FTC Provides Senate with Overview of Antitrust Activities

Providing Federal Trade Commission testimony today before the U.S. Senate Judiciary Committee's Subcommittee on Antitrust, Competition, and Business and Consumer Rights, Chairman Timothy J. Muris said that the FTC's record on antitrust activities "is impressive," with the agency fulfilling its mission of protecting American consumers by pursuing an aggressive law enforcement program during rapid changes in the marketplace.

"Through the efforts of a dedicated and professional staff," the testimony states, "the FTC has shouldered an increasing workload," despite only modest increases in resources. The guiding word at the Commission remains "continuity," according to the testimony, with the FTC "aggressively continuing to pursue law enforcement efforts and business education campaigns, and organize forums to study the changing marketplace."

In working to accomplish these goals, the testimony states that over the past year, the Commission has succeeded in three key areas: 1) building on the agency's recent history of aggressive law enforcement; 2) focusing on industries and issues significant to consumers, such as energy, health care, and matters derived from the new economy, including intellectual property rights; and 3) continuing to use the FTC's special role as an expert agency to advance the state of knowledge about issues central to the Commission's mission.

This continuity has been demonstrated, according to the testimony, through the "near unanimity" of voting patterns among the FTC's five commissioners, reflecting "both a broad consensus . . . about the types of cases the Commission should pursue, and the careful and deliberate process by which the Commissioners consider matters, consulting with staff to address the issues and concerns of individual Commissioners."

The testimony presents an overview of the FTC antitrust enforcement activities over the past year, focusing on: 1) anticompetitive mergers; 2) streamlining the merger review process; 3) non-merger enforcement; and 4) the Commission's focus in the areas of energy, health care, and intellectual property. For each of these major subject areas, the testimony provides a summary of significant cases, as well as a detailed explanation of how the Commission is working both internally and in coordination with other agencies to achieve its goals.

Although recent economic conditions have reduced merger activity, the testimony states that Commission merger enforcement remains a significant challenge. Because the size, scope, and complexity of mergers has increased, a large number of mergers still require scrutiny due to competitive concerns. The number of non-reportable mergers also requires additional attention, and resource-intensive litigation is more frequently necessary than in the past.

In presenting how the FTC is working to streamline merger review, the testimony describes work with the U.S. Department of Justice to accelerate the use of electronic premerger filing. In addition, the testimony describes the FTC's efforts to reduce burdens during investigations, the FTC's workshops on merger investigation best practices, and additional FTC workshops being held on the subject of merger remedies.

The testimony also describes the FTC's aggressive enforcement in the non-merger arena. In fiscal year 2001, the FTC opened 56 non-merger investigations, more than double the number begun in the previous fiscal year. The Commission opened an additional 51 investigations during fiscal year 2002. The FTC currently has three non-merger matters in Part III litigation, and has obtained consent order stopping anticompetitive practices in an additional nine matters, most involving health care.

The testimony indicates that, because of their great importance to consumers, the Commission gives special attention to the energy and health care industries, as well as antitrust issues related to intellectual property rights. In its discussion of the energy area, the testimony describes how the FTC has conducted in-depth studies of evolving energy markets and investigated numerous oil company mergers. In its discussion of the health care area, the testimony describes Commission antitrust investigations involving pharmaceutical companies, mergers affecting the pharmaceutical industry, and the efforts of pharmaceutical firms to thwart competition from generic drugs. Such efforts include agreements between branded and generic manufacturers, and between generic manufacturers, not to compete; and unilateral conduct, including fraudulent "Orange Book" listings. Information also is provided on the Commission's antitrust investigations involving health care providers, the recent generic drug study, and the recent workshop on health care and competition law and policy. Finally, standard-setting is discussed, as are the intellectual property hearings held at the Commission earlier this year.

The testimony then discusses antitrust exemptions, noting that immunity from the antitrust laws is exceptional and disfavored. The testimony also describes two specific exemptions, the State Action Doctrine and the Noerr-Pennington Doctrine. The testimony notes that, when properly applied, both of these immunities serve important Constitutional interests. It is sound antitrust policy, however, to seek to limit the state action and Noerr antitrust immunities to situations that fulfill their underlying purposes. New Task Forces at the FTC are examining both the state action and Noerr-Pennington exemptions. Both Task Forces are considering a variety of actions, including antitrust enforcement, amicus briefs, and competition advocacy.

The testimony next discusses business-to-business electronic marketplaces and FTC e-commerce initiatives. While noting that the Commission views positively the development of B2Bs because of their potential to generate significant efficiencies for our economy, the testimony also indicates the Commission's awareness of B2Bs' potential to inflict competitive harm. The Commission's e-commerce initiatives include the creation of an Internet Task Force and the hosting of an Internet Competition Workshop.

Lastly, the Commission's activities in the area of international antitrust enforcement are presented, including participation in the launch of the International Competition Network (ICN). A discussion of the Free Trade Agreement of the Americas follows, with the agency's work with the Organization for Economic Cooperation and Development (OECD) and provision of technical assistance to a wide range of international partners is also discussed.

The FTC vote to approve the testimony and place a copy on the public record was 5-0. The written statement presented by the Chairman at the hearing represents the views of the FTC.

The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.

(FTC File No. P859900)