Prepared Statement of
The Federal Trade Commission
Commerce, Justice, State, the Judiciary and Related Agencies
Committee on Appropriations
United States House of Representatives
April 9, 2003
Mr. Chairman, I am Timothy J. Muris, Chairman
of the Federal Trade Commission ("Commission" or "FTC").
I am pleased to appear before the Subcommittee today to testify in support
of the FTC's FY 2004 Appropriation request.(1) The
Commission would like to thank the Chairman and members of the Subcommittee
for their continued support of the agency's mission.
The FTC is the only federal agency with both
consumer protection and competition jurisdiction in broad sectors of the
economy.(2) The agency enforces laws that
prohibit business practices that are anticompetitive, deceptive, or unfair
to consumers, and it promotes informed consumer choice and public understanding
of the competitive process. The work of the FTC is critical in protecting
and strengthening free and open markets in the United States.
The FTC consistently has pursued a vigorous
and effective law enforcement program in a swiftly changing marketplace,
with rapid growth in technology, and in an increasingly globalized economy.
Through the efforts of a dedicated, professional staff, the FTC continues
to handle an increasing workload, despite only modest increases in resources.
Our testimony today summarizes some of the major activities of the past year
and describes some of the planned initiatives for FY 2004.
To accomplish our missions in FY 2004, the FTC
requests $191,132,000 and 1,074 FTE. The FY 2004 request represents an increase
of $14,524,000 over the agency's FY 2003 appropriation of $176,608,000.
During FY 2004, the FTC will address significant
law enforcement and policy issues throughout the economy, devoting major
portions of its resources to those areas in which the agency can provide
the greatest benefits to consumers. This testimony in support of our FY 2004
appropriation highlights program priorities in the FTC's two missions. The
focus of the consumer protection mission will be on broad efforts to fight
fraud and deception, as well as on consumer privacy initiatives. The Commission
also will continue initiatives directed at specific consumer groups, including
children, Spanish-speaking consumers, and military personnel. The focus of
the competition mission will be on merger and nonmerger enforcement, particularly
in health care, energy, high technology, and international competition. The
testimony concludes with a summary of the agency's FY 2004 appropriation
II. Consumer Protection
A. Fraud and Deception
The FTC targets the most pervasive types of
fraud and deception in the marketplace, drawing substantially on data from
Consumer Sentinel, the agency's award-winning consumer complaint database,
and from Internet "surfs" that focus on specific types of claims
or solicitations that are likely to violate the law. Since April 1, 2002,
the Commission organized eight joint law enforcement efforts ("sweeps")
with more than 100 law enforcement partners.(3) These
sweeps resulted in 260 law enforcement actions targeting Internet scams and
telemarketing fraud, including deceptive work-at-home opportunities, deceptive
Internet health claims, and advance-fee credit-related fraud. The FTC filed
66 of these cases.
Overall, in the past year, the FTC has
filed 120 cases involving fraud or deception. The FTC also has enjoyed
significant success in obtaining redress orders. Since April 1, 2002, the
Commission has obtained more than 55 judgments ordering more than $650
million in consumer redress.(4)
The Commission continues to ensure compliance with district
court orders by bringing civil contempt proceedings when appropriate, and
by assisting in criminal prosecution of FTC defendants who flagrantly violate
The Commission's actions against fraud and deception directly
aid consumers. For example, in November 2002, the FTC finalized a consent
order against Access Resource Services, Inc. and Psychic Readers Network,
the promoters of "Miss Cleo" psychic services, who allegedly engaged
in deceptive advertising, billing, and collection practices. The defendants
stipulated to a court order requiring them to stop all collection efforts
on accounts of, or claims against, consumers who purchased or purportedly
purchased defendants' pay-per-call or audiotext services, to forgive an estimated
$500 million in outstanding consumer charges, and to pay $5 million to the
In addition, in January 2003, the FTC obtained a permanent
injunction against SkyBiz.com, Inc., an alleged massive international
pyramid scheme. The final settlement includes $20 million in consumer redress
to be distributed to both domestic and foreign victims. The settlement also
bans the principal individual defendants from multi-level marketing for a
period of years.(6)
Most recently, in March 2003, the Commission announced settlements
with five individual defendants who allegedly engaged in deceptive charitable
telemarketing by misrepresenting both the charities that donations would
benefit and the percentage of donations that the charities would receive.(7) The
defendants raised more than $27 million between 1995 and early 1999. Among
other terms of the settlements, defendant Mitchell Gold is subject to a $10
million judgment. Following an FTC criminal referral, Gold was indicted for
mail and wire fraud in connection with the fundraising business and another
fraudulent telemarketing scheme. Gold pled guilty and was sentenced to 96
months in prison.
B. Consumer Privacy
During FY 2004, the FTC will continue to devote significant
resources to protecting consumer privacy. Consumers are deeply concerned
about the privacy of their personal information, both online and offline.
One especially important privacy concern is that consumer information be
secure, protected from theft and misuse. Although these concerns have been
heightened by the rapid development of the Internet, they are by no means
limited to the cyberworld. Consumers can be harmed as much by the thief who
steals credit card information from a consumer's mailbox as by one who steals
that information over the Internet. Of course, the nature of Internet technology
may raise its own special set of issues. The following is an overview of
the FTC's ongoing efforts to protect consumers' privacy.
In the recently enacted Omnibus Appropriations bill for FY
2003, this Subcommittee provided the FTC with the needed authority and funding
to proceed with the creation and implementation of a national Do-Not-Call
registry - a centralized database of telephone numbers of consumers who have
asked to be placed on the list. The Do-Not-Call registry - part of the FTC's
2002 amendments to the Telemarketing Sales Rule - will help consumers reduce
the number of intrusive and disruptive telemarketing phone calls they receive.
The agency has contracted with a third party to create the registry and implement
the system by rolling it out in specific geographic areas over two months
until it covers the entire nation. Once the registry is completed, telemarketers
must pay a fee to gain access to the registry and then scrub their telemarketing
lists against the telephone numbers listed in the database. After telemarketers
scrub their lists, consumers who have placed their telephone numbers on the
registry will begin to receive fewer and fewer unwanted telemarketing calls.
At the same time, the FTC will monitor industry compliance and take appropriate
law enforcement action, if warranted.
2. Identity Theft
The FTC's toll-free number 1-877-ID-THEFT is the central clearinghouse
for identity theft complaints. Calls regarding identity theft have increased
from more than 36,000 calls in FY 2000 to more than 185,000 calls in FY 2002.
These complaints are available to the FTC's law enforcement partners through
an online database, and now more than 650 law enforcement agencies access
the data. In addition, FTC investigators, working with the Secret Service,
develop preliminary investigative reports that are referred to regional Financial
Crimes Task Forces for possible prosecution.
Continuing a program begun in March 2002, the FTC, the
Secret Service, and the Department of Justice ("DOJ") conduct
training seminars to provide hundreds of local and state law enforcement
with practical tools to combat identity theft. To date, the Commission
and its partners have conducted six regional training sessions for more
600 law enforcement officers.
The FTC also engages in extensive education of both businesses
and consumers about preventing and responding to identity theft. One
of the agency's most popular publications is "Identity Theft: When
Bad Things Happen to Your Good Name."(8)
3. Safeguarding Consumer
In May 2002, the FTC finalized an order settling charges
that Eli Lilly & Company unintentionally disclosed e-mail addresses
of users of its Prozac.com and Lilly.com sites as a result of failures
to take reasonable
steps to protect the confidentiality and security of that information.
The settlement requires Lilly to establish a security program to protect
personal information against reasonably anticipated threats or risks
to its security, confidentiality, or integrity.(9)
In December 2002, the FTC settled charges against Microsoft
Corporation that, among other things, the company misrepresented the measures
it used to maintain and protect the privacy and confidentiality of consumers'
personal information collected through its Passport web services.(10) Microsoft
has agreed to implement a comprehensive information security program for
Passport and similar services. The FTC will continue to bring actions involving
claims deceptively touting the privacy features of products and services,
as well as failures to maintain adequate security for personal information.
Also, in May 2002, the Commission finalized its Safeguards
Rule to implement the security provisions of the Gramm-Leach-Bliley Act
Rule establishes standards for financial institutions to maintain the
security of customers' financial information, and becomes effective in
May 2003. To
help businesses understand and comply with the Rule, the agency issued
a new publication, "Financial Institutions and Customer Data: Complying
with the Safeguards Rule."(12)
Commissioner Orson Swindle, in particular, has focused
on issues involving information security. During the past year, he has
served as head
of the U.S. delegation to the Organization for Economic Cooperation and
Development ("OECD") Experts Group for Review of the 1992 OECD Guidelines for
the Security of Information Systems. The group released revised guidelines
in August 2002 that consist of nine principles promoting a "culture
of security." The Commission has promoted the dissemination of these
principles among industry and consumer groups. The FTC's consumer security
web site, <www.ftc.gov/infosecurity>,
contains practical tips for staying secure online and features "Dewie
the Turtle," a colorful cartoon mascot to promote good online security.
In addition, the Commission has worked with the White House Office of
Cyberspace Security to develop consumer awareness aspects of the National
4. Children's Online Privacy Protection
COPPA requires commercial web sites to give notice of their
information practices and to obtain parental consent before collecting, using,
or disclosing personal information about children under the age of 13. Since
April 2001, the FTC has brought eight COPPA cases and obtained agreements
requiring payment of civil penalties totaling more than $350,000.(14) The
two most recent cases involved settlements with Hershey Foods and Mrs. Fields.(15) Both
companies agreed to settle charges that their web sites allegedly collected
personal data from children without complying with COPPA requirements.
Deceptive spam is an ever-growing problem that the Commission
strives to address through law enforcement efforts, consumer and business
education, and research. One of the most important tools the FTC uses to
target law violations, identify trends and conduct research for education
is its spam database. Consumers forward spam they receive to the FTC database
at email@example.com. The database receives over
100,000 email messages each day, and currently contains approximately 32
million pieces of spam. In addition to its own use, the FTC shares the database
information with other federal and state law enforcement agencies.
In November 2002, the FTC and 12 law enforcement partners brought
30 enforcement actions as part of an ongoing initiative to fight deceptive
spam and Internet scams.(16) The
FTC also announced, with ten participating agencies, a "Spam Harvest," a
study designed to test which actions taken by consumers online may put
them at the greatest risk of receiving spam.(17)
The FTC recently settled an action against a company
that allegedly profited from a particularly insidious spam scam. According
to the Commission's
complaint, the subject line of the e-mail said "Yahoo sweepstakes winner," and
the message congratulated the recipient for being chosen as a winner
of a prize in a recent Yahoo sweepstakes contest. Most often, the message
that the prize was a Sony Playstation 2, making it particularly attractive
to adolescents. But the message was not from Yahoo and the recipients
had not won anything. Instead, after clicking through five web pages,
were connected to a pornographic web site at a cost of up to $3.00 a
minute. The FTC filed a complaint against the operators of the adult
web site to
which consumers had been driven by the spam.(18) The
settlement enjoined the defendants from making misleading representations
of material facts in email and other marketing, including deceptive email
header information. The settlement also requires defendants to prevent third
parties that promote their videotext services, through email or other means,
from making deceptive statements.
In a recent nationwide law enforcement sweep, Operation License
for Trouble, the FTC targeted spammers and web site operators for deceptive
marketing of fake international driving permits.(19) According
to Commission complaints, the defendants claimed that their driving permits
(which cost up to $375) were alternatives to state-issued drivers' licenses,
and could be used (1) to drive legally in the United States; (2) to avoid
points or sanctions for traffic violations; and (3) as an identification
document. The FTC obtained preliminary injunctions against such practices
in six federal court actions.(20)
While the Commission's efforts are important
factors in stopping the rising tide of spam, the FTC is hopeful that technological
fixes and other industry initiatives will provide additional solutions. To
explore the impact spam has on consumers' use of email, email marketing,
and the Internet industry, the FTC will host a public forum from April
30 through May 2, 2003.(21) The forum will
explore the proliferation of, and potential solutions to, unwanted spam
and will examine how the ability of spammers to remain anonymous assists
those who perpetrate fraud and complicates law enforcement efforts.
Through its Section 5 authority as well as its jurisdiction
under the GLB Act, the FTC takes action against "pretexting" -
the use of false pretenses to obtain customer financial information.
The agency has obtained stipulated court orders against three firms,
sent warning letters to nearly 200 others, about apparent violations
of the pretexting provisions. The Commission will continue enforcement
the abusive practice of pretexting that threatens the security of consumers'
personal financial information.
C. Deceptive Lending Practices
One of the most important ways in which the FTC protects consumers
is by taking action to stop deceptive lending practices. Unscrupulous lenders
can deceive consumers about loan terms, rates, and fees. When lenders deceive
mortgage borrowers in this manner, the resulting injury can be severe, including
the loss of one's home. The FTC continues to conduct a vigorous enforcement
program to root out deception by lenders.
Over the last year, the FTC has obtained settlements for nearly
$300 million in consumer redress for deceptive lending practices and other
related law violations. The FTC has settled cases against Associates First
Capital Corporation (now owned by Citigroup)(22) for
alleged deceptive sales of credit insurance and alleged violations of the
Equal Credit Opportunity Act(23) and the
Fair Credit Reporting Act;(24) against First
Alliance Mortgage(25) for allegedly imposing
deceptive loan terms and origination fees; and against Mercantile Mortgage(26) for
alleged deception of consumers about loan terms and alleged violations of
the Truth in Lending Act.(27) In addition
to monetary relief, the Mercantile settlement gives hundreds of consumers
the opportunity to refinance loans at low or no cost.(28)
D. Health Fraud and Deception
Truthful and substantiated health claims in advertising can
be an important source of useful information for consumers. Inaccurate information,
on the other hand, can cause serious physical as well as financial harm.
For that reason, combating deceptive health claims, both online and off,
continues to be a priority for the FTC.
1. Dietary Supplements
Challenging misleading or unsubstantiated claims in the advertisement
of dietary supplements is a significant part of the FTC's consumer protection
agenda. Over the past decade, the Commission has filed more than 80 law enforcement
actions challenging false or unsubstantiated claims about the efficacy or
safety of a wide variety of supplements.(29) The
Commission focuses its enforcement priorities on claims for products with
unproven benefits or that present significant safety concerns to consumers,
and on deceptive or unsubstantiated claims that products treat or cure serious
diseases. The FTC has taken action against all parties responsible for the
deceptive marketing, including manufacturers, advertising agencies, infomercial
producers, distributors, retailers, and endorsers.
2. Weight Loss Advertising
Since the 1990s, the Commission has filed nearly 100 cases
challenging false or misleading claims for all types of weight loss products,
including over-the-counter drugs, dietary supplements, commercial weight
loss centers, weight loss devices, and exercise equipment.(30) In
September 2002, the FTC issued a "Report on Weight-Loss Advertising:
An Analysis of Current Trends."(31) The
report concluded that false or misleading claims for weight loss products,
such as claims of substantial weight loss without diet or exercise, are widespread
and, despite an unprecedented level of FTC enforcement activity, appear to
have increased over the last decade.
The FTC continues to explore ways to stem the tide of deceptive
weight loss claims. In an opinion piece in Advertising Age, Commissioner
Sheila Anthony commented that the Commission cannot solve this problem alone
and made it clear that the industry and the media have a significant role
to play.(32) On November 19, 2002, the Commission
held a public workshop on the Advertising of Weight Loss Products.(33) Workshop
participants included government officials, scientists, public health groups,
marketers of weight loss products, advertising professionals, and representatives
of the media. Participants explored both the impact of deceptive weight loss
product ads on the public health and new approaches to fighting the proliferation
of misleading claims, including a more active role for the media in screening
out patently false weight loss advertising.
E. Cross-Border Consumer Protection
Cross-border complaints submitted to the Consumer Sentinel
database represent 14 percent of all non-identity-theft fraud complaints
received in 2002. Most of these complaints involve advance-fee credit-related
schemes, prizes and sweepstakes pitches, foreign money offers, and Internet
auctions. Last year, the Commission and its partners brought 22 law enforcement
actions involving cross-border fraud. For example, the FTC worked with the
Ontario Strategic Partnership in cases involving credit card loss protection(34) and
advance-fee credit cards,(35) and with four
Canadian law enforcement agencies in a case involving prize scams.(36) The
Commission also has been active in the Mexico-U.S.-Canada Health ("MUCH")
task force and is developing a detailed action plan to combat cross-border
health care fraud in North America. In February 2003, the FTC announced a
joint law enforcement action with its partners from Canada and Mexico against
a Canadian corporation that marketed a purported cancer cure therapy in Tijuana,
In January 2003, the FTC launched a new web site, www.ftc.gov/crossborder,
to help consumers spot, stop, and avoid cross-border fraud. In addition,
seventeen countries, including the United States, participate in www.econsumer.gov,
a web site that the FTC manages. Consumers from around the world can use
the web site to file cross-border e-commerce complaints, contact international
law enforcement agencies, and access educational materials in English, French,
German, and Spanish.
The Commission is pursuing other initiatives to fight cross-border
fraud. In February 2003, the FTC held a two-day public workshop that brought
together American and foreign law enforcement officials, business representatives,
and consumer advocates to discuss private and public sector cooperation in
combating cross-border fraud. In addition, the Commission
has entered into Memoranda of Understanding with the United Kingdom, Australia,
and Canada to combat cross-border fraud through cooperation and coordinated
enforcement activities, and to provide technical assistance to developing
The FTC also is working on the adoption of an OECD Recommendation
on Cross-Border Fraud, through OECD's Committee on Consumer Policy. This
recommendation will help develop international consensus on what constitutes
consumer fraud and on the key goals of cross-border cooperation. Last spring,
Commissioner Mozelle Thompson, who has been instrumental in pursuing the
Commission's cross-border agenda, was elected Chair of OECD's Committee on
F. Initiatives Designed to Reach Specific Consumer
The FTC has implemented a variety of initiatives that assist
particular consumer groups. Such groups include children, Spanish-speaking
consumers, and military personnel and their families.
1. Marketing to Children
Media Violence. The
FTC continues to monitor the marketing of violent entertainment products
to children. In September 2000, the agency reported that the entertainment
industry targeted advertising and promotion of violent video games, movies,
and music to children.(38) In response to
requests from Congress, the Commission has issued three follow-up reports,
in April and December of 2001 and in June of 2002.(39) These
reports found substantial improvements by the movie and electronic games
industries in how they marketed their products, but found no appreciable
change in the music industry's marketing practices. These reports also documented
widespread disclosure by the movie and electronic games industries of rating
information in advertising, and some improvement by the music industry in
disclosing the parental advisory label in advertising.
The FTC will prepare a fourth follow-up report on the industries'
practices during the year following its last report. The Commission staff
also is working with retailer trade groups on devising a consumer education
message for parents, and is preparing to hold a public workshop on these
issues later this year.
Online Gambling. In
2002, the FTC staff conducted an informal survey of over 100 online gambling
sites, revealing that minors easily can access those sites and frequently
are exposed to advertisements for online gambling on general use, non-gambling
web sites.(40) As a result of the survey,
the FTC published a consumer alert warning parents and their children that
online gambling can pose huge risks, including money loss, impaired credit
ratings, and addiction to gambling. The alert further advises that it is
illegal in every state for minors to gamble.(41)
Alcohol. The FTC monitors
alcohol advertising to ensure that ads for these products do not reflect
potentially unfair or deceptive practices, including the targeting of alcohol
advertisements to minors. In response to a Congressional request, the Commission
will report on two subjects related to alcohol advertising and youth.(42) First,
Congress asked the FTC to study the impact on underage consumers of the significant
expansion of ads for new alcoholic beverages, sometimes referred to as 'alcopops'
- sweet, flavored alcoholic beverages sometimes bearing the names of distilled
spirits brands. Second, Congress asked the FTC to review the industry's response
to the recommendations for improved self-regulation contained in the FTC's
1999 report to Congress. Those recommendations focused on stricter advertising
placement standards and the establishment of an independent
third-party review mechanism.
2. Spanish-Speaking Consumers
In FY 2002, the FTC instituted a Hispanic Outreach Program,
which included the addition of a Hispanic Outreach Coordinator position.
This effort includes the creation of a dedicated page on the FTC site, Protection
Para el Consumidor ("Consumer Protection"), which mirrors
the English version of the consumer protection page and includes translations
of several consumer education publications into Spanish. The FTC also
has provided an online Spanish-language consumer complaint form and has
outreach efforts to Hispanic media. The agency staff is translating additional
materials and expanding the program. The FTC also has taken action against
alleged law violations affecting Spanish-speaking consumers. For example,
the agency settled a civil penalty action against a Houston-based debt
collection company for alleged violations of the rights of Spanish- and
consumers under the Fair Debt Collection Practices Act.(43) The
settlement requires, among other things, that the company make disclosures
in Spanish where applicable.
3. Military Sentinel
In September 2002, the FTC and the Department of Defense
launched Military Sentinel, the first online consumer complaint
database specifically tailored to the unique needs of the military community.
The system offers members of the military and their families a way to file
complaints and gain immediate access to the FTC's full range of educational
materials and information.(44) It also gives
DOD and law enforcement officers secure access to the complaints entered
into the database.
III. Maintaining Competition
A. Merger Enforcement and Nonmerger Enforcement
During the unprecedented merger wave in the late 1990s through
2000, the agency was forced to divert resources to meet its statutory responsibilities
under the Hart-Scott-Rodino Act ("HSR").(45) With
the significant recent decline in merger activity, the Commission has been
able to restore the historical balance of resources to both merger and nonmerger
areas. Since the peak in merger activity in 2000, when the agency opened
only 25 nonmerger investigations, the FTC has worked to reinvigorate its
nonmerger enforcement program. In 2001, the agency opened 56 new nonmerger
investigations, and in 2002, the agency opened another 59 nonmerger investigations.
These investigations are targeting practices with enormous potential to harm
competition and consumers.
Merger enforcement continues to be a major focus of the competition
agenda in FY 2004. Stopping mergers that lessen competition ensures that
consumers will have the benefit of lower prices and greater choices in their
selection of goods and services. The FTC continues to review numerous complex
transactions that raise significant competitive issues and entail extensive
investigation and analysis. Some transactions involve difficult legal questions
or numerous separate product and geographic markets, each requiring detailed
analysis. Further, mergers in high tech markets involve especially exacting
analysis because of quickly changing markets. While the Commission resolves
most merger challenges through negotiated settlements, it is sometimes necessary
to litigate, particularly in those instances when the merger has been consummated.
Merger litigation requires the full-time attention of numerous staff members
- not only lawyers but also economists, paralegals, and support staff. To
counter arguments and evidence presented by merging parties, these cases
also require analysis and testimony by outside experts with specialized knowledge,
which can be extremely costly.
The following discussion addresses both enforcement and other
initiatives in several key sectors of the economy and generally.
B. Health Care
The health care sector remains enormously important to both
consumers and the national economy. Health-related products and services
account for more than 15 percent of the U.S. gross domestic product ("GDP"),
and that share has grown by about 25 percent since 1990. Without effective
antitrust enforcement, health costs would be greater and the share of GDP
would be even higher.
1. Prescription Drugs
Just last month, the FTC reached a major settlement with
Bristol-Myers Squibb ("BMS") to resolve charges that BMS engaged
in a series of anticompetitive acts over the past decade to obstruct entry
generic competition for three of BMS's widely-used pharmaceutical products:
two anti-cancer drugs, Taxol and Platinol, and the anti-anxiety agent
other things, the Commission's complaint alleged that BMS abused Food
and Drug Administration ("FDA") regulations to obstruct generic competitors;
misled the FDA about the scope, validity, and enforceability of patents to
secure listing in the FDA's "Orange Book" list of approved drugs
and their related patents; breached its duty of good faith and candor with
the U.S. Patent and Trademark Office ("PTO"), while pursuing
new patents claiming these drugs; filed baseless patent infringement
generic drug firms that sought FDA approval to market lower-priced drugs;
and paid a would-be generic rival $72.5 million to abandon its legal
challenge to the validity of a BMS patent and to stay out of the market
until the patent
expired. Because of BMS's alleged pattern of anticompetitive conduct
and the extensive resulting consumer harm, the Commission's proposed
contains strong - and in some respects unprecedented - relief.(47)
The settlement with BMS represents the latest FTC milestone
in settlements regarding allegedly anticompetitive conduct by branded or
generic drug manufacturers designed to delay generic entry. Other recent
FTC successes in this area include:
- An October 2002 consent order settling charges that Biovail
Corporation illegally acquired a license to a patent and improperly listed
the patent in the FDA's Orange Book as claiming Biovail's high blood pressure
drug Tiazac (under current law, the listing of the patent and the subsequent
lawsuit brought by Biovail against a potential generic entrant triggered
an automatic 30-month stay of FDA approval of the generic competitor);(48)
- An August 2002 settlement with Biovail and Elan Corporation,
plc resolving charges that the companies entered into an agreement that
provided substantial incentives for the two companies not to compete in
the markets for 30 milligram and 60 milligram dosage strengths of the generic
drug Adalat CC (an anti-hypertension drug);(49) and
- An April 2002 settlement resolving charges that American
Home Products entered into an agreement with Schering-Plough Corporation
to delay introduction of a generic potassium chloride supplement
in exchange for millions of dollars.(50)
2. Health Care Providers
For decades, the Commission has worked to enable innovative
and efficient arrangements for the delivery and financing of health care
services by challenging artificial barriers to competition among health care
For example, the FTC settled with four groups of physicians
for allegedly colluding to raise consumers' costs.(51) The
number of physicians involved ranged from 41 in one matter in the Denver
area to more than 1,200 in a case in Dallas-Fort Worth. The Commission's
orders put a stop to allegedly collusive conduct that harms employers, individual
patients, and health plans by depriving them of the benefits of competition
in the purchase of physician services. Most of these cases involved significant
numbers of doctors, and they have had a substantial impact on consumers.
3. Health Care Mergers
The Commission has taken action regarding a number of
proposed mergers in the health care sector. For example, in June 2002,
authorized the staff to seek a preliminary injunction blocking Cytyc
Corporation's ("Cytyc") proposed acquisition of Digene Corporation ("Digene").(52) Cytyc/Digene
involved the merger of two manufacturers of complementary cervical cancer
screening tests. Digene is the only company in the United States selling
a DNA-based test for the human papillomavirus, the virus believed to cause
nearly all cervical cancer cases. Cytyc's products accounted for 93 percent
of U.S. liquid-based Pap tests, which currently are the most widely-used
primary screening tools for the detection of cervical cancer. The complaint
alleged that the likely competitive harm involved a vertical theory in which
the incentive of the combined firm was to use its market power in one product
to stifle increased competition in the complementary product's market. Specifically,
the FTC was concerned that Digene would not support rival liquid Pap test
suppliers in obtaining the necessary FDA approval for use of the Digene product
in combination with the rivals' liquid test products. Thus, if the merger
had been consummated, TriPath (the other liquid pap test competitor) and
new entrants would be substantially impeded from competing without the merged
firm's cooperation. Following the Commission's decision to authorize the
staff to seek an injunction to block the merger, the parties abandoned the
The Commission has obtained consent orders in other health
care merger matters. The Commission alleged that Baxter International's $316
million acquisition of Wyeth Corporation's generic injectable drug business
raised competitive concerns in the markets for the manufacture and sale of
a variety of drugs, including the $400 million market for propofol, a general
anesthetic commonly used for the induction and maintenance of anesthesia
during surgery, and the $225 million market for new injectable iron replacement
therapies used to treat iron deficiency in patients undergoing hemodialysis.(53) To
settle this matter, the parties agreed to divestitures that are expected
to maintain competition in those markets.
The FTC also obtained an agreement settling allegations that
Amgen Inc.'s $16 billion acquisition of Immunex Corporation would reduce
competition for three important biopharmaceutical products: (1) neutrophil
regeneration factors used to treat a dangerously low white blood cell count
that often results from chemotherapy; (2) tumor necrosis factors used to
treat rheumatoid arthritis, Crohn's disease, and psoriatic arthritis; and
(3) interleukin-1 inhibitors used in the treatment of rheumatoid arthritis.(54) The
settlement required that the companies divest certain assets and license
certain intellectual property rights in these markets.
4. Report on Generic Drugs
The FTC has focused on competition in the pharmaceutical industry
for several years. Commissioner Leary has a special interest in the subject
of pharmaceutical competition and has addressed this topic in speeches to
solicit input from affected parties and to promote dialogue regarding practical
In July 2002, the FTC issued a report entitled "Generic
Drug Entry Prior to Patent Expiration: An FTC Study,"(56) which
evaluated whether the Hatch-Waxman Amendments to the Federal Food, Drug,
and Cosmetic Act are susceptible to strategies to delay or deter consumer
access to generic alternatives to brand-name drug products. The report recommended
changes in the law to ensure that generic entry is not delayed unreasonably,
including through anticompetitive activity. In October 2002, President Bush
directed the FDA to implement one of the key findings identified in the FTC
study.(57) Specifically, the FDA
has proposed a new rule to curb one of the abuses uncovered by the FTC -
pharmaceutical firms' alleged misuse of the Hatch-Waxman patent listing provisions
- to speed up consumer access to lower-cost generic drugs.(58)
5. Hearings on Health
Care and Competition Law and Policy
Consistent with the broad mandate of the FTC Act, the
FTC commenced a series of hearings on "Health Care and Competition Law and Policy" on
February 26, 2003.(59) The FTC is conducting
these hearings jointly with the DOJ's Antitrust Division. Over the next seven
months, the FTC and DOJ will spend almost 30 days of hearings examining health
care issues through the lens of competition law and policy, encompassing
antitrust, consumer protection, and competition advocacy. The hearings will
consider the competition law and policy issues raised by hospitals, insurers,
quality and consumer information, physicians, and non-price competition.
The hearings also will spend time looking into pharmaceuticals, long-term
care, Medicare, remedies for anticompetitive conduct, and international perspectives
on competition law and policy. A public report that incorporates the results
of the hearings will be prepared after the hearings.
Antitrust law enforcement is particularly important in the
oil and gas industry, because fuel price increases can strain the budgets
of many consumers and also can have a direct and significant impact on businesses
of all sizes throughout the U.S. economy. Enforcement of the antitrust laws
helps ensure that the oil and gasoline industries remain competitive. Although
most of the Commission's energy-related enforcement actions have involved
mergers, the nonmerger side is equally important.
1. Oil Merger Investigations
In recent years, the FTC has investigated numerous oil mergers.
When necessary, the agency has insisted on divestitures to cure potential
harm to competition. In the Commission's most recent case, Conoco/Phillips,
the Commission required the merged company to divest two refineries and related
marketing assets, terminal facilities for light petroleum and propane products,
and certain natural gas gathering assets.(60)
Standard Nonmerger Case
The Commission recently issued an administrative complaint
in an important nonmerger case involving the Union Oil Company of California
its complaint, the Commission alleged that Unocal violated Section 5
of the FTC Act by subverting
the California Air Resources Board's ("CARB") regulatory standard-setting
procedures of the late 1980s relating to low-emissions reformulated gasoline
("RFG"). According to the complaint, Unocal misrepresented to industry
participants that some of its emissions research was non-proprietary and
in the public domain, while at the same time pursuing a patent that would
permit Unocal to charge royalties if CARB used such emissions information.
The FTC alleged that Unocal did not disclose its pending patent claims and
that the corporation intentionally perpetuated the false and misleading impression
that it would not enforce any proprietary interests in its emissions research
results. The FTC's complaint states that Unocal's conduct has allowed it
to acquire monopoly power for the technology to produce and supply California "summer-time" RFG,
a low-emissions fuel mandated for sale in California from March through
October. The complaint states that the costs of most of the royalties
would be passed through to consumers in the form of higher retail gasoline
prices. This case is pending before an Administrative Law Judge.(62)
3. Study of Refined Petroleum
Building on its enforcement experience in the petroleum industry,
the FTC is studying the causes of the recent volatility in refined petroleum
products prices. In two public conferences, held in August 2001 and May 2002,(63) participants
discussed key factors that affect product prices, including increased dependency
on foreign crude sources, changes in industry business practices, and new
governmental regulations. The information gathered through these public conferences
will form the basis for a report to be issued later this year.
4. Gasoline Price Monitoring
In May 2002, the FTC announced a project to monitor wholesale
and retail prices of gasoline. This project tracks retail gasoline prices
in approximately 360 cities nationwide and wholesale (terminal rack)
prices in 20 major urban areas. The FTC Bureau of Economics staff receives
data purchased from the Oil Price Information Service ("OPIS"),
a private data collection company. The economics staff uses an econometric
(statistical) model to determine whether current retail and wholesale prices
each week are "anomalous" in comparison with historical data.
This model relies on current and historical price relationships across
as well as other variables.
As a complement to the analysis based on OPIS data, the FTC
staff also regularly reviews reports from the Department of Energy's Consumer
Gasoline Price Hotline, looking for prices that are significantly above the
levels indicated by the FTC's econometric model, or other indications of
potential problems. The results may trigger further staff inquiry to determine
what factors might be causing price anomalies in a given area. These factors
could include supply disruptions such as refinery or pipeline outages, changes
in taxes or fuel specifications, unusual changes in demand due to weather
conditions and the like, and possible anticompetitive activity.
To enhance the Gasoline Price Monitoring Project, the FTC has
recently asked each state Attorney General to forward to the FTC's attention
consumer complaints they receive about gasoline prices. The staff will incorporate
these complaints into its ongoing analysis of gasoline prices around the
country, using the complaints to help locate price anomalies outside of the
360 cities for which the staff already receives daily pricing data.
The goal of the Monitoring Project is to alert the FTC
to "unusual" changes
in gasoline prices so that further inquiry can be undertaken expeditiously.
As part of the Monitoring Project, the Commission is working with other
federal and state officials. When price increases do not appear to have
causes, the FTC staff will consult with the Energy Information Agency
of the Department of Energy. The FTC staff also will contact the offices
the appropriate state Attorneys General to discuss the anomaly and the
appropriate course for any further inquiry, including the possible opening
of a law enforcement
D. High Technology
As an agency with a history of keeping pace with marketplace
developments, the FTC is well-positioned to take a leading role in assessing
the impact of technology on domestic and world markets. In addition to bringing
enforcement actions in high tech areas, the FTC is studying the impact of
the Internet and intellectual property on competition law and policy.
1. Standard-Setting Cases
As technology advances, efforts will increase to establish
industry standards for the development and manufacture of new products. Standard
setting is often procompetitive, but anticompetitive activities can take
place during the standard-setting process. The Commission's most recent action
involving alleged subversion of a standard-setting process is the complaint
against Unocal, discussed previously.
In another matter, the Commission issued an administrative
complaint in June 2002 against Rambus, Inc., alleging that, as a participant
in an electronics industry standard-setting organization, Rambus - in violation
of the organization's rules - failed to disclose that it had a patent and
several pending patent applications on technologies that eventually were
adopted as part of the industry standard.(64) The
standard at issue in Rambus involved a common form of computer
memory used in a wide variety of popular consumer electronic products, such
as personal computers, fax machines, video games, and personal digital assistants.
The Commission's complaint alleges that, once the standard was adopted, Rambus
was in a position to reap millions in royalty fees each year, and potentially
more than a billion dollars over the life of the patents.(65) Because
standard-setting abuses can harm robust and efficiency-enhancing competition
in high tech markets, the Commission will continue to pursue investigations
in this important area.(66)
2. Intellectual Property Hearings
In 2002, the FTC and DOJ commenced a series of hearings
and Intellectual Property Law and Policy in the Knowledge-Based Economy."(67) The
hearings responded to the increasing need to manage the issues at the intersection
of competition and intellectual property law and policy. The Commission anticipates
releasing a report on its findings later this year.
3. Internet Task Force
In 2001, the FTC's Internet Task Force began to evaluate
potentially anticompetitive regulations and business practices that could
The Task Force has discovered that some state regulations may have the
effect of protecting existing bricks-and-mortar businesses from new Internet
The Task Force also is considering whether private companies may be hindering
e-commerce through the use of potentially anticompetitive tactics. In
October 2002, the Task Force held a public workshop to: (1) enhance the
of these issues; (2) educate policymakers about the potential anticompetitive
effects of state regulations; and (3) educate private entities about
the types of business practices that may be viewed as problematic.(68)
E. Other Enforcement
1. General Merger Enforcement
The Commission reviews and challenges mergers in any
sector that have significant potential to harm competition and consumers.
last summer the Commission settled allegations that Bayer AG's $6.2 billion
purchase of Aventis S.A.'s crop science business raised antitrust concerns
in the markets for a number of crop science products, including markets
for (1) new generation chemical insecticide products and active ingredients;
(2) post-emergent grass herbicides for spring wheat; and (3) cool weather
cotton defoliants. These new generation products are at the forefront
of pesticide, insecticide, and herbicide products, and maintaining competition
in these markets is significant because they offer greater effectiveness,
with less environmental impact than current generation products. In settling
this matter, the Commission required Bayer to divest businesses and assets
used in the manufacture of these products to parties capable of maintaining
competitive conditions in these markets.(69)
Also, in October 2002, the Commission authorized the staff
to seek a preliminary injunction in federal court blocking the proposed acquisition
of the Claussen Pickle Company by the owner of the Vlasic Pickle Company.(70) If
allowed to proceed, the combined firm would have had a monopoly share of
the refrigerated pickle market in the United States. Following the FTC's
decision, the parties abandoned the proposed acquisition.
2. Mergers Not Reportable
In FY 2004, the FTC will continue to devote resources to monitoring
merger activities that are not subject to premerger reporting requirements
under HSR, but that could be anticompetitive. In 2000, Congress raised the
HSR size-of-transaction filing threshold to eliminate the reporting requirement
for smaller mergers, but of course it did not eliminate the substantive prohibition
under Section 7 of the Clayton Act(71) against
smaller mergers that may substantially lessen competition. Consequently,
the agency must identify - through means such as the trade press and other
news articles, consumer and competitor complaints, hearings, and economic
studies - and remedy those unreported, usually consummated mergers that could
One notable example is a case that the Commission brought against
MSC.Software Corporation.(72) In
this case, the company ultimately agreed to settle FTC allegations that
MSC's 1999 acquisitions
of Universal Analytics, Inc. and Computerized Structural Analysis & Research
Corp. violated federal antitrust laws by eliminating competition in,
and monopolizing the market for, advanced versions of Nastran, an engineering
simulation software program used throughout the aerospace and automotive
industries. Under the terms of the settlement agreement, MSC must divest
at least one clone copy of its current advanced Nastran software, including
the source code. The divestiture will be through royalty-free, perpetual,
non-exclusive licenses to one or two acquirers who must be approved by
F. International Competition
Because competition increasingly takes place in a worldwide
market, cooperation with competition agencies in the world's major economies
is a key component of the FTC's enforcement program. Given differences in
laws, cultures, and priorities, it is unlikely that there will be complete
convergence of antitrust policy in the foreseeable future. Areas of agreement
far exceed those of divergence, however, and instances in which differences
will result in conflicting results are likely to remain rare. The Commission
has increased its cooperation with agencies around the world, both on individual
cases and on policy issues, and is committed to addressing and minimizing
1. ICN and ICPAC
In the fall of 2001, the FTC, DOJ, and 12 other antitrust
agencies from around the world launched the International Competition Network
an outgrowth of a recommendation of the International Competition Policy
Advisory Committee ("ICPAC"). ICPAC suggested that competition
officials from developed and developing countries convene a forum in
which to work together on competition issues raised by economic globalization
the proliferation of antitrust regimes. The ICN provides a venue for
antitrust officials worldwide to work toward consensus on proposals for
and substantive convergence on best practices in antitrust enforcement
and policy. Sixty-seven jurisdictions already have joined the ICN, and
staff is working on initial projects relating to mergers and competition
The FTC continues to participate in the work of the OECD on,
among other things, merger process convergence, implementation of the OECD
recommendation on hard-core cartels (e.g., price-fixing agreements),
and regulatory reform.
IV. Needed Resources for Fiscal Year
To accomplish the agency's mission in FY 2004, the FTC requests
$191,132,000 and 1,074 FTE (which is the same FTE level as FY 2003). This
level of resources is needed to allow the FTC to continue its past record
of accomplishments in enhancing consumer protection and protecting competition
in the United States and, increasingly, abroad. The FY 2004 request represents
an increase of $14,524,000 over the FTC's enacted FY 2003 appropriation.
The increase includes:
- $7,991,000 to fund mandatory and base expenses that were
not funded in FY 2003; and
- $6,533,000 to fund mandatory and base expenses requested
in FY 2004.
The FTC's FY 2004 budget request is calculated based on three
funding sources. Most of the funding will be derived from offsetting collections:
an estimated $159,000,000 from HSR premerger notification filing fees and
an estimated $18,000,000 from Telemarketing Sales Rule ("TSR")
fees. The HSR fee is based on a three-tiered filing rate structure mandated
by Congress as of February 1, 2001. The TSR fee will be assessed, collected,
and used to cover the costs associated with implementing and enforcing provisions
relating to a national registry of telephone numbers of consumers who choose
not to receive telephone solicitations from telemarketers. The FTC anticipates
that the remaining funding needed for the agency's operations will derive
from the General Fund in the U.S. Treasury.
Mr. Chairman, the FTC appreciates the strong support for its
agenda shown by you and the Subcommittee. I would be happy to answer any
questions that you and other Members may have about the FTC's budget request
1. The written statement
represents the views of the Federal Trade Commission. My oral presentation
and responses to questions are my own and do not necessarily reflect the
views of the Commission or any other Commissioner.
2. The FTC has broad
law enforcement responsibilities under the Federal Trade Commission Act,
15 U.S.C. § 41 et seq. With certain exceptions, the statute
provides the agency with jurisdiction over nearly every economic sector.
Certain entities, such as depository institutions and common carriers, as
well as the business of insurance, are wholly or partly exempt from FTC jurisdiction.
In addition to the FTC Act, the agency has enforcement responsibilities under
more than 40 additional statutes and more than 30 rules governing specific
industries and practices.
3. The Commission
works with various federal and state law enforcement agencies, as well as
Canadian, Mexican, and other international authorities. See, e.g., FTC
Press Release, State, Federal Law Enforcers Launch Sting on Business
Opportunity, Work-at-Home Scams (June 20, 2002), available at <http://www.ftc.gov/opa.2002/06/bizopswe.htm>. See
also FTC Press Release, FTC, States Give "No Credit" to
Finance Related Scams in Latest Joint Law Enforcement Sweep (Sept. 5,
2002), available at <http://www.ftc.gov/opa/2002/09/opnocredit.htm>.
figure represents the amount of redress that has been ordered by the court
in over 55 orders from April 2002 to March 2003. The figure does not represent
the actual amount of money that has or will be collected pursuant to those
5. FTC v. Access Resource
Services, Inc., Civ. Action No. 02-60226-CIV Gold/Simonton (S.D. Fla.
Nov. 4, 2002).
v. SkyBiz.com, Inc., Civ. Action No. 01-CV-396-EA (M) (N.D. Okla.
Jan. 28, 2003).
7. FTC v. Mitchell
Gold, Civ. Action No. SAcv 98-968 DOC (Rzx) (C.D. Cal. March 7, 2003).
8. Since the Commission
first published the booklet in February 2002, the FTC has distributed more
than 1.2 million paper copies and logged more than 1 million "hits" accessing
the booklet on the FTC web site. The publication is available at <http://www.ftc.gov/bcp/conline/pubs/credit/idtheft.htm>.
9. Eli Lilly & Co.,
Dkt. No. C-4047 (May 10, 2002).
Corp., Dkt. No. C-4069 (Dec. 24, 2002).
11. Standards for
Safeguarding Customer Information; Final Rule, 67 Fed. Reg. 36,484 (May 23,
2002) (to be codified at 16 C.F.R. Part 314).
Facts for Businesses, Financial
Institutions and Customer Data: Complying with the Safeguards Rule, available
13. 15 U.S.C. §§ 6501-6506.
14. United States
v. Hershey Foods Corp., Civ. Action No. 4:03-cv-00350-JEJ (M.D. Pa.
Feb. 26, 2003); United States v. Mrs. Fields Famous Brands, Civ.
Action No. 2:03cv00205 (D. Utah Feb. 25, 2003); United States
v. The Ohio Art Co., Civ. Action No. 3:02CV7203 (N.D. Ohio Apr. 30,
2002); United States v. American Pop Corn Co., Civ. Action No.
C02-4008DEO (N.D. Iowa Feb. 28, 2002); United States v. Lisa Frank,
Inc., Civ. Action No. 01-1516-A (E.D. Va. Oct. 3, 2001); United
States v. Looksmart, Ltd., Civ. Action No. 01-606-A (E.D. Va. Apr.
23, 2001); United States v. Bigmailbox.com, Inc., Civ. Action
No. 01-605-A (E.D. Va Apr. 23, 2001); United States v. Monarch Servs.,
Inc., Civ. Action No. AMD 01 CV 1165 (D. Md. Apr. 20, 2001).
15. United States
v. Hershey Foods Corp., Civ. Action No. 4:03-cv-00350-JEJ (M.D. Pa.
Feb. 26, 2003); United States v. Mrs. Fields Famous Brands, Civ.
Action No. 2:03cv00205 (D. Utah Feb. 25, 2003).
16. FTC Press Release, Federal,
State, and Local Law Enforcers Tackle Deceptive Spam and Internet Scams (Nov.
13, 2002), available at <http://www.ftc.gov/opa/2002/11/netforce.htm>.
17. See FTC
Consumer Alert, Email Address Harvesting: How Spammers Reap What You
Sow (Nov. 13, 2002), available at <http://www.ftc.gov/bcp/conline/pubs/alerts/spamalrt.htm>.
18. FTC v. BTV
Indus., Civ. Action No. CV-S-02-0437-LRH-PAL (D. Nev., Jan. 6, 2003).
19. FTC Press Release, FTC
Targets Sellers Who Deceptively Marketed International Driver's Permits
over the Internet and via Spam (Jan. 16, 2003), available at <http://www.ftc.gov/opa/2003/01/idpfinal.htm>.
20. FTC v. Carlton
Press, Inc., Civ. Action No. 03-CV-0226-RLC (S.D.N.Y. Jan. 14, 2003); FTC
v. One or More Unknown Parties Doing Business as the Institute for Int'l
Licensing, Civ. Action No. 1:03-CV-00021-RMC (D.D.C. Jan. 29, 2003); FTC
v. Jordan Maxwell, Civ. Action No. 03-0128 (C.D. Calif. Jan. 8, 2003); FTC
v. Yad Abraham, Civ. Action No. 03-0030 (C.D. Calif. Jan. 8, 2003); FTC
v. William Scott Dion, Civ. Action No. 03-40005-NMG (D. Mass. Jan.
9, 2003); FTC v. Jaguar Business Concepts, LP, Civ. Action No.
MJG03cv108 (D. Md. Jan. 13, 2003).
21. FTC Press Release, FTC
to Hold Three Day Public Spam Workshop (Feb. 3, 2003), available
22. FTC v. Associates
First Capital Corp., Civ. Action No. 1:01-CV-00606 JTC (N.D. Ga. 2002)
(pending court approval).
23. 15 U.S.C. §§ 1691-1691f, as
24. Id. §§ 1681-1681(u), as
25. FTC v. First
Alliance Mortgage Co., Civ. Action No. SACV 00-964 DOC (MLGx) (C.D.
26. U.S. v. Mercantile
Mortgage Co., Civ. Action No. 02C 5079 (N.D. Ill. 2002).
27. 15 U.S.C. §§ 1601-1667f, as
28. The Commission
continues its litigation against Chicago-area mortgage broker Mark Diamond
and against D.C.-area mortgage lender Capital City Mortgage Corporation. FTC
v. Mark Diamond, Civ. Action No. 02C-5078 (N.D.Ill. filed Nov. 1, 2002); FTC
v. Capital City Mortgage Corp., Civ. Action No. 1: 98-CV-00237 (D.D.C.
Jan. 29, 1998). The Diamond case represents the FTC's first litigated
case against a mortgage broker. In Capital City, the FTC alleges
that Capital City deceived consumers into taking out high-rate, high-fee
loans and then foreclosed on consumers' homes when they could not afford
29. See, e.g., FTC
v. Dr. Clark Research Ass'n, Civ. Action No. 1-03-00054-TRA (N.D.
Ohio Jan. 8, 2003); FTC v. Vital Dynamics, Civ. Action No. 02-CV-9816
(C.D. Calif. Jan 17, 2003) (consent decree); FTC v. Rexall Sundown,
Inc., Civ. Action No. 00-CV-7016 (S.D. Fla. Mar. 11, 2003) (proposed
consent decree subject to court approval).
30. See, e.g., Enforma
Natural Prods., Inc., Civ. Action No. 2:00cv04376JSL (CWx) (C.D. Cal.
Dec. 9, 2002) (consent decree); Weider Nutrition Int'l, Dkt. No.
C-3983, 2001 WL 1717579 (Nov. 15, 2000); FTC v. SlimAmerica, Inc., 77
F. Supp. 2d 1263 (S.D. Fla.1999); Jenny Craig, Inc., 125 F.T.C.
333 (1998) (consent order); Weight Watchers Int'l, Inc., 124 F.T.C.
610 (1997) (consent order); NordicTrack, Inc., 121 F.T.C. 907
(1996) (consent order).
31. FTC Staff Report,
Weight Loss Advertising: An Analysis of Current Trends (Sept. 2002), available
Sheila Anthony, Let's clean up the diet-ad mess, Advertising Age,
Feb. 3, 2003, at 18.
33. See Public
Workshop: Advertising of Weight Loss Products, 67 Fed. Reg. 59,289 (Sept.
34. FTC v. STF Group, Civ.
Action No. 03 C 0977 (N.D. Ill. filed Feb. 10, 2003).
35. FTC v. Pacific First
Benefit, LLC, Civ. Action No. 02 C 8678 (N.D. Ill. filed Dec. 2, 2002).
36. FTC v. BTV Indus., supra n.
37. FTC v. CSCT, Inc., Civ.
Action No. 03 C 00880 (N.D. Ill. filed Feb. 6, 2003).
38. FTC, Marketing Violent
Entertainment to Children: A Review of Self-Regulation and Industry Practices
in the Motion Picture, Music Recording & Electronic Game Industries (Sept.
2000), available at <http://www.ftc.gov/reports/violence/vioreport.pdf>.
Marketing Violent Entertainment to Children: A Six-Month Follow-Up Review
of Industry Practices in the Motion Picture, Music Recording & Electronic
Game Industries (Apr. 2001), available at <http://www.ftc.gov/reports/violence/violence010423.pdf>;
FTC, Marketing Violent Entertainment to Children:
A One-Year Follow-Up Review of Industry Practices in the Motion Picture,
Music Recording & Electronic Game Industries (Dec. 2001), available
FTC, Marketing Violent Entertainment to
Children: A Twenty-One Month Follow-Up Review of Industry Practices in
the Motion Picture, Music Recording & Electronic Game Industries (June
2002), available at <http://www.ftc.gov/reports/violence/mvecrpt0206.pdf>.
40. See FTC
Press Release, FTC Warns Consumers About Online Gambling (June 26,
2002), available at <http://www.ftc.gov/opa/2002/06/onlinegambling.htm>.
41. FTC Consumer
Alert, Online Gambling and Kids: A Bad Bet (June 26, 2002), available
42. Conference Report
on the Omnibus Appropriations Bill for FY 2003, H. Rep. No. 108-10 (Feb.
43. United States
v. United Recovery Systems, Inc., Civ. Action No. H-02-1410 (sl) (S.D.
Tex. Apr. 22, 2002).
44. FTC Facts for
Consumers, Military Sentinel: Fact Sheet, available at [no longer available].
45. 15 U.S.C. § 18a,
as amended, Pub. L. No. 106-553, 114 Stat. 2762 (2000).
Squibb Co., File Nos. 001-0221, 011-0046, and 021-0181 (Mar. 7, 2003)
(proposed consent order accepted for public comment).
47. The proposed
order includes a provision prohibiting BMS from triggering a 30-month stay
based on any patent BMS lists in the Orange Book after the filing of an application
to market a generic drug.
Corp., Dkt. No. C-4060 (Oct. 2, 2002).
Corp. and Elan Corp., Dkt. No. C-4057 (Aug. 15, 2002).
Corp., Dkt. No. 9297 (Apr. 2, 2002) (consent order as to American
51. System Health
Providers, Dkt. No. C-4064 (Oct. 24, 2002); R.T. Welter & Assoc.,
Inc. (Professionals in Women's Care), Dkt. No. C-4063 (Oct. 8, 2002); Physician
Integrated Servs. of Denver, Inc., Dkt. No. C-4054 (July 16, 2002); Aurora
Associated Primary Care Physicians, L.L.C., Dkt. No. C-4055 (July
52. FTC Press Release, FTC
Seeks to Block Cytyc Corp.'s Acquisition of Digene Corp. (June 24,
2002), available at <http://www.ftc.gov/opa/2002/06/cytyc_digene.htm>.
53. Baxter International
Inc. and Wyeth, Dkt. No. C-4068 (Feb. 3, 2003).
54. Amgen Inc.
and Immunex Corp., Dkt. No. C-4056 (Sept. 3, 2002).
55. See Thomas
B. Leary, Antitrust Issues in Settlement of Pharmaceutical Patent Disputes (Nov.
3, 2000), available at <http://www.ftc.gov/speeches/leary/learypharma.htm>;
Thomas B. Leary, Antitrust Issues in the Settlement of Pharmaceutical
Patent Disputes, Part II (May 17, 2001), available at <http://www.ftc.gov/speeches/leary/learypharmaceuticalsettlement.htm>.
56. Generic Drug
Entry Prior to Patent Expiration: An FTC Study (July 2002), available
57. President Takes
Action to Lower Prescription Drug Prices by Improving Access to Generic Drugs
(Oct. 21, 2002), available at <http://www.whitehouse.gov/news/releases/2002/10/20021021-2.html>.
for FDA Approval to Market a New Drug: Patent Listing Requirements and Application
of 30-Month Stays on Approval of Abbreviated New Drug Applications Certifying
That a Patent Claiming a Drug Is Invalid or Will Not Be Infringed; Proposed
Rule, 67 Fed. Reg. 65448 (Oct. 24, 2002).
59. The FTC web site
for the hearings is http://www.ftc.gov/ogc/healthcarehearings/index.htm.
To date, the FTC has released a detailed agenda for the hearings' sessions
in February through May. All of the documents relating to the hearings appear
on the web site.
60. Conoco Inc.
and Phillips Petroleum Company, Dkt. No. C-4058 (Feb. 7, 2003) (consent
61. Union Oil
Co. of California, Dkt. No. 9305 (complaint issued Mar. 4, 2003).
62. A second standard-setting
case, Rambus, also is pending before an Administrative Law Judge.
This case, which is discussed below, involves standard setting in the electronics
63. FTC Press Release, FTC
to Hold Public Conference/Opportunity for Comment on U.S. Gasoline Industry
in Early August (July 12, 2001), available at <http://www.ftc.gov/opa/2001/07/gasconf.htm>;
FTC Press Release, FTC Chairman Opens Public Conference Citing New
Model To Identify and Track Gasoline Price Spikes, Upcoming Reports (May
8, 2002), available at <http://www.ftc.gov/opa/2002/05/gcr.htm>.
64. Rambus, Inc.,
Dkt. No. 9302 (complaint issued June 18, 2002).
66. In 1996, the
FTC settled a similar complaint against Dell Computer, alleging that Dell
had failed to disclose an existing patent on a personal computer component
that was adopted as the standard for a video electronics game. Dell Computer
Co., Dkt. No. C-3658 (May 20, 1996).
67. FTC Press Release, Muris
Announces Plans for Intellectual Property Hearings (Nov. 15, 2001), available
68. FTC Press Release, FTC
to Host Public Workshop to Explore Possible Anticompetitive Efforts to
Restrict Competition on the Internet (July 17, 2002), available
69. Bayer AG
and Aventis S.A., Dkt. No. C-4049 (July 24, 2002) (consent order).
70. FTC v. Hicks,
Muse, Tate & Furst Equity Fund V, LP, Civ. Action No. 1:02-cv-02070-RWR
(D.D.C. filed Oct. 23, 2002). A notice of voluntary dismissal was filed
on October 31, 2002.
71. 15 U.S.C. § 18.
Corp., Dkt. No. 9299 (Oct. 29, 2002).