FTC Finalizes Procedure Changes to Streamline Agency Investigative Processes and Keep Pace With Technology

The Federal Trade Commission today issued final changes to agency procedure that will streamline the FTC’s investigatory process, make updates to keep pace with electronic evidence discovery, and provide more detail on how the agency evaluates allegations of misconduct by attorneys practicing before the Commission.

The changes concern the procedures in Parts 2 and 4 of the agency’s Rules of Practice, and they reflect public comments received after the changes were proposed earlier this year.  They are part of the FTC’s effort to periodically review and update its rules to ensure that they are efficient, effective, and not unduly burdensome on outside parties.

Investigations.  The final changes to Part 2 will expedite FTC investigations and ensure the agency’s investigatory processes continue to keep pace with electronic discovery.  For example, the changes require parties to meet and confer with FTC staff within 14 days (with certain exceptions) to resolve electronic discovery issues relating to subpoenas and civil investigative demands (CIDs), as well as any other issues.

Other changes include:

• streamlining the process for resolving disputes over FTC subpoenas and CIDs, as well as petitions to limit or quash FTC subpoenas and CIDs;
•  expediting the FTC’s pre-merger review process by giving the agency’s General Counsel the authority to initiate enforcement proceedings when a party fails to comply with the Hart-Scott-Rodino second request process; and
•  relieving parties of their obligations to preserve documents related to an FTC investigation after a year passes with no written communication from Commission staff.  The revision does not remove any obligation that parties may have to preserve documents for investigations by other government agencies, or for litigation.

Attorneys.  The final changes to Section 4.1(e) clarify the agency’s procedures for evaluating allegations of misconduct by attorneys practicing before the Commission.

The Commission vote approving proposed changes to Parts 2 and 4 of the agency’s Rules of Practice, 16 CFR, Parts 2 and 4, was 4-1, with Commissioner J. Thomas Rosch voting no.

Accompanying today’s vote, Chairman Jon Leibowitz issued a statement that the Commission’s revised Rules of Practice “mak[e] us a more effective agency.”  In response to questions about whether the rules should be more stringent about requiring compulsory process, he explained that, “while most competition investigations warrant compulsory process, and its use is strongly encouraged, it makes sense to provide staff with at least some flexibility in choosing which method to deploy in at least some investigations.”  As to internal reporting requirements, he added, “Our staff already meets regularly with individual Commissioners and responds to any inquiries about particular matters. . . .  This best practice, however, is a matter of internal management that does not necessarily need to be enshrined in the Rules of Practice.”

Commissioner Rosch concurred in part and dissented in part for the reasons set forth in his earlier statement on the Commission vote to issue the proposed rules for public comment in January 2012.  That statement supported the Commission’s efforts to modernize the agency’s operating rules and agreed with most of the revisions, yet concluded that the rule changes were insufficient because they did not include mandatory compulsory process in all full-phase investigations and regular reports on the status of pending investigations to all commissioners. 

The final Rules of Practice can be found on the FTC’s website. The Part 2 rule revisions will take effect on November 9, 2012, and will apply to all investigations, unless the Commission or certain Commission officials determine, with respect to a particular investigation pending as of November 9th, that the application of an amended rule to that investigation would not be feasible or would create an injustice. The changes to Rule 4.1 will apply to any alleged attorney misconduct that occurs on or after November 9, 2012.

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