FTC International Monthly - April

FTC International Monthly: U.S. Competition, Consumer Protection and Privacy News

APRIL 2014

Key Developments

FTC Chairwoman Releases FTC 2013 Annual Highlights


On March 28, FTC Chairwoman Edith Ramirez released the agency’s 2013 Annual Highlights at the Spring Meeting of the American Bar Association’s Section of Antirust Law in Washington, D.C.  The Highlights, which provides an overview of the FTC’s major initiatives and achievements in the past year, also calls attention to FTC’s centennial.  This year marks 100 years since U.S. President Woodrow Wilson signed the FTC Act into law. (For more information on the agency’s centennial symposium, see “In Other News” below.)

The web-based Annual Highlights report is divided into four main sections. Enforcement Highlights discusses the agency’s efforts to promote competition in the health care and pharmaceutical industries that led to two Supreme Court victories (FTC v. Actavis Inc., and FTC v. Phoebe Putney) as well as its first law enforcement actions involving mobile cramming and the Internet of Things.  It contains graphics (in side bar) showing how the actions aimed at consumer fraud resulted in monetary redress orders of more than $297 million and civil penalty orders of $20 million.  Policy Highlights details the agency’s research and policy work including the FTC’s leading role in developing strong mutual enforcement cooperation and sound policy principles with its international partners.   Education Highlights showcases the agency’s efforts to alert businesses to compliance standards, and to alert consumers to the tell-tale signs of fraud and deceptive business practices.  Finally, the Stats & Data 2013 infographic summarizes the agency’s achievements.

FTC Signs Memorandum of Understanding with UK Privacy Enforcement Agency:

Also Introduces EU/APEC Mapping Tool  for Cross-Border Data Transfer Systems

UK MOU Picture Plus Caption

On March 6, FTC Chairwoman Edith Ramirez and the U.K. Information Commissioner and ICO Chief Executive Christopher Graham signed a memorandum of understanding (MOU) aimed at promoting increased cooperation and communication between the two agencies.  The MOU is designed to bolster the agencies’ privacy enforcement partnership at a time when more and more consumer information is moving across national borders, increasing the need for cross-border enforcement cooperation. Over the last several years, the FTC and the ICO have worked together on numerous investigations and international initiatives to increase global privacy cooperation such as the Global Privacy Enforcement Network (GPEN) and the London Action Plan, an anti-spam initiative. 

That same day, Chairwoman Ramirez, Isabelle Falque-Pierrotin, President of the French data protection authority and Chair of the Article 29 Working Party, and other officials from the EU and Asia-Pacific Economic Cooperation (APEC) economies, announced a project mapping the requirements of the APEC Cross Border Privacy Rules and the EU’s Binding Corporate Rules.  The document, jointly designed by APEC officials and the EU’s Article 29 Data Protection Working Party, is designed to be a practical reference tool for companies that seek “double certification” under these APEC and EU systems for protecting data transferred across borders.

U.S. and Canadian Antitrust Agencies Issue Best Practices for Coordinating Merger Reviews

Canadian best practices

On March 25, the FTC, the DOJ Antitrust Division, and Competition Bureau Canada issued a set of “best practices” for coordinating merger reviews.  The document aims to provide greater transparency as to how the agencies coordinate merger reviews that affect the United States and Canada.  The best practices build on the framework of the 1995 antitrust cooperation agreement between the United States and Canada and the experience gained under that framework.  They do not modify existing law.

The best practices set out how effective day-to-day cooperation works between the two U.S. agencies and the Competition Bureau, including how the agencies communicate with each other, benefit from the similarity of their respective merger review timetables, cooperate in the analysis of evidence, use waivers of confidentiality provided by the parties, and address remedies and settlements.  The best practices also seek to promote cooperation and coordination to enhance the likelihood of consistent outcomes when the same merger is reviewed in both the United States and Canada.  The best practices also acknowledge the contribution that merging parties can make to facilitating cooperation, and provide guidance to firms on working with the agencies to coordinate and facilitate the reviews of their proposed transactions.

ICN Holds Roundtable on Investigative Process

On March 25, the International Competition Network held a one-day Roundtable on Investigative Process at the FTC. The FTC and DOJ Antitrust Division hosted the event. The roundtable focused on deepening the discussion of how different investigative practices can enhance the effectiveness of agencies’ decision-making and ensure the protection of procedural rights.  115 agency and private sector participants from 35 jurisdictions attended the Roundtable.

The Roundtable covered the transparency of agencies’ investigations, opportunities for parties to engage with the agency, and protection of confidential information. Sessions used a sample investigative timeline to frame the discussion of investigative practices that promote fair and informed enforcement actions by facilitating effective engagement and interaction between agencies, parties, and third parties.

The Roundtable was a part of the ICN’s Investigative Process Project, co-led by the FTC and the European Commission’s DG-COMP. The Project builds on the premise that effective competition enforcement depends on investigative procedures that provide for appropriate transparency, predictability, confidentiality protections, notice, and an opportunity to be heard.

Consumer Protection and Privacy

Mobile App Providers Settle FTC Charges That They Placed Consumers’ Credit Card Details, Credit Report Data, and Social Security Numbers at Risk By Failing to Securely Transmit Sensitive Personal Information

Two mobile app providers, Fandango and Credit Karma, have agreed to settle FTC charges that, despite their security promises, they deceived millions of consumers regarding the security of their personal information and failed to take reasonable steps to secure their mobile apps, leaving them vulnerable to “man-in-the-middle” attacks.  Such attacks allow an attacker to intercept personal information, and are especially dangerous on public Wi-Fi networks such as those at coffee shops, airports, and shopping centers.  In particular, the FTC alleged that both companies disabled Secure Sockets Layer or SSL certificate validation in their apps, which would have ensured that attackers could not intercept personal information submitted through the app.

The settlements require Fandango and Credit Karma to establish comprehensive security programs, undergo independent security assessments every other year for the next 20 years, and not misrepresent the level of privacy or security of their products and services.  Public comment may be submitted on the Fandango settlement and the Credit Karma settlement through April 28, 2014, after which the Commission will decide whether to make the proposed consent orders final.

Home Security Company ADT Settles FTC Charges that Endorsements Deceived Consumers

As part of its crackdown on deceptive endorsements,  the FTC settled charges it brought against ADT LLC, a home security company, alleging that the company misrepresented endorsements from experts in child safety, home security and technology as independent reviews when, in fact, the endorsers were paid more than $300,000 by ADT and received free products and services.  The FTC’s complaint alleged that ADT paid spokespersons to demonstrate and review its product, the ADT Pulse, on national television and radio news programs and talk shows, and in blogs and other online material, without disclosing their connections to the company.  The settlement prohibits ADT from misrepresenting paid endorsements as independent reviews in the future.

FTC Action Leads to Ban Against Worldwide Internet Directory Scammers, Construct Data/Fair Guide

A federal court has banned a Slovakia-based operation from the online directory business and entered a $9 million judgment against the defendants.  In March 2013, the FTC charged Construct Data Publishers and two individual defendants with tricking small businesses and non-profits into paying millions of dollars to be listed in an online directory that they did not want.  The U.S. court’s order is the latest in a series of actions taken against Construct Data/Fair Guide, which has victimized consumers worldwide.  Courts in Germany and Italy have also entered orders against the company for its deceptive practices.  In 2007, to settle a lawsuit by an Austrian trade association, Construct Data agreed to cease its deceptive solicitations in Europe.  The following year, however, Construct Data moved from Austria to Slovakia and continued it scheme, targeting small businesses and non-profits in the United States and other countries.


FTC Charges Two Leading Suppliers of Propane Exchange Tanks with Collusion

The FTC has issued an administrative complaint alleging Blue Rhino and AmeriGas Cylinder Exchange illegally coordinated to reduce the amount of propane in their tanks sold to Walmart, a key customer.  The complaint is available on the FTC website.  The complaint states that the companies controlled approximately 80 percent of the market for wholesale propane exchange tanks in the United States.  It alleges that in 2008, each company decided to implement a price increase by reducing the amount of propane in their exchange tanks from 17 pounds to 15 pounds, without a corresponding wholesale price reduction and that the companies colluded by secretly agreeing that neither would deviate from their proposal to reduce the fill level to Walmart.  The FTC alleges that this secret agreement had the effect of raising the price per pound of propane to Walmart and likely to the ultimate consumers.  The case will be tried before an administrative law judge.

FTC Staff Issues Policy Paper on Competition and Regulation of Advanced Practice Nurses

FTC staff has issued a policy paper urging  state legislators to be cautious when evaluating proposals to limit the scope of practice of Advanced Practice Registered Nurses (APRNs). APRNs and other practitioners, including physicians, may be trained and licensed to provide many of the same health care services.  Therefore, scope of practice restrictions that limit the range of services APRNs may provide and the extent to which they can practice independently can limit the supply of those primary health care services and limit competition between different of practitioners for various health care services.  In the paper, FTC staff contends that the analysis of scope of practice limitations should account for the value of competition and urges that the regulatory review process consider the benefits of competition and the potential adverse competitive impact of regulations, along with other legitimate policy goals.  The policy paper is part of the FTC’s ongoing efforts to promote competition in the health care sector, which benefits consumers through lower costs, better care, and more innovation.

In Other News

FTC To Host Symposium in Celebration of Agency’s Centennial

In celebration of its 100th anniversary, the FTC will host a public symposium on November 7, 2014, in Washington, D.C.  The symposium will feature keynote addresses and panel discussions examining the Commission’s history and its future.  A detailed agenda for the event, along with logistical details, will be posted to the Commission’s website in the near future.  The Commission was established pursuant to the FTC Act, signed into law by President Woodrow Wilson on September 26, 1914.  More information on the centennial and the agency’s history can be found on the FTC website.

FTC Publishes New Strategic Plan and Submits FY 2015 Budget Request and Performance Plans to Congress

On March 10, the FTC announced publication of its FY 2014-2018 Strategic Plan and its Fiscal Year 2015 budget request to Congress.  The strategic plan will guide the agency’s work over the next five years and serve as the basis for reporting the agency’s performance results. 

FTC Calls for Papers for 7th Annual Microeconomics Conference

The FTC’s Bureau of Economics is accepting submissions for the Seventh Annual Microeconomics Conference to be held on October 16-17, 2014 in Washington, DC.  Topics of interest range from health care competition and merger policy to innovation, privacy, and intellectual property.  See the Call for Papers for more details. The deadline for submissions is June 2, 2014. 

FTC Testifies on Data Security Before Senate Commerce, Science and Transportation Committee

Testifying before the Senate Commerce, Science, and Transportation Committee on March 26, the FTC renewed its call for data security legislation and provided an update on its efforts to protect consumers’ privacy amid growing reports of data breaches.  The testimony by Chairwoman Edith Ramirez is available on the FTC website,  It notes the agency’s civil law enforcement authority with regard to data security found in specific statutes such as the Fair Credit Reporting Act, Children’s Online Privacy Protection Act, and the Commission’s Safeguards Rule under the Gramm-Leach-Bliley Act.  It also notes the 50 data security cases the Commission has settled under the unfair or deceptive practices provision of the FTC Act.  In addition, it describes the agency’s data security policy initiatives and consumer and business education.

FTC Files Amicus Brief Clarifying Role of Children’s Online Privacy Protection Act

On March 21, the FTC filed an amicus brief in a federal appeals court opposing a lower court’s ruling that the Children’s Online Privacy Protection Act (COPPA) preempts state privacy laws regarding teenagers.  According to the brief, COPPA’s preemption provisions do not apply to state privacy protections for teenagers because COPPA’s provisions apply only to children under 13 years old.  The brief is available on the FTC website.

FTC Releases Fourth Major Study on Alcohol Advertising and Industry Efforts to Reduce Underage Marketing 

On March 20, the FTC released its fourth major study on the alcohol industry’s compliance with self-regulatory guidelines, including those designed to address concerns about youth access to alcohol marketing.  The study shows over 93 percent compliance with placement guidelines.