Anticompetitive Conduct, Consumer Protection Matters, and Other Commission Activities

• Pages: 153-186

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CHAPTER V

ANTICOMPETITIVE CONDUCT, CONSUMER

PROTECTION MATTERS, AND OTHER

COMMISSION ACTIVITIES

A. Part II Investigations

The staff of the Federal Trade Commission’s (FTC of Commission)

Bureau of Competition (BC) investigates conduct that may constitute an

“unfair method of competition” in violation of Section 5 of the FTC Act

(as it relates to Sections 1 and 2 of the Sherman Act),1 while the Bureau

of Consumer Protection (BCP) staff investigates whether conduct

amounts to an “unfair or deceptive act or practice” or violates one of the

numerous consumer protection statutes enforced by the agency. The

procedures for these investigations are contained in the Commission’s

Rules of Practice (FTC’s Rules or Rules) and do not vary depending on

which bureau conducts the investigation. However, nuances sometimes

arise in the purpose for which the bureaus employ a particular

investigative tool, or with respect to the frequency with which a

particular process is used, and, where appropriate, these differences are

noted below.

1.

Beginning an Investigation

The Commission may “gather and compile information” and

investigate “the organization, business, conduct, practices, and

management of any person, partnership, or corporation engaged in or

whose business affects commerce.”2 The Commission has delegated

limited authority to initiate investigations, without power of redelegation,

to the Director, Deputy Directors, Associate Directors of the BC and

BCP, and the Regional Directors and Assistant Regional Directors of the

Commission’s regional offices.3 Thus, the bureaus’ staff, rather than the

Commission, investigates matters in accordance with the FTC’s Rules.

1. Although less frequent, BC also investigates § 2 of the Clayton Act,

commonly known as the Robinson-Patman Act. See Chapter 2.A.2.a for

a discussion of the Robinson-Patman Act.

2. 15 U.S.C. § 46(a). Exceptions to this authority include banks and saving

and loan institutions. Id.

3. Id.

154 FTC Practice and Procedure Manual

Investigations may be triggered by (1) a request from the President,

Congress, government agencies, or the Attorney General; (2) referrals by

the courts; (3) a complaint by members of the public; or (4) the

Commission’s own initiative (e.g., based on press monitoring or

customer and competitor complaints).4

The Commission typically does not disclose the existence of an

investigation until it issues an administrative complaint, authorizes or

files a judicial complaint, announces a proposed settlement, or closes a

matter.5 The Commission may disclose the existence of an investigation,

however, if the target has publicly disclosed the existence of the

investigation, or if the practice has received substantial publicity so that

disclosure would not identify a target that has not already disclosed its

own identity.6

a. Complaints from Consumers and Competitors

Any individual, partnership, corporation, association, or organization

may request that the Commission institute an investigation regarding any

matter under the Commission’s jurisdiction. The person or entity

making the request will not be regarded as a party to any proceeding that

may result from the investigation.7 Pursuant to Rule 2.2, consumer or

competitor requests should be in the form of a signed statement setting

forth the alleged violation of law with any supporting information and

the name and address of the person or persons who are the basis of the

complaint.8

For consumer protection-related issues, individual consumers may

file a complaint with the Commission by electronically registering a

complaint on the FTC’s Web site.9 Although the Commission does not

4. 16 C.F.R. §§ 2.1, 2.2.

5. Policy Concerning Disclosures of Nonmerger Competition and Consumer

Protection Investigations, 63 Fed. Reg. 63,477 (Nov. 13, 1998).

6. Id.

7. It is the general policy of the Commission to not publish or divulge the

name of the applicant or complaining party, except as required by law or

by the Commission’s rules. Where a complainant is a consumer or

consumer representative concerning a specific consumer product or

service, the Commission, in the course of the referral of the complaint or

of an investigation, may disclose the identity of the complainant or

complainants. 16 C.F.R. § 2.2.

8. Id.

9. See www.ftc.gov.

Competition and Consumer Protection Matters 155

resolve individual consumer complaints, consumer complaints help the

Commission determine whether law enforcement action is warranted.

Consumer complaints are typically entered into Consumer Sentinel, a

secure, restricted, on-line database that provides law enforcement

agencies access to hundreds of thousands of complaints regarding

identity theft, Internet and telemarketing scams, and other frauds.10 The

Commission also provides specific Web sites for complaints involving

violations of the Telemarketing Sales Rule (National Do Not Call

Registry), reports of identify theft, or complaints regarding an online

transaction involving a foreign company.11

Competitors may also submit a complaint to the Commission.

Though it is typically less expensive to submit a complaint to the

Commission than to file a lawsuit against a competitor, there is no

guarantee that the Commission will respond to the complaint because its

limited resources allow it to pursue only a small percentage of

complaints.

b. Referrals from Other Federal or State Agencies

and the National Advertising Division

Federal and state agencies as well as other organizations often work

closely with and refer matters to the FTC. One of the best-known

examples of this cooperative effort is the BCP’s long-standing

relationship with the National Advertising Division of the Council of

Better Business Bureau (NAD).12 The NAD is the advertising industry’s

self-regulatory body for resolving disputes over truth and accuracy in

national advertising. The NAD monitors and investigates national

10. Consumer Sentinel, http://www.consumer.gov/sentinel.

11. See www.donotcall.gov, www.ftc.gov/idtheft, and www.econsumer.gov.

12. See Deborah Platt Majoras, Chairman, FTC, Remarks to the Council of

Better Business Bureaus: Self Regulatory Organizations and the FTC

(Apr. 11, 2005), http://www.ftc.gov/speeches/majoras/050411selfregorgs.

pdf; Pamela Jones Harbour, Commissioner, FTC, Remarks Before the

National Advertising Division: Helping the FTC Help You: Effective

Self-Regulation is Better Business (Sept. 26, 2005), http://www.ftc.

gov/speeches/harbour/ 050926selfreg.pdf; Orson Swindle, Former

Commissioner, FTC, Remarks Before the 2004 Joint Government Affairs

Conference, Advertising Issues Before the Federal Trade Commission

(Apr. 28, 2004), http://www.ftc.gov/speeches/swindle/040428aaf.htm;

Robert Pitofsky, Former Chairman, FTC, Remarks Before the D.C. Bar

Association Symposium: Self-Regulation and Antitrust (Feb. 18, 1998),

http://www.ftc.gov/speeches/pitofsky/self4.htm.