From the enforcer: Federal Trade Commission

United States: from the enforcer's competition economists

Address: 600 Pennsylvania Avenue NW, Washington, DC 20580, United States
Web: www.ftc.gov

Contacts

Joseph J Simons
Chairman
Tel: +1 202 326 3400
Email: [email protected]

Noah Joshua Phillips
Commissioner
Tel: +1 202 326 3776
Email: [email protected]

Rohit Chopra
Commissioner
Tel: +1 202 326 3886
Email: [email protected]

Rebecca Kelly Slaughter
Commissioner
Tel: +1 202 326 2144
Email: [email protected]

Christine S Wilson
Commissioner
Tel: +1 202 326 3217
Email: [email protected]

D Michael Chappell
Chief Administrative Law Judge
Tel: +1 202 326 3632
Email: [email protected]

Alden F Abbott
General Counsel
Tel: +1 202 326 2505
Email: [email protected]

Randolph W Tritell
Director, Office of International Affairs
Tel: +1 202 326 3051
Email: [email protected]

Bilal Sayyed
Director, Office of Policy Planning
Tel: +1 202 326 2004
Email: [email protected]

Jeanne Bumpus
Director, Office of Congressional Relations
Tel: +1 202 326 2946
Email: [email protected]

Bureau of Competition
General Inquiries
Tel: +1 202 326 3300
Email: [email protected]

Ian Conner
Director
Tel: +1 202 326 3746
Email: [email protected]

Bureau of Consumer Protection

Andrew Smith
Director
Tel: +1 202 326 3280
Email: [email protected]

Bureau of Economics
General Inquiries
Tel: +1 202 326 3429

Andrew Sweeting
Director
Tel: +1 202 3263005
Email: [email protected]

Office of Public Affairs
(Press Office) General inquiries
Tel: +1 202 326 2180
Email: [email protected]

Cathy MacFarlane
Director
Tel: +1 202 326 2324
Email: [email protected]

Overview

The FTC is an independent law enforcement agency headed by five commissioners, who are appointed by the President for staggered seven-year terms and confirmed by the Senate. The President designates the chairman from among the commissioners. The FTC is organised into three main Bureaus: the Bureau of Competition, the Bureau of Economics, and the Bureau of Consumer Protection, each supervised by a bureau director. (The agency also has several supporting offices.) The Bureaus of Competition and Economics are principally responsible for antitrust enforcement. The agency also has seven regional offices throughout the United States, three of which participate in antitrust enforcement (each regional officeengages in consumer protection enforcement).

As an independent law enforcement agency within the executive branch, the FTC has both prosecutorial and adjudicative powers to enforce the FTC Act, which includes, but is not limited to, violations of the Sherman Act, as well as the Clayton Act. In its prosecutorial role, the FTC, like the Antitrust Division of the Department of Justice (DOJ), investigates potentially anticompetitive conduct through subpoenas, civil investigative demands, investigational hearings and other forms of pre-complaint discovery. When there is ‘reason to believe’ the law has been or is being violated, the FTC (in its prosecutorial role) may either issue an administrative complaint or file a federal court complaint setting forth its charges.

In the administrative complaint context, an administrative law judge (ALJ) is assigned to handle the adjudication of the complaint. ALJs are officials appointed by the FTC to whom the Commission delegates the initial performance of the agency’s statutory adjudicative process. The ALJ resolves discovery, evidentiary, and procedural disputes and conducts the full adversarial evidentiary hearing on the record. Upon conclusion of the hearing, the ALJ issues an initial decision setting out the findings of fact and conclusions of law and recommending either dismissal of the complaint or entry of an order to cease and desist the challenged anticompetitive practices. The cease and desist order may also require affirmative actions, such as divesting assets, or include fencing-in provisions that prohibit practices beyond those challenged in the complaint to ensure effective relief. The FTC staff (complaint counsel) or the respondent can appeal the ALJ’s initial decision to the Commission, sitting as an adjudicative tribunal, which can conduct a de novo review of the ALJ’s findings of fact and conclusions of law. Upon appeal of an initial decision, or if the Commission decides on its own to review the case, the Commission receives briefs, holds oral argument, and thereafter issues a final decision and order. The Commission’s decision and order is appealable by any respondent against which an order is issued. The respondent may file a petition for review with any territorial US court of appeals within whose jurisdiction the respondent resides or carries on business or where the challenged practice was employed. The party losing in the court of appeals may seek review by the US Supreme Court.

The FTC may seek civil penalties in federal district court if it believes a respondent has violated an FTC administrative order. The FTC also can seek an injunction and other equitable relief in federal district court to challenge an allegedly anticompetitive merger or anticompetitive conduct.

Questions and answers

How long is the head of agency’s term of office?

The five commissioners serve staggered seven-year terms. Commissioners can be removed only for inefficiency, neglect of duty, or malfeasance in office. The President designates a chairman from among the commissioners or can nominate a new commissioner to serve as chairman if there is a vacancy. The President can designate a new chairman at any time.

When is the agency head next due for reappointment?

President Trump named Joseph J Simons to a term on the Commission that expires 24 September 2024 and designated him as chairman. Joseph J Simons was sworn in as chairman of the Federal Trade Commission on 1 May 2018.

Which posts within the organisation are political appointments?

The commissioners (including the chairman) are nominated by the President and subject to confirmation by the Senate. The bureau directors, general counsel, and a few other senior staff positions are selected by the chairman, with the approval of the Commission.

What is the agency’s annual budget?

The agency’s budget for financial year 2019 was US$310 million.

How many staff are employed by the agency?

The agency had 1,130 full-time equivalent employees at the end of financial year 2019.

To whom does the head of the agency report?

The FTC is an independent agency within the executive branch. The President has the authority to designate the chairman from among its members, and may remove a commissioner for inefficiency, neglect of duty or malfeasance.  In addition, the agency is subject to oversight primarily by the Senate Committee on Commerce, Science, and Transportation and the House of Representatives Committee on Energy and Commerce, as well as the Senate and House Committees on the Judiciary. Many of the FTC’s enforcement and other actions are subject to independent judicial review.

Do any industry-specific regulators have competition powers?

Yes. For example, the following agencies have certain authority to regulate competition issues in the following industries or sectors:  Federal Communications Commission in the telecommunications sector; the Department of Transportation in the airline sector; the Surface Transportation Board regarding railroads; the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation in the financial services industry; and the Federal Energy Regulatory Commission in the electric power sector.

If so, how do these relate to your agency’s role?

There are very few sectors, such as railroads, in which the regulator has principal authority to evaluate the effect of mergers on competition. In these sectors, when the regulator must take into account competitive concerns, the antitrust agencies may exercise an advisory role. In other sectors, such as banking, telecommunications, and electric power, a separate federal government agency has concurrent jurisdiction to evaluate proposed mergers under a different statutory or regulatory standard. The FTC has authority to enforce the competition laws concurrently with the sectoral regulator in the electric power sector; in matters investigated concurrently, the FTC coordinates closely with the Federal Energy Regulatory Commission. (The FTC Act exempts banks and common carriers, such as airlines and telecommunications firms, from the FTC’s jurisdiction, some of which may be within the concurrent jurisdiction of the US Department of Justice (DOJ).)

May politicians overrule or disregard authority’s decisions? If they have ever exercised this right, describe the most recent example.

Politicians cannot overrule or disregard the FTC’s prosecutorial or adjudicative decisions.

Does the law allow non-competition aims to be considered when your agency takes decisions?

No, the US Supreme Court has made clear that only competition aims can be considered.

Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned?

Respondents may appeal the FTC’s adjudicative decisions to the territorial US Courts of Appeals. Certain other agency actions are reviewable in the US district courts. Final appeal of all decisions is to the US Supreme Court. There is no additional form of judicial review. Courts have overturned the agency’s competition decisions.

Has the authority ever blocked a proposed merger? If yes, please provide the most recent instances.

Yes. The FTC can challenge a proposed merger in US federal court and through the Commission’s administrative adjudicatory process. If the FTC challenges the merger in federal court, the court determines whether the acquisition violates federal antitrust law.  If the FTC challenges the merger administratively, the adjudication follows the process discussed above.

In the vast majority of mergers in which the FTC finds a competitive problem, the parties choose either to enter into a consent agreement or to abandon the transaction. In fiscal year 2019 (1 October 2018–30 September 2019), nine transactions were abandoned after FTC staff informed the parties of its antitrust concerns. The FTC also initiated litigation in two matters (Fidelity National Financial/Stewart Information Services and Evonik Industries/Peroxy Chem). In Fidelity National Financial/Stewart Information Services, the FTC issued an administrative complaint challenging Fidelity National’s proposed acquisition of Stewart Information Services and authorized staff to seek a preliminary injunction in federal court to prevent the proposed acquisition pending an administrative trial on the merits. The parties abandoned the transaction following the issuance of the FTC’s complaint. In Evonik Industries/Peroxy Chem, the FTC issued an administrative complaint, and authorised staff to file a request for a temporary restraining order and preliminary injunction in federal district court, alleging the acquisition would harm competition for hydrogen peroxide in certain geographic markets. In January 2020, a federal court denied the FTC’s motion for a preliminary injunction. Thereafter, the Commission withdrew its complaint from administrative adjudication, and the merger was consummated.

Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances.

Yes. Merger investigations may be settled by a consent order allowing the parties to consummate the transaction subject to conditions, including divestitures.

In fiscal year 2019, the FTC issued consent orders settling charges and requiring divestitures or other relief in 10 transactions concerning, among other products and services:

  • Distribution and sale of industrial, medical and other gases (Linde/Praxair);
  • Retail gasoline (Marathon Petroleum/REROB);
  • PET resin (Indorama Ventures/DAK America);
  • Office supplies wholesalers (Staples/Essendant);
  • Dialysis equipment (Fresenius Medical Care/NxStage);
  • physician services (UnitedHealth Group/DaVita);
  • metalworking fluids (Quaker Chemical/Global Houghton);
  • interventional medical and surgical devices (Boston Scientific/BTG);
  • food service distributors (US Foods/SGA); and
  • Natural gas pipeline transportation (DTE Energy/Generation Pipeline).

Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.

Under the Hart–Scott–Rodino Antitrust Improvements Act (HSR Act), the FTC issued second requests (prompting the US equivalent of Phase II investigations) in 30 merger investigations in fiscal year 2019. The DOJ, which shares antitrust authority to review mergers, issued 31 Second Requests in FY 2019.

Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances.

Not applicable. These cases are handled by the DOJ, which has criminal enforcement authority.

Do you operate an immunity leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations?

This is operated by the DOJ.

Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?

The DOJ is responsible for criminal enforcement.

Are there any plans to reform the competition law?

Numerous bills to amend the antitrust laws are introduced in every Congress, though few are enacted. The second session (2020) of the 116th Congress is no exception. In addition to bills that have been introduced in multiple congresses, such as measures to give the FTC greater authority to challenge patent settlement agreements between brand name and generic drug companies, bills to remove the exemption from antitrust liability for health insurance, and bills that make it easier for the federal antitrust agencies to challenge mergers involving large corporations, in 2020, members of Congress also introduced bills to impose a moratorium on some mergers to address their concerns that the economic hardships resulting from the pandemic would lead many large corporations to seek to acquire their smaller rivals. None of these measures has been enacted in this Congress, however.

In addition to legislation, the House Judiciary Committee has also undertaken in the 116th Congress an investigation of competition and tech platforms. The Committee began this inquiry in 2019, and has said it expects to issue a report on its findings, to include recommendations for amendments to the antitrust laws, in the Fall of 2020. The Chairman of the relevant subcommittee has said he intends to introduce legislation in 2020 based on the report’s findings. It is likely that these reforms to the antitrust laws, and others, will also be proposed in the next Congress, which begins in January 2021.

When did the last review of the law occur?

Subcommittees of the House and Senate Judiciary Committees regularly hold hearings to oversee the general enforcement of the federal antitrust laws, examine high-profile mergers, and consider specific topics. The reach and application of current antitrust laws, as well as proposed amendments to them, are discussed at these hearings. The Subcommittees also regularly invite the heads of the FTC and the DOJ’s Antitrust Division to testify before them. The House Judiciary Committee held a hearing on tech platforms and competition in November 2019, at which the Chairman of the FTC and Department of Justice’s Assistant Attorney General for the Antitrust Division both testified.

Do you have a separate economics team? If so please give details.

Yes. The FTC has 83 economists in its Bureau of Economics, all of whom have a PhD degree. The Commission’s investigations of competition matters integrate legal and economic analysis. The economists work with the lawyers as a team. The Bureau of Economics, however, provides its own recommendation to the Commission on most matters.

Has the authority conducted a dawn raid?

In the United States, dawn raids are used in connection with the criminal investigation of hardcore cartels and therefore are conducted by the DOJ. The Commission has not undertaken such raids as part of its investigation and enforcement of competition laws.  The agency has, with court approval, accessed business premises in consumer protection fraud cases.

Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.

The Commission has the authority to seek civil penalties for violations of its cease-and-desist orders and for violations of the Clayton Act’s premerger reporting requirements. The agency has not obtained such penalties against individual officers or directors in competition matters. These types of remedies are pursued only in connection with suspected hardcore cartels and, therefore, only by the DOJ.

What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?

In general, the HSR Act requires a pre-merger notification filing when either the acquiring or acquired person is engaged in US commerce, and the acquisition is of voting securities, non-corporate interests (as long as control is also being acquired), or assets valued in excess of a certain dollar amount, presently set at US$94 million. In addition, if the acquisition is valued between US$94 million and US$376 million, one party must have sales or assets of at least US$188 million, and another party must have sales or assets of at least US$18.8 million. The dollar thresholds are adjusted annually to reflect changes in the US gross national product.

Generally, the acquisition of foreign assets by a US buyer is exempt unless the foreign assets generated sales in or into the US exceeding US$94 million in the most recent fiscal year. Similarly, the acquisition of foreign voting securities by a US buyer is exempt unless the foreign issuer either holds US assets valued at more than US$94 million or made aggregate sales into the US of over US$94 million in the most recent fiscal year. For more detail regarding the acquisition of foreign assets and voting securities, including acquisitions by foreign buyers, see 16 CFR 802.50 and 16 CFR 802.51.

Are there any restrictions on investments that involve less than a majority stake in the business?

The requirement to comply with the HSR Act is not limited to transactions that involve a change of control. Any acquisition that results in the acquiring person holding more than US$94 million worth of the voting securities of another company may require a filing, even if that amount represents a very small percentage of the total outstanding stock of the target. However, there is a narrowly interpreted exemption for the acquisition of up to 10 per cent of a corporation’s voting securities, where the acquisition is made solely for the purpose of investment. Acquisitions of less than 50 per cent of a non-corporate entity are not reportable.

Section 7 of the Clayton Act prohibits any acquisition, including a minority stake, where the effect is to substantially lessen competition in any relevant market.  In addition, section 5 of the FTC Act prohibits unfair methods of competition, including agreements that restrain competition in conjunction with minority investments.

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