DECEMBER 2013
FTC Testifies before Congress on Its Work to Protect Consumers and Promote Competition As the Agency Approaches Its 100th Anniversary
The FTC appeared before the House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade on December 3. Chairwoman Edith Ramirez, along with fellow Commissioners Julie Brill, Maureen K. Ohlhausen, and Joshua D. Wright, testified on The FTC at 100: Where Do We Go from Here?
The testimony highlighted the FTC’s history of protecting consumers and promoting competition in the U.S. economy. It also described the agency’s current efforts and future challenges as it approaches the 100th anniversary of the agency’s establishment in 1914.
Among the key themes and facts stressed in the testimony:
- The FTC is a highly productive and efficient, small independent agency that uses enforcement, advocacy, education and policy work to advance the twin missions of protecting consumers and promoting competitive markets in the United States, without impeding legitimate business activity.
- Over the past three years, the FTC has saved consumers approximately $3 billion in economic injury by stopping illegal anticompetitive practices and mergers, returned $196 million to victims of deceptive or unfair practices, and brought enforcement actions that led to $117 million in disgorgement of ill-gotten gains and civil penalties to the Treasury.
- The FTC is poised to adapt to challenges posed by evolving technology and globalization as it vigorously enforces against the perennial problems of consumer fraud, deceptive advertising, and anticompetitive conduct.
The testimony noted the agency’s strong bilateral enforcement cooperation relationships with foreign consumer protection authorities, using authority Congress granted in the U.S. SAFE WEB Act. It also noted the FTC’s work developing cooperative relationships with foreign antitrust agencies to ensure close collaboration on cross-border cases and convergence toward sound competition policies.
FTC Provides Input on the U.S.-EU Safe Harbor Framework to European Commission
In response to European concerns about the transfer of personal data from Europe to the United States through the U.S.-EU Safe Harbor Framework, FTC Chairwoman Edith Ramirez sent a letter to Viviane Reding, the European Commission’s Vice-President in Charge of Justice, Fundamental Rights and Citizenship, expressing her commitment to protecting consumer privacy and the enforcement of the Safe Harbor framework. Chairwoman Ramirez’s letter underscored her view that Safe Harbor continues to be “an effective and functioning tool for the protection of the privacy of EU citizens’ data transferred to the United States.” (The U.S. Department of Commerce administers the framework, and the FTC provides an enforcement backstop.) Chairwoman Ramirez’s letter accompanied staff comments to the European Commission in response to issues Commissioner Reding raised about the Safe Harbor program’s administration, redress, and enforcement. In the letter, the FTC detailed its consumer privacy enforcement program, which includes ten Safe Harbor law enforcement actions, and provided suggestions on ways to increase the program’s efficacy, including greater transparency, awareness and international enforcement cooperation.
FTC Stops $14 Million Canada-Based Online 'Yellow Pages' Scam
At the FTC’s request, a federal judge has halted a fraudulent Canadian yellow pages scheme that targeted small businesses and churches in the United States. The judge issued a temporary restraining order and asset freeze against the fraudsters in Montreal. The FTC brought this case as part of its increased enforcement against business directory scams that operate in the U.S. and abroad. This effort has included the recent Construct Data and Yellow Page Marketing cases.
The Montreal scheme allegedly defrauded victims of more than $14 million for unwanted listings in online business directories. Among the illegal tactics were falsely claiming a prior business relationship. The fraudsters also recorded employees of victim organizations confirming contact information, but used the out-of-context recordings to bully the organizations into paying for unwanted listings. The FTC is seeking an injunction to permanently stop the illegal practices. The agency is also seeking to return money to the victims, who have made more than 13,000 complaints. The FTC has received assistance from several Canadian and U.S. partners. Canadian partners have included the Canadian Anti-Fraud Centre, the Royal Canadian Mounted Police, and the RCMP-led Centre of Operations Linked to Telemarketing Fraud (Project COLT)..
At FTC's Request, Telemarketer Ordered to Pay $5.1 Million to Reimburse Victims of Car-Buying Scam
A federal court has ordered a Canadian telemarketer and four companies he owns to pay more than $5.1 million to American and Canadian consumers who were duped in a car-buying scam. Consumers paid hundreds of dollars based on false claims that the defendants had buyers lined up for their cars, and that refunds would be provided if the cars weren’t sold. According to the FTC’s complaint, the defendants called consumers who listed vehicles for sale on websites such as craigslist.org or ebay.com. In those calls, they falsely claimed that, in exchange for a fee, typically $399, they would put the consumer in touch with a buyer, often telling consumers they had undervalued the vehicle and that the price the buyer was willing to pay would cover the defendants’ fee. In addition to the $5.1 payment, the court order permanently bans the defendants from telemarketing and payment processing and bars them from making misrepresentations. The FTC received assistance from the Business Practices and Consumer Protection Authority, British Columbia, Canada, in this matter.
Chairwoman Ramirez Testifies on Enforcement of U.S. Antitrust Laws
Testifying before a Subcommittee of the U.S. House of Representatives Judiciary Committee, FTC Chairwoman Edith Ramirez described the FTC’s ongoing efforts to promote competition and protect consumers in many important sectors of the economy, including health care, pharmaceuticals, and technology.
The testimony outlined the FTC’s critical work promoting competition in health care markets. Noting that health care consolidation can undermine efforts to control rising health care costs, Chairwoman Ramirez cited examples of FTC actions to prevent anticompetitive health care mergers and discussed ongoing work to prevent branded drug companies from using anticompetitive “pay-for-delay” agreements to stifle generic entry.
In technology markets, the testimony detailed efforts to promote competition by using a balanced and fact-based approach to enforcement and further discussed the Commission’s concern with the problem of “patent hold-up” that can arise following an industry standard-setting process.
The testimony also noted that the FTC is addressing concerns about the rise of patent assertion entities (PAEs) -- firms with a business model focused primarily on acquiring patents and then attempting to generate revenue by asserting intellectual property against persons already practicing the patented technology. Two months ago, the Commission proposed to study the issue in order to develop a fuller and more accurate picture of the impact of PAE activity on competition and innovation. (The deadline for interested parties to submit comments on the proposed study has been extended until December 16, 2013. Comments can be submitted electronically).
On the international front, with antitrust enforcement having gone global with some 130 jurisdictions enforcing a variety of competition laws, Chairwoman Ramirez noted that it is crucial for the U.S. antitrust agencies to cooperate with our counterparts worldwide. In fiscal year 2012, the FTC had substantive contacts in 26 enforcement matters with counterpart agencies around the world. The reviewing agencies reached compatible outcomes in the 15 cases completed within the fiscal year.
FTC Closes Seven-month Investigation of Proposed Office Depot/OfficeMax Merger
Significant developments in the market for consumable office supplies led the FTC to close its investigation into the proposed $1.2 billion merger of office supply superstores Office Depot, Inc. and OfficeMax, Inc., after having blocked a merger between Office Depot and Staples, Inc., sixteen years ago. The Commission statement detailing the basis for its decision highlights that the market dynamics in 1997 were very different from today’s. The statement explains that today’s market for the sale of consumable office supplies is broader, due mainly to two significant developments. First, customers now look beyond office supply superstores like Office Depot and OfficeMax, relying more heavily on other brick-and-mortar retailers like Wal-Mart and Target and club stores like Costco and Sam’s Club. In addition, the explosive growth of online commerce has had a major impact on this market. Company documents show that the superstores have responded to their awareness of the continued growth of online competitors with new pricing practices and other strategies.
Chairwoman Ramirez speaks on Issues and Challenges in Competition Enforcement in BRICS Countries
FTC Chairwoman Edith Ramirez addressed the proper goal of competition law and policy at the third annual BRICS International Competition Conference in New Delhi, India. The Chairwoman’s remarks focused on lessons learned from the FTC’s nearly one hundred years of experience, demonstrating that consumers and economic development are best served when competition enforcement focuses on competitive effects and consumer welfare. The speech, which will be posted shortly on the Chairwoman’s webpage on the FTC website, also addresses the importance of competition advocacy in helping lawmakers and regulators to better understand how their proposals may impact consumer welfare.
FTC Amends Rules on the Transfer of Exclusive Patent Rights in the Pharmaceutical Industry
The FTC issued final changes to the premerger notification rules, to reflect the longstanding staff position that a transaction involving the transfer of exclusive rights to a patent or a part of a patent in the pharmaceutical industry may be reportable under the Hart Scott Rodino Act. The rule changes also clarify the treatment of retained manufacturing rights. Although the rule is limited to the pharmaceutical industry, parties dealing with the transfer of exclusive rights to a patent or part of a patent in other industries are advised to consult with the FTC’s Premerger Notification Office to determine whether the arrangement at issue is reportable. The Commission will assess the appropriateness of a rule for other industries.
FTC Issues FY 2013 National Do Not Call Registry Data Book
The Federal Trade Commission just issued the 2013 National Do Not Call Registry Data Book. (The FTC’s National Do Not Call Registry lets consumers choose not to receive telemarketing calls.) According to the Data Book, at the end of Fiscal Year 2013 (October 1, 2012 to September 30, 2013), the Do Not Call Registry contained 223,429,112 actively registered phone numbers. This year’s Data Book also reveals trends in complaint data including data on the number of monthly complaints specifically related to pre-recorded telemarketing “robocalls,” and requests for a telemarketer to stop calling. Most telemarketing robocalls have been illegal in the United States since September 2009. As part of its effort to stop deceptive, misleading, and otherwise unlawful robocalls, the FTC will take action against entities violating the agency’s Telemarketing Sales Rule.
FTC Announces Agenda for Workshop Examining Competition Issues Surrounding Biologic and Follow-on Biologic Medicines: Biosimilars and Interchangeables
The FTC will hold a workshop examining competition issues surrounding biologic and follow-on biologic medicines on December 10th. The workshop, which will be webcast on the FTC’s site, will take the form of a moderated roundtable discussion organized into two panels that will address: 1) how state regulations may impact competition of follow-on biologics; and 2) how naming conventions may impact competition of follow-on biologics.
FTC to Host Spring Seminars on Emerging Consumer Privacy Issues
In a series of seminars next spring, the FTC will examine the impact on consumer privacy of new trends in Big Data. The FTC seminars will focus on mobile device tracking, alternative scoring products and consumer health information. The sessions will be held in Washington, DC and will be open to the public. The FTC invites public comment on the proposed topics.
FTC Names Chief Technologist and Policy Advisor on Privacy and Data Security
FTC Chairwoman Edith Ramirez announced the appointments of Latanya Sweeney as the agency’s Chief Technologist and Andrea Matwyshyn as a Senior Policy Advisor on privacy and data security issues. Dr. Sweeney joins the FTC from Harvard University, where she is a professor of government and technology and the founder and director of Harvard’s data privacy lab. Dr. Matwyshyn joins the FTC from the Wharton School of the University of Pennsylvania, where she is an assistant professor for legal studies and business ethics. She is also an affiliate in the Center for Technology, Innovation and Competition at the University of Pennsylvania Law School, and a faculty affiliate of the Center for Internet and Society at Stanford Law School.
FTC Warns Consumers: Beware of Typhoon Haiyan Charity Scams
Because scams often follow international disasters, the FTC is reminding those moved to help alleviate the suffering inflicted by Typhoon Haiyan in the Philippines to keep several tips in mind (tips are also available in Tagalog). Among the suggestions you may wish to communicate to consumers in your country are:
- Donate to charities you know and trust. Be alert for charities that seem to have sprung up overnight in connection with current events, like a natural disaster.
- Ask if a caller is a paid fundraiser, who they work for, and what percentage of your donation goes to the charity and to the fundraiser. If you don’t get a clear answer or if you don’t like the answer you get, consider donating to a different organization.
- Check out the charity on websites such as the Better Business Bureau's (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar or on websites used frequently in your jurisdiction.
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Read the FTC’s How to Help Victims of Typhoon Haiyan in the Philippines. As a reminder, the FTC’s consumer education materials are available for agencies in other countries to adapt and use.
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