FTC Testifies on Initiatives to Protect Consumers, Preserve Competition

The FTC today told the Senate Committee on Commerce, Science & Transportation Subcommittee on Interstate Commerce, Trade and Tourism that it has a robust record in protecting consumers and preserving competition in the marketplace.

Speaking for the Commission, Chairman Deborah Platt Majoras said that much of the work of the FTC’s Bureau of Consumer Protection has been devoted to data security and identity theft, technology risks to consumers, fraud in the marketing of health care products, financial practices, telemarketing fraud, and enforcement of the National Do Not Call Rule. “During the past three fiscal years, the FTC has obtained more then 250 court orders requiring defendants to pay more than $1.2 billion in consumer redress, obtained 47 court judgments for civil penalties in an amount over $38 million, and filed approximately 180 new complaints in federal district court to stop unfair and deceptive practices. It also completed 54 statutorily-mandated rulemakings and reports, hosted 48 conferences and workshops, issued 40 reports on topics significant to consumers, and developed 250 consumer and business education campaigns.”

According to the testimony, the goal of the FTC’s Bureau of Competition is to remove impediments to competition in the marketplace. “To accomplish this, the FTC has focused its enforcement efforts on sectors of the economy that have a significant impact on consumers, such as health care and pharmaceuticals, energy, technology, and real estate. So far in fiscal year 2007, there have been 20 merger cases that have resulted in enforcement action or withdrawal – including three litigated preliminary injunction actions – and 11 nonmerger enforcement actions.”

The testimony identifies certain legislative recommendations that the Commission believes will allow us to better protect U.S. consumers. These are: (1) to stop brand name drug companies from paying generic companies not to compete at the expense of consumers; (2) to repeal the telecommunications common carrier exemption; and (3) to ensure that the Commission has authority to impose civil penalties in cases in which the Commission’s traditional equitable remedies are inadequate, such as spyware and data security cases.

Highlights of the agency’s accomplishments in the consumer protection and competition missions include:

• Over the past few years, the FTC has brought 14 enforcement actions against businesses, including BJ’s Wholesale Club, ChoicePoint, CardSystems Solutions, and DSW Shoe Warehouse, for their alleged failures to provide reasonable data security.
• For its “Deter, Detect, and Defend” identity theft education program, the FTC has distributed over 2.6 million brochures, has recorded more than 3.2 million visits to the program’s Web site, and has disseminated 55,000 kits, which can be used by employers, community groups, Members of Congress, and others to educate their constituencies.
• Since 1997, the Commission has brought 90 spam-related law enforcement actions against 143 individuals and 100 companies, 26 of which were filed after Congress enacted the CAN-SPAM Act. The Commission has brought eleven spyware enforcement actions in the past two years.
• From April 2006 through August 2007, the FTC initiated or resolved 19 law enforcement actions involving 31 products making allegedly deceptive health claims.
• In the last decade, the agency has brought 21 actions against companies and principals in the mortgage lending industry, focusing in particular on the subprime market.
• In 19 lawsuits filed since 1998, the FTC has alleged that collection agencies, collection law firms, companies that purchase and collect delinquent credit accounts, and credit issuers have used illegal debt collection practices.
• From 1991 to the present, the FTC has brought more than 350 telemarketing cases; 240 of these cases were brought after 1995, when the FTC promulgated the Telemarketing Sales Rule.
• Since October 2006, based on the FTC’s Criminal Liaision Unit referrals to criminal agencies, 115 FTC defendants or their associates have been charged, pled guilty, or were sentenced in criminal cases.
• So far in 2007, the Commission has challenged three mergers in the energy industry: Western Refining’s acquisition of Giant Industries; Equitable Resource's proposed acquisition of The Peoples Natural Gas Company; and the proposed $22 billion deal whereby energy firm Kinder Morgan would be taken private by its management and a group of investment firms, including The Carlyle Group and Riverstone Holdings. The FTC also charged the American Petroleum Company with illegally conspiring with competitors to restrict the importation and sale of motor oil lubricants in Puerto Rico.
• In the past year, the agency has brought eight enforcement actions against associations of competing realtors or brokers. The associations, which control multiple listing services, adopted rules that allegedly discouraged consumers from entering into non-traditional listing contracts with real estate brokers.
• In health care during the past year, the agency achieved substantial relief for consumers before allowing mergers in the areas of generic drugs, over-the-counter medications, injectable analgesics, and other medical devices and diagnostic services. The FTC has challenged price-fixing agreements among competing physicians and agreements between drug companies that delay generic entry. The Commission also recently issued an opinion ruling that Evanston Northwestern Healthcare Corporation’s acquisition of Highland Park Hospital was anticompetitive.
• The FTC guards against anticompetitive conduct in the retail sector. In June, the Commission sought a preliminary injunction in federal district court blocking Whole Foods’ acquisition of its chief rival, Wild Oats Markets, Inc. Also in June, the FTC challenged Rite Aid Corporation’s proposed $3.5 billion acquisition of the Brooks and Eckerd pharmacies from Canada’s Jean Coutu Group (PJC), Inc. In March, the Commission announced a proposed order settling charges that the Missouri State Board of Embalmers and Funeral Directors illegally restrained competition by defining the practice of funeral directing to include selling funeral merchandise to consumers on an at-need basis.
• In the past year, the FTC has sought to persuade regulators to adopt policies that do not unnecessarily restrict competition in the areas of gasoline sales, real estate brokerage, real estate legal services, attorney advertising, and pharmacy benefit managers. The FTC also has produced reports on intellectual property issues, municipal provision of wireless Internet, broadband policy, and competition in real estate.
• In 2007, the FTC sent 20 staff experts on 20 technical assistance missions to 14 countries, including the Association of Southeast Asian Nations Community, India, Russia, Azerbaijan, South Africa, Central America, Tanzania, and Egypt.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.