMerger decision-making processesandtoassess Guidelines. Assessing theHorizontalMerger Board ofDentistry. mover associationandtheSouthCarolina Part 3proceedingsagainstanintrastate State Action defense.Recentmattersinclude pursuing enforcementmatterstoclarifythe to theantitrustlaws. The agencyalsois on clarifyingapplicationofthisexemption The reportmakesdetailedrecommendations commerce fromthedisciplineofcompetition. consumers byshieldingmajorareasof interpretation hasthepotentialtoharm its originalobjectivesandthatoverbroad the doctrinehasbecomeunmooredfrom years before. The reportconcludedthat first articulatedbytheSupremeCourt60 and applicabilityoftheState Action doctrine, To promotetransparencyinits l work anddedication oftheitstalented staff. the agency’s fiveCommissionersandthehard achievements. They areatributetothevisionof has reasontobeproud oftheseextensive approximately 1,050staff members,theFTC other accomplishmentsmorefully. Withonly

sales –thatwereallegedtobedeceptively products –representingabout$1billionin involving dietarysupplementsandother Commission brought26enforcementactions its attacksondeceptivehealthclaims. The a multi-prongedstrategy, theFTCincreased Against DeceptiveHealthClaims. Employing A Broad-Based Approach and combatidentitytheft. effectiveness ofitsexistingtoolstoidentify which willallowtheagencytoassess and typesofidentitytheftinthemarketplace, survey providednewdataontheprevalence personal experienceswithidentitytheft. The The chaptersbelowdescribetheseand screen outbogusweight-lossclaims. guide showingthemediahowtoidentifyand weight-loss advertisementsbypublishinga againstdeceptive media tohelpinthefight products. Finally, theFTCchallenged claims onfoodanddietarysupplement health about obesityandtopermitqualified labeling requirementstoaddressconcerns drugs; andsuggestingchangestofood advertising toconsumersofprescription marketing; advocatingcontinuedtruthful against deceptivedietarysupplement and Drug Administration throughenforcement agency alsocontinuedtoworkwiththeFood cure awidevarietyofhealthconditions. The marketed fortheirpurportedabilitytotreator Federal Trade Commission Using

Fulfilling the Original Vision - 3 The FTC at 90 - 4 21 involving anticompetitiveconduct. The actions, including15involving mergersand Commission approved 36antitrustenforcement highly productive.Inthe past12months,the l l l l l of thatstrategyinclude: the impactofitscompetitionmission.Elements has adoptedastrategicframeworktomaximize and services,greaterinnovation. The FTC promotes lowerprices,higherqualityproducts a vibranteconomy. Aggressive competition and openmarketsthatarethecornerstoneof is criticaltoprotectandstrengthenthefree Guidance Competition LawEnforcementand Chapter 1: Federal Trade Commission

The competitionmissioncontinuestobe efforts. consistency ofmultilateralenforcement the worldtoimprovequalityand Work withcompetitionagenciesthroughout voluntary compliance;and standards tothepublicclearlyfacilitate Communicate FTCpoliciesandenforcement the boundariesofantitrustexemptions; of antitrustprinciples,suchasbyclarifying Seek appropriatelycomprehensivecoverage reporting, andadvocacy; including lawenforcement,researchand broad setofpowersandcapabilities, Take fulladvantageoftheFTC’s uniquely care andenergy; that mostaffect consumers,suchashealth Concentrate onsegmentsoftheeconomy The workoftheFTC’s competitionmission to adopt competition-based policies; filing amicus to adoptcompetition-basedpolicies;filing comments thaturgedothergovernmententities research activities;issuingreports;submitting including conductinghearings,workshops,and pursued numerousnon-enforcementinitiatives, Chapter 3,theagency’s competitionmissionalso two adjudicativeopinions. As describedin agreements. Inaddition,theCommissionissued seven administrativecomplaintsand14consent concerns. Nonmergerenforcementincluded mergers inlightoftheagency’s antitrust abandoned anadditionalsevenproposed agreements inmergercases,andtheparties complaints andacceptedsixconsent Commission issuedtwoadministrative of mergeractivity inrecentyears. Resources proceedings isduein part tothereducedlevel 3 proceedings. obtained reliefinthreecasesafterinitiatingPart Finally, duringthepast12months,agency additional casesbeforeaU.S.Courtof Appeals. final Commissionadjudicativedecisionsintwo (four cases). The agencyalsoisdefending Judge (ALJ)(fivecases)ortheCommission adjudication beforeanFTC Administrative Law Box 1.)Currently, ninecompetitioncasesarein 3 complaintsthaninanyyearsince1985.(See year 2003,theCommissionapprovedmorePart Rules toadjudicatecompetitioncases.Infiscal of theadministrativeprocessunderPart3its authorities throughouttheworld. cooperating withandassistingcompetition privateantitrustcases;and briefs insignificant Mix ofCases. The FTChassignificantlyexpandedtheuse A.

Administrative Adjudication The increaseinPart3 Federal Trade Commission

Fulfilling the Original Vision - 5 The FTC at 90 - 4 Federal Trade Commission with recognized expertiseincompetition law opinions issuedbythe Commission,abody the FTC Act, thoughtfulandcarefullywritten Consistent withcongressional intentinpassing beyond thereliefobtainedinaparticularcase. opinions offer benefitsthatextendwell questions andcutting-edgeissues. these Part3casesinvolvecomplicatedpolicy care hasledtomorelitigatedcases.Manyof focus oncriticalindustriessuchashealth worked toidentifyproblems,andtheagency’s Pennington working ontheFTC’s State Action, especially inkeyeconomicsectors. The staff approach toidentifyingseriousmisconduct, is alsoaproductoftheagency’s systematic The FTC’s expandedadministrativedocket through injunctiveactionsinfederalcourt. through administrativeproceedings,insteadof which normallyarecontested often consummated)mergers, more focusonnon-reportable(and filing thresholdshasnecessitated Moreover, the2001changeinHSR proceedings underPart3. usually litigatedinadministrative in federalcourt,conductcasesare agreement, generallyarelitigated when notresolvedbyaconsent Hart ScottRodino Act (HSR), mergers reportedunderthe conduct. Whileproblematic on suspectedanticompetitive review cannowbefocused previously divertedtomerger Advantages ofPart3. Systematic Approach toIdentifyingCases. , andInternet Task Forceshave Part3adjudicative Noerr-

Complaints 10 12 14 0 2 4 6 8 9318 9518 9718 9919 9119 9319 9519 9719 9920 0120 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 Part 3CompetitionComplaintsIssued l cases. issued FinalDecisionsintwoPart3antitrust appeal. Duringthepastyear, the Commission conclusions inmatterswhichithearsan of the ALJ’s findings offactandthelegal Commission canconductafull antitrust jurisprudence. and therebyhelpshapethedevelopmentof courts Commission opinionsalsocaninfluence applicable standardsandenforcementpolicy. the businesscommunity, andthepublicon and policy, can provideguidancetothebar,

yFsa er(93–2003) by FiscalYear(1983– of concerts featuringthe Three Tenors inan discount earlieralbums andvideorecordings into anillegalagreement nottoadvertiseor several musicdistribution companiesentered The Three Tenors, involvingallegationsthat The CommissionissuedaFinalDecisionin Polygram Holding(TheThreeTenors). Under theFTC’s RulesofPractice,the 1.

Appeals. Commission DecisionsandPending Federal Trade Commission de novo review Box 1

Fulfilling the Original Vision - 5 The FTC at 90 - 6 l Federal Trade Commission

but ratherbyacontinuum “rangingfrom determined bybrightlines ofdemarcation, test oflegalityhorizontal restraintsisnot explained thattheapplicable substantive to treathighbloodpressure. The opinion Dur isapotassiumchloridesupplementused consumers billionsofdollarseachyear. K- rising costofprescriptiondrugs,saving brand-name drugshelpstolowertherapidly competition fromgenericequivalentsof Dur. The delayharmedconsumersbecause versions oftheSchering-PloughdrugK- manufacturers todelayalaunchofgeneric Plough agreedtopaytwogenericdrug ALJ’s dismissalofchargesthatSchering- issued afinaldecisionoverturningthe Schering-Plough. Appeals fortheDistrictofColumbiaCircuit. is nowpendingbeforetheU.S.Courtof Respondents haveappealed,andthecase simply eliminatedinterbrandcompetition. prevent free-riding,statingthatitinstead on advertisinganddiscountingservedto Respondents’ claimthatthemoratorium hazards. The Commissionalsorejected competitive sort generallyposesignificant anticompetitive” becauserestrictionsofthis inherently suspect,andthus“presumptively or advertise Three Tenors productswere Respondents’ agreementsnottodiscount principles. The Commissionfoundthat restraints, basedonestablishedcaselaw will analyze“inherentlysuspect”horizontal provided ablueprintofhowtheCommission upholding the ALJ’s findingofillegality, The unanimousCommissionopinion, effort topromotetheirmostrecentconcert. The Commission per l l complaints inthepast12months:

The CommissionissuedninePart3 2. Appeals fortheEleventhCircuit. has appealedthecasetoU.S.Courtof evidence ofanticompetitiveeffects. Schering because theCommissionfounddirect it wasnecessarytodefinemarketsindirectly Tenors, butrejectedthe ALJ’s conclusionthat examination thanwasrequiredin Three Commission conductedamoredetailed facts ofindividualcases.”Inthiscase,the ambiguous behavior, responsivetothe conduct toadetailedexaminationofmore se the competing movers’ collectivefiling of and Kentucky. The complaints challenge household moversin Alabama, Mississippi, complaints againstassociations ofintrastate The CommissionissuedthreePart3 Association (HouseholdMoversCases). Mississippi, and Alabama Trucking Association, MoversConferenceof Kentucky HouseholdGoodsCarriers bargaining withpayors. other actionsconsistentwithdoctors’ joint with payorsonphysicians’ behalfortaking bars Brownand Toland fromnegotiating recently acceptedaconsentagreementthat organization enrollees. The Commission to provideservicesforpreferredprovider which itsdoctorswouldcontractwithpayors area withfixingthepricesandtermsunder physicians’ organizationintheSanFrancisco & Toland). California PacificMedicalGroup(Brown

condemnationofparticularlyegregious New Part3Complaints. The complaintchargedthis

Federal Trade Commission

Fulfilling the Original Vision - 7 The FTC at 90 - 6 Federal Trade Commission l l l

the antitrustlawsbycollectively settingthe alleged that Piedmont Health Alliance violated Piedmont Health Alliance. fee standards. the termscompliedwithgroup’s minimum payor offers toparticipatingphysiciansunless agreed-upon terms,andrefusingtosubmit to dealwithpayorsexceptoncollectively physicians onpriceandotherterms,refusing agreements amongitsparticipating violated theantitrustlawsbynegotiating complaint allegedthatthisphysiciangroup North Texas Specialty Physicians. liability undertheState Action doctrine. actions wereexemptfromfederalantitrust Board argued,amongotherthings,thatits the Commissiononamotiontodismiss, children. IntheJanuaryargumentbefore Carolina’s economicallydisadvantaged action fellparticularlyheavilyonSouth consequences oftheBoard’s anticompetitive treatments. The complaintchargedthatthe including cleanings,sealants,andfluoride in-school preventivedentalservices, the abilityofdentalhygieniststoprovide imposed anticompetitiverestrictionson pending complaintallegedthattheBoard South CarolinaBoardofDentistry. Commission’s complaint. in accordwiththereliefrequested tariffs containingcollectiveintrastaterates, their respectivecases,agreeingtostopfiling Alabama andMississippiassociationssettled violations ofSection5theFTC Act. The rates forintrastatemovingservices,alleging The complaint The The l l l after appealtotheCommission.

Evanston NorthwestHealthcare. production ofgasolineandprescriptiondrugs. range ofproducts,includingthoseusedinthe merger ultimatelycouldaffect pricesfora the lossofcompetitionresultingfrom petroleum andpharmaceuticalcompanies, customers forthistechnologyincludeleading The complaintchargedthat,because simulation softwareforprocessindustries. leading providersofengineeringprocess challenged themergeroftwothree Aspen Technology. its 450memberphysiciansinNorthCarolina. prices itdemandedfrompayorsonbehalfof computer memory. The complaintalleged Rambus monopolized a commonformof of an ALJ decision dismissingchargesthat anappeal withtheCommission Counsel filed Rambus. Three othercasesalsoarependingdecision 3. insurers constitutedillegalpricefixing. that jointnegotiationbythesephysicianswith group ofphysiciansemployedbyENHand affiliated withHighlandParkHospitalintoa a groupofindependentphysicianspreviously complaint allegedthatthepartiescombined following theacquisition.Inaddition, the hospital’s pricesincreasedsignificantly Counties, Illinois. According tothecomplaint, owner ofnearbyhospitalsinCookandLake Evanston NorthwestHealthcare(ENH),the acquisition ofHighlandParkHospitalby Commission challengedtheJanuary2000

Other PendingPart3Matters. OnMarch1,2004,Complaint The Commission Federal Trade Commission The

Fulfilling the Original Vision - 7 The FTC at 90 - 8 l l Federal Trade Commission

violated Section 7oftheClayton Act. storage tanksbeunwound becauseit of twobuildersfield-erected, industrial Decision requiringthat thiscombination considering anappealfrom ALJ Initial Chicago Bridge. Pennington protected fromantitrustscrutinybythe Unocal hasarguedthatsuchconductis consumers hundredsofmillionsdollars. California “summertime”RFGandcosting the technologyusedtoproduceandsupply patents, givingUnocalamonopolyover regulatory standardthatoverlappedUnocal (RFG). Unocal’s actionsallegedlyledtoa to low-emissionsreformulatedgasoline participants concerningitsresearchrelating Resources Board(CARB)andtoindustry misrepresentations totheCalifornia Air The complaintallegedthatUnocalmade Union OilCompanyofCalifornia(Unocal). complaint chargingmonopolizationbythe an appealofthe ALJ’s dismissalofthe Commission heardoralargumentin Unocal. billion dollarsoverthelifeofpatents. fees eachyear, andpotentiallymorethana was inapositiontoreapmillionsroyalty standard wasadopted,Rambusallegedly industry standardforthememory. Oncethe that eventuallywereadoptedaspartofthe pending patentapplicationsontechnologies to disclosethatithadapatentandseveral SSO’s purposesandprocessesbyfailing (SSO), Rambusintentionallysubvertedthe industry standards-settingorganization that, asaparticipantinanelectronics OnMarch10,2004,the doctrine. The Commissionalsois Noerr- and exceptionstotheantitrustlaws. professional associations,andimmunitiesfrom care, prescriptiondrugs,standardssetting, areas. The areasofemphasisincludedhealth sought systematicallytodevelopcasesinkey prioritiesand focus, theagencyidentified as itdidin2000.Consistentwithitsstrategic twice asmanynewnonmergerinvestigations last threeyears,theagencyhasopenedatleast activity subsidedsubstantially. Ineachofthe enforcement beginningin2001whenmerger balance betweenmergerandnonmerger of healthcare. other anticompetitivepractices thatraisethecost agreements amonghealth careprovidersand has redoubleditsefforts tostopanticompetitive and thenationasawhole. Recently, theagency of concernforconsumers,employers,insurers, The rapidlyrisingcostofhealthcareisamatter American Medical Association prominent prioritiessinceitbroughtitslandmark sector hasbeenamongtheFTC’s most decades. that ofanyfiscalyearinatleastthepasttwo complaints. This recordofenforcementexceeds are 14consentagreementsandsevenPart3 a priority. (SeeBox 2.) Among thesecases multiple casesineachoftheareastargetedas 21 nonmergerenforcementactions,including initiatives. Duringthatyear, theagencyinitiated revealed thesuccessofitsinvestmentinthese The FTCbegantorestoreitshistoric B. Promoting competitioninthehealthcare 1. The FTC’s recordinfiscalyear2003

Nonmerger Enforcement Focus onHealthCare. caseinthe1970s. Federal Trade Commission

Fulfilling the Original Vision - 9 The FTC at 90 - 8 Federal Trade Commission l l l of doctors,including: groups. numbers These casesinvolvesignificant administrative complaintsagainstanothertwo consent agreementsinninemattersandissued consumers’ costs. The Commissionobtained groups ofphysicianswithcolludingtoraise past year, theCommissionhaschargedmany

and surroundingareas; 600 communityphysiciansservingSt.Louis A settlementwith900facultyphysiciansand members; Dallas/Fort Worth physiciansgroupof600 and aPart3complaintagainstseparate physicians associationwith1,000members A settlementwithaDallas/FortWorth area requiring anesthesiologyservices; of aSanDiegoareahospital’s cases members workonapproximately70percent California anesthesiologistsgroupswhose A settlementwithtwoSanDiegoCounty, Collusion Among Physicians.

Enforcement Actions 10 15 20 25 0 5 9318 9518 9718 9919 9119 9319 9519 9719 9920 0120 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 omre EnforcementActionsInitiated Nonmerger yFsa er(93–2003) by FiscalYear(1983– Inthe services. Forexample,theCommission against organizationsthatincludehospital the Commissionhaspursuedsimilaractions to thecasesinvolvingphysicianorganizations, in thepurchaseofphysicianservices. ofcompetition by deprivingthemofthebenefits employers, individualpatients,andhealthplans to stop,allegedlycollusiveconductthatharms l 500 physicians,settledchargesthatthegroup Partners, agroupconsistingof15hospitalsand consent agreement,SouthGeorgiaHealth prices inafive-countyareaMaine.Insimilar engaged incollusionthatraisedhealthcare and 11 hospitals, toresolvechargesthatMHA Health Alliance (MHA),agroupof325physicians accepted aconsentagreementwithMaine

Collusion InvolvingHospitals. The FTC’s enforcementactionsstop,orseek settlement withthatorganization. Francisco physicians,andthesubsequent organization withmorethan1,500San An administrativecomplaintagainstan Box 2 the Commission namedahospital represents thefirstcase inwhich Carolina counties. This settlement local physiciansinfour North by in facilitatingprice-fixing Corporation, wereinstrumental and itsparent, Tenet Healthcare that FryeRegionalMedicalCenter the Commissionsettledcharges hospital services.InDecember, in collusiveconductproviding organizations allegedlyengaged first challengestoprovider cases representtheCommission’s prices. collectively fixed Thesetwo Federal Trade Commission Inaddition

Fulfilling the Original Vision - 9 The FTC at 90 - 10 protections afforded underState Action and Believing thatsomecourts hadexpandedthe from competition’s beneficialdiscipline. doctrines shieldsubstantial areasofcommerce apply. The State Action and widely theantitrustlawsproperlyshould marketplace conduct,butdetermininghow appropriate legalstandardstogovern involves notonlyfashioningandapplying – ofimportantpreventivedentalhealthcare. particularly economicallydisadvantagedchildren can provide,andthusdeprivedchildren– competition thatlicensedandtrainedhygienists Board’s actionartificiallyinsulateddentistsfrom The administrativecomplaintallegesthatthe reinstating andexpandingtherestrictions. responded byissuinganemergencyregulation preventive careinschools,andtheBoard child beforeahygienistwaspermittedtoprovide a statutory requirement for a dentist to examine a legislature passedalawin2000thateliminated to thecomplaint,SouthCarolinastate treatment planhadbeenestablished. According patient firsthadbeenseenbyadentistand care servicesinaschoolsettingunlessthe hygienists fromprovidingbasicpreventivedental regulation thatprohibitedlicenseddental administrative complaintchallengingaboard mentioned above,theCommissionissuedan group remainsinPart3. conspiracy. The caseagainstthephysicians as aparticipantinanallegedproviderprice-fixing Federal Trade Commission Effective applicationoftheantitrustlaws 2. South CarolinaBoardofDentistry.

Restraints onCompetition. Seeking toRemovePublic Noerr-Pennington As

articulated” prongtothepointthatabroadstate Some courtshavebroadenedthe“clearly and is“activelysupervised”bythestate. articulated” statepolicytosupplantcompetition the antitrustlawsifitispursuanttoa“clearly that otherwiseillegalconductisshieldedfrom to statepolicy. The SupremeCourthasruled upon certainprivateconducttakenpursuant State Action doctrineconfersantitrustimmunity clarify thelegalstandards. brought casesthatmayprovideopportunitiesto Supreme Courtarticulated,theCommissionhas Noerr-Pennington agreements intheseactions,the Commission Public Commentaccompanying theconsent supervision requirement. Inthe Analyses to Aid regardingtheactive opportunities forclarification of householdgoodsmovershaveprovided enforcement actionsaimedatassociations of consumers. A series ofCommission under thedoctrine’s protectiontothedetriment of thestandardsweepsavarietyactivities underlying thestandard.Overbroadapplication factors werewell-tailoredtotheprinciples considered avarietyoffactors,notallthose State Action doctrine. Although courtshave constitutes “activesupervision”underthe guidanceonwhat have notprovidedsufficient FTC taskforcehasconcludedthatcourts of cleararticulation. Dentistry competition. The of acleararticulationpolicytorestrain a regulatoryschemeisdeemedtheequivalent authorization ofcertainactsorimplementation State Action -Clear Articulation. State Action - Active Supervision. caseraisesissuesregardingthescope beyondthestandardsthat South CarolinaBoardof The An Federal Trade Commission

Fulfilling the Original Vision - 1 The FTC at 90 - 10 Federal Trade Commission agencies inadvance. Whilethevastmajority mergers mustbereported totheantitrust raised thethresholdsgoverning whichproposed Notification Act,effective inFebruary 2001, not apply to Unocal’s alleged misrepresentations. various argumentswhy conduct fromantitrustchallengeandrejected Noerr-Pennington decision inlargepartonhisconclusionthatthe dismissal ofthecomplaint. The ALJ basedhis on appealbeforetheCommissionafter ALJ’s Resources BoardandtoUnocal’s competitorsis alleged misrepresentationstotheCalifornia Air Litigation. consumer welfare. when thestandardsincludecompetitionor established bythestatelegislature,particularly action comportswiththesubstantivestandards qualitative andquantitative–ofhowtheprivate assessment–both objectives; and(3)aspecific the privateconductfurtherslegislature’s reasoning, andsupportingevidencethat on themeritsthatwouldprovideanalysis, opportunity tobeheard;(2)awrittendecision adequate factualrecord,includingnoticeand challenged conduct:(1)thedevelopmentofan whether thestate“activelysupervised” jurisprudence, thatarerelevanttodetermining principles establishedintheSupremeCourt’s threefactors,basedontheoriginal identified Amendments totheHSRPremerger 1. C. Noerr-Pennington

Consummated Mergers. Administrative Adjudication of Merger Enforcement The agency’s challengetoUnocal’s doctrine insulatesUnocal’s -UnocalPart3 Noerr-Pennington should review periodhasrun.Finally, theFTC,aspart could harmcompetitionevenaftertheHSR have aresponsibilitytochallengemergersthat that timeperiod.Inthosecases,theagencies competitiveproblemswithin identify significant review period,occasionallytheagenciescannot problematic combinationsduringtheinitialHSR while theagenciesordinarilyidentifypossibly knowledge, andothersources.Inaddition, HSR, relyingonpressaccounts,industry mergers amongthosenotreportableunder emphasis onidentifyingpossiblyanticompetitive issues. Consequently, theFTChasplacedmore concern, asmallnumberdoraisecompetition of newlyexempttransactionsposenoantitrust l advance. possiblyanticompetitivemergersin identified completed mergerstoassesshowwellithas development,” conductsperiodicreviewsof of itsongoing“competitionpolicyresearchand

proposed divestiturerelief. Subsequently, the from dissipatingassets thatarethesubjectof injunctive relieftoprevent ChicagoBridge emergency motionseeking authorizationfor an the acquisition,ComplaintCounselfiled intent tocloseaplantitacquiredaspartof employees of its Chicago Bridgehadnotified appeal. InDecember, afterlearning that matter isnowbeforetheCommissionon and orderedthatthedealbeundone. The the ALJ ruledthatthemergerwas illegal an injunctioninfederalcourt.LastJune, the mergerunderPart3insteadofseeking Act. Thus, theCommissionchallenged concluded thatitlikelyviolatedtheClayton had beenconsummatedwhentheFTC Chicago Bridge. This mergeralready Federal Trade Commission

Fulfilling the Original Vision - 1 The FTC at 90 - 12 l health-related markets. Two efforts standout: involving pharmaceuticals,hospitals,andother The FTCdevotesspecialattentiontomergers health careisapriorityinmergerenforcement. lives of American consumers. energy, thathavesignificantimpactonthedaily sectors of the economy, primarily health care and resources initsmergerenforcementprogramto l l Federal Trade Commission

consumers, andtheFTCcarefully monitors drug pricesareamajor concernformany Pfizer/Pharmacia. Health Care. The FTCcontinuedtodevotesubstantial 2. effects resultingfromamerger. instead ofrelyingonpredictionsprice be abletoexamineactualpriceevidence challenging thismerger, theCommissionmay another facetofconsummatedmergers.In Evanston NorthwestHealthcareillustrates challenging ahospitalacquisitionby Commission’s administrativeaction Evanston NorthwestHealthcare. engineering simulationsoftwareforindustry. competitor intheprovisionofprocess and ledtotheeliminationofasignificant of Hyprotechin2002wasanticompetitive Technology’s $106.1millionacquisition issued aPart3complaintallegingthat Aspen Aspen Technology. divestiture, shouldthe ALJ’s orderbeupheld. acquired assetsinaformthatwillfacilitate order” thatrequirespreservationofthe Commission approvedan“interimconsent

Segments. Continued EmphasisonKeyMarket As inthenonmergerarea, Risingprescription The Commission The l transmission andpetroleumrefining. FTC consideredmergersinvolvingnaturalgas effects oncompetition.In thepastyear, the in energy-relatedmarketsforpossibleadverse consumer. The FTC carefullyreviewsmergers l

go forward. allowing theremainderoftransactionto consumers’ interestsinthosemarkets,while The orderrequiresdivestiturestoprotect and threedifferent veterinaryconditions. coughs, motion sickness, erectile dysfunction, symptoms ofmenopause,skinconditions, including drugstotreatoveractivebladder, separate andwide-rangingproductmarkets, billion mergerwouldharmcompetitioninnine divestitures toresolveconcernsthattheir$60 and PharmaciaCorporationtomakecertain largest pharmaceuticalcompanyintheworld, year, theCommissionorderedPfizer, Inc.,the pharmaceutical companymergers.Last pipeline fromCMSEnergy Corporation,after $1.8 billionpurchaseof thePanhandle order allowedSouthern UnionCompany’s natural gastotheKansas Cityarea. The competition inthemarketfordeliveryof final consentorderdesignedtopreserve In July2003,theCommissionapproveda Southern Union(PanhandlePipeline). Energy. stems fromthateffort. of HighlandParkHospital,discussedabove, Evanston NorthwestHealthcare’s acquisition administrative complaintchallenging hospital mergersinseveralcities. The is reviewingtheeffects ofconsummated Hospital MergerRetrospective. The costofenergyaffects every The FTC

Federal Trade Commission

Fulfilling the Original Vision - 13 The FTC at 90 - 12 Federal Trade Commission l economy whentheythreatened competition. challenge proposedmergersacrossthe l

– anenzyme importanttothenation’s food protect competitionin the marketforphytase DSM/Roche. The agencycontinuedtoscrutinizeand 3. optimization. synergies and efficiencies relatingtorefinery would producesubstantialmerger-specific credible evidencethattheacquisitionlikely Commission’s statement,Sunocopresented raising prices.Inaddition,accordingtothe from prevent Sunocoandotherarearefiners and conventionalgasolinethatlikelywould sourcesofbothreformulated significant a fourth,theFTC’s investigationidentified refineries, andtheacquisitionwouldadd owned threePhiladelphia-arealocal consumers’ interests. Although Sunoco El PasoCorporationwouldnotthreaten acquisition ofEaglePointOilCompanyfrom the FTCconcludedthatSunoco’s proposed Sunoco/Eagle Point. gas intheKansasCityarea. consumers payinghigherpricesfornatural between them,andlikelyresultingin and control,eliminatingdirectcompetition common ownershipormanagement would haveplacedthetwopipelinesunder The complaintallegedthatthetransaction of naturalgastotheKansasCityarea. Panhandle inthemarketfordelivery the Centralpipeline,whichcompeteswith under whichoneofitssubsidiariesmanaged Southern Unionterminatedanagreement

Other MergerEnforcement. The Commissionactedto After investigation, l objectives because afullunderstanding ofthe standards. Transparency servestheFTC’s understanding ofitsenforcement policiesand law enforcementefforts byfacilitatingpublic l

The remedyfullyresolvedtheagency’s of ARC’s in-space liquidpropulsionbusiness. protects competitionbyrequiringdivestiture acquisition of Atlantic ResearchCorporation involving GenCorp,Inc.’s $133million GenCorp/ARC. nutrients thatarevitaltolivestockproduction. digestibility ofphosphorousandother added topoultryandswinefeedpromote DSM divestitsphytasebusiness.Phytaseis and FineChemicalDivision,butrequiresthat acquisition ofRocheHolding AG’s Vitamin DSM N.V. toproceedwithits$1.89billion supply –byobtainingasettlementthatallows The FTCincreasesthe effectiveness ofits D. materials inmanufacturingapplications. control andtoinspectthetoleranceof Ultrasonic NDT equipmentisusedforquality days ofitsacquisition Afga’s NDT assets. divest itsultrasonicNDT businesswithin20 The consentagreementrequiresGEto N.V.’s nondestructivetesting(NDT)business. $437 millionacquisitionof Agfa-Gevaert arising fromGeneralElectricCompany’s settlement toresolveantitrustconcerns GE/AGFA. transaction. the partiestocompleteotherwisebenign space propulsionthrusters,whileallowing competition inmarketsforfourtypesofin- concerns aboutthetransaction’s impacton

Transparency andPolicyGuidance The Commissionreacheda A finalconsentorder Federal Trade Commission

Fulfilling the Original Vision - 13 The FTC at 90 - 14 l l action. statements explainingwhyitdeclinedtotake For thisreason,theCommissionhasissued agency initiateslitigationoracceptsasettlement. public asthedocumentsreleasedwhen can provideasmuchusefulinformationtothe decided nottotakeactioninaparticularcase Enforcement Action. ways. understanding ofitsactionsinseveraladditional has soughttoexpandpublicawarenessand transaction orconductatissue. The FTC successfully tochallengethetypeofmerger communities thattheFTCcanandwillmove also communicatestothebusinessandlegal marketatissue,but competition inthespecific enforcement actionnotonlypromotes government intervention.Eachsuccessful or anticompetitivepracticeswithoutneedfor their clients,andpreventsharmfulmergers facilitates antitrustlawyers’ counselingof to challenge,andwhy, informsbusinesses, kinds oftransactionsorconducttheFTCislikely Federal Trade Commission

of aconsummatedmerger ofNovazyme Genzyme/Novazyme. Philadelphia-area refinery. from Sunoco’s acquisitionofanadditional would preventanyanticompetitiveresult likely pipeline fromGulfCoastrefineries, shipments viaamajorpetroleumproducts aswell including otherlocalrefineries of gasolinesupplytothePhiladelphiaarea, investigation, explainingthatmultiplesources issued astatementwhenitclosedthis Sunoco/Eagle Point. Explaining DecisionsNottoTake ExplainingwhytheFTC The Commission Inthisinvestigation a statementpresentinghisviewsonthe first treatmentgainingFDA approval.In seven yearsofmarketexclusivitytothe under theOrphanDrug Act, whichgrants few individuals,potentialtreatmentsfall affliction. BecausePompediseaseaffects currently noeffective treatmentforthis affecting infantsandchildren. There is disease isarareandoftenfatal replacement therapies(ERT). Pompe treatment forPompediseaseusingenzyme of researchintothedevelopmenta potential impactonthepaceandscope the FTCfocusedontransaction’s Pharmaceuticals andGenzymeCorporation, innovation. the relationshipbetween competitionand statement expressing her generalviewson not participateinthismatter butissueda disease ERT. Commissioner Harbourdid two rivalsseekingtodevelopPompe Guidelines andthatiteliminatedoneof anticompetitive undertheHorizontalMerger grounds thatthemergerwaspresumptively he arguedinfavorofachallengeonthe Thompson alsoissuedastatementinwhich in factbenefitpatients.Commissioner ERT programs,andthatthemergermay progress oneitherofthetwoPompedisease caused areductioninR&Dspendingor uncovered noevidencethatthemerger He explainedthattheagency’s investigation factswasthereforenecessary.case-specific competition, andthatcarefulinvestigationof causal relationshipbetweeninnovationand and researchhavenotestablishedageneral Chairman Murisnotedthateconomictheory matter, closedbya3-1Commissionvote, Federal Trade Commission

Fulfilling the Original Vision - 15 The FTC at 90 - 14 Federal Trade Commission l

manufacturers. PBM monopsonypoweroverpharmaceutical Commission alsofoundnoreasontoexpect any adverseeffect onconsumers. The regionally orientedPBMs,shouldprevent PBM services,anddozensofsmall,often several retailpharmacychainsoffering competition fromseveralhealthplansand additional PBMs, alongwithsignificant remaining national,independent,full-service concluded thatcompetitionfromthe or directlywithemployers. The Commission consumers undercontractswithhealthplans formostU.S. administer prescriptionbenefits services intheUnitedStates.PBMs management(PBM) prescription benefit firms aretwoofthelargestproviders proposed acquisitionof AdvancePCS. The investigation intoCaremarkRx,Inc.’s statement explainingtheclosingofits Caremark. Post Merger HHI 5,000 -6,999 4,000 -4,999 3,000 -3,999 2,400 -2,999 2,000 -2,399 1,800 -1,999 0 -1,799 7,000 + Total The Commissionissueda 0-99 2/22 0/14 0/0 0/0 0/0 0/2 1/1 1/1 0/4 All MarketsbyFiscal Year (1996-2003) 100 -199 Post MergerHHIandChangein(Delta) 31/34 17/20 0/0 2/0 0/2 2/2 4/1 1/5 5/4 Horizontal MergerInvestigations 200 -299 41/22 18/8 0/0 3/2 1/1 3/1 4/3 7/4 5/3 Enforced/Closed 300 -499 77/22 22/11 Change inHHI(Delta) 13/4 12/1 17/4 1/0 3/1 3/0 6/1 500 -799 (See Box3.)Forinvestigationsinvolvingthree more than780marketsoverthelasteightyears. in 151horizontalmergerinvestigationsinvolving HHIs associatedwiththeFTC’s investigations tabulated post-acquisitionHHIsandchangein for fiscalyears1996to2003. Thedatashow staff analysisofhorizontalmergerinvestigations in HHI.Inaddition,theFTCrecentlyreleaseda Herfindahl-Hirschman Index(HHI)andchange merger enforcementactionsbypost-acquisition 2003. The reportindicatedthenumberof data forthetwoagenciesfrom1999through released areportsummarizingmergerchallenge and Challenges. assist practitionersandbusinessesinevaluating during theinvestigation. This informationshould or “strongcustomercomplaints”wereidentified information onwhetherornot“hotdocuments” or fewermarkets,theFTCstaff alsoreported 118/30 41/11 15/6 31/8 12/2 2/0 6/0 8/1 3/2 Data onHorizontalMergerInvestigations

800 -1,199 93/17 49/11 25/3 5/0 7/1 6/0 1/1 0/0 0/1 Together withDOJ,theFTC 1,200 -2,499 144/22 63/12 42/2 28/7 11/1 0/0 0/0 0/0 0/0 Federal Trade Commission 2,500 + 101/4 81/2 20/2 0/0 0/0 0/0 0/0 0/0 0/0 607/173 104/18 103/30 100/3 88/23 63/30 34/14 55/49 Total 60/6 Box 3

Fulfilling the Original Vision - 15 The FTC at 90 - 16 elements. evaluating thefactsof eachcaseinlightofthose prong oftheState Action doctrineismetand in determiningwhether theactivesupervision active supervisionregimethatitwillconsider elementsof an statements identifyingspecific for example,theCommissionissuedlengthy conduct. IntheHouseholdMoverscases, the enforcementstandardsthatapplytospecific of outliningtheagency’s analyticalapproachand documents canservethemoregeneralpurpose commenting onaproposedsettlement,these assisting thepublicininterpretingand making themmoreinformative.Besides consent agreement,itrecentlyhasemphasized Analyses to Aid PublicCommenttoexplaina Although theCommissionroutinelypublishes defendants forthesameinjury. persons orexcessivemultiplepaymentsby to potentialduplicativerecoveriesbyinjured The agencystatedthatitremainssensitive in privateactionsandcriminalproceedings. light ofotherlikelyremedies,includingremedies and (3)thevalueofequitablemonetaryreliefin calculating theamountofremedialpayment, (2) whetherthereisareasonablebasisfor (1) whethertheunderlyingviolationisclear, or restitution,theagencywouldconsider: in determiningwhethertoseekdisgorgement in antitrustcases. The statementexplainedthat, remedies, suchasdisgorgementandrestitution, statement ontheuseofmonetaryequitable Commission unanimouslyissuedapolicy proposed acquisition. the likelihoodofanantitrustchallengetoa Federal Trade Commission Analyses to Aid PublicComment. Disgorgement PolicyStatement. The

their purchasing decisions. accurate informationto helpconsumerswith business educationto promoteandprovide consumer harmsandfocused itsconsumerand targeted itslawenforcementtocombattheworst reporting, andconsumerprivacy. The FTC theft, telemarketingfraud,Internetcredit importance toconsumers,includingidentity months, theagencyfocusedonissuesofcritical practices inthemarketplace.Duringpast 12 protects againstfraud,deception,andunfair Rulemaking, andGuidance ment, Consumer ProtectionLawEnforce Chapter 2: objectives whileminimizingantitrustrisks–for industry groupscanachievelegitimatepro-consumer competitors. CommissionerLearydescribedhow and traditionalantitrustlimitsoncollaborationamong industry self-regulationmeasurestocombatfraud Leary consideredtensionsthatmightarisebetween the other. insights achievedinonemissionmightinformpolicy functions andcreatesopportunitiesforexploringhow requires coherentprinciplesforexercisingthese emphasized thatthecombinationofresponsibilities speeches, Commissioner Thomas B.Learyhas consumer protection.Invariousarticlesand role ofadvancingcompetitionpolicyandpromoting competition andconsumerprotectionprograms. and improvetheconceptuallinksbetweenits Leary underscoredtheneedforFTCtoconsider collectively cantaketoreducefraud,Commissioner As heoutlinedpracticalstepsthatbusinesses through reasonabledisputeresolutionmechanisms. premised onobjectivecriteria,andareimplemented well-tailored tothepurposeofpreventingfraud,are example, byensuringthatindustryethicalcodesare The FTC’s consumerprotectionmission In apresentationinJanuary2004,Commissioner The Federal Trade Commissionhasthedual Achieving aSynthesisof Competition Policyand Consumer Protection Box 4 - Federal Trade Commission

Fulfilling the Original Vision - 17 The FTC at 90 - 16 Federal Trade Commission law enforcement, andavarietyof legaltools, investigation, closecoordination withcriminal as “phishing.”Usingsophisticated technical into revealingpersonal information,known a newonlinetechniquefordupingconsumers FTC identifiedandtargetedtheemergence of especially inthecyberworld.Forexample, electronic toolsextensivelytoferretoutfraud, and fightfraud. TheFTCcontinuedtouse businesses andconsumersabouthowtoavoid at homeandabroad,educatedmore recruited morelawenforcementpartners consumer complaintstoitsinternaldatabases, deception. The agencyaddedthousandsof improve itsmethodsforidentifyingfraudand themselves fromfraudanddeception. the law, andconsumersabouthowtoprotect emerging issues,industryaboutcomplyingwith authorities; andto the lawactingaloneorwithothergovernment egregious fraudanddeception;to mission remainsthesame:to using state-of-the-arttechnology, itsfundamental public policydebate. As theFTCtrackstrends conferences advanceFTCknowledgeandthe and deception;workshops,hearings, help singleoutthemostseriousonlinefraud experiences inthemarketplace;Internetsurfs provide valuableinformationaboutconsumer mission. The agency’s complaintdatabases set prioritiesforitsconsumerprotection Over thepastyear, theFTCcontinuedto 1. A. The FTCusesvariouspolicytoolsto

Deception. Tools toIdentifyFraudand Fraud andDeception educate the agencyabout identify enforce the most perpetrators ofsuchschemes. the FTChasbeguntotrackdownandstop category ofthetopcomplaints.) www.consumer.gov find awealthofstatistics aboutfraudthrough can accesspublicsectionsofthisWeb siteand organizations sincelastyear. Consumers also and Australia –anincreaseofmore than400 agencies acrosstheUnitedStates,Canada, available onlinetoover990enforcement over 1.5millionfraudcomplaintsandis in 1997,ConsumerSentinelnowcontains is theFTC’s primaryfrauddatabase.Created entries nowexceeds3.2million. to theFTC’s database. The totalnumberof the CRC added 944,000 complaints and inquiries year2003, online, andsendingletters.Infiscal complaints number (1-877-FTC-HELP),filing submitted byconsumersusingtheFTC’s toll-free Center respondstocomplaintsandinquiries consumers andlawenforcersattheFTC. The continues tobeavitalresourceforboth 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. Consumer ResponseCenter. Consumer Sentinel.

Magazine BuyersClubs-1% Business Opportunities&Work-at-Home Plans-2% Telephone Services-3% Advance FeeLoans&CreditProtection-4% Foreign MoneyOffers -4% Prizes, Sweepstakes&Lotteries-5% Internet Services&ComputerComplaints-6% Shop-at-Home/Catalog Sales-9% Internet Auctions -15% Identity Theft -42% Calendar Year 2003 Fraud Complaints Top 10Consumer . (SeeBox5foralist by Federal Trade Commission ConsumerSentinel The CRC Box 5

Fulfilling the Original Vision - 17 The FTC at 90 - 18 Postal InspectionService, FTCinvestigators Working withtheSecretServiceandU.S. 890 lawenforcementagencies accessthedata. through anonlinedatabase, andnowmorethan the dataavailabletolawenforcementpartners Consumer Sentinel,theFTCbeganmaking complaints. Buildingonitsexperiencewith The databasenowholdsmorethan500,000 for thecollectionofconsumercomplaintdata. central clearinghouseforIDtheftcomplaints and maintains anIDtheftdatabase,whichisthe year2003.Second,theFTC 321,000 infiscal year2002tomorethan than 185,000infiscal inquiries totheFTChaveincreasedfrommore to itscomplaintdatabase.Complaintsand form (at (1-877-ID-THEFT) andanonlinecomplaint First, theagencyoperatesatoll-freenumber againstidentitytheft. two majortoolsinthefight Federal Trade Commission names.” and facilitatetheprocessforregainingvictims’ good on waystobothpreventIDtheftfromhappening to assistvictims,andworkwiththeprivatesector investigations, maintainarobustidentitytheftprogram efforts toassistcriminallawenforcementwiththeir much aspossible. The Commission willcontinueits capabilities, iscommittedtoreducingidentitytheftas Commission, throughitseducationandenforcement area offraud,CommissionerHarbournoted,“The the toolsnecessarytocombatthisrapidly-growing to provideconsumersandlawenforcementwith Emphasizing theCommission’s continuedcommitment and detailingtheFTC’s ongoingID Theft program. Conference, addressingthedangersofidentitytheft 2003, CommissionerHarbourspokeattheInsideID Commissioner on August 4,2003.InDecember Identity TheftTools. Pamela JonesHarbourwassworninasa Enforcement andConsumers www.consumer.gov/idtheft to CombatIdentityTheft Providing Tools forLaw The FTCemploys ) asportals Box 6 by mid-March2004. yeartomorethan94million 700,000 inthefirst total numberofspamreceivedhasgrownfrom of 250,000newpiecesspam This databasecurrentlyreceivesanaverage are encouragedtoforwardspam( electronic mailboxtowhichInternetcustomers alike. Since1998,theFTChasmaintainedan be aproblemforconsumersandbusinesses for unsolicitedcommerciale-mail,continuesto Forces forpossibleprosecution. are referredtoregionalFinancialCrimes Task develop preliminaryinvestigativereportsthat now accessibleto18member countries,with through complaints filed launched inSeptember 2002.Consumer “ its newesttoolstoidentifyfraudistheFTC’s accounts, whichiseasiertodetectandrepair. a muchlowerratethanthemisuseofexisting theft, theopeningofnewaccounts,isrising at however, wasthatthemostserious formofID preceding thesurvey. Onepromisingfinding, $5 billioninout-of-pocketexpensesfortheyear nearly $48billion,andconsumervictimsreported institutionstotaled to businessesandfinancial 7.) According tothesurvey, identitytheftlosses million personsinthelastyearalone.(SeeBox identity theftinthelastfiveyears,including9.9 27.3 million Americans havebeenvictimsof nationwide surveyonidentitytheft,showingthat frauds, theFTCreleasedfindingsfromthis one ofthemostfrequentlyreportedconsumer econsumer.gov Spam Database. Cross-Border FraudWeb Site. Identity TheftSurvey. ” Web site,redesignedand “Spam,”thepopularname econsumer.gov Concentratingon daily [email protected] Among . The are ). Federal Trade Commission

Fulfilling the Original Vision - 19 The FTC at 90 - 18 Federal Trade Commission $425 millioninconsumerredress. FTC obtained110 judgmentsorderingmorethan cases involvingtheInternet.Inpastyear, the disseminate fraudulentschemes,andbrought58 also hasfocusedontheuseofInternetto auction fraud,andfundraisingfraud. The FTC work-at-home schemes,Internetscams,online by theFTCitself,through“sweeps”targeting than 160separateactions,including20filed 100 lawenforcementpartnersbroughtmore During thepast12months,FTCandover types offraudforlawenforcementactions. information, theFTCtargetsmostpervasive commerce disputes. cross-border consumerdisputes,especiallye- dispute resolutionproviderstohelpresolve pilot programtolinkconsumerswithalternative site, theFTCalsohasestablishedasix-month Ireland asthenewestaddition. Through this 2 1 Drawing onalltheabovesourcesof 2. (Source: Population Division, U.S.CensusBureau;Table NA-EST2002-ASRO-01). Based on the U.S. p Source:Identity Theft Survey

Victims, In millions 10 12 Law Enforcement. 0 2 4 6 8 New Accounts & Other (1.5% ) Frauds 3.2 opulation age 18 and 2 Incidence of Identity Theft April 2002 – March 2003 March April 2002 – Report conducted by te xsigAcut xsigCei adOl Total Victimization Existing Credit Card Only Other Existing Accounts (0.7%) vr(1.7mlin sof July 1, 2002 over (215.47 million) as 1.5 Synovateforthe (2.4%) 5.2 FTC (March-April 2003). 1 (4.6%) 9.9 is toactas of attorneysandinvestigators,whosefunction Criminal LiaisonUnit(CLU),adedicatedstaff cooperation. In2003,theFTCcreated efforts, throughbothformalandinformal been apartoftheFTC’s consumerprotection criminal lawenforcementagencieshaslong the servicingofsubprimeloans.(SeeBox8.) redress forviolationsoftheFTC Act relatedto defendants toprovide$40millioninconsumer Corp., whichwouldrequirethecorporate approval ofitssettlementwithFairbanksCapital them traininginareasofFTCexpertise,and authorities abouttheFTCanditsmission,offers cases, educatescriminallawenforcement typesofconsumerfraud agents forspecific interested lawenforcementagenciesandcase Specifically, appropriateand the CLUidentifies with theFTConconsumerfraudissues. enhanced throughcooperationorconsultation enforcement agencieswhoseworkwouldbe Criminal LiaisonUnit. In addition,theFTCisawaitingcourt Box 7 the terms, rates, orfees. The deceive consumersabout loan unscrupulous lenders, however, including homeownership. Some in thenation’s economy, is essentialtofullparticipation most consumers,accesstocredit and OtherCreditSchemes. parallel prosecutions. and ensurethesmoothprogressof the FTCpreparecasesforreferral criminal lawenforcementtohelp coordinates trainingofFTCstaff by point ofcontactforcriminallaw Deceptive LendingPractices Federal Trade Commission Coordinationwith For

Fulfilling the Original Vision - 19 The FTC at 90 - 20 l not qualifythemforprimeloans. at borrowerswhosecreditratingsandhistory do the subprimelendingmarket,whichisdirected the FTChascontinueditsvigilantmonitoring of consumer redressinagencyhistory. This year, obtaining oneofthelargestjudgmentsfor lending marketinrecentyears,lastyear has paidspecialattentiontothesubprime even further. in return,orworse,toseetheircreditdamaged dollars fortheseservices,onlytoreceivenothing to them.Consumersmaypayhundredsof their debtorobtaincreditotherwiseunavailable consumer debt,promisingtohelpthemmanage target consumerswithbadcreditorsignificant home.Bogusorganizations the consumer’s results canbesevere,includingthelossof Federal Trade Commission

*$40.0m is pending court approval. owned subsidiaryFairbanks CapitalCorp., Fairbanks CapitalHolding Corp.,itswholly- Commission announced settlementswith Fairbanks Capital. Deceptive SubprimeLending. Corp.,$40.4m*, 9% FairbanksCapital ConsumerCredit CapitalChoice infcn ers res-$425 Million Total Significant Redress Orders - $36.7m,8% MitchellGold $23.8m,5% Cyberspace.com $17.7m,4% HudsonBerkley $83.8m, 18% pi 03-March 2004 April 2003 - ConsumersGroup FirstCapital $8.5m,2% InNovember2003,the RexallSundown $7.4m,2% The FTC OtherMatters $32.6m,7% Associates/Citigroup $215m,45% The l l

the Commission chargedsubprime lender Stewart Finance. other restrictionsontheir businesspractices. tape recordfutureloan closings,andimposes misrepresenting loanterms,requiresthemto settlement alsoenjoinsthedefendantsfrom claimants attheendofJanuary2004. The redress, whichwasdistributedtoallqualified defendants paid$270,000inconsumer market. Pursuanttothesettlement, terms tohomeownersinthesubprime General thattheymisrepresentedkeyloan Commission andtheIllinois Attorney Services, Inc.,settledchargesbythe Diamond andhiscompany, OSIFinancial Illinois-based mortgagebrokerMark Mark Diamond. late feesandotherunauthorizedfees. timely mannerandchargedconsumersillegal post consumers’ mortgagepaymentsina defendants, amongotherthings,failedto Box 8 the U.S.DepartmentofHousing jointly bytheCommissionand According tothecomplaint,filed of subprimemortgageloans. illegal practicesintheservicing variety ofunfair, deceptive,and Fairbanks withengagingina redress. The agencycharged Basmajian willpay$400,000in final courtapproval),anddefendant redress toconsumers(subject defendants willpay$40millionin separate settlements,thecorporate CEO, Thomas D.Basmajian.In and theirfounderformer and UrbanDevelopment,the InNovember2003, InSeptember2003, Federal Trade Commission

Fulfilling the Original Vision - 21 The FTC at 90 - 20 Federal Trade Commission Florida-based defendants falselyrepresented advance fee. The complaintallegedthatthe the offer ofcreditcardstoconsumersforan Telemarketing SalesRuleinconnectionwith Data, Inc.,withviolatingtheFTC Act andthe LLC, itsprincipals,andsuccessor, Pulsar the CommissionchargedPlatinumUniversal, consumer neverreceives.InNovember2003, with thepromiseofacreditcard,which deceptive schemesinvolvecollectingfees Advance FeeCreditScams. injunction. contained inthedistrictcourt’s preliminary purchasers agreedtohonortherestrictions injunction. As aresult,thenew(unrelated) branch officesfreeofthedistrictcourt’s FTC objectedtothesaleofStewartFinance’s bankruptcy reorganizationcase,wherethe previously untestedwatersinarelated abusive practices. This casealsocharted a preliminaryinjunctionhaltingtheallegedly fees. InOctober, theCommissionobtained deposit program,whichimposedadditional refinance loans,andtoparticipateinadirect Car Clubmemberships,toobtaincostly add-on products,suchasinsuranceand induce unwittingconsumerstopurchase deception andotherillegalpracticesto alleged thatStewartFinanceengagedin in lessthanoneyear. The Commission in amountslessthan$1,000toberepaid consumers inthesubprimemarket,typically Finance providedsmallpersonalloansto laws. According tothecomplaint,Stewart companies withviolatingfederallending John BenStewart,Jr., andninerelated Stewart FinanceCompany, itsowner Other engaged in deceptive practices. According to the creditcounselingagency,itself asanon-profit is AmeriDebt, anationalorganizationthatpromotes a complaintinfederalcourtchargingthat In November2003,theCommissionfiled involve deceptivecreditcounselingservices. Still otherschemesthattheFTChasfought the court. stipulated toapreliminaryinjunctionenteredby did notreceiveacreditcard. The defendants the defendantsafee,when,infact,consumers that theywouldobtainacreditcardafterpaying to English-andSpanish-speakingconsumers l different kindofscam. FTC announcedfoursweeps,eachtargeting a greater relieftoconsumers. This year, the scammers, lawenforcementcanprovide multiple casessimultaneouslyagainstnumerous on aparticulartypeoffraud.Bybringing enforcement agenciestomakeagreaterimpact unique vehicleforpartneringwithotherlaw law enforcementstrategy. They providea continue tobeanessentialpartoftheFTC’s Act. notices asrequiredbytheGramm-Leach-Bliley charged that AmeriDebt failedtoprovideprivacy their finances. Additionally, thecomplaint andteachconsumershowtohandle non-profit, that theychargenoup-frontfee,operateasa complaint, thedefendantsfalselyrepresented

Deceptive CreditCounselingServices. with theirdeceptivepitches, theFTC that takemoneyoutof consumers’ pockets Targeting sellersofwork-at-homeschemes Operation “Pushing the Envelope.” Law EnforcementSweeps. Federal Trade Commission Sweeps

Fulfilling the Original Vision - 21 The FTC at 90 - 22 l l l Federal Trade Commission

which defendantsused stolenidentitiesto high-dollar transactions, andschemesin consumers intoafalse senseofsecurityin online escrowservices designedtolull Cases challengedsuchscamsasphony one ofthetopcomplaintsFTCreceives. targeted onlineauctionfraud,consistently Operation “BidderBeware.” new legislation. enforcement actions,consumereducation,or states joinedinthesweepbyannouncinglaw individuals andbusinesses.Inaddition,34 used deceptiontoexploitwell-intentioned companies andindividualsthatallegedly fiveactionstargeting Commission filed they dowiththemoneyraise. The misrepresenting whotheyareandwhat solicitors preyonthegoodwillofdonors, to stopfraudulentfundraising.Fraudulent campaign withregulatorsofstatecharities a lawenforcementandpubliceducation Also inMay2003,theFTCannounced Operation “PhoneyPhilanthropy.” fraudulent Internetscams. of allegedlydeceptivespammessagesand techniques, theseagenciestargetedavariety provided bytheFTCinInternetinvestigation law enforcementagencies.Usingtraining by morethan20federal,state,andlocal more than40lawenforcementactions Netforce, announcedinMay2003,included Southwest Netforce. businessopportunities. envelope-stuffing down onpurveyorsofallegedlyfraudulent and statelawenforcementsweeptocrack announced inDecember2003ajointfederal The Southwest This sweep

to beamajorfocusoftheFTC’s enforcement combating deceptivehealthclaimscontinues information forconsumers.Forthatreason, in advertisingcanbeanimportantsourceof Truthful claims andsubstantiatedhealthbenefit l l include: health orappearanceofconsumers.Highlights services, allofwhichpurportedlyimprovethe marketers ofdietarysupplements,devices,and program. Inthepastyear, theagencysued

Health, Safety, andWeight LossClaims. online auctions. engaged inallegedlyfraudulentactivity prosecutions againstindividualsandentities law enforcementactions,includingcriminal state andlocallawenforcers,announced53 were guiltyoffraud. The FTC,alongwith33 making itappearthatinnocentthirdparties sell nonexistentgoodsinonlineauctions, with makingthesame type offalseclaims Ab Forceelectronicmuscle stimulationbelt Commission chargedthe marketersofthe Ab Devices. product oranyotherweight-lossproduct. false ormisleadingrepresentationsaboutthe prohibit allofthedefendantsfrommaking $140,000 and$1million,respectively, and D’Alessandro, Jr. andHarrySiskind topay 2002. SeparatesettlementsrequireEdward Evening Weight LossFormula” inDecember sued themarketersof“BodySolutions their weight-lossproduct. The Commission used falseandunsubstantiatedclaimstosell agreed tosettlefederalchargesthatthey Nutritionals, Inc.,andtwoofitsofficers Mark Nutritionals. InOctober2003,the InOctober2003,Mark Federal Trade Commission

Fulfilling the Original Vision - 23 The FTC at 90 - 22 Federal Trade Commission l l

by, electromagnetic radiation emittedby reduce exposureto,or preventpenetration falsely claimedthattheir productscould protection devices,alleging thatthefirms against firmsmarketingcellphoneradiation the pastyear, theCommissionbrought cases Cell PhoneRadiationProtection. sevendays. and inchlossinthefirst fat proves thatBodyFlexcausessignificant loss insevendays;andthata“clinicalstudy” enough bodyfattoachievetheclaimedinch calories; thatBodyFlexcausesuserstoburn in thefirstsevendayswithoutreducing from fourto14inchesacrosssixbodyareas claimed thatBodyFlexcausesuserstolose complaint allegedthatthedefendantsfalsely fast inchandfatloss. The November2003 falsely advertisingthatBodyFlexcauses marketers oftheBodyFlex+Systemfor BodyFlex. exercise. and wasaneffective alternativetoregular abdominalmuscles; caused well-defined belt causedlossofweight,inches,andfat; defendants hadfalselyclaimedthatthe consumers wasthesame,andthusthat The Commissionallegedthattheeffect on expressly promisedinthoseinfomercials. their productwouldproducethesameresults in Project Absurd, andtherebyimpliedthat claims ininfomercialspreviouslytargeted and promotionalmaterials,referencedthe respondents, throughtheiradvertisements in aPart3administrativecomplaintthatthe Absurd” in2002. The Commissionalleged as thosetheFTCtargetedin“Project in themarketingandsaleoftheirproduct The Commissionsuedthe During l l

in federalcourttargetedallegedlydeceptive The twosettlementsandonecomplaintfiled of weight-lossproductscontainingephedra. enforcement actionsagainstdirectmarketers Commission announcedinJuly2003three Ephedra Weight LossProducts. consumers. garnered almost$500,000inredressfor they offer. The combinedsettlements efficacy, orbenefitofanygoodservice substantiate claimsabouttheperformance, evidenceto firms tohaveadequatescientific units. The settlementagreementsrequirethe cell orcordlessphones,byvideodisplay the FTCandFDA aretakingagainst action ispartofaseries ofinitiativesthat about theproduct’s healthbenefits. The with makingfalseandunsubstantiatedclaims Coral CalciumSupremedietarysupplement Commission chargedthemarketersof supplement crazeof2003.InJune2003,the Coral Calcium. 2004. contain ephedrabecameeffective inMarch of weightlossandbodybuildingproductsthat side effects.” An FDA rulebanningthesale “100% safe,”“perfectlyorhave“no that theephedraweight-lossproductsare claims. The agencyalsochallengedclaims studies” or“medicalresearch”provethese loss withoutdietorexercise,andthat“clinical rapid, substantial,andpermanentweight- claims thattheephedrasupplementscause containing ephedra. The actionschallenged side effects forweightlosssupplements claims aboutefficacy, safety, andlackof Coralcalciumwas Federal Trade Commission The the diet

Fulfilling the Original Vision - 23 The FTC at 90 - 24 l l Federal Trade Commission

million dollars ofdefendants’ assets. the infomercialoff theairandfrozeseveral the courtrequired defendants totake Through astipulatedpreliminary injunction, placebo atrelievingmuscularandjointpain. Q-Ray Braceletisnomoreeffective thana conducted attheMayoClinicshowedthat pain, asprovenbytests,eventhoughastudy acting effective treatmentforvarioustypesof deceptively claimedthatthebraceletisafast- The complaintallegedthatthedefendants unsubstantiated claimsinaninfomercial. pain-relief product,withmakingfalseand the Q-RayIonizedBracelet,apurported Commission chargedthemarketersof Q-Ray Bracelet. future. and distributingmisbrandedproductsinthe $5.3 millionandtodiscontinuemanufacturing destroy misbrandedSeasilverproductworth settlement withtheFDA,Seasilveragreedto supplement, food,drug,ordevice.Inits or unsubstantiatedclaimsforanydietary redress, andarebannedfrommakingfalse will payatotalof$4.5millioninconsumer March 2004settlements,thedefendants diseases, includingcancerand AIDS. Under it wasclinicallyproventotreatorcure650 promoted Seasilverthroughfalseclaimsthat Commission allegedthatthedefendants – withunsubstantiatedmedicalclaims. The promoting thedietarysupplement“Seasilver” against twocompanies–bothchargedwith and theFDA announcedcoordinatedactions Seasilver. unsubstantiated healthandmedicalclaims. the purveyorsofproductswithallegedly InJune2003,theCommission InJune2003,the Advances inpaymenttechnologybringimportant l both gateway intotheelectronic bankingsystem.In these fraudulenttransactions byprovidinga against ACH processorsthatallegedlyassist rules. outbound telemarketersinviolationofthe ACH to processpaymentsonbehalfoffraudulent rules thatgovernthisindustry, andhaveagreed processors havefailedtoabidebythestrict the FTCisconcernedthatanumberof ACH merchants andconsumers. At thesametime, and relativelysafepaymentmechanismfor part because ACH offers afast,inexpensive, has grownsubstantiallyinrecentyears, The volumeof ACH paymenttransactions paper transactionswithelectronicpayments. banks. The ACH paymentmechanismreplaces system forclearingelectronicpaymentsamong Network (ACH)isanationwidefundstransfer protection. The Automated Clearinghouse they alsoposenewchallengesforconsumer efficiencies forindustryandconsumers,but

Electronic PaymentProcess Abuses. million. with salessince1998totalingatleast$800 dietary supplementmarketersintheU.S., one ofthelargestandmostvisibledirectmail court orderforviolationsoftheFTC Act, is Braswell, whoalreadyisundera1983federal Alzheimers, obesity, anderectiledysfunction. to curerespiratorydisease,diabetes, claims forfivedietarysupplementspromoted making falseandmisleadingadvertising charged GlennBraswellandotherswith Gero Vita. The Commission has filed twoactions The Commissionhasfiled FTC v. Electronic FinancialGroup InMay2003,theCommission and Federal Trade Commission

Fulfilling the Original Vision - 25 The FTC at 90 - 24 Federal Trade Commission business education. rulemaking, andongoing consumerand vigorous enforcementofexistinglaws,additional information fallintothreemajorcategories: that canresultfromthemisuseofpersonal initiatives toreducetheseriousconsequences year2003.FTC to $19.3millioninfiscal year 2001 approximately $4.5millioninfiscal the resourcesdedicatedtothisissue–from fact, theagencyhasdramaticallyincreased in theFTC’s consumerprotectionagenda.In million inrestitutionandotherconsumerredress. serve nearly26yearsofdetentionandpay$54 orders. Lastyear, courtsordereddefendantsto and prosecuteviolatorsofFTC-obtainedcourt second reporthighlightingefforts todetect consumers. Last August, theFTCissuedits Commission ordersandcontinuetopreyupon flout Project Scofflawtargetsindividualswho toprevent. were designedspecifically deceptive practices,which ACH processingrules on behalfoftelemarketersengagedinabusiveor thousands ofconsumersbyprocessingcharges These processorsallegedlyharmedtensof deceptive orabusivetelemarketingpractices. advance-fee creditcardsorwhoengageinother payments fortelemarketerswhodeceptivelysell alleged, knowinglyprocessedelectronic orders againstthedefendantswho,agency Commission obtainedtemporaryrestraining FTC v. First American PaymentProcessing Consumer privacyhasgrowninimportance B. Project Scofflaw.

Consumer Privacy Created in1996, , the scams, andphonycredit offers. business opportunities, deceptivemoney-making scams, includingInternetauctionfraud,bogus of allegedlydeceptiveschemesandillegal corporations. These mattersrepresentanarray court ordersagainsttenindividualsandfive In November2003,theFTCannouncedfederal targeting Internetscamsanddeceptivespam. 285 criminalandcivillawenforcementactions more than Postal InspectionServicehavefiled Service, FederalBureauofInvestigation,and fraud, theFTC,DepartmentofJustice,Secret of lawenforcementinitiativestargetingInternet Highlights include: consumers, tocasesattackingdeceptivespam. aimed atelicitingpersonalinformationfrom actions rangedfromcasesinvolvingdeceptions privacy duringthepastyear. Lawenforcement enforcement ofexistinglawstoprotectconsumer government program.” soquicklyfromarelativelyinexpensive people benefit results areremarkable.Itisraretofindsomany Harris Interactivestated,“Inmyexperiencethese no telemarketingcallssincesigningup. telemarketing calls,and25%saytheyhavereceived registry. U.S. adults(57%)saythattheyhavesignedupforthe February 13,2004,showingthatmorethanhalfofall reinforced byaHarrisInteractive 1. Internet andSpam. The FTCcontinueditsaggressive of NationalDoNotCallRegistry Humphrey Taylor, Chairmanof The HarrisPoll Of thoseregistered,92%reportreceivingfewer The effectiveness oftheDo NotCallRegistrywas

Harris PollHighlightsSuccess Law Enforcement. Inacontinuingseries Federal Trade Commission ® survey, released ® Box 9 ,

Fulfilling the Original Vision - 25 The FTC at 90 - 26 pre-register consumersfortheFTC’s National from claimingthat,for a fee,hecanregisteror district courtorderpermanently barsKenChase Do NotCallRegistry. commercial e-mailinthefuture. post $1millionbondsbeforesendingunsolicited requires eachoftheoperation’s principalsto collected fromconsumers. The orderfurther from personalinformationthatwasdeceptively and privacylawsfromusingorbenefitting from consumers,violatingfederallending information way toobtainsensitivefinancial advertised “3.95%30 Year Mortgages”asa Mortgage, Inc.,anInternetoperationthat 2003, aCommissionsettlementbars30Minute Federal Trade Commission benefits ofthefree benefits flow ofinformation.” protection ofindividualprivacyandreapingthe the dialoguegoingwithsharpfocusonimproving civil societymustcontinueworkingtogethertokeep At thesametime,weingovernment,industry, and in enforcingtheprivacylawswehaveonbooks. is ajourney, notadestination.We needtobevigilant stated, “Thepathtomoreeffective privacyprotection the concernsofconsumers. balance theinterestsofachangingmarketplacewith thoughtful leadershipinseekingeffective solutionsthat IAPP notedthatCommissioner Swindlehasprovided againstspam,the privacy concernsandthefight privacy andinformationsecurity, tointernational shaping ofpublicpolicyissues.Fromissuesonline onthe marketplace aswellhispositiveinfluence security inanincreasinglyautomatedandglobalized understanding ofthecomplexityprivacyand Swindle. deep The IAPP citedtheCommissioner’s Leadership Award toCommissionerOrson Professionals (IAPP)presentedthe2004Privacy “Pre-Registration” ScamsfortheNational 30 MinuteMortgage. In acceptingtheaward,CommissionerSwindle The International Association ofPrivacy Automated andGlobalized Protecting Privacyinan Marketplace A December2003U.S. EnteredinDecember Box 10 e-mail messagesclaimingthattherehadbeen individual posingas America Onlineandsending that thescam,called“phishing,”involvedan violated federallaws. The complaintalleged settled Commissionchargesthathisscam data credit cardnumbersandotherfinancial and deceptivespamtoconconsumersoutof who allegedlyusedhijackedcorporatelogos signed upforhisservice. provided tothemorethan250consumerswho requires thedefendanttoverifyallrefunds list throughhistwoWeb sites. The orderalso Do NotCallRegistryoranyotherdonotcall settlement requires thatGuess?implement a hackers, contrarytothe company’s claims. The card numbers,tocommonly knownattacksby consumers’ personalinformation, includingcredit settle Commissionchargesthatitexposed accessory marketerGuess?,Inc.,agreedto personal information,designerclothingand that misrepresentthesecurityofconsumers’ 2003 thatinitsthirdcasetargetingcompanies well. consumers andtostealconsumers’ identitiesas that thedefendantused AOL’s identitytospam billing center, itwasnot. The complaintalleged pages. Whilethesiteappearedtobe AOL’s type style,colors,andreallinksto AOL web they landedonasitethatcontained AOL’s logo, to clickonahyperlink,andwhentheydidso, information. The messagedirectedconsumers access iftheydidnotupdatetheirbilling they riskedlosingtheiraccountsandInternet accounts. The e-mailwarnedconsumersthat a problemwiththebillingofconsumers’ AOL Phishing. Guess.com. InJuly2003,anidentitythief The FTCannouncedinJune Federal Trade Commission

Fulfilling the Original Vision - 27 The FTC at 90 - 26 Federal Trade Commission volume ofunwanted messages;requires that of obtaininge-mailaddresses tosendahigh the sourceofe-mail;prohibits abusivemeans Act prohibitsfalsifying either thecontentor practices relatingtospam. The CAN-SPAM in December2003,addressesawiderange of Act of2003(CAN-SPAM Act), signedintolaw of Non-SolicitedPornographyandMarketing the requirementsforshowingconsentalso. account information,theamendmentsheighten purchase. Ininstancesinvolvingpreacquired express andinformedconsentpriortoa seller ortelemarketertoobtainaconsumer’s consumer accountnumbers,andrequiresthe in account information,makingitillegaltotraffic rule alsonowrestrictstheuseofpreacquired accountability intelemarketing. The amended to consumers’ callerIDsystemstoensure require thattelemarketerstransmitinformation intrusions. Among otherthings,theamendments against deceptivetelemarketingandunwanted TSR thatgiveconsumersaddedprotection changestothe also adoptedothersignificant National DoNotCallRegistry. The Commission rulemaking effort for2003 wasthecreationof theft. address spam,consumercredit,andidentity imposed newresponsibilitiesontheFTCto privacy ofconsumers.Inlate2003,Congress to implementstatutescriticalprotectingthe Guess.com anditsotherWeb sites. comprehensive informationsecurityprogramfor CAN-SPAM Act. Telemarketing SalesRule. Congress hasdirectedtheFTCtoissuerules 2.

Rulemaking. The Controllingthe Assault The major of theFACT Act includemakingtheexisting Credit Reporting Act. The primaryfeatures sweeping changesandadditionstotheFair signed intolawinDecember2003,makes Transactions Act of2003(FACT Act), also enforcement approachesandpenalties. of aDoNotE-MailRegistryandcreatesnew FTC toreportCongressonthefeasibility oriented material. The Act alsodirectsthe requires awarninglabelfore-mailwithsexually to “optout”offuturee-mailmessages;and senders ofcommerciale-mailtoallowrecipients requires commercial e-mailbesoidentified; enforcement initiatives –theagencycanprovide and amicusbriefs–all incoordinationwithits projects, reports,studies, advocacyfilings, the useofhearings,workshops, research complement itsenforcementauthority. Through make fulluseofitsarraypolicyinstruments to Enforcement Assisting andComplementingLaw Special PolicyInstrumentsfor Chapter 3: and willproceedduring2004. rulemakings. These rulemakingsareunderway FTC, amongotherthings,toengageinseveral credit information. The FACT Act requiresthe enhance accuracyandconsumeraccessto several provisionstocombatidentitytheftand preemption provisionspermanentandadding FACT Act. Over thepastyear, theFTCcontinued to A.

Competition Policy The Fairand Accurate Credit Federal Trade Commission

Fulfilling the Original Vision - 27 The FTC at 90 - 28 Task ForceonState Action issuedareport some keyinitiativesduringthepast12months. FTC andelsewhere. The FTChasconcluded development ofcompetitionpolicy, bothatthe investments intheseactivitiesinformthe competition andthemarketplace. The agency’s issuing reportsonarangeoftopicsrelevantto its longtraditionofperformingresearchand consumers. make extraordinarycontributionsonbehalfof intellectual leadershiponcompetitionissuesand Federal Trade Commission Section 6(b) study, • Reporting and Research TOOL: Comments to FDA • Advocacy Competition TOOL: State Action Report. Over thepastdecade,FTChasrevived 1. Waxman Amendments. recommended changes to the Hatch- anticompetitive drug firm conduct and to Patent Expiration study. suggested by FTC regulations as supporting amending

Research andReports. Testimony supporting "Greater Access • Testimony on Competition in the • Testimony Congressional TOOL: main FTC recommendations. competition; final legislation adopted two provisions concerning generic drug to Affordable Pharmaceuticals Act" Pharmaceutical Industry. The FTC’s Integrated Approach to Competition Policy Competition to Approach Integrated FTC’s The such as removing impediments to competition in the pharmaceutical industry. Generic Drug Entry Prior , focused on The FTC uses a variety of tools to achieve its policy goals, competition from generic versions generic from competition GOAL: Remove impediments to impediments Remove GOAL: of prescription medicines. prescription of Lastfall,theFTC • • • • • Enforcement Law TOOL: two generic firms. alleged illegal agreement between Biovail/Elan conduct. acquisition and other anticompetitive involving alleged illegal patent Biovail (Tiazac) agreements. regulatory process and illegal order resolving charges of abuse of Bristol-Myers Squibb (BMS) pharmaceutical product markets. order protecting competition in nine Pfizer/Pharmacia alleged anticompetitive agreements. Schering-Plough - litigation involving Amicus brief in • TOOL: Pennington defense. with FTC analysis rejecting concerning a patent; court agreed representations to the FDA allegedly fraudulent antitrust litigation, involving Amicus Curiae Amicus - consent order involving - consent order - merger consent In re Buspirone supervision” prongofthedoctrineandadvocates that moreguidanceisneededonthe“active particular conductatissue. The reportnoted intent todisplacecompetitionwithrespectthe that theauthorizingstatutemustalsoevincean report recommendedareturntotheprinciple the substanceofstate’s policychoice. The entity toactinaspecificarea,whileoverlooking general grantofauthoritytoalocalgovernment a focusing onthe“foreseeability”testtofind “clear articulation”requirementtoobroadly, often report concludedthatcourtshaveinterpretedthe approaches theagencyshouldtake. The staff doctrine toobroadlyandrecommendingseveral concluding thatmanycourtshaveappliedthe - consent Briefs Noerr- Box 11 shipping ofwinetoconsumers. e-commerce bypermitting direct and thatstatescouldexpand more choicesinthewine market, offers consumerslowerpricesand which concludedthate-commerce Barriers toE-Commerce:Wine report, Last July, theFTCreleasedastaff competition withprivatefirms. participate inthemarketplace requirement onmunicipalitiesthat impose anactivesupervision conduct, andthatcourtsshould Action doctrineprotectsthealleged in determiningwhethertheState effects oncitizensofotherstates that courtsconsider“spillover” case. Finally, the reporturged by theFTCinIndianaMovers use ofthethree-parttestadopted Internet Wine SalesReport. Possible Anticompetitive ,

Federal Trade Commission

Fulfilling the Original Vision - 29 The FTC at 90 - 28 Federal Trade Commission a finalrule inJune2003thateliminates multiple Expiration: An FTCStudy drugs, entitled made intheFTC’s July2002reportongeneric recommendations implementation ofspecific Activities. enhance consumerchoice. Lens Consumers Act’s requirementsshould contact lenssellerstotheFairnessContact that adherencebyeyecarepractitionersand convenience thattheyvaluehighly. Italsostated some consumersacombinationofpriceand unique alternativedistributionchannelandoffer sellers, suchasInternetproviders,representa The reportfoundthatnon-traditionalcontactlens professional licensingforonlinelenssellers. unnecessarily burden e-commerce, such as state or refrainfromadopting,requirementsthat and recommendedthatpolicymakersrescind, more convenienceinthecontactlensmarket commerce offers consumersgreaterchoicesand Contact Lenses Anticompetitive BarrierstoE-Commerce: the FTCreleasedastaff report, the wine. and obtainanadult’s signature beforedelivering requiring thatasupplierverifytherecipient’s age an outrightbanondirectshipping,suchasby to minorsthroughlessrestrictivemeansthan report alsoconcludedthatstatescanlimitsales wines fromsuppliersaroundthecountry. The from convenientlypurchasingmanypopular as much21percentonsomewinesand direct shippingpreventconsumersfromsaving The empiricalstudyfoundthatstatebanson Generic DrugReport-Follow-Up Contact LensesReport. This pastyearsawthe Generic Drug Entry Prior to Patent , whichconcludedthate- . The FDA approved InMarch2004, Possible of agreementsrequiringnotification. filing suchagreements,andclarifyingthekinds FTC publishedanoticeoutliningproceduresfor between brandedandgenericdrugfirms. The that theFTCbenotifiedofcertainagreements facilitate entryofgenericdrugsandrequires implements keyFTCrecommendationsto Moreover, theMedicare Act passedin2003 consistent withanotherFTCrecommendation. that canbelistedintheFDA OrangeBook, harmful toconsumers,andalsolimitsthepatents as drugs, whichtheFTCstudyhadidentified 30-month staysonFDA approvalofgeneric examine whether anysuchmovements might identify unusualmovements inpricesandthen initiated aprojecttomonitor gasolinepricesto Investigation Initiative. agency succeedinitsenforcementinitiatives. important economicsupportthathelpsthe facilitates bettercaseselectionandprovides FTC. The learningderivedfromthesestudies price effects fromamergerclearedbythe analyzed whethertherewereanticompetitive and Vertical MarketStructure The ImportanceofIndustrySupplyShocks Effects oftheMarathon- Ashland JointVenture: and refiners.Inanotherpaper, of zonepricingonconsumers,retailstations, the authorsinvestigatedcompetitiveeffects oil industry. In studies ofmergersinvolvinghospitalsandthe the FTCstaff hasbeenconductingretrospective inform itsenforcementactivities.Forexample, emerging topicstodeveloppolicypositionsand Studies. Retrospectives andOtherEconomic Gasoline PriceMonitoringand The FTCalsostudiescurrentor Experimental GasolineMarkets In2002,theFTC Federal Trade Commission , FTCeconomists The Economic ,

Fulfilling the Original Vision - 29 The FTC at 90 - 30 lead to significant advances instate-of-the-art lead tosignificant agenda, FTChearings andworkshopscan in-depth analysistoa carefully developed and academiccommunities, anddevoting experts fromthebusiness,legal,government, and development”tools.Bybringingtogether of theFTC’s mosteffective policy“research investigation. the possibleopeningofalawenforcement appropriate courseforfurtherinquiry, including discuss thepricinganomalyandto appropriate State Attorney General’s Office to state agencies. The FTCstaff alsocontactsthe consulting withthestaff ofvariousfederaland the possiblecauses,including,ifappropriate, detects unusualpricemovements,theyresearch crude oilandthepriceofgasoline.Ifstaff prices andthespreadbetweenpriceof movements inthelevelofgasoline of Energyandalsoexamines from thestatesandDepartment customer complaintdatareceived incorporates intotheiranalysis level. (SeeBox12.) The staff urban areasatthewholesale 360 citiesatretailand20key Service (OPIS)forapproximately daily, fromtheOilPriceInformation techniques andpricedata,updated model usesstandardstatistical identifying suchmovements. This statistical modelforthepurposeof FTC economistsdevelopeda result fromanticompetitiveactivity. Federal Trade Commission Hearings andworkshopsrepresentone 2.

Hearings andWorkshops. market definition; horizontalhospital networks arrangements, including geographicandproduct in hospitalmergercases andotherjoint law andpolicytohealth care;issuesinvolved complications involved inapplyingcompetition challenges and hearings focusedonthespecific and consumerinformation,amongothers. The pharmaceuticals, long-termcare,Medicare, issues involvinghospitals,physicians,insurers, examination ofawiderangehealthcare held 27daysofhearingsinacomprehensive 2003. Overaseven-monthperiod,theagencies and CompetitionLawPolicy commenced aseriesofhearingson health caremarket,theFTC,workingwithDOJ, Policy. Guidelines. on theapplicationofHorizontalMerger health care,andalsoinitiatedapublicdialogue of hearingsrelatingtointellectualpropertyand past year, theFTCcompletedtwolengthysets knowledge ofcompetitionpolicyissues.Inthe Gasoline PriceMonitoring Hearings onHealthCareandCompetition Retail Monitoring Retail and Wholesale Monitoring To exploredevelopmentsinthedynamic onFebruary26, Health Care Box 12 Federal Trade Commission

Fulfilling the Original Vision - 31 The FTC at 90 - 30 Federal Trade Commission Attorney General statingthatamendments submitted commentsto theNorthCarolina the greatestimpacton consumers’ pocketbooks. care, andothersectorsoftheeconomythat have its emphasisinlawenforcement:energy, health agency focusesonthesameareasthatreceive welfare. As partofitscoordinated strategy, the as theymakedecisionsaffecting consumer policy makerstoapplycompetitionprinciples marketplace bypersuadingothergovernment eliminate private restrictionsoncompetitionbyworkingto last eightyears. release ofdataonmergerinvestigationsfromthe carefully. The workshopfollowedcloselythe most extensivelyandhavestudiedthem clarification –fromthosewhohaveusedthem and weaknessesareasforpossible feedback ontheGuidelines–theirstrengths and thebusinesscommunity, and(2)toobtain efforts topromotetransparencyforconsumers current mergerpolicy, consistentwithother objectives: (1)toincreaseunderstandingof Merger Guidelines. The workshophadtwo three-day workshoptodiscusstheHorizontal In February2004,theFTCandDOJhelda later thisyear. agency expectstoissueareportontheseissues information andqualityofcareissues. The of healthinsuranceproviders;andconsumer providers; thecompetitiveeffects ofmergers and verticalarrangementswithotherhealthcare The FTCcomplementsitsefforts toremove 3. Horizontal MergerGuidelinesWorkshop. Energy -MotorFuel.

Advocacy. public impediments toacompetitive The FTCstaff

and Kansas,anexisting lawinWisconsin. similar proposalspending in Alabama, New York, consumers. The FTCstaff filed commentson aggressive competition, tothedetrimentof the staff wasconcernedthatitwoulddeter dealers liableforprocompetitiveprice-cutting, to retailers.Becausetheproposalcouldmake discounts in awaythatwouldnotalwaysreflect “cost” requirements andwouldhaveredefined eliminated the“intent”and“businesspractice” Proposed amendmentstothestatutewould have practice withtheintenttoinjurecompetition. sell gasolinebelowcostasaregularbusiness Under currentNorthCarolinalaw, itisillegalto by causinghighergasolinepricesatthepump. potentialtoharmconsumers have significant to thestate’s MotorFuelMarketing Act could innovation andcompetition. together, toomanyquestionablepatentsareharming that, althoughcompetitionandpatentsoftenworkwell of transcripts.Manyhearingsparticipantsreported 100 writtensubmissionsgeneratingover5,000pages this topic,withmorethan300expertpanelistsand innovation. strike theproperbalancebetweenthemcanharm effectiveness inpromoting innovation. A failureto in onepolicy’s rulescanharmtheotherpolicy’s foster innovation,buterrorsorsystematicbiases innovation.Bothcan federal policiesthatinfluence of economicinsightsintopatentlawandpolicy. invalidate obviouspatents,andthoughtfulintegration validity, carefulapplicationofpatentlawtopreventor recommends newproceduresforchallengingpatent questionable patents. Among othersteps,thereport ten recommendationstoreducetheproportionof The ProperBalanceofCompetition The Commission’s October2003reportmakes The FTCandDOJheld24daysofhearingson Competition andpatentsstandoutamongthe and PatentLawPolicy To PromoteInnovation: FTC REPORT: Federal Trade Commission Box 13

Fulfilling the Original Vision - 31 The FTC at 90 - 32 services providedtocovered patients.Seventy- must reimbursehospitals inwholeorpartfor acquisition onhealthcare plans,whichultimately analysis focusedonthepossibleeffects ofthe raised concernsaboutincreasedprices. The the Slidellarea’s onlytwofull-servicehospitals FTC staff explainedthatthepotentialmergerof FTC’s viewsonthetransaction.Inresponse, Slidell, andthe Attorney General requestedthe hospital,such as approve thesaleofanonprofit the votersandstate Attorney Generalmust by Tenet Healthcare.UnderLouisianalaw, both proposed acquisitionofSlidellMemorialHospital on thepotentialanticompetitiveeffects ofthe agency employed another of its tools to comment potentially anticompetitivehospitalmergers,the uses itslawenforcementauthoritytochallenge Constrained byMarketForces. Determining WhetherNaturalGasPrices Are Public ServiceCommissiononStandardsfor Distributed Generation,andtotheGeorgia Public UtilitiesCommissiononExitFeesand Among Affiliated Companies,totheCalifornia Commerce Commissionon Asset Transfers the staff submittedcommentstotheIllinois Standard ElectricityMarketDesign.Inaddition, through Open Access Transmission Serviceand and onRemedyingUndueDiscrimination on Market-BasedRatesand Authorizations, to theFederalEnergyRegulatoryCommission competition. Agency staff submittedcomments process ofopeningelectricitymarketsto and assistanceinconnectionwiththeongoing The FTCcontinuedtoprovideitsexpertise Federal Trade Commission Health Care. Energy -ElectricityandNaturalGas. Although theFTCtypically

practices, especiallychainopticalstores,could because theoperationofcommercialoptometry could enduppayingmoreforeyeglasses optometry, theFTCstaff notedthatconsumers on proposedregulationsforthepracticeof In acommenttothe Tennessee legislature compete inthemarketforrealestateclosings. would undulylimittheabilityofnon-lawyersto Representatives opposingproposalsthat Association andtheRhodeIslandHouseof provided commentstotheIndianaStateBar merger. seven percentofareavotersdisapprovedthe comments totheDepartment of Transportation acknowledging theFTC’s analysis. one CFTCCommissionerissuingastatement to approvethenewentrant’s application,with the FTC’s letter, theCFTCvotedunanimously innovation, andraiseprices. After receiving that impedecompetition,limitnewentrants, stifle public restraints,suchasregulatorybarriers, in equitymarkets. The letteralsocriticized consistent withtheeffects ofmultipleexchanges loweredbid-askspreads,aresult significantly exchanges, ratherthanasingleexchange,have that securities-basedoptionslistedonmultiple The lettercitedtworecentstudiesthatfound U.S.-registered commodityfuturesexchange. allowing anewentranttoestablishcompeting competition inthemarketforfuturestradingby Futures Trading Commissiontosupportmore submitted aletterurgingtheCommodity be moredifficult. Professional Services. Computer Reservation Services. Financial Services. The agencyrecently The FTCstaff FTC Federal Trade Commission

Fulfilling the Original Vision - 3 The FTC at 90 - 32 Federal Trade Commission l conduct byforeignentities. jurisdiction ofU.S.courtsoveranticompetitive attorneys fromrealestateclosings,andthe the State Action doctrine,theexclusionofnon- standard underSection2oftheSherman Act, issues. Recentbriefshaveaddressedthelegal courts resolveimportantcompetitionpolicy past yearinprovidingamicusbriefstohelp other ruleslaterthisyear. and includedasunsetprovisiontoterminatethe governing airlinecomputerreservationssystems final ruleeliminatedmostoftheproposedrules without ashowingthatitisexclusionary. DOT’s conduct notbecondemnedonthesegrounds airline computerreservationsystemsandthat facilities theoriesinaproposedrulemakingon applying monopolyleveragingandessential urged thattheDepartmentusecautionin

by theincumbent localexchange carrier. acquire accesstothe network operated of localtelephoneservice attemptingto The caseinvolvedanew entrantprovider under generalmonopolizationprinciples. the plaintiff toallegeexclusionaryconduct leveraging” theories,despitethefailureof on “essentialfacilities”and“monopoly Section 2oftheSherman Act based permitted thecasetogoforwardunder reversed theSecondCircuit,whichhad by theCommissionandDOJ. The Court consistent withthejointamicusbrieffiled Court issuedanopinionin decision inseveralyears,theU.S.Supreme Verizon v. Trinko The Commissionhasbeenactiveoverthe 4.

Amicus Briefs. . Initsfirst antitrust Trinko in January, l l

In thiscaseinvolvingapplicationoftheState Secondary School Athletic Association Brentwood Academy v. Tennessee had failedtostateanantitrustclaim. the governmentandheldthatcomplaint by essentially agreedwiththeargumentsfiled violation underSection2. The Court required toestablishamonopolization be exclusionaryorpredatory, asisgenerally only iftherefusaltodealcanbeshown antitrust lawscanbeusedtorequireaccess the Telecommunications Act of1996,the whatever accessmayberequiredunder The government’s briefargued that federal agencies’ position. consumers. The Georgiacourtrejectedthe indicated thatsuchlayclosingswouldharm consumer choiceandthatnoevidence likely wouldlowerpricesandincrease allowing non-lawyerstoconductclosings real estateclosings. The briefarguedthat that onlylicensedattorneysmayconduct Court torejectaStatebarcommitteeruling amicus briefurgingtheGeorgiaSupreme The CommissionandDOJsubmittedajoint On ReviewofUPL Advisory Opinion articulated bythesovereignstateitself. undertaken inconformitywithapolicyclearly “state action”narrowlyrefersonlytoactions brief explainedthat,intheantitrustcontext, state actorforconstitutionalpurposes. The secondary schoolsthathadbeendeemeda doctrine protectedaprivateassociationof that adistrictcourterredinholdingthe Action doctrine,theCommissionargued Federal Trade Commission .

.

Fulfilling the Original Vision - 3 The FTC at 90 - 34 FTC conductsnumerous studiesofmarketplace and Web sitestotrackconsumerfraud,the technological andlegalissuesrelatedtospam. issues, anddevelopedevengreaterexpertise in analysis onavarietyofconsumerprotection of falseadvertising,providedimportantdata and the public, the FTC heightened media awareness enforcement agencies,industry, themedia,and protection enforcement.Working withotherlaw various policytoolstocomplementitsconsumer l l Federal Trade Commission

In additiontousingelectronic databases 1. In similarfashion,theFTCappliedits B. participants, acts,targets,andeffects.” “primarily foreignorprimarilydomestic... Sherman Act, insteadofwhetheritinvolved involved commercewithinthereachof with bothforeignanddomesticelements conspiracy whether anallegedprice-fixing that thelowercourtshouldhavedetermined brief intheU.S.SupremeCourt,arguing anamicus The CommissionandDOJfiled Dee-K Enterprisesv. HeveafilSdn.Bhd effects ofthatconspiracyonU.S.commerce. antitrust conspiracydoesnotarisefromthe plaintiff’s claimedinjury from analleged a U.S.courtisimproperwhenforeign agencies assertedthatthejurisdictionof brief totheU.S.SupremeCourt. The Antitrust Improvements Act inthisamicus the properapplicationofForeign Trade Commission andDOJjointlyaddressed Empagran v. Hoffmann-LaRoche

Research andReports. Consumer ProtectionPolicy . The .

products thathavebeen ratedorlabeledby prevent childrenfrompurchasing entertainment collect dataontheextent towhichretailers and theaters. The surveywasconductedto 2003 nationwideundercoversurveyofstores Children. Bogus Weight LossClaims.” a mediareferenceguideentitled“RedFlag: support thevoluntaryinitiative,FTCreleased individual mediaoutletsoverthelastyear. To 2002 andmeetingswithtradeassociations culmination ofaworkshopheldinNovember true. (SeeBox14.) The announcementisthe ads containingclaimsthataretoogoodtobe in voluntarilyscreeningweight-lossproduct education campaigntoassistmediaoutlets 2003, theFTCannouncedits“RedFlag” findings inreports. issues affecting consumersandpublishesits ä ä ä ä ä ä ä product will... Purchase ofInappropriateMaterialby Weight-Loss Advertising.

body orrubbingitintotheskin Cause substantialweightlossbywearingitonthe Cause substantialweightlossforallusers pounds perweekformorethanfourweeks Safely enableconsumerstolosemorethanthree consumers tolosesubstantialweight Block theabsorptionoffatorcaloriestoenable consumer stopsusingtheproduct) Cause permanentweightloss(evenwhenthe how muchtheconsumereats Cause substantialweightlossnomatterwhator for amonthormorewithoutdietingexercise Cause weightlossoftwopoundsormoreaweek A claimistoogoodtobetrueifitsaysthe Bogus Weight LossClaims LastOctober, theFTCreleased its Red Flag: InDecember Box 14 Federal Trade Commission

Fulfilling the Original Vision - 35 The FTC at 90 - 34 Federal Trade Commission reduce thenumberof ads seen self-regulation isdesigned to concluded thatwhileadvertising FMB market. The FTC’s report underage consumersinthe found noevidenceoftargeting mechanisms. The reportalso of externaladvertisingreview alcohol adsandintheadoption standards fortheplacementof improvementin a significant research. The reportindicated marketing plans,andconsumer analyzing theiradvertisements, FTC investigatedninemajoralcoholadvertisers, FTC’s 1999 Alcohol ReporttoCongress. The self-regulatory recommendationsmadeinthe whether thealcoholindustryhadimplemented targeted tounderageconsumers,aswell characteristics ofbeeranddistilledspirits–was beverages (FMBs)–thatcombine malt examined whetheradvertisingforflavored Alcohol Marketingand Advertising September 2003,theFTCissueda on DVD. were successfulinpurchasingR-ratedmovies retailers, where81percentoftheteenshoppers For thefirsttime,FTCalsosurveyedDVD atmovietheaters. admission toanR-ratedfilm percent weresuccessfulinpurchasingticketsfor able tobuyexplicit-labeledrecordings;and36 able tobuyM-ratedgames;83percentwere that 69percentoftheteenageshopperswere inappropriate forchildren. The surveyshowed associations orentertainmentproducersas the entertainmentindustryself-regulatory Alcohol IndustrySelf-Regulation. . The report Report on In Only 15.5% of the spam w prescription drugs without a pre NoClear Falsity 34% on theirface.(SeeBox15.) This isthefirst not necessarilytruthful,weredeceptive service. The remaining,15.5percent,although text, oradvertisedanillegitimateproduct false “from”lines,“subject”ormessage deceptive ontheirfaceandcontainedapparently of 1,000piecesspam,84.5percentwere own spamdatabase.Inarandomsample came frommultiplesources,includingtheFTC’s in spam.Samplespamanalyzedthestudy FTC issuedareportonsurveyoffalseclaims should addressunderageaccesstoalcohol. by minors,acomprehensivealcoholpolicyalso opportunities. percent, wasforinvestmentandbusiness category forsignsoffalsityinthesample,90 considerably amongtypesofoffers. The highest of likelyfalseclaimsinthetextspamvaried of claimsappearinginspam. The incidence systematic reviewofthelikelytruthorfalsity False Claims In Spam Study ere not clearly false or di Productsor False ClaimsinSpam. Illegitimate Promoting Services 18.5% scription, gamb No Obvious Deception 15.5% ling, or pornography. o ela illegitimate prod d not sell an Federal Trade Commission In April 2003,the uct or service, ClearFalsity 66% such as Box 15

Fulfilling the Original Vision - 35 The FTC at 90 - 36 mandates oftheCAN-SPAM Act. be animportantresource astheFTCmeets The informationgathered duringthiseventwill between governmentand theprivatesector. depend onthecontinuedcooperativeefforts technology, thelaw, andconsumeraction– must bepursuedfrommanydirections– cannot befoundovernight.Instead,solutions to thespamproblemiscriticallyimportant,it spam. The consensuswasthat,whileasolution potential solutionstothedetrimentaleffects of issue toexploreandencourageprogresstoward gathered representativesfrommanysidesofthe May 2,2003,onspam. At theforum,FTC held athree-daypublicforumfrom April 30to education, andlawenforcementefforts, theFTC advisory. for themorhavebeenlabeledwithaparental have beenratedaspotentiallyinappropriate in particular, children’s accesstoproductsthat self-regulation intheentertainmentindustryand, provided aforumfordiscussingthestateof violent entertainmenttochildren. The workshop to examineissuesaboutthemarketingof the FTChostedapublicworkshoplastOctober Children. various fields. representatives, andahostofotherexpertsin academics, othergovernmentagency from theexperiencesofconsumers,businesses, workshops tostudyemergingissuesandlearn marketplace, theFTCholdshearingsand Federal Trade Commission Spam Forum. Marketing Violent Entertainmentto As newdevelopmentsariseinthe 2.

Hearings andWorkshops. Besidesthereportdescribedabove, Buildinguponitsresearch, research anddebatedtheappropriate officials. Panelistspresentedtheiroriginal consumer privacyadvocates,andgovernment information extensively, academicresearchers, from avarietyofbusinessesthatuseconsumer range ofperspectives,includingexecutives The workshopfeaturedparticipantswitha theeconomy.flow ofinformationthatbenefits privacy interestswiththepromotionoffree goal istobalancetheprotectionofconsumer collection anduseofconsumerinformation. The and coststoconsumersbusinessesofthe toexaminethebenefits “information flows” June 2003,theagencyheldaworkshopon its expertise toothergovernment agencies mission during2003. The agencylends to advancetheFTC’s consumerprotection campaign through2004. California, and expects to continue this education in Chicago,New York City, andSantaClara, topresentsimilarworkshops and localofficials standards. The FTChasjoinedwithotherstate about complyingwithtruth-in-advertising presented aone-dayback-to-basicsworkshop Southern Indiana,andWestern Kentucky Office, andBetterBusinessBureauofLouisville, 2003, theFTC,Kentucky Attorney General’s of theRoadfor Advertisers. analysis. including theappropriateuseofcost-benefit from consumerandbusinessperspectives, methodology forevaluatinginformationpractices Information FlowsWorkshop. Advocacy continuedto beanimportantway 3. Green LightsandRedFlags:FTCRules

Advocacy. InSeptember In Federal Trade Commission

Fulfilling the Original Vision - 37 The FTC at 90 - 36 Federal Trade Commission l l issues: approaches toregulatory current andproposed for commentontheFDA’s Food andDrug Administration number ofrequestsfromthe FTC staff respondedtoa to truthfulinformation,the that consumershaveaccess FTC’s ownefforts toensure FDA. are atstake. issues affecting consumers proceedings whenimportant and intervenesincourt

level of scientific support. level ofscientific toincludethe when appropriatelyqualified claims forfoodsanddietary supplements communicate truthful, non-misleading health FTC staff supportedallowingmarketersto food anddietarysupplements.Overall,the healthclaims”for regulations for“qualified also commentedontheFDA’s proposed Qualified HealthClaims. industry andmoreeffective forconsumers. regulatory schemelessburdensomefor to makethecurrent and suggestingchanges of prescriptiondrugs, consumer advertising advocating thecontinued comments totheFDA The FTCstaff provided Drug Advertisements. Direct toConsumer Consultation withthe Complementingthe

The agency “Teaser” Web site. NordicaLite, a sham weight loss • Project Waistline, a public information campaign with • Voluntary Guidelines for businesses that market weight • • Education Business Consumerand TOOL: Outreach to encourage industry associations to • Guidelines to encourage voluntary self-regulation • Outreach to encourage the media to reject ads with • PromotingIndustry Self-Regulation TOOL: consumers about false advertising claims. product, is advertised on the Web to educate Information in English and Spanish. exercise equipment, and health club memberships. on effective strategies for healthy weight loss, buying brochures, bookmarks, and “news you can use” features loss products and services. weight loss ads, released December 2003. Red Flag, a reference guide for the media on screening member companies. institute and enforce truthful advertising standards for among marketers of weight loss products. obviously false weight loss claims. Testimony on Dietary Supplement • Testimony on Ephedra-Containing • Testimony Congressional TOOL: Enforcement (October 2002). Dietary Supplements (July 2003). The FTC’s Integrated Approach to Consumer Protection Policy Protection Consumer to Approach Integrated FTC’s The such as ensuring access to truthful information about weight loss products and services. The FTC uses a variety of tools to achieve its policy goals, l GOAL: Ensure consumer access consumer Ensure GOAL:

the FTCcontinuestocoordinate withFDA papers onfoodadvertising andonobesity, these foods. As describedinthebriefing companies todevelop andmarketmoreof healthier, lowercaloriefoodand encourage changes wouldhelpconsumersidentify food labels. The FTCstaff notedthatthese the prohibitiononcaloriecomparisons reviewing certainservingsizes,andremoving regarding labelingrequirements,including obesity, recommendations makingspecific agency commentedonfoodlabelingand Food LabelingandObesity. to truthful information truthful to about weight loss. weight about • • Workshops and Reports TOOL: guidance brochure released December 2003. against weight loss fraud. Workshop report and media advertising claims and explore new approaches evaluate scientific validity of common weight loss Report. Deception in Weight Loss Advertising Workshop and widespread and on the rise. concluded that use of false and misleading claims was examined 300 weight loss advertisements and Trends Report. Weight Loss Advertising: An Analysis of Current Recent cases: • Over $65 million in redress, disgorgement, and • Over 110 cases filed since 1990. • Enforcement Law TOOL: civil penalties. � � supplements including “Skinny Pill.” weight loss and health claims for dietary involving allegedly false and unsubstantiated Fountain of Youth Group patch; over $1 million in consumer redress. weight loss claims for “Peel Away the Pounds” involving allegedly false and unsubstantiated Advanced Patch Technologies TOOL: Advocacy TOOL: Comments to FDA that calorie information • Public workshop held November 2002 to Working Group on Obesity. adopted in Calories Count: Report of FDA to consumers. Recommendations largely be more prominent, accurate, and available Issued in September 2002, the report Federal Trade Commission Finally, the - consent order - consent order Box 16

Fulfilling the Original Vision - 37 The FTC at 90 - 38 Similarly, in low-value, orno-value, “coupon”compensation. Inc. settlements. In particularly objectionableclass-action amicusbriefsopposing the agencyhasfiled of consumersareadequatelyrepresented, action settlementstoensurethattheinterests Farm of Appeals fortheNinthCircuitin asimilarbriefintheU.S.Court Commission filed than itoffers toothers.InFebruary2003,the customer insuranceonlessfavorableterms respect toanewcustomerwhenitoffers that company doesnottake“adverseaction”with legislative historywhenitheldthataninsurance misinterpreted boththewordingof Act andits favorable. The briefarguedthatthedistrictcourt have chargediftheinformationhadbeenmore report thatishigherthanthepriceitwould insurance, basedoninformationinaconsumer when theinsurancecompanysetsapricefor is definedintheFairCreditReporting Act, company takes“adverseaction,”asthatterm Financial ServicesGroup to theNinthCircuitin consumers. Lastyear, theCommissionargued appropriate casestochampiontheinterestsof Federal Trade Commission As partofitsefforts tomonitorclass- amicusbriefsin The Commissionalsofiles 4. Health Claims Task Force and throughparticipationonFDA’s Qualified supplements throughformalwrittencomment healthclaimsforfoodsanddietary qualified on implementationofpoliciestopermit , theCommissionobjected totheuseof .

Amicus Briefs. In reFirstDatabank Schneider v. CiticorpMortgage, Rauschv. TheHartford thataninsurance and Willes v. State Carter appeared ineverynationalnewspaper, onevery publications, andFTCconsumertipshave over 100consumerandbusinesseducation the past12months,FTCissuedorrevised comprehensive educationcampaign.During enforcement initiative,theFTClaunchesa deception. Witheachmajorconsumerprotection as thefirstlineofdefenseagainstfraudand compensation frominjuredconsumers. excessive attorneyfees,whichdivertneeded v. IRCServices to manage radio stations. national radioandtelevision, andlocal TV and national dailies, major market dailies, magazines, campaign thatledtostaff interviewsinmajor also managedanaggressivemediaoutreach what theagencyreceivedlastyear. The FTC by phoneandonline–morethandouble more than5,400Spanish-languagecomplaints Spanish-speaking consumers,andreceived printed and300,000electronicpublicationsto year. The agency distributedmorethan300,000 its outreachtoHispanicconsumersinthelast publications onitsWeb sites. and loggedmorethan22millionaccessesto more than5.2millionprintedpublications rise. Duringfiscalyear2003,theFTCdistributed media markets.Distributionalsocontinuedto cable), andineverynewspaperthetop100 national televisionnetwork(broadcastand Consumer andbusinesseducationserves 5. www.consumer.gov Hispanic Outreach.

and Outreach. Consumer andBusinessEducation www.consumer.gov , theCommissionobjectedto The FTCexpanded . The FTCcontinues andtorecruit Federal Trade Commission

Fulfilling the Original Vision - 39 The FTC at 90 - 38 Federal Trade Commission financial literacy. Consumersconduct financial (NCPW), heldthispast February, focused on NationalConsumerProtectionWeek year’s FLEC’s workinggroups. FTC staff alsoareactivelyparticipatinginthe education. about theimportanceoffinancial inaugural FLECmeeting,ChairmanMurisspoke information about federal financial literacy. At the that provideacoordinatedpointofentryfor toll-free hotline,toserveasclearinghouses to establishavenues,suchasaWeb siteand education amongall American consumersand strategy topromotefinancialliteracyand purpose oftheFLECistodevelopanational the FTCand19otherfederalagencies. The Secretary ofthe Treasury andcomposedof Commission (FLEC)tobechairedbythe establishes aFinancialLiteracyandEducation ahead. plan additionaltrainingsessionsfortheyear and more than1,300lawenforcementofficers the agenciesconducted11 trainingsessionsfor Kansas City, Missouri.Inthepasttwoyears, Florida andNew York CitytoSeattleand officers throughoutthecountry, fromOrlando, seminars forlocalandstatelawenforcement Service, andDOJconductedaseriesoftraining training sessions,theFTC,U.S.Secret program initiatedlastyearwithsixregional to morethan180agencies. information. The numberofmembershasgrown offers one-stopaccesstofederalconsumer new memberstoparticipateinthesite,which National ConsumerProtection Week. Financial Literacy. Identity TheftTraining. Title VoftheFACT Act Expandingona This ownership. insurance, retirementplanning,andhome and moneymanagement,savinginvesting, on avarietyoffinancialtopics,includingcredit information forconsumersinseverallanguages, site, better.manage theirfinances TheNCPW Web their optionsinthemarketplaceandhowto aimed tohelpconsumerslearnmoreabout advocacy organizations,includingtheFTC, by governmentagenciesandconsumer and overwhelming.NCPW2004,sponsored many ofthesetransactionscanbeconfusing virtually everyday. Withouttherightinformation, transactions thatrequireaneducateddecision l topical subjects.Somerecentalertsare: publish consumeralertsonabroadrangeof the secondawardforcampaign. Association ofConsumer Agency Administrators, honored withan ACE awardfromtheNational The FTC’s Alaska Native Art campaignwas Community CollegeInnovation Awards Program. Planning &Management one ofthreegrandprizewinnersinthe Community CollegeinDallas–wasnamed consumer classesforstudentsofElCentro “Consumer College”–aseriesoffreeone-hour honored for excellence. The Southwest Region’s

job scamsandhowto avoidthem. This vulnerable consumers tofederalandpostal employment guides,and Web sitestoalert the classifiedsections ofnewspapers, Campaign. Federal andPostalJobScams Advertising Consumer Alerts. Awards. www.consumer.gov/ncpw Two FTCoutreach projectswere Ads havebeenrunningin The FTCcontinuesto Federal Trade Commission magazine’s first , containshelpful College

Fulfilling the Original Vision - 39 The FTC at 90 - 40 l l l l Federal Trade Commission

Your Information?” alertsconsumers about Phishing. abuse. security thatcanreduce theoddsofan millions. The alertgivestipsoninformation home computerstosendbulke-mailsbythe consumers thatspammersaretakingover Spamming Who?CoulditBe You?” warns consumer alertsonspame-mail.“Who’s Spam. software. sharing their computerswhenusingfile secure thepersonalinformationstoredon lists suggestionstoassistconsumers sharing. associated withfile Thealertalso warns consumersaboutanumberofrisks “File Sharing: A FairShare?MaybeNot” Online FileSharing. thejob. work, orskiptownwithoutfinishing artists whomayovercharge,performshoddy consumers ofpotentialhomerepairrip-off a Disaster:Repairing Your Home,”warns when hiringcontractors. This alert,“After may nottakethenecessaryprecautions booked formonths,frustratedconsumers Because manylegitimatecompaniesare contractors usuallyexceedsthesupply. a naturaldisaster, thedemandforqualified Post-Disaster HomeRepairRip-offs. 20,000 visitspermonth. at CRC havespiked,andthecampaignsite 2003, thenumberofrelatedrequeststo case. SincetheadsbeganinOctober recovered intheCareerInformationServices “information” remedyisfundedby$1.6million www.ftc.gov/jobscams The FTCexpandeditsseriesof “IsSomeone‘Phishing’ for The FTC’s alert isloggingalmost After has builtastrongnetworkofcooperative of theagency’s missions. The Commission that areincreasinglycriticaltotheachievement International Activities Chapter 4: agencies aroundtheworld onindividualcases broadened anddeepened itscooperationwith effective enforcementprogram. The FTChas other jurisdictionsisa key componentofan perpetrated outsidetheU.S. both anticompetitiveconductandfraudsthatare American consumerswhocanbeharmedby more andwithothernationstoprotect know noborders. The Commissionworks to lawenforcement–fraudanddeceptionnow electronic commercepresentsnewchallenges The growthofcommunicationmediaand agencies innewmarket-basedeconomies. developing competitionandconsumerprotection FTC activelyassistsnewdemocraciesin plays aleadroleinkeymultilateralfora. The relationships withitscounterpartsabroadand The FTCisinvolvedininternationalactivities information. passwords, andothersensitivepersonal information, SocialSecuritynumbers, their creditcardnumbers,bankaccount spam todeceiveconsumersintodisclosing “phishing” –ahigh-techscamthatuses Cooperation withcompetitionagenciesof 1. A.

Policy Development. Cooperation inEnforcementand Competition Federal Trade Commission

Fulfilling the Original Vision - 41 The FTC at 90 - 40 Federal Trade Commission l l l following mattersduringthepastyear: investigations ofmutualinterest,includingthe the staffs continuetoworktogethercloselyon Canada, andotherjurisdictionsremainvitalas with counterpartsintheEuropeanUnion, and onpolicyissues. The FTC’s relationships

were announcedwithin twoweeksofeach settlements withtheFTC andtheECthat jurisdictional mergers. The partiesreached enable themtorespond quicklytomulti- have developedamongtheagenciesthat demonstrated thevalueofcontactsthat Germany, andtheEC. The cooperation with thecompetitionauthoritiesofIreland, merger investigationinvolvedcooperation GE/Agfa. of maintainingcompetition. remaining venturepartnerwouldbecapable joint venture,aswellassurancesthatthe and theECrequiredunwindingofa remedy ultimatelycoordinatedbytheFTC critical enzymeincertaincattlefeed. The anticompetitive effects inthemarketfora Chemicals Divisionpresentedpotential acquisition ofRocheVitamins andFine DSM/Roche. Australia, Canada,Mexico,andSouth Africa. transaction withcompetitionauthoritiesin coordinated variousantitrustaspectsofthe obtained remedialmeasures. The FTCalso nine affected marketsinwhichtheFTC the EuropeanCommissionontwoof close coordinationbetweentheFTCand billion acquisitionofPharmaciainvolved $60 competition concernsraisedbyPfizer’s Pfizer/Pharmacia. The successfulresolutionofthis DSM’s proposed$2billion The resolutionofthe intellectual propertyregulations,theJapanFair into ECproceedingsregardingmergerpolicyand the pastyear, theU.S.agenciesprovidedinput subject toreviewinbothjurisdictions.During means bywhichtheagenciesreviewmergers institutionalize andmakemoretransparentthe EC andtheU.S.agenciesissuedin2002that bythe“bestpractices”that are exemplified policy divergencesinallareas. These efforts remain committedtoaddressingandminimizing to streamlinecooperationinmergercasesand work onmulti-jurisdictional merger review, second annualconference, highlightingits Box 17.)InJune2003, theICNhostedits in antitrustenforcement andpolicy. (See substantive convergenceonbestpractices consensus onproposalsforproceduraland venue forantitrustofficialsworldwidetoachieve agencies from76jurisdictions,providesa Network, whichhas86membercompetition international cooperationandconvergence. multilateral competitionforathatfurther States. counterparts onpolicyreviewsintheUnited frominputtheirforeign have benefitted Competition Act. Similarly, theU.S.agencies and proposedamendmentstotheCanadian relating tothetreatmentof“essentialfacilities,” Trade Commission’s proposedreformofrules The FTCanditscounterpartagenciesseek parties. other andwithinthetimeframesoughtby ICN. The FTCparticipatesactivelyinvarious 2.

Cooperation. Multilateral Competition The InternationalCompetition Federal Trade Commission

Fulfilling the Original Vision - 41 The FTC at 90 - 42 kit” ofcompetitionadvocacy mechanisms.Its studies ofadvocacy, andassembleda “tool advocacy provisions,conducted sectoral resource center, preparedacompilationof Group developedanonlineinformationand investigations. manual onrecommendedtechniquesformerger interagency coordination,andispreparinga procedural fairness,confidentiality, and practices onconductofmergerinvestigations, Working Grouphaspreparednewrecommended April 2004annualconference,theMergers previous year. InpreparationfortheICN’s andReviewadoptedthe Merger Notification complement theeightGuidingPrinciplesfor Procedures,which on MergerNotification ICN adoptedsevenRecommendedPractices and Procedures,whichtheFTCchairs, Working Group’s SubgrouponNotification Based onrecommendationsoftheMerger competition advocacy, andcapacitybuilding. Federal Trade Commission The ICN’s Competition Advocacy Working International CompetitionNetwork Belgium Barbados Azerbaijan Austria Australia Armenia Argentina Andean Community Albania Denmark Czech Republic Cyprus Croatia Costa Rica Colombia Chile Canada Bulgaria Brazil Member Jurisdictions Korea Kenya Kazakhstan Japan Jamaica Italy Israel Ireland Indonesia India Iceland Hungary Greece Germany France Finland European Union Estonia EFTA Senegal Russia Romania Portugal Poland Philippines Peru Panama Pakistan Norway New Zealand Netherlands Morocco Mexico Malta Macedonia Lithuania Latvia Kyrgyzstan the synergiesbetween thetwodisciplines and consumerprotection, whichexplored the OECD’s firstjointroundtableoncompetition and competitionpolicy. The FTCwasaleaderin examining theissuesatintersectionoftrade process convergence,regulatoryreform,and OECD’s continuingworkon, year, theFTChasparticipatedactively inthe and promotebestpractices.Duringthepast from developedcountriestoshareexperiences is animportantforumforcompetitionofficials areas ofoverlap. authorities andregulatorsexerciseauthorityin industries, andthemannerinwhichantitrust antitrust enforcementinitiativesinregulated viability ofantitrustlawinregulatedsectors, 2003, hassubgroupscompilingreportsonthe Enforcement inRegulatedSectors,created agencies. The Working Groupon Antitrust agencies andtheircounterpartcompetition Zambia Yugoslavia Venezuela Uzbekistan United States United Kingdom Ukraine Turkey Tunisia Thailand Tajikistan Taiwan Switzerland Sweden Sri Lanka Spain South Africa Slovenia Slovak Republic OECD. Box 17 The OECDCompetitionCommittee examining therelationshipbetween support forcompetitionpolicyand examining waystobuildbroader best inparticularcircumstances, of technicalassistancethatwork conducting astudyonthetypes which theFTCco-chairs,is policies, andoneofitssubgroups, face inimplementingcompetition challenges developingcountries also preparedareportonthe The CapacityBuildingGroup Implementation Working Group. Building andCompetitionPolicy work iscontinuingintheCapacity technical assistancefunding interalia , merger Federal Trade Commission

Fulfilling the Original Vision - 43 The FTC at 90 - 42 Federal Trade Commission frauds, regardlessofwhere they up itscommitmenttofight these a result,theFTChasstepped behind jurisdictionalborders. As to scamconsumerswhilehiding ever-evolving electronicmedia border fraud.Fraudstersuse protection efforts oncross- focused itsinternationalconsumer jurisdictional lines,theFTChas and investigationsthatblur number ofconsumercomplaints have seenadramaticriseinthe Free Trade Agreement with Australia. negotiated thecompetitionchapterofproposed also participatedintheU.S.delegationthat Trade Agreement ofthe Americas. The FTC develop competitionprovisionsforaFree and theothernationsofhemisphereto FTC hasbeenworkingwithotherU.S.agencies WTO MinisterialConferenceinCancun. The in theWTO. The FTCstaff participatedinthe issues relatingtotheroleofcompetitionpolicy Trade andCompetitionPolicy, whichexamined Working GroupontheInteractionbetween delegation totheWorld Trade Organization competition issues. The FTCco-chairstheU.S. approximately 30non-members. involving OECDmembersandrepresentativesof also hostedaGlobalForumonCompetition in promotingconsumerwelfare. The OECD Because thepastfewyears B. Trade agreementsincreasinglyinvolve 3.

Consumer Protection Trade/Competition Fora. 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 5,000 0 9519 9719 9920 0120 2003 2002 2001 2000 1999 1998 1997 1996 1995 84 proposals, (3)aworkshoptoexplorepublic- border enforcementcooperation,(2)legislative plan includes:(1)OECDguidelinesoncross- unveiledin2002. Cross-Border Fraud,first The forward toimplementtheFive-PointPlanFight Network. (SeeBox18.) International ConsumerProtectionEnforcement Committee onConsumerPolicyandthe international organizationssuchastheOECD’s has increaseditsvisibilityandparticipationin may originate. As partofthiseffort, theFTC l technical assistance. cooperation arrangements,and(5)international private partnerships,(4)bilateralandmultilateral 1,237 yClna er(95–2003) By CalendarYear(1995–

This pastyear, theFTCcontinuedtomove 1. Commercial Practices Across Borders,” Consumers FromFraudulentandDeceptive announced its“GuidelinesforProtecting OECD’s CommitteeonConsumerPolicy OECD Guidelines. Cross-Border Complaints Cross-Border

4,567 Border Fraud. Five-Point PlantoFightCross- 8,660 6,236 12,213 InJune2003,the Federal Trade Commission 16,318 30,798 45,066 Box 18

Fulfilling the Original Vision - 43 The FTC at 90 - 44 l Federal Trade Commission

these schemes.” enforcement agenciestoworktogethercombat international commitmentbyconsumerprotectionlaw marketplace. The OECDGuidelines...reflectan intheglobal consumers andconsumerconfidence through telemarketing,Web sites,andspam,harms Thompson remarked,“Cross-borderfraud,perpetrated In announcingtheGuidelines,Commissioner and DeceptiveCommercialPractices Across Borders.” “Guidelines for Protecting Consumers From Fraudulent Thompson’s leadership,theOECDissuedits Consumer Policy. 2002, hehaschairedtheOECD’s Committeeon OECD’s CommitteeonConsumer Policy. SinceMarch spearheaded ajointmeetingbetweenICPENand Enforcement Network(ICPEN);andin April 2003,he to theInternationalConsumerProtectionand issues. HecontinuestoheadtheU.S.delegation international cooperationonconsumerprotection involved intheFTC’s efforts tofostergreater improving the agency’s abilitytocombat recommendations focus primarilyon ability tocombatcross-border fraud. The changes thatwouldimprove theFTC’s submitted proposalsforlegislative Legislative Proposals. consumer redress. the stageforfuturediscussionsregarding cooperation inanti-fraudefforts, andset internationally, inviteprivate-sector authority ofconsumerprotectionagencies joint investigations. They alsodetailthe on howcountriescanworktogetherin information coordination, aswellspecific broad principlesregardinglawenforcement border fraud. The Guidelinescontain countries toworktogethercombatcross- acommitmentamongmember which reflect In June2003,asaresultofCommissioner Commissioner MozelleW. Thompson isactively Cooperation inConsumer Fostering International Protection The FTChas Box 19 l l

fraud. The workshopdelvedintowaysin cross-border private partnershipstofight 2003, theFTCheldaworkshoponpublic/ Public/Private Workshop. the UnitedStates. more fullymessagesoriginatingfromoutside spam byallowingtheagencytoinvestigate deceptive legislation wouldhelptheFTCfight targeting U.S.consumers.Inparticular, the pursue thefraudstersintheircountrywhoare foreign partners,whichmayenablethemto enable theFTCtosharekeyinformationwith assets. Whenenacted,thelegislationwould fraud involvingforeignparties,evidence,or Mexico-U.S.-Canada Health Fraud Task Electronic Commerce Steering Group,the Protection and Enforcement Network, APEC’s groups includetheInternationalConsumer agencies fromallovertheworld.Such foster cooperationwithforeignenforcement organizations, whichallownetworkingand the agencyparticipatesinseveralmultilateral fraud involvingthesecountries.Inaddition, coordinate jointactionsagainstcross-border have helpedstreamlinecooperationand United Kingdom,andIreland. These MOUs key partners,suchasCanada, Australia, the memoranda ofunderstanding(MOUs)with into severalenforcementcooperation Arrangements. Bilateral andMultilateralCooperation combat internationalconsumerscams. and Internetserviceproviders)canhelp companies, electronicpaymentprocessors, (e.g., privatemailboxoperators,shipping which membersofcertainkeyindustries The FTChasentered InFebruary Federal Trade Commission

Fulfilling the Original Vision - 45 The FTC at 90 - 44 Federal Trade Commission as telecommunications anddataprotection with spamenforcement responsibilities(such in Brussels. As aresult,manyforeignagencies related initiativesattheOECDSpamWorkshop staff gaveapresentationontheagency’s spam- against spam. This pastFebruary, theFTC international contactstobuildglobalpartnerships citizens. cross-border lotteryschemesthattargetsenior such areasasadvance-feecreditcardsand province of Alberta. Caseshavetargeted a newpartnershipfocusingontheCanadian Vancouver telemarketing boilerrooms;and andothers,totarget British Columbiaofficials, Mounted Police,theFTC’s NorthwestRegion, Emptor,” coordinatedbytheRoyalCanadian focus on Toronto-based telemarketing;“Project coordinated bytheFTC’s MidwestRegionto places: theOntarioStrategicPartnership, coordinate lawenforcementefforts inthree to partnerships withCanadianofficials the north,Canada. The agencyhasforged special attentiontotheU.S.’s neighborto l

The FTCisusingitsgrowingnetworkof 3. The FTC’s internationalefforts havepaid 2. the fightagainstcross-borderfraud. detailed below, isalsoanimportantpartof FTC’s internationaltechnicalassistance, International Technical Assistance. Dialogue. Force, andtheInformalPanamerican

International CooperationonSpam. Canadian Partnerships. Cross-Border Telemarketing Fraud/ The Community, Egypt, Indonesia,Mexico,and Russia, SoutheastEurope,Eurasia,the Andean technical assistanceoncompetitionmattersin laws. Inthispastyear, theFTCprovided nations inthedevelopmentoftheircompetition has providedtechnicalassistancetoover40 AID, andinpartnershipwithDOJ,theFTC reforms. WithfundingprincipallyfromUS commitment tomarketandcommerciallaw transition economiesthathavemadethe mutual cooperationonthisissue. authorities) haveexpressedtheirinterestin protection training missionsinHungary, Last year, FTC staff conductedconsumer Eastern Europe,Eurasia, andSouth America. conducting US AID-funded trainingmissionsin country becomesahavenforfraud,theFTC is on consumerprotectionandensurethatno nations inSoutheast Asia. of assistancetothe ASEAN community often FTC receivedfundingtobeginnewprograms agencies oftheworld.Inpastyear, the with theircounterpartsinthenewercompetition enable careerFTCstaff tosharetheirexpertise schedules thesetechnicalassistanceactivitiesto targeted short-termmissions. The agency of residentadvisors,regionalworkshops,and skills. These programsrelyonacombination emphasized thedevelopmentofinvestigative Africa. The FTC’s short-termprogramshave continues itsresidentadvisorprograminSouth advisor programinIndonesiaand,withDOJ, South Africa. The FTCmaintainsaresident Foroveradecade,theFTChasassisted C. To broadeninternational cooperation

International Technical Assistance Federal Trade Commission

Fulfilling the Original Vision - 45 The FTC at 90 - 46 as collecting marketinformation,conducting functions oftheoldBureau ofCorporations,such 1914. The agencyhascontinuedmanyofthe incorporated intotheFTC uponitscreationin the precursortoFTC,whichCongresslater 100th anniversaryoftheBureauCorporations, Economics heldasymposiuminhonorofthe and Competition FTC: Concentration,Cooperation,Control, history oftheFTC,entitled history, publishedaseminalarticleontheearly General Counselandanexpertontheagency’s ofthe Winerman, aseniorattorneyintheOffice in theFTC’s history. Insummer2003,Marc to recognizeimportantpeopleandevents and ConsideringtheFuture Reflecting onPastAchievements authorities. relationships withthatcountry’s cybercrime Internet-related investigationsandstrengthening training Romanianauthoritiesonhowtoconduct FTC’s recentmissiontoBucharestfocusedon auction fraudoriginatesinRomania. The amountofInternet For instance,asignificant scam artiststargetingU.S.consumerstoday. some arehometothemostsophisticated these nationsaredevelopingeconomically, commerce andthroughtheInternet. Although with thedetectionandpreventionoffraudine- substantiation. A centralfeatureistoassist advertisement interpretation,andadvertising consumer credit,advertisingprinciples, such issuesasbasicconsumerprotections, Slovenia, Romania,Ukraine,andPeru,covering Federal Trade Commission The past12monthshaveprovidedoccasion . InSeptember, theBureauof The Originsofthe and consideritsfuture.September26,2004 will havemorereasontocelebrateitspast agency. with JodieBernsteinduringseparatetoursatthe former ChairmanRobertPitofsky, whoserved Chairman Murisinmakingthepresentationwas the BureauofConsumerProtection. Assisting this timetoJodieBernstein,formerDirectorof Kirkpatrick Award fordistinguishedservice, made thethirdpresentationofMilesW. President. Finally, inDecember, theagency reports attherequestofCongressand industry andpolicyresearch,preparing that inspireditsformation. serve thevision American consumersandfulfill achievements butalsotoplanfutureinitiatives opportunity fortheFTCnotonlytoreflectonpast milestone. The 90-yearmarkwillprovidean the FTCwillhostseveraleventstoobservethis agency tobeginoperation.NextSeptember, FTC’s firstfiveCommissioners,permittingthe tothe Covington, administeredtheoathofoffice the DistrictofColumbia,HonorableJ.Harry when theChiefJusticeofSupremeCourt 2005 marksthe90thanniversaryofday Federal Trade Commission Act, andMarch16, commemorates the90thanniversaryof During thecoming12months,FTC Federal Trade Commission

Fulfilling the Original Vision - 47 The FTC at 90 - 46 Federal Trade Commission Pablo Zylberglait,and Todd J.Zywicki. Randolph W. Tritell, MarianneWatts, Beth Arvan Wiggins,MarcL.Winerman, Erin Malick,MaureenOhlhausen,Lydia B.Parnes,C.LeePeeler, BilalSayyed, D. BruceHoffman, BrianHuseman,MaryanneKane,RonaKelner, WilliamE.Kovacic, JamesC.Hamill,Jr.,Susan S.DeSanti,NikkiEllington,MaameGyamfi, James Cooper, JeanneM.Crouse,JohnF. Daly, RachelMillerDawson, JohnDelacourt, Contributing FTCstaff alsoinclude Asheesh Agarwal, JeanineBalbach, Dawne E.Holz,GraphicsandDesign Karen Leonard,ConsumerProtection James M.Giffin,Competition J Principal ContributorstoReport udith Bailey, Chair Federal Trade Commission

Fulfilling the Original Vision - 47 The FTC at 90 - 48 Outstanding Team Effort Award Excellence inEconomics Award Otis B.Johnson Award Award forExcellenceinSupervision A. LeonHigginbotham,Jr. Award Paul RandDixon Award Outstanding Scholarship Award Mary GardinerJones Award James M.Mead Award Richard C.Foster Award Stephen Nye Award Eleanor F. Greasley Award Louis D.Brandeis Award Chairman’s Award Federal Trade Commission

Federal Trade Commission Annual Awards

April Tabor BasedEconomy HearingandReport Team Competition andIntellectual PropertyintheKnowledge- 601 NewJersey Avenue Relocation Team TSR DoNotCall Team Christopher Taylor Enid Williams Colleen Tressler Robin Overholt Robert Schroeder Michael Vita David Pender Peggy Twohig Joan Fina Dean Forbes John Jacobs Steven Wernikoff Ramona Elliott Judith Moreland Gregory Ashe Jesse Leary Michele Arington Marc Winerman Doris Pressley Dolores Wood Douglas McGuckin Frances Williams Erin Malick Diane Reinertson Sylvia Brooks Renard Francois Catherine Norris Betty Moss Rhett Krulla David Torok 0ctober 2003