Federal Trade Commission Initiatives for Fy 2004 to Focus on Privacy, Fraud and Deception, Health Care, Energy, Technology and International Competition

To continue its work for consumers in FY 2004, the Federal Trade Commission today requested $191,132,000 and 1,074 FTE. The FY 2004 request was made during testimony by Chairman Timothy J. Muris before the Subcommittee on Commerce, Justice, State, the Judiciary and Related Agencies of the House Committee on Appropriations, and represents an increase of $14,524,000 over the agency's FY 2003 appropriation.

The testimony detailed that the consumer protection program funds will be directed to fighting fraud and deception, protecting consumer privacy, and initiatives directed at specific consumer groups, including children, Spanish-speaking consumers, and military personnel.

In the competition program, funds will be directed to merger and nonmerger enforcement, particularly in health care, energy, high technology, and international competition.

In his oral statement, Chairman Muris explained that since April 1, 2002, the Commission has organized eight joint law enforcement efforts (sweeps) with more than 100 law enforcement partners, resulting in 260 federal and state law enforcement actions. In the past year, the FTC has filed 120 cases involving fraud or deception, and has obtained more than 55 judgments ordering more than $650 million in consumer redress. Also, pending court approval of a settlement with a subprime lender, the Commission anticipates returning $215 million to injured consumers.

In addition to the "do not call" registry, the Commission's "most significant accomplishment in the consumer privacy program," the testimony noted that the agency maintains an active identity theft program both to provide assistance to consumers who are victims of ID theft and to support criminal law enforcement agencies in identifying and prosecuting the perpetrators of these crimes. The agency has taken steps against Eli Lilly & Company and Microsoft Corporation for alleged misrepresentations of measures they used to maintain and protect the privacy and confidentiality of consumers' personal information, and has finalized the Safeguards Rule to implement the security provisions of the Gramm-Leach-Bliley Act (GLB) Rule.

According to the testimony, the FTC also will continue to address the ever-growing problem of spam. In the past year, the FTC and 12 law enforcement partners brought 30 enforcement actions as part of an ongoing initiative to fight deceptive spam and Internet scams. Chairman Muris noted that although 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 e-mail, e-mail marketing, and the Internet industry, the FTC will host a public forum from April 30 through May 2 of this year.

Chairman Muris next expressed the Commission's appreciation for Chairman Wolf's outstanding consumer protection advocacy activities on behalf of children. Chairman Muris continued his testimony by announcing an FTC public workshop on the marketing of violent entertainment products that will be held this fall. Following the workshop, the Commission will prepare a report to Congress on the workshop, the findings concerning the marketing of these entertainment products, and the results of a new mystery shopper survey of retailers.

According to the testimony, since April 2001, the FTC has brought eight cases and obtained agreements requiring payment of civil penalties totaling more than $350,000 for violations of the Children's Online Privacy Protection Act. In addition, as requested by the Appropriations Committees, the agency has begun to collect information concerning the impact on underage consumers of ads for new alcoholic beverages, referred to as 'alcopops,' and on the alcohol beverage industry's response to the recommendations for improved self-regulation contained in the FTC's 1999 report to Congress.

On the antitrust front, the testimony explains, the Commission has been equally active protecting consumers from anticompetitive merger and nonmerger conduct, particularly in the health care, energy, and high-tech industries. The FTC opened 56 new nonmerger investigations in 2001 and another 59 in 2002. These investigations target practices with enormous potential to harm competition and consumers.

The testimony notes that in its focus on specific sectors of the economy, the FTC has devoted significant resources to the health care industry and the energy/gasoline market. The testimony cites the Commission's recent settlement with Bristol-Myers Squibb to resolve charges that the company obstructed the entry of low-price generic competition for three of Bristol's widely used pharmaceutical products (Taxol, Platinol, and BuSpar) as an example of its health care work, and its standard-setting case against Unocal as a significant example of the FTC's work in the nonmerger area.

Noting that "stopping mergers that lessen competition will continue to be a major focus of the competition agenda," Chairman Muris continued his testimony by detailing some recent FTC actions to block, or reach settlements in proposed mergers representing a broad range of different industries. For example, in its review of Cytyc Corp's proposed acquisition of Digene Corp, two manufacturers of complementary cervical cancer screening tests, the Commission was prepared to allege that the merger would allow the combined firm to use its market power to impede competition in another market. The parties abandoned the transaction before the FTC challenged the transaction. In Vlasic/Claussen, the FTC challenged a combination that would have created a monopoly in the U.S. refrigerated pickle market. And in Baxter International Inc's acquisition of Wyeth Corporation it reached a settlement to preserve competition in markets for certain generic injectable drugs.

In summary, Chairman Muris stressed the vital nature of the FTC's role in protecting consumers and voiced the hope that the subcommittee would approve the full budget request.

The Commission's vote to approve the testimony was 5 - 0.

(FTC File No. P010101)