Procedural Issues in Investigations, Enforcement Actions, and Other Commission Activities

• Pages: 183-229

183

CHAPTER V

PROCEDURAL ISSUES IN INVESTIGATIONS,

ENFORCEMENT ACTIONS, AND OTHER

COMMISSION ACTIVITIES

A. Part 2 Investigations

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

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

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

(including violations of Section 1 and 2 of the Sherman Act, which

constitute unfair methods of competition),

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 t he

numerous consumer protection statutes and rules enforced by the agency.

The procedures for these investigations are contained primarily in Part 2

of the Commission Rules of Practice (FTC Rules or Rules),

“Nonadjudicative Procedures,” 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, and Assistant Directors of the BC; to

the Director, Deputy Directors, and Associate Directors of the BCP; and

to the Regional Directors and Assistant Regional Directors of the

1

. Although less frequently, BC also investigates p ossible violations of

Section 2 of the Clayton Act, commonly known as the Robinson -Patman

Act. See Chapter II.A.2.a for a discussion of the Robinson-Patman Act.

2

. 15 U.S.C. § 46(a). Exceptions to this authority include “banks, savings

and loan institutions . . . , Federal credit unions . . . , and common carriers

subject to the Act to regulate commerce, and its relation to other persons,

partnerships, and corporations.” Id.

184 FTC Practice and Procedure Manual

Commission’s regional offices.

3

Thus, the Bureaus and their staff, rather

than the Commission, conduct investigations in accordance with the

FTC’s Rules. Investigations may be triggered by (1) a request from the

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

referrals by the courts; (3) consumer complaints; or (4) the

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

customer and competitor complaints).

4

Investigations are ordinarily confidential,

5

therefore the Commission

typically does not disclose the existence of an investigation until it issues

an administrative complaint, authorizes or files a complaint in federal

district court, announces a proposed settlement, closes a matter, or takes

some other type of public action.

6

The Commission, however, may

disclose the existence of an investigation when “a party to a merger or

other transaction has publicly disclosed the existence of a transaction or

proposed transaction in a press release or in a public filing with a

government body.”

7

The Commission may also disclose the existence of

a non-merger investigation when “[a] target has publicly disclosed the

relevant information in either a press release or a filing with a

government agency; or the investigation or the practice has received

substantial publicity and the disclosure does not identify a target that has

not already disclosed its own identity.”

8

The filing of a petition to limit

or quash compulsory process will also make the investigation public, as

such petitions and the Commission’s rulings on the petitions are part of

the public record.

9

a. Complaints from Consumers and Competitors

Any individual, partnership, corporation, association, or organization

may request that the Commission institute an investigation regarding any

3

. 16 C.F.R. § 2.1.

4

. Id. §§ 2.1, 2.2.

5

. See generally 15 U.S.C. § 57b-2; 16 C.F.R. § 4.10.

6

. Policy Concerning Disclosures of Nonmerger Co mpetition and Consumer

Protection Investigations: Notice of Revised Po licy, 63 Fed. Reg. 63,477

(Nov. 13, 1998).

7

. Notice of Policy of Disclosing Investigations of Announced Mergers:

Notice of Revised Policy, 62 Fed. Reg. 18,630 (Apr. 16, 1997).

8

. Policy Concerning Disclosures of Nonmerger Co mpetition and Consumer

Protection Investigations: Notice of Revised Po licy, 63 Fed . Reg. 63,477

(Nov. 13, 1998).

9

. 16 C.F.R. §§ 2.10(d) & 4.9(b)(4).

Procedural Issues in Investigations and Enforcement Actions 185

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.

10

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, filed with the Office of the Secretary in conformity with Rule

4.2(d).

11

Notwithstanding the existence of t hese specific rules,

complainants also frequently contact Commission staff informally, by

telephone or otherwise, and staff has the discretion to follow-up on such

contacts as they deem appropriate.

For consumer protection-related issues, individual consumers may

file a complaint with the Commission by electronically registering a

complaint on the FTC’s website.

12

Although the Commission does not

resolve individual consumer complaints, consumer complaints help the

Commission determine whether law enforcement action is warranted.

Consumer complaints are typically entered into Consumer Sentinel

Network, 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.

13

The Commission also provides specific websites for complaints

involving violations of the Telemarketing Sales Rule (National Do Not

Call Registry), reports of identity theft, or complaints regarding an online

transaction involving a foreign company.

14

Competitors may also submit a complaint to the Commission.

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

10

. Id. § 2.2(b). Where “the complainant’s identity is not otherwise made

public, the Commission’s policy is not to publish or divulge the name of a

complainant except as authorized by la w or by the Commission’s rules.”

Id. § 2.2(c). Where a complainant is a consumer or consumer

representative concerning a specific consumer product or service,

however, the Commission, in the course of referring the complaint, or in

furtherance of an investiga tion, may disclose the identity of the

complainant or complainants. Id.

11

. Id. § 2.2(a).

12

. See FTC Complaint Assistant, available at https://www.ftccomplaint

assistant.gov.

13

. Consumer Sentinel Network, available at http://www.ftc.gov

//enforcement/consumer-sentinel-network/; see 16 C.F.R. § 2.2(c).

14

. See https:www.donotcall.gov/, http://www.consumer.ftc.gov/features/

feature-0014-identity-theft, and http://www.econsumer.gov.