Federal Trade Commission

For the Consumer

1-877-ftc-help

www.ftc.gov
About this Report 

T

he Federal Trade Commission’s FY 2007 Performance and Accountability 

Report (PAR) provides the results of the agency’s program and financial 

performance and demonstrates to the Congress, the President, and the 

public the FTC’s commitment to its mission and accountability over the 

resources entrusted to it. This report, available at www.ftc.gov/par, includes 

information that satisfies the reporting requirements contained in the following 

legislation: 

◗ Federal Managers’ Financial Integrity Act of 1982 

◗ Government Performance and Results Act of 1993 

◗ Government Management Reform Act of 1994 

◗ Reports Consolidation Act of 2000 

◗ Accountability of Tax Dollars Act of 2002 

◗ Improper Payments Information Act of 2002 

There are three major sections to this report. The first section, Management’s 

Discussion and Analysis (MD&A), provides an overview of the FTC’s organization, 

program, and financial performance centered around the Mission, Strategic Goals, 

and Objectives. The Performance Section contains a more detailed performance 

analysis of the FTC’s programs relative to its Strategic Goals. The Financial Section 

provides the financial details, including the independent auditor’s report and audited 

financial statements. The Financial Section also provides the management challenges 

identified by the Inspector General. 
FTC At-A-Glance


History 

◗ The FTC was originally established in 1903 as the Bureau of Corporations. In 1914, 

President Woodrow Wilson signed the Federal Trade Commission Act into law. 

Laws Enforced 

◗ The FTC is a law enforcement agency with both consumer protection and competition 

jurisdiction in broad sectors of the economy. The agency administers a wide variety 

of laws and regulations. Some examples are: Federal Trade Commission Act, 

Telemarketing Sales Rule, Identity Theft Act, Fair Credit Reporting Act, and Clayton Act. 

Did You Know? 

◗ Consumers are affected every day by the FTC’s activities as they, for example, receive 

fewer telemarketing calls, obtain free credit reports, receive less spam, receive identity 

theft victim assistance, access truthful information about health and weight loss 

products, pay lower prescription drug prices due to the availability of generic drugs, 

and enjoy competitive prices for goods as a result of merger reviews and actions taken 

by the FTC. 

◗ The agency manages the National Do Not Call Registry, which gives consumers the 

opportunity to limit telemarketing calls. Since its launch in 2003, the Registry has 

logged over 150 million phone numbers. 

◗ Over the past three years, the FTC has saved consumers $1.2 billion in economic injury 

by stopping illegal practices. FTC’s jurisdiction ranges from misleading health claims 

and deceptive lending to weight loss schemes and business opportunity fraud. 

◗ In Fiscal Year 2007, the FTC took action against mergers likely to harm competition 

in markets with a total of $42.6 billion in sales. The agency’s efforts to maintain 

aggressive competition among sellers benefits consumers with lower prices, higher 

quality products and services, additional choice, and greater innovation. 

◗ Consumer Information System, the FTC’s fraud and identity theft complaint database, 

contains over 3.5 million fraud and identity theft complaints and is accessible to more 

than 1,650 other law enforcement agencies across the United States, Canada, and 

Australia via an encrypted website. 

Profile 

◗ The agency is headquartered in Washington, DC, and operates with seven regions 

across the U.S. 

◗ Total full-time equivalents at the end of FY 2007 were 1,059. 

◗ Total new budget authority for FY 2007 was $212 million. 

 Performance and Accountability Report—Fiscal Year 2007 i 
Deborah Platt Majoras 

Chairman 

Message from the Chairman 

T

he FTC’s Performance and Accountability Report for Fiscal 


Year 2007 reflects the agency’s program performance and 


financial activities over the past year and demonstrates 


our continued commitment to championing consumers by 


promoting competition and consumer welfare in U.S. markets. 


The accomplishment of our two Strategic Goals, Protect


Consumers and Maintain Competition, is based on four objectives 


and related strategies for each goal: 


◗ Identify illegal practices. 


◗ Stop illegal practices through law enforcement. 


◗ Prevent consumer injury through education of consumers 


and businesses. 

◗ Enhance consumer welfare through research, reports, 

advocacy, and international cooperation and exchange. 

As an agency with broad jurisdiction, the FTC is often at the forefront of new 

markets, new technologies, and, unfortunately, new illegal practices. We approach 

these challenges by applying our strategic framework to promote consumer welfare 

and competition in U.S. markets. Consumers calling our toll-free phone numbers 

or filing complaints online alert us to real-time scams and illegal practices entering 

the marketplace. We use aggressive law enforcement to react quickly and stop everchanging schemes. Our consumer and business education staff issue alerts immediately 

to warn the public of emerging schemes, followed by web pages and brochures to make 

sure that consumers and businesses have good information to protect themselves and 

prevent further injury. We strive to enhance consumer welfare by working closely 

and cooperatively with our private, public, domestic, and international partners to 

research and share information, and advocate our positions on important consumer and 

competition issues. 

In the past year, the FTC has targeted its consumer protection law enforcement 

and education to such areas as subprime mortgage lending practices, data security, 

identity theft, spam, spyware, health fraud, and childhood obesity. We have 

promoted competition and innovation in such areas as the energy, real estate, health 

care, retail, and technology industries. Sidebars describing the FTC’s FY 2007 cases 

and activities are included in the MD&A and Performance sections of this report. 

More information on the FTC’s activities and our wealth of consumer and 

business education materials can be found at our website at www.ftc.gov. In 

addition, as part of our Hispanic law enforcement and outreach initiative, we have 

ii Performance and Accountability Report—Fiscal Year 2007 
a Spanish version of our web page and have translated over 100 of our education 

publications. These materials can be found at www.ftc.gov/ojo. 

Addressing the broad array of challenges facing the FTC in achieving its strategic 

goals rests on sound financial management, information technology, data security 

and privacy, and administrative support services. For example, resources are used to 

provide technological support to law enforcement and education initiatives, as well as 

performance-enhancing technologies that facilitate the transparent and accountable 

management of all resources. The FY 2007 independent financial audit resulted in the 

FTC’s eleventh consecutive unqualified opinion, the highest audit opinion available. 

The audit of the FTC’s financial statements, which includes tests of internal control and 

compliance with laws and regulations, is conducted in accordance with Government 

Auditing Standards and the Office of Management and Budget (OMB) Bulletin No. 

07-04, Audit Requirements for Federal Financial Statements. 

The Reports Consolidation Act of 2000 requires an assessment of the completeness 

and reliability of the program and financial data contained in this report. Based on 

criteria issued by OMB, I conclude that the data are complete and reliable. In addition, 

the FTC evaluated its management controls and financial management systems, as 

required by the Federal Managers’ Financial Integrity Act (see page 19). 

In FY 2007, we continued to move forward on the challenges previously 

identified by the Inspector General, and our responses to the specific challenges 

ahead are discussed in the Other Accompanying Information section. The areas 

of information technology security, redress administration (returning money 

from defendants under court orders to wronged consumers), and the protection of 

personally identifiable information continue to represent important management 

and performance challenges for the FTC. Agency management concurs with 

the Inspector General on the significant challenges management faces and on his 

assessment of the FTC’s progress in addressing those challenges. Moving forward, 

we will continue our efforts to proactively tackle these challenges. 

I look forward to working with agency staff, my fellow Commissioners, and our 

partners in the coming year to continue providing high-quality service to American 

consumers. 

Deborah Platt Majoras


November 14, 2007


 Performance and Accountability Report—Fiscal Year 2007 iii 
Table of Contents


About this Report......................................................... inside front cover


FTC At-A-Glance ....................................................................................... i


Message from the Chairman................................................................... ii


MANAGEMENT’S DISCUSSION AND ANALYSIS.................................. 1


Mission and Organization .................................................................. 2


Vision and Mission Statements...................................................................................... 2


Our Organization .............................................................................................................. 3


Our People......................................................................................................................... 5


Performance Overview....................................................................... 6


Strategic Planning Framework ....................................................................................... 6


Performance Measurement Methodology....................................................... 6


Strategic Goals and Objectives......................................................................... 7


FY 2007 Performance Summary.................................................................................... 7


Management Challenges ................................................................. 12


Management Assurances (on Internal Controls, Financial 


Systems, and Compliance with Laws and Regulations)............. 18


Implementation of the Federal Managers’ Financial Integrity Act at the FTC..........18


Chairman’s Statement of Assurance.............................................................................19


Summary of Material Weaknesses and Non-Conformances .................................... 20


Federal Information Security Management Act ......................................................... 20


Improper Payments Information Act............................................................................ 20


Debt Collection Improvement Act .................................................................................21


Prompt Payment Act.......................................................................................................21


Agency Financial Management Systems Plans ...........................................................21


Financial Highlights .......................................................................... 23


Introduction .................................................................................................................... 23


Overview of Financial Position ..................................................................................... 23


Results of Operations .................................................................................................... 25


Limitations of Financial Statements............................................................................. 26


PERFORMANCE SECTION .................................................................... 29


Introduction to Performance ........................................................... 30


Relationship of Outputs to Outcomes.......................................................................... 30


Verification and Validation of Performance Data .......................... 32


Strategic Goal #1............................................................................... 34


Strategic Goal #2.............................................................................. 50


Summary of Program Evaluations ................................................. 73


iv Performance and Accountability Report—Fiscal Year 2007 
FINANCIAL SECTION ............................................................................. 85


Message from the Chief Financial Officer ...................................... 86


Independent Auditor’s Report......................................................... 88


Principal Financial Statements........................................................ 92


Notes to the Financial Statements ................................................. 97


Other Accompanying Information................................................. 125


IG-Identified Management Challenges .......................................................................125


Management’s Response to IG Challenges................................................................128


Appendix A: Performance Measures Comparison............................ 131


Acronyms .............................................................................................. 137


Contact Information and Acknowledgements.................................. 139


 Performance and Accountability Report—Fiscal Year 2007 v 

Management’s Discussion

and Analysis 

1 
Mission and Organization 

The work of the FTC is critical to protecting and strengthening free 

and open markets and promoting informed consumer choice both 

in the United States and around the world. The FTC performs its 

mission through the use of a variety of tools, including law enforcement, 

rulemaking, research, studies on marketplace trends and legal 

developments, and consumer and business education. 

FTC’s Mission 

To prevent business practices that are 

anticompetitive or deceptive or unfair to 

consumers; to enhance informed consumer 

choice and public understanding of the 

competitive process; and to accomplish 

these missions without unduly burdening 

legitimate business activity. 

FTC’s Vision 

A U.S. economy characterized by vigorous 

competition among producers and consumer 

access to accurate information, yielding 

high-quality products at low prices and 

encouraging efficiency, innovation, and 

consumer choice. 

2 Performance and Accountability Report—Fiscal Year 2007 
Our Organization 

C

onsumers and businesses are likely to be more 

familiar with the work of the FTC than they 

think. In the consumer protection area, the 

care labels in clothes, product warranties, or stickers 

showing the energy costs of home appliances illustrate 

information that is required by the FTC. Likewise, 

businesses must be familiar with the laws requiring 

truthful advertising or prohibiting price fixing. These 

laws also are administered by the FTC. 

The FTC deals with issues that touch the economic 

lives of most Americans. In fact, the agency has a long 

tradition of maintaining a competitive marketplace 

for both consumers and businesses. When the FTC 

Photograph of the FTC Headquarters Building 

was created in 1914, its purpose was to prevent unfair in Washington, DC. President Franklin D. 

methods of competition in commerce as part of the battle 	 Roosevelt personally laid the building’s 

cornerstone in 1937. The photograph shows 

to “bust the trusts.” Over the years, the Congress passed one of a pair of sculptures found outside of 

additional laws giving the agency greater authority over	 the building, entitled “Man Controlling Trade,” 

completed in 1942 by New York sculptor 

anticompetitive practices. In 1938, the Congress passed	 Michael Lantz.

a broad prohibition against “unfair and deceptive acts or 

practices.” Since then, the FTC also has been directed to administer a wide variety of 

other consumer protection laws and regulations, including the Telemarketing Sales Rule, 

the Identity Theft Act, and the Equal Credit Opportunity Act. 

The FTC is an independent agency that reports to the Congress on its actions. 

These actions include pursuing vigorous and effective law enforcement, advancing 

consumers’ interests by sharing its expertise with federal and state legislatures and 

U.S. and international government agencies, developing policy and research tools 

through hearings, workshops, and conferences, and creating practical and plainlanguage educational programs for consumers and businesses in a global marketplace 

with constantly changing technologies. 

The FTC is headed by five Commissioners, nominated by the President and 

confirmed by the Senate, each serving a seven-year term. The President chooses 

one Commissioner to act as Chairman. No more than three Commissioners can 

be of the same political party. The FTC’s mission is carried out by three Bureaus 

consisting of the Bureau of Consumer Protection, the Bureau of Competition, and 

 Management’s Discussion and Analysis 3 
the Bureau of Economics. Work is aided by offices, including the Office of General 

Counsel, the Office of Inspector General, and the Office of the Executive Director, 

and seven regions. 

In FY 2007, the Office of International Affairs was created to handle the 

international aspects of the FTC’s work, which include assisting the Bureaus 

of Competition and Consumer Protection with investigations that involve an 

international component; representing the FTC at meetings of international 

organizations (such as the International Competition Network, the International 

Consumer Protection Enforcement Network, and the Organization for Economic 

Cooperation and Development); and promoting cooperation and sound policy 

approaches to international antitrust and consumer protection issues. The chart 

below shows how the FTC is organized. 

Chairman 

Deborah Platt Majoras 

Commissioner 

Pamela J. Harbour 

Office of Congressional Relations 

Jeanne Bumpus 

Office of Public Affairs 

Nancy Ness Judy 

Office of Inspector General Howard L. Sribnick 

Office of Administrative Law Judges Stephen J. McGuire 

Office of the Secretary

Donald S. Clark 

Commissioner 

William E. Kovacic 

Commissioner 

J. Thomas Rosch 

Commissioner 

Jon Leibowitz 

Office of the 

Executive Director 

Charles Schneider 

Regions 

Bureau of 

Consumer Protection 

Lydia B. Parnes 

Bureau of Economics 

Michael R. Baye 

Bureau of Competition 

Jeffrey Schmidt 

Chief of Staff 

Brian Huseman 

Office of General Counsel 

William Blumenthal 

Office of International Affairs 

Randolph W. Tritell 

CFO 

Steven Fisher 

CIO 

Stanley Lowe, Acting 

Federal Trade Commission 

4 Performance and Accountability Report—Fiscal Year 2007 
The agency is headquartered in Washington, DC, and operates with seven regions 

across the U.S. The graphic below illustrates the placement of the FTC’s regions. 

New York, NY 

Northeast 

(includes Puerto Rico 

and U.S. Virgin Islands) 

East Central 

Midwest 

Chicago, IL 

Seattle, WA 

Northwest (includes Alaska) 

Western (includes Hawaii) 

Los Angeles, CA 

San Francisco, CA 

Southeast 

Atlanta, GA 

Dallas, TX 

Southwest 

Washington, DC 

(Headquarters) 

Cleveland, OH 

Our People 

T

he FTC’s workforce is its greatest asset. The agency’s workforce consists of 

approximately 1,100 civil service employees dedicated to addressing the major 

concerns of American consumers. The chart below shows workforce composition 

by category. 

0 

200 

400 

600 

800 

1000 

1200 

Other Professions 

Attorneys 

Economists 

Senior Managers 

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Total: 1100 Total: 1074

Total: 1019

Total: 1089 Total: 1075

459 444

418

462 444

517 527 506 515 491

80 78 72 74 73

41 38 38 39 41

FTC’s Workforce Composition 

Note: These totals reflect full- and part-time staff on board as of September 30 for each year. 

The actual full-time equivalent usage for each year varies from the on-board count.

 Management’s Discussion and Analysis 5 
Performance Overview 

This section explains the FTC’s performance planning framework and 

provides an overview of performance for the year. The Performance 

Section contains details of program performance results, trend data 

by fiscal year, resources, strategies, factors affecting performance, and 

verification and validation of performance data. 

Strategic Planning Framework 

Performance Measurement Methodology 

The FY 2007 strategic planning framework originates from the FTC’s FY 2006–2011 

Strategic Plan available at www.ftc.gov/strategicplan and is supported by the FTC’s 

Performance Plan available at www.ftc.gov/par. 

Strategic Goals 

Long-term statements of aim outlined in the Strategic Plan that 

defines how the agency carries out its mission. 

Objectives Statements of how the FTC plans to achieve the Strategic Goals. 

Performance 

Measures 

Indicators used to gauge success reaching Objectives. Key 

measures are those that address the most significant activities of 

an Objective. 

Targets 

Expressions of desired performance levels or specific desired 

results targeted for a given fiscal year. Targets are expressed in 

quantifiable terms. 

As illustrated on the next page, the FTC’s work is structured around two 

Strategic Goals and eight Objectives. Performance Measures within the eight 

Objectives are used to gauge each Objective’s success. 

6 Performance and Accountability Report—Fiscal Year 2007 
Strategic Goals and Objectives 

Strategic Goals Objectives 

Protect Consumers 

Prevent fraud, deception, 

and unfair business 

practices in the 

marketplace 

Identify fraud, deception, and unfair practices that cause the greatest 

consumer injury 

Stop fraud, deception, unfairness, and other unlawful practices through 

law enforcement 

Prevent consumer injury through education 

Enhance consumer welfare through research, reports, advocacy, and 

international cooperation and exchange 

Maintain Competition 

Prevent practices 

through law enforcement 

anticompetitive mergers 

and other anticompetitive 

business practices in the 

marketplace 

Identify anticompetitive mergers and practices that cause the greatest 

consumer injury 

Stop anticompetitive mergers and business 

Prevent consumer injury through education 

Enhance consumer welfare through research, reports, advocacy, and 

international cooperation and exchange 

FY 2007 Performance Summary 

The chart below captures Performance Measure results. Of the 34 Performance 

Measures, 26 were met or exceeded, six were new measures in which data is being 

collected to establish a baseline for a FY 2008 target, and two were not met (2.2.4 

and 2.2.5). Based on these results, the FTC has made significant progress toward 

reaching its eight Objectives. 

22 

4 

6 

2 

Target Exceeded 

64% 

Establish Baseline 

18% 

Target Not Met 

6% 

Target Met 

12% 

Total Performance Measures 34 

Target Exceeded 

Target Met 

Target Not Met 

Establish Baseline 

Summary of FY 2007 

Performance Results

 Management’s Discussion and Analysis 7 
Strategic Goal 1: Protect Consumers 

Performance Measure 

FY 07 

Target 

FY 07 

Actual 

5-Year 

Target 

Objective 1.1 Identify Fraud, Deception, and Unfair Practices That Cause the Greatest 

Consumer Injury 

1.1.1 Collect and enter complaints and inquiries into 

the consumer database. 

1 million 

complaints 

1.1 million ✔ N/A 

1.1.3 KEY MEASURE: Determine the percentage of 

the agency’s consumer protection law enforcement 

actions that are responsive to the consumer complaint 

information gathered by the agency. 

50% 76% ✔ N/A 

Objective 1.2 Stop Fraud, Deception, Unfairness, and Other Unlawful Practices Through 

Law Enforcement 

1.2.1 KEY MEASURE: Stop economic injury to 

consumers each year through law enforcement. 

$400 million $519 million ✔ $2 billion ★

1.2.5 Stop fraudulent and deceptive practices by 

obtaining orders. 

130 orders 137 ✔ N/A 

Objective 1.3 Prevent Consumer Injury Through Education 

1.3.1 Track consumer protection messages accessed 

online or in print. 

45 million 

messages 

47 million ✔ N/A 

1.3.2 Track consumer protection messages, related to 

identity theft, accessed online or in print. 

8 million 

messages 

9.6 million ✔ N/A 

1.3.3 Track consumer protection messages, in Spanish, 

accessed online or in print. 

2.2 million 

messages 

2.2 million ✔ N/A 

1.3.4 KEY MEASURE: Track a) the number of times 

print media publish articles that refer to the FTC 

consumer protection activities and b) the circulation 

of media that publish those articles. 

Establish 

baseline 

a) 3,066 

b) 863 million 

N/A 

Objective 1.4 Enhance Consumer Welfare Through Research, Reports, Advocacy, and 

International Cooperation and Exchange 

1.4.1 KEY MEASURE: Convene or participate 

substantially in workshops and conferences on novel or 

challenging consumer protection problems or issues. 

6 workshops 

and 

conferences 

10 ✔ 30 ★

1.4.2 Issue reports on novel or challenging consumer 

protection problems or issues. 

8 reports 8 ✔ 40 ★

1.4.3 File public and advocacy comments with other 

federal and state government agencies. 

6 advocacy 

filings 

7 ✔ 30 ★

✔ SignifieS that the target iS conSidered met or exceeded 

★ SignifieS that the ftc iS on track to meet the 5-year target 

N/A SignifieS that the Performance meaSure doeS not have a 5-year target 

continued 

8 Performance and Accountability Report—Fiscal Year 2007 
Strategic Goal 1: Protect Consumers (continued) 

Performance Measure 

FY 07 

Target 

FY 07 

Actual 

5-Year 

Target 

1.4.4 Cooperate with foreign government agencies on 

enforcement matters with cross-border components. 

20 foreign 

government 

agencies 

23 ✔ 100 ★

1.4.5 Provide consumer protection related policy or 

technical input related to foreign government agencies 

or international organizations. 

20 

instances of 

input 

34 ✔ 100 ★

✔ SignifieS that the target iS conSidered met or exceeded 

★ SignifieS that the ftc iS on track to meet the 5-year target 

N/A SignifieS that the Performance meaSure doeS not have a 5-year target 

Strategic Goal 2: Maintain Competition 

Performance Measure 

FY 07 

Target 

FY 07 

Actual 

5-Year 

Target 

Objective 2.1 Identify Anticompetitive Mergers and Practices That Cause the Greatest 

Consumer Injury 

2.1.1 KEY MEASURE: Achieve positive outcomes in 

matters in which Hart-Scott-Rodino (HSR) requests for 

additional information are issued. 

At least 

90% 

100% ✔ N/A 

2.1.3 KEY MEASURE: Percent of significant nonmerger 

investigations that result in a positive outcome. 

At least 

90% 

100% ✔ N/A 

2.1.4 Track the number of enforcement actions for 

the total mission, for a) the merger and b) nonmerger 

programs. 

Establish 

baseline 

a) 22 

b) 11 

N/A 

2.1.5 Report the number of a) second requests, 

b) reportable transactions for which premerger 

notifications were received, c) HSR investigations 

that resulted in enforcement action, d) transactions 

in which antitrust issues were resolved through 

voluntary abandonment or restructuring because of 

FTC concerns, and e) investigations closed because 

the evidence indicated that a competitive problem was 

unlikely. 

Establish 

baseline 

a) 31 

b) 2,108 

c) 20 

d) 5 

e) 11 

N/A 

2.1.6 Track the number of significant nonmerger 

investigations closed each year, a) with enforcement 

action and b) without enforcement action. 

Establish 

baseline 

a) 11 

b) 17 

N/A 

✔ SignifieS that the target iS conSidered met or exceeded 

★ SignifieS that the ftc iS on track to meet the 5-year target 

N/A SignifieS that the Performance meaSure doeS not have a 5-year target 

continued

 Management’s Discussion and Analysis 9 
Strategic Goal 2: Maintain Competition (continued) 

Performance Measure 

FY 07 

Target 

FY 07 

Actual 

5-Year 

Target 

Objective 2.2 Stop Anticompetitive Mergers and Business Practices Through 

Law Enforcement 

2.2.1 KEY MEASURE: Positive outcome of cases 

brought by the FTC due to alleged violations. 

At least 

80% 

100% ✔ N/A 

2.2.2 Achieve savings for consumers through merger 

enforcement. 

$500 million $805 million ✔ $2.5 billion ★

2.2.3 Take action against mergers likely to harm 

competition in markets with a total of at least $125 

billion in sales over a five-year period; $25 billion in 

sales each year. 

$25 million $42.6 million ✔ $125 billion ★

2.2.4 Achieve savings for consumers through 

nonmerger enforcement. 

$80 million $75 million $400 million ★

2.2.5 Take action against anticompetitive conduct in 

markets with a total of at least $40 billion in annual 

sales over a five-year period; $8 billion each year. 

$8 billion $2.6 billion $40 billion ★

2.2.6 Save consumers at least six times the amount of 

agency resources allocated to the merger program over 

a five-year period. (Efficiency Measure) 

600% 

(annual) 

2,500% ✔ 600% 

(cumulative) 

★

2.2.7 Save consumers at least four times the amount of 

agency resources allocated to the nonmerger program 

over a five-year period. (Efficiency Measure) 

400% 

(annual) 

424% ✔ 400% 

(cumulative) 

★

Objective 2.3 Prevent Consumer Injury Through Education 

2.3.2 Quantify number of hits on antitrust information 

on the FTC’s website. 

At least 

15 million hits 

15.7 million ✔ N/A 

2.3.5 KEY MEASURE: Track a) the number of times print 

media publish articles that refer to FTC competition 

activities and b) the circulation of media that publish 

those articles. 

Establish 

baseline 

a) 2,982 

b) 635 million 

N/A 

Objective 2.4 Enhance Consumer Welfare Through Research, Reports, Advocacy, and 

International Cooperation and Exchange 

2.4.1 Convene or participate substantially in workshops, 

conferences, seminars, and hearings involving 

significant competition-related issues. 

At least 4 

workshops, 

conferences, 

seminars, and 

hearings 

7 ✔ 20 ★

✔ SignifieS that the target iS conSidered met or exceeded 

★ SignifieS that the ftc iS on track to meet the 5-year target 

N/A SignifieS that the Performance meaSure doeS not have a 5-year target 

continued 

10 Performance and Accountability Report—Fiscal Year 2007 
Strategic Goal 2: Maintain Competition (continued) 

Performance Measure 

FY 07 

Target 

FY 07 

Actual 

5-Year 

Target 

2.4.2 KEY MEASURE: Issue studies, reports, and 

workings or issue papers on significant competitionrelated issues. 

At least 8 

studies, 

reports, 

and papers 

18 ✔ 40 ★

2.4.3 KEY MEASURE: Make advocacy filings with other 

federal and state government agencies urging them 

to assess the competitive ramifications and costs and 

benefits to consumers of their policies. 

At least 6 

advocacy 

filings 

11 ✔ 30 ★

2.4.4 Issue advisory opinions to persons seeking 

agency review of proposed business actions. 

At least 2 to 

3 opinions 

2 ✔ 12 ★

2.4.5 File amicus briefs with courts addressing 

competition-related issues. 

At least 2 to 

3 briefs 

4 ✔ 12 ★

2.4.6 Track the volume of traffic on www.ftc.gov 

relating to competition, research, reports, advocacy, 

and internal cooperation and exchange. 

At least 

1.1 million 

visitors 

1.1 million ✔ N/A 

2.4.7 KEY MEASURE: Track the a) number of cases on 

which the FTC cooperated with a foreign competition 

authority, b) number of consultations with or comments 

to foreign competition authorities, c) number of 

written submissions on international fora, d) number 

of international events attended, and e) number of 

leadership positions held by FTC staff in international 

competition organizations. 

Establish 

baseline 

a) 61 

b) 70 

c) 19 

d) 48 

e) 8 

N/A 

✔ SignifieS that the target iS conSidered met or exceeded 

★ SignifieS that the ftc iS on track to meet the 5-year target 

N/A SignifieS that the Performance meaSure doeS not have a 5-year target

 Management’s Discussion and Analysis 1 1
Management Challenges 

The FTC stands prepared to face the challenges of today’s marketplace 

as a champion for consumers and competition. As a law enforcement 

agency with a broad mandate, many of the FTC’s challenges are defined 

by the conditions of the marketplace, and thus its challenges are ever 

changing. For example, as consumers and businesses encounter difficulties 

with identity theft, subprime mortgage lending, spam, anticompetitive 

business practices in the energy or real estate industry, or health care fraud 

or practices, the FTC steps forward to protect consumers and maintain 

competition. Many of the most serious challenges the FTC currently faces 

are summarized by Strategic Goal below, along with a brief description 

of the FTC’s activities to address the challenges. (Note: these are missionrelated challenges as opposed to the management challenges identified by 

the Inspector General, which are addressed in the Other Accompanying 

Information section of this report.) 

Strategic Goal 1: Protect Consumers: Prevent Fraud, Deception, 

and Unfair Business Practices in the Marketplace 

Improving Data Security. Identity theft exacts a heavy financial and emotional 

toll from its victims, and the FTC seeks to assist the millions of Americans who 

are victimized each year. The agency meets this challenge by combating identity 

theft primarily by bringing law enforcement actions against companies that fail 

to maintain reasonable safeguards to protect consumer information from identity 

theft, and educating consumers on how to avoid identity theft. The President’s 

Identity Theft Task Force, co-chaired by Chairman Majoras, has released dozens of 

new recommendations for combating identity theft. Along with other agencies, the 

FTC is implementing these recommendations, including improving data security 

within federal agencies and departments, studying new methods of authenticating 

consumers’ identities, studying the use of social security numbers, and training 

identity theft counselors and businesses on data security. 

Stopping Technology Abuses. Technology provides countless benefits to 

consumers, including choice, convenience, and increased access to goods, services, 

and information. It also provides new vehicles for fraudulent, deceptive, and unfair 

practices in the marketplace. If consumers are not adequately protected, not only can 

12 Performance and Accountability Report—Fiscal Year 2007 
they suffer economic injury, but they can lose confidence in 

these new technologies. For this reason, the FTC is active 

in bringing cases against those who abuse technology. Two 

of the FTC’s highest priorities are to stop spyware and 

other deceptive and unfair practices that make it difficult 

or dangerous for consumers to operate their computers, 

and to bring law enforcement actions stopping deceptive or 

fraudulent spam email. 

Protecting Consumers in the Financial Services 

Marketplace. Agency law enforcement actions target 

deceptive and other illegal practices involving mortgage 

lending, with a focus on the subprime market. These 

practices can have severe consequences for consumers, 

including unanticipated high-cost mortgages, ruined credit 

histories, loss of their homes, and unwarranted fears of 

arrest and incarceration for failure to pay on time. The 

FTC’s challenge is to combat unfair and deceptive practices 

involving, among other things, mortgages, credit cards, 

payment cards, debt collection, and student loans. 

Stopping Health Fraud and Childhood Obesity. 

Consumers can fall prey to fraudulent health marketing 

because they are desperate for help. The FTC takes on the 

challenges of the deceptive marketing of health products, 

particularly products making disease prevention or weight 

loss claims, and products targeted to children. At an FTC 

workshop on childhood obesity, leading food manufacturers 

released details of their pledges to voluntarily restrict their 

advertising to children under 12 and committed to limiting 

their advertising directed to children to food products 

that meet certain nutritional criteria or to refrain from 

advertising to children. Also, the companies committed 

to restricting their use of third-party licensed characters to 

products that meet the nutritional criteria and to websites 

promoting healthy lifestyles. 

Beware of Spyware 

www.onguardonline.gov/spyware.html 

Spyware is software installed 

on your computer without your 

consent to monitor or control your 

computer use. Clues that spyware 

is on a computer include a barrage 

of pop-up ads, a browser that takes 

you to sites you don’t want to go 

to, unexpected toolbars or icons 

on your computer screen, keys that 

don’t work, random error messages, 

and sluggish performance when 

opening programs or saving files. To 

lower your risk of spyware infections: 

update your operating system and 

web browser software, and set your 

browser security high enough to 

detect unauthorized downloads; use 

anti-virus and anti-spyware software, 

as well as a firewall, and update them 

all regularly; download free software 

only from sites you know and trust, 

enticing free software downloads 

frequently bundle other software, 

including spyware; don’t click on links 

inside pop-up windows; and don’t 

click on links in spam that claim to 

offer anti-spyware software; you may 

unintentionally be installing spyware.

 Management’s Discussion and Analysis 13 
“Green” Marketing. New “green” claims, such as claims for carbon reduction, 

landfill reduction, and sustainable packaging, are entering the market daily. These 

claims can be extremely useful for consumers; however, the complexity of the issues 

involved creates the potential for confusing, misleading, and fraudulent claims. 

Given this potential, the FTC is conducting research, developing consumer and 

business outreach, and pursuing enforcement actions in this area. 

Building International Partnerships. The FTC promotes market-oriented 

consumer protection and privacy policies globally, particularly in areas involving 

e-commerce and new technologies. Given the challenge of the increasingly crossborder nature of fraud, spam, spyware, and privacy issues, developing international 

partnerships is critical to the effective enforcement of laws to protect U.S. consumers. 

The FTC has begun to use the tools provided by the 2006 U.S. SAFE WEB Act to 

increase the effectiveness of its cross-border cooperation and enforcement. 

Improving Data Collection. The FTC continues to target its law 

enforcement efforts in large part based on the analysis of consumer complaint 

data that it gathers in the agency’s Consumer Information System (CIS) 

database. CIS enables the agency and its law enforcement partners to detect 

trends in consumer fraud as they occur. To meet the challenges of collecting and 

analyzing the increasing volume of consumer complaints, accommodating the 

added number of users of the CIS system, and meeting the increased demands on 

access to pertinent data, the FTC is updating the system to ensure that it is easier 

to navigate, more secure, and more reliable. 

Strategic Goal 2: Maintain Competition: Prevent Anticompetitive 

Mergers and Other Anticompetitive Business Practices in the 

Marketplace 

Preventing and Stopping Anticompetitive Mergers. Many mergers benefit 

consumers by allowing firms to operate more efficiently. Other mergers, however, 

may result in higher prices, fewer choices, or lesser quality. The challenge for the 

FTC is to analyze the likely effects of a merger on consumers and competition—a 

process that can take thousands of hours of investigation and economic analysis— 

14 Performance and Accountability Report—Fiscal Year 2007 
and identify those that may be harmful. The FTC has been facing a demanding 

merger review workload as merger volume has increased more than 50 percent since 

FY 2004, which can be considered the first representative baseline year after the filing 

threshold change. Based on current patterns, the high volume of merger work is 

projected to continue into FY 2008 and beyond. The efforts of the FTC in this area 

benefit consumers by keeping prices low, and the quality and choice of goods and 

services high. 

Preventing Anticompetitive Activity in Energy Industries. The price of 

gasoline continues to be a concern for consumers, and is a commensurately high 

priority for the FTC. The FTC meets this challenge by focusing closely on gasoline 

markets and moving quickly to address any anticompetitive activity, whether merger 

or nonmerger activity. Nonmerger activity may include illegal agreements among 

competitors, agreements between manufacturers and product dealers, creating 

monopolies, and other anticompetitive activities. 

Promoting Competition in Health Care and Prescription Drugs. The 

rapidly rising cost of health care is a matter of concern for consumers, employers, 

insurers, and the nation as a whole. Health-related products and services now 

account for more than 15 percent of gross domestic product, and that share has 

grown by 25 percent since 1990. Prescription drugs costs alone were projected 

to be more than $213 billion in 2006 (with the federal government paying more 

than 30 percent of that amount). Exclusion payment patent settlements, where the 

branded manufacturer pays the generic to stay off the market, pose a significant 

threat to competition by depriving consumers of low-cost generic drugs. Recent 

court decisions, however, have taken a benign view of these harmful agreements. 

Therefore, in addition to investigating, and challenging where appropriate, patent 

settlements between brand and generic companies, the FTC is also advocating for 

legislation to eliminate this problem. The agency also addresses rising prescription 

drug prices by monitoring pharmaceutical company mergers. In addition, the 

FTC stops anticompetitive agreements between physicians and hospital service 

organizations and monitors hospital and other mergers that may raise the cost of 

health care. 

 Management’s Discussion and Analysis 15 
Anticompetitive conduct 

In FY 2007, the FTC filed 

complaints against seven real 

estate associations—in the Bureau 

of Competition’s first ever law 

enforcement sweep—to stop real 

estate multiple listing services from 

limiting competition from discount 

brokers. This number included five 

consents and two administrative 

complaints (one of which was 

settled by consent, the other of 

which remains in FTC administrative 

litigation). The Bureau also brought 

four other anticompetitive practices 

cases this year, which resulted 

in consent orders resolving the 

charges. These cases included: 

Advocate Health Partners (physician 

price fixing), Missouri State Board of 

Embalmers and Funeral Directors 

(limiting competition in the sale 

of caskets), Motor Oil Importers 

of Puerto Rico (a conspiracy to 

restrict the import of motor oil), and 

Colegio Optometras de Puerto Rico 

(optometrist price fixing). 

Preventing and Stopping Anticompetitive 

Business Practices in the Real Estate Industry. 

Purchasing or selling a home is one of the most 

significant financial transactions most consumers will 

ever make, and anticompetitive industry practices 

can raise the prices of real estate services. The FTC 

investigates and challenges anticompetitive actions to 

preserve competition in the real estate industry, allowing 

consumers more choice, and ensuring that consumers 

who choose to use discount real estate brokers will not 

be handicapped by rules aimed at discouraging discount 

brokers. 

Preventing and Stopping Anticompetitive 

Business Practices in High Technology. The growing 

importance of technology is a crucial marketplace 

challenge that is placing more and more demands 

on antitrust enforcement. The FTC’s antitrust 

investigations increasingly involve high-technology 

sectors of the economy, such as computer hardware 

and pharmaceutical products. Furthermore, issues in 

antitrust matters increasingly intersect with intellectual 

property concerns, raising difficult questions about how 

to reconcile these two bodies of law, both of which have 

a goal of promoting innovation. 

Increasing Consumer Outreach. The FTC is working to meet the challenge 

of educating consumers on the important role of competition in providing them 

the most valuable mix of price, choice, and innovation. The FTC staff develops 

specialized web pages on issues of interest and importance to consumers and 

industry, such as health care, oil and gas, and real estate; seeks opportunities to speak 

on competition issues; and submits articles on competition to consumer-oriented 

publications. 

16 Performance and Accountability Report—Fiscal Year 2007 
Preventing Misuse of Government Processes. An important part of the 

FTC’s competition agenda includes efforts to identify, investigate, and, where 

appropriate, prosecute the misuse of government processes. Such misuse can take 

a variety of forms, including abusing government regulatory processes, making 

misrepresentations to government agencies, or enforcing intellectual property rights 

in bad faith. This can harm consumers by, for example, keeping lower-cost generic 

drugs from the marketplace. The FTC remains vigilant in meeting the challenge 

of stopping these practices, by seeking out and scrutinizing competitors’ misuse of 

government processes to hamper rivals. 

Promoting Sound Competition Policy at the International Level. Because 

antitrust enforcement increasingly involves cross-border issues, the FTC’s work 

promoting international convergence toward sound policies is vital to meeting the 

challenge to maintain competition. Although antitrust laws generally support the 

operation of competitive market economies and antitrust laws and enforcement 

policies around the world share many goals, some differences among them may 

increase costs to firms that seek to merge, establish distribution channels, or pursue 

other business arrangements across borders. The FTC plays a leading role bilaterally 

and through international organizations to increase the procedural and substantive 

consistency of antitrust rules and their enforcement. The agency also broadens and 

deepens its strong cooperation with foreign antitrust agencies on cases and policy 

issues. In addition, the FTC provides technical assistance to foreign competition 

agencies, particularly in countries in the process of developing competition laws or 

enforcing newly adopted laws. 

Advocating for Competition Before the Courts and Other Government 

Agencies. The FTC works to meet the important challenge of eliminating 

government-imposed impediments to a competitive marketplace by advising other 

government policymakers to apply sound competition principles as they make 

decisions affecting consumer welfare. Among its activities, the FTC continues to file 

comments on proposed government action (legislation, regulation, and other rules) 

affecting competition across many industries, such as the provision of legal services, 

real estate brokerage, the direct shipment of wine to consumers, and contractual 

relationships between product suppliers and distributors.

 Management’s Discussion and Analysis 17 
Management Assurances (on Internal Controls, Financial 

Systems, and Compliance with Laws and Regulations) 

Implementation of the Federal Managers’ Financial Integrity 

Act (FMFIA) at the FTC 

The FTC considers internal controls to be an integral part of all systems and processes 

that the agency utilizes in managing its operations and carrying out activities toward 

achieving strategic goals and objectives. The FTC holds agency managers accountable for 

efficiently and effectively performing their duties in compliance with applicable laws and 

regulations and for maintaining the integrity of their activities through the use of controls. 

Previously in FY 2006 the FTC established a Senior Assessment Team (SAT) 

whose role is to provide strategic direction and oversight over the agency’s internal 

control program, to promote and facilitate compliance with applicable guidance 

(e.g., Office of Management and Budget (OMB) Circular A-123 “Management’s 

Responsibility for Internal Control,” and to communicate the results of reviews to 

senior management and the head of the agency. 

Some of the functions that the SAT performs are developing and documenting 

an internal control review plan, identifying key processes and related control 

activities and performing a preliminary risk assessment of such processes, reviewing 

and assessing the overall control environment, helping to ensure the timely 

implementation of any corrective actions needed to address identified weaknesses, 

and establishing guidance for use by program managers in monitoring and assessing 

management controls within their areas of responsibility. 

During FY 2007 the SAT performed the functions above and found that the 

FTC’s overall control environment is strong. Additionally, the SAT updated guidance 

for program managers’ use in completing self assessments relative to the processes and 

controls within their areas of responsibility. Senior managers throughout the agency 

completed self assessments that disclosed no significant control weaknesses. The SAT 

evaluated the results of the managers’ assessments and concurred that no material 

weaknesses or non-conformances were identified. The results of these evaluations and 

other information, such as independent audits or reviews performed by the Office of 

Inspector General and GAO (e.g., Federal Information Security Management Act 

review), independent audits of service providers’ operations and financial systems 

(e.g., reviews conducted in accordance with Statement on Auditing Standards (SAS) 

70), internal analyses, and other relevant evaluations and control assessments, were 

considered by the SAT and the agency head in determining whether there are any 

management control problems or non-conformances must be disclosed in the annual 

assurance statement. 

The Chairman’s assurance statement that follows is supported by the processes 

and reviews described above, which were carried out in FY 2007. 

18 Performance and Accountability Report—Fiscal Year 2007 
Chairman’s FMFIA Statement of Assurance 


 Management’s Discussion and Analysis 19 
Summary of Material Weaknesses and Non-Conformances 

As noted in the Chairman’s statement, the FTC has no material weaknesses or nonconformances to report for FY 2007. Additionally, for the past three years, no new 

material weaknesses or significant non-conformances were identified nor were there 

any existing unresolved weaknesses requiring corrective action. 

Federal Information Security Management Act (FISMA) 

The FTC continues to stay vigilant in ensuring that there are no material weaknesses 

in administrative controls over information systems and is always seeking methods 

of improving its secure configuration. The OIG completed its review of the FTC’s 

implementation of the FISMA for FY 2007, and in his semi-annual report to 

Congress, the Inspector General reported that “the FTC security environment is 

strong and robust and continues to evolve to expand its coverage and to address 

changing threats and requirements.” As part of the agency’s effort to meet or 

exceed the requirements of FISMA, 100 percent of agency systems have undergone 

certification and accreditation and the FTC’s certification and accreditation policy 

conforms with the standards established by the National Institute of Standards and 

Technology (NIST). Additionally, the Information Technology Management Office 

is presently updating its security policies and procedures as an integrated effort 

relative to the agency’s comprehensive review of privacy matters led by the Privacy 

Steering Committee. 

Improper Payments Information Act 

The Improper Payments Information Act (Public Law No. 107-300) defined 

requirements to reduce improper/erroneous payments made by the federal 

government. The Office of Management and Budget (OMB) also has established 

specific reporting requirements for agencies with programs that possess a significant 

risk of erroneous payments and for reporting on the results of recovery auditing 

activities. A significant erroneous payment as defined by OMB guidance is an 

annual erroneous payment in a program that exceeds both 2.5 percent of the program 

payments and $10 million. 

20 Performance and Accountability Report—Fiscal Year 2007 
The agency reviews controls and systems under the FMFIA to ensure that 

the agency has controls that can be relied on. In this review, the agency has not 

identified any programs where significant erroneous payments have occurred within 

the agency. The agency will continue to review programs on an annual basis to 

determine if any significant erroneous payments exist. 

Debt Collection Improvement Act 

The Debt Collection Improvement Act prescribes standards for the administrative 

collection, compromise, suspension, and termination of federal agency collection 

actions and referrals to the proper agency for litigation. Although the Act has no 

material effect on the FTC since it operates with minimal delinquent debt, all debt 

more than 180 days old has been transferred to the U.S. Department of the Treasury 

for cross-servicing. In addition, recurring payments were processed by electronic 

funds transfer (EFT) in accordance with the EFT provisions of the Debt Collection 

Improvement Act of 1996. 

Prompt Payment Act 

The Prompt Payment Act requires federal agencies to make timely payments to 

vendors, including any interest penalties for late invoice payments. In fiscal year 

2007, the FTC paid interest penalties on 67 invoices, or about 1 percent, of the 6,373 

vendor invoices processed, representing payments of approximately $47,295,000. The 

FTC paid only $1 in interest penalties for every $23,014 disbursed in FY 2007. 

Agency Financial Management Systems Plans 

In FY 2004, the FTC developed a Financial Management Systems Five-Year Strategic 

Plan for the period 2004–2008. This plan called for modernizing the aging financial 

systems that support FTC operations. The most significant and challenging goal set 

forth in the plan was: “By 2008, the FTC will have a state-of-the-art, integrated core 

financial management system that encompasses accounting, budget, acquisitions, and 

Performance Measurement requirements.” During FY 2007, the FTC initiated and 

completed all of the necessary groundwork to make this goal a reality. As a result, 

 Management’s Discussion and Analysis 21 
in October 2007 the FTC, working in partnership with the Department of Interior’s 

National Business Center, successfully transitioned from a legacy core financial 

system to a state-of-the-art, integrated core financial system that encompasses 

accounting, budget, acquisitions, and performance measurement requirements. 

The Financial Management Office led the agency-wide effort and in FY 2007 

established: a project management office, a formal project governance structure that 

was endorsed by senior management, and a multi-year implementation plan. The 

core financial system that went live in October supports processing all transaction 

types from general ledger, accounts receivable, collections, budget (funding and 

execution), acquisition related (e.g. requisitions and purchase orders), and payments, 

and has the ability to capture non-financial data for linking performance and 

financial information. The new system is based on commercial off-the-shelf software 

that was approved by the Financial Systems Integration Office for its capability to 

satisfy mandatory financial system requirements. In FY 2008 and beyond, the FTC 

will continue its phased implementation approach and will leverage functionality 

offered by the new financial system. For example, future plans call for integrating 

more robust project and cost accounting functionality, property management, and 

budget formulation and personnel and payroll support using an Enterprise Resource 

Planning system approach. 

22 Performance and Accountability Report—Fiscal Year 2007 
Financial Highlights 

Introduction 

The financial highlights presented below are an analysis of the information 

that appears in the FTC’s FY 2007 financial statements. The agency’s financial 

statements, which appear in the Financial Section of this report, are audited by 

the Office of Inspector General. FTC management is responsible for the fair 

presentation of information contained in the principal financial statements. The 

financial statements and financial data presented below have been prepared from 

the agency’s accounting records in accordance with Generally Accepted Accounting 

Principles (GAAP). GAAP for federal agencies are the standards prescribed by the 

Federal Accounting Standards Advisory Board (FASAB). For the eleventh straight 

year, the FTC is proud to have received an unqualified (clean) opinion on our audited 

financial statements. 

Note that the agency currently tracks cost at the strategic goal level, but the 

longer term objective is to capture cost at the objective level. The implementation 

of a new financial management system lays the groundwork for doing this, as future 

phases will have objective costing capability. 

Overview of Financial Position (Balance Sheet Analysis) 

Assets. The FTC’s Balance Sheet shows total assets of $346.0 million at the end of 

FY 2007. This is an increase of $23.9 million or 7.4 percent over FY 2006 total assets 

of $322.1 million. This increase is primarily due to increases in Fund Balance with 

Treasury of $15.7 million and Cash and Other Monetary Assets of $22.8 million, 

offset by decreases in Accounts Receivable and Property, Plant, and Equipment of 

$14.7 million. The increase in Fund Balance with Treasury is due to a 44 percent 

increase in receipt of Hart-Scott-Rodino (HSR) premerger filing fees. This increase 

reflects a higher overall volume of merger review activity, as opposed to an increase in 

fees. The increase in Cash and Other Monetary Assets primarily results from a $22 

million (37 percent) increase in the amount of funds collected by the redress program 

agents under the agency’s Consumer Protection strategic goal. The composition of 

the agency’s assets is as follows: 

 Management’s Discussion and Analysis 23 
3.4% 

($11,655) 

Cash and Other Monetary Assets 

Accounts Receivable, Net 

Fund Balance with Treasury 

General Property and Equipment, Net 

35.6% 

($123,309) 

36.2% 

($125,208) 

24.8% 

($85,848) 

Cash and Other 

Monetary Assets 

General Property and 

Equipment, Net 

Fund Balance

 with Treasury 

Accounts 

Receivable, Net 

Assets by Type (Dollars Shown in Thousands) 

Liabilities. The agency’s total liabilities at the end of FY 2007 were $273.4 million, 

increasing slightly at $442 thousand over the prior year’s total liabilities of $273.0 

million. Accrued Redress Receivables Due to Claimants and Redress Collected But 

Not Yet Disbursed represent 74.7 percent of all liabilities in FY 2007 versus 70.0 

percent in FY 2006. These two liabilities are where the FTC obtains consumer redress 

in connection with settlement or litigation of both its administrative and its federal 

court cases. The liability for Divestiture Fund Due represents the contra account for 

the divestiture fund held by one of the FTC’s redress agents until distribution of the 

funds are ordered per terms of the court case agreement. 

2.7% 

($7,436) 

6.3% 

($17,257) Accrued Redress Receivables 

Due to Claimants 

Redress Collected But Not 

Yet Disbursed 

Divestiture Fund Due 

Accounts Payable 

Other Liabilities 

45.4% 

($123,974) 

29.3% 

($80,180) 

16.3% 

($44,570) 

Accrued Redress 

Receivables 

Due to Claimants 

Other 

Liabilities 

Accounts 

Payable 

Divestiture 

Fund Due 

Redress 

Collected 

But Not Yet 

Disbursed 

Liabilities by Type (Dollars Shown in Thousands) 

24 Performance and Accountability Report—Fiscal Year 2007 
Net Position. Net Position is the sum of Unexpended Appropriations and the 

Cumulative Results of Operations. At the end of FY 2007, the agency’s Net Position 

on the Balance Sheet and the Statement of Changes in Net Position is $72.6 million, 

increasing 47.8 percent over the FY 2006 ending Net Position of $49.1 million due to 

the growth in the Cumulative Results of Operations. The increase of $24 million in 

Cumulative Results of Operations resulted from (1) a $16 million decrease in the Net 

Cost of Operations and a net reduction in Appropriations Used of $4 million for a 

net increase of $12 million and (2) a FY 2006 rescission of $12 million. 

Results of Operations and Summary of Budgetary Resources 

The Statement of Budgetary Resources provides information on budgetary resources 

made available to the agency for FY 2007 and the status of these resources at the 

end of the fiscal year. For FY 2007, total Budgetary Resources apportioned and 

available were about $224 million (including unobligated balances brought forward). 

This represents an increase of about 5 percent over the Total Budgetary Resources 

of $213.7 million in FY 2006. Earned Revenue of $167.0 million includes $28.6 

million that is temporarily not available (per Public Law No. 110-5) to the agency 

as a budgetary resource. The remaining $138.4 million in earned revenues that were 

available in FY 2007 comprises 60 percent of the 2007 budgetary resources. The 

remaining 40 percent consists of appropriations from the general fund.

 Management’s Discussion and Analysis 25 
8.3% 

($19,174) 

19.5% 

($45,113) 

Appropriations 

Net Earnings 

Reimbursable Activities 

Temporarily Not Available 

pursuant to public law 

60.0% 

($138,400) 

12.0% 

($28,600) Appropriations 

Net Earnings 

Reimbursable 

Activities 

Temporarily 

Not Available 

Earned Revenues 

(Dollars Shown in Thousands) 

Limitations of Financial Statements 

FTC management has prepared its FY 2007 financial statements from the books and 

records of the agency in accordance with the requirements of OMB Circular A-136, 

Financial Reporting Requirements, as amended. The financial statements represent 

the financial position and results of operations of the agency pursuant to the 

requirements of Chapter 31 of the U.S. Code section 3515(b). While these statements 

have been prepared from the agency’s books in accordance with the formats 

prescribed by OMB, the statements are in addition to the financial reports used to 

monitor and control budgetary resources, which are prepared from the same books 

and records. These statements should be read with the understanding that they are 

for a component of the U.S. government, a sovereign entity. One implication is that 

unfunded liabilities cannot be liquidated without legislation that provides resources 

to do so. 

26 Performance and Accountability Report—Fiscal Year 2007 
End of Fiscal Year Balances 

Comparison of FY 2007 and FY 2006 

End of Fiscal Year Balances % Change 2007 

(Dollars Shown in Thousands) over 2006 FY 2007 FY 2006 

CONDENSED BALANCE SHEET 

Accounts Receivable, Net –9% $125,208 $137,023 

Cash and Other Monetary Assets 23% 123,309 100,548 

Fund Balance with Treasury 16% 85,848 70,139 

General Property & Equipment, Net 19% 11,655 14,400 

Total Assets 7% $346,020 $322,110 

Redress Receivables Accrued Due to Claimants –5% $123,974 $130,513 

Undisbursed Redress 35% 80,180 59,267 

Divestiture Fund Due 4% 44,570 43,054 

Accounts Payable and Other –38% 24,693 40,141 

Total Liabilities 0.00% $273,417 $272,975 

Unexpended Appropriations –100% — 14 

Cumulative Results of Operations—Other Funds 48% 72,603 49,121 

Total Net Position 48% 72,603 49,135 

Total Liabilities and Net Position 13% $364,020 $322,110 

FOR THE YEAR 

Gross Cost 8% $224,578 $207,705 

Less: Earned Revenue 8% 166,960 133,444 

Net Program Costs –22% $ 57,618 $ 74,261 

Financial Management Indicators for FY 2007 

Debt Transferred to Treasury 100% 

Fund Balance with Treasury (Identifies the difference between 0% 

the fund balance reported in Treasury reports and the agency fund Unreconciled 

balance with Treasury recorded in its general ledger on a net basis.) 

Invoice Payments 

 Percentage Interest Penalties Paid to Invoices Processed 0.004%

 On-Time Payments 99% 

Credit Cards*

 Travel Card Delinquency Rates – Centrally Billed Accounts 0%

 Purchase Card Delinquency Rate 0% 

*The Office of Management and Budget threshold for delinquency is 61 days.

 Management’s Discussion and Analysis 27 

Performance Section


29 
Introduction to Performance 

T

his section contains program performance results details, a discussion of 

strategies and factors affecting performance, trend data, resources, verification 

and validation of performance data, and summaries of program evaluations. 

In FY 2006, the FTC revised its Strategic Plan for the years 2006–2011. This effort 

encompassed updating the agency’s performance framework to better define and measure 

its activities. As part of the update, a fourth Objective and associated Performance 

Measures were added to each of the Strategic Goals. Since FY 2007 is the first year these 

changes were applied, the majority of the FTC’s Performance Measures have no trend 

data. This is indicated as “N/A” in the performance tables that follow. Likewise, some 

Performance Measure targets are to establish a baseline and will be evaluated or set based 

on first year results. Appendix A compares the FY 2007 Performance Measurement 

framework with the FY 2006 framework and shows the measures listed sequentially. 

Relationship of Outputs to Outcomes 

The goals of the FTC are to protect consumers and maintain and promote competition 

in the marketplace. The FTC has a number of desired outcomes of these goals 

including: (1) stopping fraud and anticompetitive mergers or conduct through strategic 

law enforcement actions; (2) educating consumers and businesses of their rights and 

responsibilities; and (3) influencing policymakers, legislators, and the judiciary to issue 

and interpret policies and laws that are pro-consumer and pro-competitive. It is difficult, 

if not impossible, to precisely measure the value, in monetary terms or otherwise, of 

deterrence, education, and advocacy, but the agency is confident, taking into account the 

information it gains through the performance measures it currently uses, that consumers 

benefit from the deterrence of unfair or deceptive acts and anticompetitive mergers or 

conduct, receiving accurate consumer information, and advocating agency positions. 

The agency’s current performance measures include both output and outcome measures, 

however the FTC is continuously reviewing its performance measures with the aim 

of developing additional outcome measures. The agency also added two efficiency 

measures (measures 2.2.6 and 2.2.7) in FY 2007. Some examples that highlight the 

agency’s focus towards measuring desired outcomes follow. 

A measurable outcome of the FTC’s goals is substantial financial savings 

to consumers through law enforcement actions to stop specific frauds and 

anticompetitive conduct or mergers. 

30 Performance and Accountability Report—Fiscal Year 2007 
The FTC has developed five long-term outcome performance measures directed 

at these law enforcement actions, as discussed below. Even so, the FTC strives 

to develop performance measures that directly support subsequently determining 

whether desired outcomes were achieved. For example, two new output measures 

(measures 1.4.3 and 2.4.3) were added in FY 2007 that count the number of 

advocacy comments filed by the agency. The FTC is looking to take the next step to 

measure the outcome of its advocacy, e.g., were proposed laws changed or abandoned 

in a way that benefitted or prevented harm to consumers and/or competition as 

a result of the FTC filing. Under its Consumer Protection goal, in addition to 

counting consumer complaints added to the FTC’s database, a new measure (measure 

1.1.3) was added to determine the percentage of agency’s consumer protection law 

enforcement actions that were responsive to the consumer complaint information 

gathered by the agency. Although this is another output measure, it brings the FTC 

closer to determining its role in the ultimate desired outcome of a marketplace free of 

fraud, deception, and unfair practices that cause consumer injury. 

In FY 2007, the FTC added two new outcome measures under its Maintain 

Competition goal. These two measures (2.2.2 and 2.2.4) seek to measure the consumer 

savings that result from merger and nonmerger enforcement. The FTC now measures 

its achievement of outcomes using five long-term performance measures: (1) the 

five-year consumer protection performance goal (measure 1.2.1) to save consumers 

approximately $2 billion through law enforcement actions stopping consumer fraud; 

(2) the five-year maintaining competition performance goal (measure 2.2.3) to take 

action against anticompetitive mergers in markets with a total of at least $125 billion 

in annual sales; (3) the five-year maintaining competition performance goal (measure 

2.2.5) to take law enforcement action against anticompetitive nonmerger conduct in 

markets with a total of at least $40 billion in annual sales; (4) the five-year maintaining 

competition performance goal (measure 2.2.2) to achieve at least $2.5 billion in 

savings for consumers through merger enforcement; and (5) the five-year maintaining 

competition performance goal (measure 2.2.4) to achieve at least $400 million in 

savings for consumers through nonmerger enforcement. These five performance 

measures, in addition to its annual outcome performance measures, provide valuable 

indicators on how the FTC is progressing towards achieving its strategic goals to protect 

consumers and maintain competition.

 Performance Section 31 
Verification and Validation of Performance Data 

T

he financial data and performance results described in this report enable the 

FTC to administer its programs, gauge their success, and make adjustments 

necessary to improve program quality for the public. In this regard, the FTC 

has taken the following steps to ensure the performance information it reports is 

complete, accurate, and consistent: 

◗ Developed a policy and documented the procedures used to validate and 

verify the quality, reliability, and credibility of the FTC’s performance results. 

◗ Held program managers accountable for the performance results reported in 

the Performance and Accountability Report and for taking specific steps to 

improve measures and set meaningful targets that challenge the agency to 

leverage its resources. 

◗ Worked with the FTC’s Office of Inspector General to ensure an independent 

review of the systems and methodologies used for collecting performance 

data and worked with senior economists from the Bureau of Economics who 

reviewed statistical data as appropriate. 

◗ Subjected Performance Measure results to periodic senior management and 

Commission review throughout the fiscal year. 

Automated systems and databases that collect, track and store performance data 

are monitored and maintained by FTC program managers, with systems support 

provided by the Information and Technology Management Office. Each system, 

such as the Consumer Information System, incorporates internal program edits 

to control the accuracy of supporting data. The edits, typically, evaluate data for 

reasonableness, consistency, and accuracy. Cross-checks between other internal 

automated systems also provide assurances of data reasonableness and consistency. In 

addition to internal monitoring of each system, experts outside of the business units 

routinely monitor the data collection methodology. The Financial Management 

Office is responsible for providing direction and support on data collection 

methodology and analysis, monitoring and ensuring that data quality checks are in 

place, and reporting performance management data. 

The FTC also uses results from financial statement audits to help verify and 

validate performance data. During the FY 2007 audit, various tests and reviews of 

the primary accounting system and internal controls, as required by Government 

Auditing Standards, were conducted. The Inspector General and auditors met with 

32 Performance and Accountability Report—Fiscal Year 2007 
mission program managers to review FY 2007 performance results and supporting 

data. In their FY 2007 report, the auditors reported no material weaknesses 

in internal controls or material compliance violations. The auditors issued an 

unqualified opinion on the agency’s FY 2007 financial statements. Additionally, 

the auditors reported that they had obtained an understanding of the design of 

significant internal controls relating to the existence and completeness assertions, 

with respect to the Performance Measures reported in the Management’s Discussion 

and Analysis and Performance sections.

 Performance Section 33 
Strategic Goal #1: Protect Consumers 

Prevent Fraud, Deception, and Unfair Business Practices in the Marketplace 

I. Strategic View 

As the nation’s premier consumer protection agency, a primary goal of the FTC is 

to protect consumers by preventing fraud, deception, and unfair business practices 

in the marketplace. The agency applies four related objectives to achieve this broadreaching goal: 

Objective 1.1 	 Identify fraud, deception, and unfair practices that cause the 

greatest consumer injury. 

The FTC identifies practices that cause consumer injury by analyzing the 

consumer complaint data collected in its Consumer Information System 

(CIS) database, holding public discussions, and monitoring the marketplace. 

Objective 1.2 	 Stop fraud, deception, unfairness, and other unlawful practices 

through law enforcement. 

The FTC uses information gathered under Objective 1.1 to target law 

enforcement efforts. Its law enforcement program aims to stop and deter 

fraud and deception, protect consumers’ privacy, and increase compliance 

with its consumer protection statutes. 

Objective 1.3 Prevent consumer injury through education. 

The FTC targets its education efforts to give consumers the information they 

need to protect themselves from injury and to explain to businesses how to 

comply with applicable laws. 

Objective 1.4 	 Enhance consumer welfare through research, reports, advocacy, 

and international cooperation and exchange. 

The FTC complements its law enforcement and education efforts by 

gathering, analyzing, and making public certain information concerning the 

nature of business practices in the marketplace. 

34 Performance and Accountability Report—Fiscal Year 2007 
II. Strategic Analysis 


Objective 1.1 	 Identify Fraud, Deception, and Unfair Practices That Cause 

the Greatest Consumer Injury 

Identifying the practices that cause the greatest consumer injury is the first step 

in preventing fraud, deception, and unfair business practices in the marketplace. 

Our Strategy 

To identify consumer protection problems, the FTC collects and analyzes data from 

many sources. Its Consumer Response Center receives consumer complaints and 

inquiries via a toll-free number (1-877-FTC-HELP), mail, and the Internet. Partners 

such as the National Fraud Information Center of the National Consumers League, 

the Internet Fraud Complaint Center (a partnership between the FBI and the 

National White Collar Crime Center), Better Business Bureaus, and PhoneBusters 

(the Canadian fraud database) also share the consumer complaint data they collect 

with the FTC. The FTC continues to pursue new international partnerships to 

increase its collection of information from consumer agencies in other countries. 

For example, through the econsumer website (www.econsumer.gov), the agency 

partners with other members of the International Consumer Protection Enforcement 

Network, an international group that identifies and shares information about 

worldwide consumer protection issues. 

All of this information is entered into the FTC’s CIS database and then 

analyzed by FTC staff to identify current trends and target fraudulent, deceptive, 

and unfair business practices. The agency shares the more than 4.1 million fraud 

and identity theft complaints that it has collected through FY 2007 with more 

than 1,650 other law enforcement agencies across the United States, Canada, and 

Australia via an encrypted website. Although the FTC does not act on behalf of 

individual consumers, the consumer complaint database enables the FTC and its 

law enforcement partners to spot trends, target the most serious consumer frauds, 

and coordinate their enforcement efforts. The ongoing input and analysis of current 

complaint data have allowed the FTC to move quickly to stop illegal practices before 

they cause more harm to consumers. 

Consumers can call the FTC’s second toll-free number, 1-877-ID-THEFT, or 

view its website (www.consumer.gov/idtheft/) to obtain information about, and 

 Performance Section 35 
report, identity theft. In FY 2007, the agency received over 335,000 identity theft 

complaints and inquiries. The FTC uses this data to spot patterns that can help 

criminal law enforcement agencies prosecute identity theft and help businesses avoid 

the financial consequences of this crime. Criminal cases are identified by the joint 

FTC and U.S. Secret Service Case Referral Program, and strong leads are referred to 

regional task forces, many led by the Secret Service Financial Crimes Division. In 

addition, the FTC’s Criminal Liaison Unit (CLU) identifies law enforcement agencies 

and case agents for referral of specific types of consumer fraud cases, educates 

criminal law enforcement authorities about the FTC and its mission, and coordinates 

training of FTC staff by criminal law enforcement authorities to help staff prepare 

cases for referral and ensure smooth progress of parallel prosecutions. 

The FTC, along with the Secret Service and the Department of Justice (DOJ), 

initiated a training program in 2002 to provide local and state law enforcement 

officers with practical tools to enhance combined efforts to combat identity theft, 

including information about accessing consumer complaint data. In FY 2007, the 

FTC and its partners, which now include the U.S. Postal Inspection Service, the 

American Association of Motor Vehicle Administrators, and the FBI, have conducted 

26 seminars, training more than 3,300 law enforcement officers from more than 

1,100 agencies. 

Performance Results 

The key Performance Measure under this objective measures the percent of agency 

consumer protection law enforcement actions that are responsive to the consumer 

complaint information gathered by the agency (Measure 1.1.3). This measure was 

added in the 2006–2011 Strategic Plan to take the FTC a step beyond counting the 

number of complaints to examining whether complaints collected are used to set the 

consumer protection agenda under this objective. 

Measure 1.1.1 under this objective requires that the FTC collect and enter 

complaints and inquiries into the consumer database. The large number of consumer 

complaints and inquiries added to the FTC’s database gives the agency a broad view 

of what reporting consumers are experiencing. The database allows the FTC and its 

law enforcement partners to identify and develop cases against operators engaging 

in deceptive and fraudulent practices that cause the greatest consumer injury. By 

analyzing consumer complaints, the FTC refined its enforcement and education 

36 Performance and Accountability Report—Fiscal Year 2007 
AnnuAl liSt of top ten conSumer complAintS for cAlendAr YeAr 2006 

% of Total 

Rank Top Categories 2006 Complaints 

1 Identity Theft 36% 

2 Shop-at-Home/Catalog Sales 7% 

3 Prizes/Sweepstakes and Lotteries 7% 

4 Internet Services and Computer Complaints 6% 

5 Internet Auctions 5% 

6 Foreign Money Offers 3% 

7 Advance-Fee Loans and Credit Protection/Repair 2% 

8 Magazines and Buyers Clubs 1% 

9 Telephone Services 1% 

10 Health Care 1% 

For the seventh year in a row, identity theft tops the list, accounting for 36 percent of the 674,354 complaints 

received between January 1 and December 31, 2006 (the latest data available). For more information go to 

www.ftc.gov/opa/2007/02/topcomplaints.shtm.

efforts to target the top consumer complaints. Not only did the FTC’s database help 

identify the most serious and commonly reported consumer protection problems, but 

it also quickly informed the agency of emerging scams so that the agency could move 

rapidly to stop consumer injury. 

In FY 2007, the FTC’s law enforcement and education efforts addressed the 

leading areas identified by the consumer complaint information gathered by the 

agency. Identity theft remained at the top of the list of consumer complaints in 

the FTC’s CIS database, and the agency continued to focus law enforcement and 

education efforts on this area. In co-chairing the Presidential Identity Theft Task 

Force, the FTC helped lead the development of the coordinated strategic plan to 

address ID theft, and implement the 31 major recommendations. 

The FTC also received more complaints about debt collectors than any other 

single industry. To address these complaints, the FTC engaged in aggressive law 

enforcement, bringing several cases involving debt collection this year. For example, 

in January 2007, the FTC charged a collection agency, Rawlins & Rivera, Inc., and 

its principals with falsely threatening and illegally harassing consumers to pay their 

debts. The FTC also alleged the defendants had improper communications with 

third parties about consumers’ debts, used abusive and obscene language in calls, 

and continued collection activities after receiving timely dispute letters from the 

 Performance Section 37 
consumers. In March 2007, the FTC obtained a preliminary injunction to halt the 

unlawful and abusive practices. In June 2007, at the request of the FTC, a federal 

court stopped an operation that allegedly victimized Spanish-speaking consumers 

nationwide by posing as debt collectors seeking payments consumers did not owe. 

The following Performance Measures ensure that the agency’s enforcement 

activities are targeted at areas of greatest consumer concern, thus making the agency 

responsive to consumer needs and changes in the marketplace and efficient in its 

consumer protection efforts. They also help ensure that the agency effectively 

leverages law enforcement resources by sharing this important information. 

performance measure 1.1.1 

Collect and enter complaints and inquiries into the consumer database. (Numbers shown in thousands.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

1,000 1,100 950 1,011 700 1,015 700 994 450 944 

Target Exceeded. To aid in assessing its effectiveness in identifying fraudulent and deceptive practices, the 

FTC measures the number of consumer complaints and inquiries added to its CIS database. The FTC added 

1,100 thousand entries into its database, 110 percent of the target of 1 million. 

Key measure: performance measure 1.1.3 

Determine the percentage of the agency’s consumer protection law enforcement actions that are 

responsive to the consumer complaint information gathered by the agency. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

50% 76% N/A N/A N/A N/A 

Target Exceeded. Seventy-six percent, or 42 out of 55, of the agency’s actions were responsive to the 

consumer complaint information. The agency considers its actions responsive if consumer complaints were 

used in developing law enforcement actions. 

Actual performance significantly exceeded the target of 50 percent. The target for this new Performance 

Measure was based on a 2006 estimated percentage. Based on the FY 2007 results, the target will be 

adjusted upward and monitored over the next few years to determine a target that best represents the 

optimum use of these complaints. 

38 Performance and Accountability Report—Fiscal Year 2007 
Objective 1.2 	 Stop Fraud, Deception, Unfairness, and Other Unlawful 

Practices Through Law Enforcement 

Once fraud, deception, and unfair business practices are identified in the 

marketplace, the FTC focuses its law enforcement efforts on areas where it 

can have the greatest impact for consumers. 

Our Strategy 

Through its law enforcement efforts, the FTC stops fraudulent, deceptive, and unfair 

practices by obtaining court-ordered injunctions against defendants. Enforcement 

efforts include cases covering a range of topics—from data security to spyware to 

fraudulent spam to deceptive lending practices and credit counseling services to 

misleading health claims. 

The FTC plays a vital role in protecting consumers’ privacy, emphasizing both 

enforcement and education. It focuses on telemarketing, spam, identity theft, 

spyware and unauthorized adware, and financial privacy, through enforcement of 

the CAN-SPAM Act, FACT Act, the Gramm-Leach-Bliley Safeguards Rule, the 

Telemarketing Sales Rule, and Section 5 of the FTC Act. 

With advances in technology, spammers, spyware operators, fraudulent 

telemarketers, and other scam artists can strike quickly on a global scale. An 

increasing number of complaints the FTC receives involve international transactions, 

and an increasing number of law enforcement investigations the FTC undertakes 

involve some international component. As a result, the FTC has implemented 

a comprehensive program to combat cross-border consumer protection law 

violations. The FTC continues to develop new bilateral and multilateral enforcement 

partnerships and to strengthen existing ones. 

In the nonfraud area, the FTC works to ensure compliance with the 

consumer protection statutes that it enforces. Given its broad jurisdiction and 

limited resources, it focuses on the most serious identified problems, using varied 

enforcement tools and encouraging self-regulation in appropriate situations. 

Performance Results 

Two Performance Measures fall under this objective. The key Performance Measure 

(Measure 1.2.1) is to save consumers more than $400 million by stopping fraudulent, 

 Performance Section 39 
nAtionAl do not cAll 

regiStrY 

The National Do Not Call Registry is 

open for business, putting consumers 

in charge of the telemarketing calls they 

get at home. The federal government 

created the national registry to make it 

easier and more efficient for consumers 

to stop getting telemarketing calls 

they don’t want. More than 150 

million telephone numbers have been 

registered since its inception in 2003. 


Consumers can register cell phone and 

home phones online at www.ftc.gov/ 

donotcall or call toll-free, 1-888-382-1222 


(TTY 1-866-290-4236), from the number 


they wish to register. Registration is free.


deceptive, and unfair practices in the marketplace. 

The second measure is new to the 2006–2011 Strategic 

Plan and requires the FTC to obtain 130 orders to 

stop fraudulent, deceptive, unfair, and other unlawful 

practices (Measure 1.2.5). 

These measures of the number of orders obtained 

and dollars saved are important ones. The FTC’s 

experience in most cases is that once it files a 

complaint in federal district court and obtains a court 

order, the defendants stop their practices. If they fail 

to comply to an order, they are subject to contempt 

proceedings. In stopping these practices, the agency 

directly stops further consumer losses caused by these 

defendants. By publicizing these law enforcement 

actions and distributing consumer education materials, 

it seeks to alert consumers to fraudulent and deceptive 

practices, educate them to avoid such practices in the 

future, and ultimately increase consumer confidence 

in the marketplace, while deterring similar behavior by


would-be violators.


40 Performance and Accountability Report—Fiscal Year 2007 
Key measure: performance measure 1.2.1

Stop economic injury to consumers each year through law enforcement. (Dollars shown in millions.)

2007 2006 2005 2004 2003

Target Actual Target Actual Target Actual Target Actual Target Actual

$400 $519 $400 $293 $400 $366 $400 $349 $400 $606

Target Exceeded. The FTC saved consumers $519 million, 130 percent of its annual target of $400 million. 

The agency estimates consumer savings by assessing the economic injury an entity caused with fraudulent, 

deceptive, or unfair trade practices. Staff use two ranges of economic injury: the 12 months prior to the 

FTC’s filing of a complaint and the economic injury for the life of the business. To make such assessments, 

staff use company sales and other records, as well as information from employees and customers 

where applicable. Certain cases, such as Do Not Call and spyware cases, indicate less easily quantifiable 

economic injury and so require the incorporation of lost consumer time in accordance with appropriate 

measurements. The two ranges provide uniform, quantifiable measures for calculating savings and also 

minimize speculation about the likely duration of the practices. Due to the variance of savings on an annual 

basis, this measure has a five-year target of $2 billion. 

2007 2006 2005 2004 2003

Target Actual Actual Actual Actual Actual

130 137 N/A N/A N/A N/A

Target Exceeded. The FTC obtained 137 orders, 105 percent of its target of 130 orders. 

Because this is the first year the FTC has measured the number of consumer protection orders obtained, all 

final orders, plus all orders approved by the Commission, are included in the results. 

 Performance Section 41
Objective 1.3 Prevent Consumer Injury Through Education 

An educated consumer and business community is a first line of defense 

against fraud and deception. 

Our Strategy 

The FTC is committed to using education and outreach as cost-effective methods to 

prevent consumer injury, increase business compliance, and leverage its law enforcement 

program. Virtually every consumer protection effort contains an educational 

component, from compliance Internet surfing and law enforcement sweeps to the 

announcement of new rules and regulations. Through FTC publications and websites, 

as well as external media, the agency reaches out to tens of millions of consumers and 

businesses every year on issues that directly impact their daily activities. 

The CIS database helps the FTC tailor its education efforts to topical areas where 

fraud, deception, unfair practices, and information gaps are causing the greatest injury. 

Through the FTC’s education efforts, consumers are given the tools they need to spot 

potentially fraudulent and other illegal promotions, and businesses are advised of how 

they can comply with the law. As with the agency’s law enforcement activities, more 

of its educational efforts now involve the Internet. Use of the Internet to disseminate 

information about fraud and technology-related matters plays an integral role in the 

FTC’s education, deterrence, and enforcement efforts, permitting the agency to reach 

vast numbers of consumers and businesses quickly, simply, and at low cost. 

The FTC coordinates with hundreds of private and public partners to provide 

information about specific campaigns, products, and services. It continues to manage 

the www.consumer.gov website, with more than 180 agencies participating, which 

offers one-stop access to federal consumer information. The www.consumer.gov 

website is linked to the interagency www.firstgov.gov website. 

To reach the growing population of Hispanic consumers in the United States, 

the FTC has expanded its Hispanic Outreach Program. The Spanish-language page, 

www.ftc.gov/ojo, on the FTC website continues to increase its library of translated 

consumer publications. 

Going forward, the FTC will continue to focus consumer and business education 

efforts on subjects identified by its consumer complaint databases where information 

gaps cause the greatest injury, and on those that address the emerging issues of the day. 

42 Performance and Accountability Report—Fiscal Year 2007 
The FTC will continue to use technology creatively, 

including new interactive media, to extend the reach 

of consumer and business education. 

Performance Results 

The FTC’s key Performance Measure under this 

objective gauges its impact by tracking the number of 

times print media publish articles that refer to FTC 

consumer protection activities and the circulation 

of media that publish those articles (Measure 1.3.4). 

This measure, added in the 2006–2011 Strategic Plan, 

takes a step beyond counting the number of hits on 

the FTC’s consumer protection web pages. 

The remaining three measures (Measures 1.3.1, 

1.3.2, and 1.3.3) help the FTC gauge the impact of its 

education efforts by tracking the number of consumer 

and business education publications it distributes to 

the public in response to consumer requests. These 

Performance Measures help ensure that the agency 

is engaging in a sufficient amount of educational 

activity and that the educational materials are aimed 

at particularly vulnerable populations. 

The FTC seeks to alert as many consumers as 

possible to the telltale signs of fraud, deception, and 

unfair business practices, and other critical consumer 

protection issues through dissemination of its 

education messages. Ideally, the agency would like to 

measure the extent to which its educational materials 

improve consumer understanding and help consumers 

get better value for their money. This effect would 

be extremely difficult to measure, but tracking the 

distribution of publications provides a rough idea 

of how many consumers the FTC is reaching. The 

measure of the number of publications distributed 

diSASter recoverY 

The FTC helps protect consumers against 

fraud, deception, and unfair practices 

during and after disasters, a time when 

consumers are particularly vulnerable. 

What you can do to prepare for 

emergencies: 

•	 Organize your finances 

•	 Check your insurance 

•	 Floodproof your home 

Remember that although you may have 

lost your belongings, you haven’t lost 

your good judgment. Visit the following 

sites for detailed tips and information to 

help you prepare for disasters: 

•	 Federal Emergency Management 

Agency’s Community and Family 

Preparedness Program 

www.fema.gov 

•	 American Red Cross Community 


Disaster Education 


www.redcross.org 


•	 FTC Disaster Recovery 

www.ftc.gov/bcp/edu/microsites/ 

recovery

 Performance Section 43 
by the FTC indicates its impact in educating consumers, although it does not fully 

capture the millions of FTC publications that are distributed to consumers by others. 

performance measure 1.3.1 

Track consumer protection messages accessed online or in print. (Numbers shown in millions.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

45 47 25 53 20 35.3 15 26.5 14 28 

Target Exceeded. The FTC accomplished 105 percent of its target of 45 million publications. 

Of the 47 million consumer protection messages accessed, 38 million were accessed online and nine million 

were print publications distributed by the FTC. While the number of print publications distributed has 

remained relatively static over the last decade, the number of publications accessed through the Internet 

soared as more consumers and businesses have gone online. 

performance measure 1.3.2 

Track consumer protection messages, related to identity theft, accessed online or in print. (Numbers shown 

in millions.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

8 9.6 3.3 9.4 3 3.7 2.5 3.7 2.5 3.0 

Target Exceeded. The FTC accomplished 121 percent of its target of eight million. As a subset of the 

totals tracked in Performance Measure 1.3.1, the FTC tracks the number of consumer protection messages 

related to the high-profile and emerging issues of data security and identity theft. The 9.6 million 

actual result includes 6.4 million messages accessed online, and more than 3.2 million print publications 

distributed, including 35,000 consumer education how-to kits to community members interested in giving 

presentations on identity theft. 

44 Performance and Accountability Report—Fiscal Year 2007 
performance measure 1.3.3 

Track consumer protection messages, in Spanish, accessed online or in print. (Numbers shown in thousands, 

unless otherwise noted.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

2.2 

million 

2.2 

million 550 2.4 million 500 1.1 million 400 737 N/A 458 

Target Met. The FTC accomplished 100 percent of its target of 2.2 million. 

Using this data, the FTC evaluated whether it needed to reach new audiences, in light of any changes in 

demographics, advertising, and marketing practices, and what strategies or partnerships may allow the FTC 

to reach those audiences. In light of continued consumer fraud against Hispanics, the FTC released a new 

bilingual compendium of information for the Spanish-speaking population and Hispanic organizations, and 

continues to assess the consumer information needs of that audience. 

Key measure: performance measure 1.3.4 

Track a) the number of times print media publish articles that refer to the FTC consumer protection activities 

and b) the circulation of media that publish those articles. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

Establish 

Baseline 

a) 3,066 

b) 863 million 

N/A N/A N/A N/A 

As this was a new measure in FY 2007, the actual results will be used to establish a baseline for the FY 2008 

target. The target will be refined as more data is collected in future years.

 Performance Section 45 
Objective 1.4	 Enhance Consumer Welfare Through Research, Reports, 

Advocacy, and International Cooperation and Exchange 

Research, reports, and advocacy complement law enforcement and education 

to enhance the welfare of consumers. 

Our Strategy 

This objective and its related Performance Measures are new additions to the FTC’s 

2006–2011 Strategic Plan. This objective was added to capture the FTC’s use of 

a variety of strategies in addition to law enforcement and education to enhance 

consumer welfare. Notably, the agency convenes conferences and workshops through 

which experts and other experienced and knowledgeable parties identify novel or 

challenging consumer protection issues and discuss ways to address those issues. 

The FTC also issues reports that the Congress has mandated or that the agency 

has prepared on its own initiative that analyze consumer protection problems and 

suggest public and private sector policies to address them, such as self-regulatory 

efforts. Further, the FTC files comments with federal and state government bodies 

advocating policies that promote the interests of consumers and highlight the role of 

consumer and empirical research in their decision making. In particular, the agency 

testifies before the Congress on consumer protection issues. 

The FTC also engages in a variety of international cooperation, exchange, and 

advocacy activities designed to promote market-based consumer protection policies 

and effective cross-border coordination. Finally, the FTC also files amicus briefs 

(friend of the court briefs) to aid courts’ considerations of important consumer 

protection issues. 

Going forward, the FTC will use the new Performance Measures under this 

objective to help ensure that it continues to augment its enforcement and education 

efforts by encouraging discussions among all interested parties, as well as careful 

study of and empirical research on novel or challenging consumer protection 

problems, such as green marketing and behavioral advertising. These activities will 

continue to enhance consumer welfare by guiding the FTC’s consumer protection 

policy decisions, as well as the decisions of other state, federal, and international 

policymakers. 

46 Performance and Accountability Report—Fiscal Year 2007 
Performance Results 

The key Performance Measure under this objective gauges the FTC’s efforts 

to enhance consumer welfare by tracking the number of workshops on novel 

or challenging consumer protection problems or issues in which it convenes or 

substantially participates in workshops and conferences on novel or challenging 

consumer protection problems or issues (Measure 1.4.1). The industry has given 

great weight to the FTC’s policy efforts. For example, the FTC has continued to 

encourage industry self-regulation in the area of childhood obesity. This summer, 

at an FTC workshop, leading food manufacturers released details of their pledges to 

voluntarily restrict their advertising to children under 12 and committed to limiting 

their advertising directed to children to food products that meet certain nutritional 

criteria or to refrain from advertising to children. Also, the companies committed 

to restricting their use of third-party licensed characters to products that meet these 

nutritional criteria and to websites promoting healthy lifestyles. The FTC also gauges 

the impact of its efforts to enhance consumer welfare by tracking the number of 

reports it issues on novel or challenging consumer protection issues (Measure 1.4.2) 

and tracking the number of public and advocacy comments it files with other federal 

and state government agencies (Measure 1.4.3). The agency tracks its international 

consumer protection efforts to cooperate with foreign government agencies on 

enforcement matters with cross-border components (Measure 1.4.4), and to provide 

consumer protection related policy or technical input related to foreign government 

agencies or international organizations (Measure 1.4.5). 

Key measure: performance measure 1.4.1 

Convene or participate substantially in workshops and conferences on novel or challenging consumer 

protection problems or issues. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

6 10 N/A N/A N/A N/A 

Target Exceeded. The FTC exceeded its target and convened or participated substantially in 10 workshops 

and conferences on novel or challenging consumer protection problems or issues. This is a new Performance 

Measure and the five-year target is 30 workshops. This target will be studied to determine if it needs to be 

reset for future years. 

 Performance Section 47 
performance measure 1.4.2 

Issue reports on novel or challenging consumer protection problems or issues. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

8 8 N/A N/A N/A N/A 

Target Met. The FTC accomplished 100 percent of its target of eight reports. This is a new Performance 

Measure and the five-year target is 40 reports. The target will be monitored to determine if it needs to be 

reset for future years. 

performance measure 1.4.3 

File public and advocacy comments with other federal and state government agencies. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

6 7 N/A N/A N/A N/A 

Target Exceeded. The FTC exceeded its target by filing seven public and advocacy comments. This is a 

new Performance Measure and the five-year target is 30 advocacy filings. The target will be monitored to 

determine if it needs to be reset for future years. 

performance measure 1.4.4 

Cooperate with foreign government agencies on enforcement matters with cross-border components. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

20 23 N/A N/A N/A N/A 

Target Exceeded. As this is a new Performance Measure, the target will be monitored to determine if it 

needs to be reset for future years. The five-year target is 100 government agencies, or 20 per year. 

48 Performance and Accountability Report—Fiscal Year 2007 
performance measure 1.4.5 

Provide consumer protection related policy or technical input related to foreign government agencies or 

international organizations. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

20 34 N/A N/A N/A N/A 

Target Exceeded. As this is a new Performance Measure, the target will be monitored to determine if it 

needs to be reset for future years. The five-year target is 100 instances, or 20 per year. 

Resources Utilized—Strategic Goal 1 

(Dollars Shown in Millions by Fiscal Year) 

2007 2006 2005 2004 2003 

Full-Time Equivalents 570 548 546 555 559 

Obligations $126 $116 $115 $105 $100 

Differences between these obligations and the Statement of Budgetary Resources are due 

to rounding. 

 Performance Section 49 
Strategic Goal #2: Maintain Competition 

Prevent Anticompetitive Mergers and Other Anticompetitive Business 

Practices in the Marketplace 

I. Strategic View 

A key function of the FTC is to protect and strengthen the free and open markets 

that are the cornerstone of a vibrant economy. Aggressive competition among sellers 

in an open marketplace gives consumers the benefit of lower prices, higher quality 

products and services, maximum choice, and innovation, leading to beneficial new 

products and services. The FTC seeks to promote vigorous competition by using the 

antitrust laws to prevent anticompetitive mergers and to stop business practices that 

diminish competition, such as agreements among competitors about prices or other 

aspects of competition (referred to as nonmerger enforcement). The agency applies 

four related objectives to achieve this broad-reaching goal. 

Objective 2.1 	 Identify anticompetitive mergers and practices that cause the 

greatest consumer injury. 

FTC Staff identify mergers and business practices that have resulted in or 

are likely to result in anticompetitive effects by conducting thorough factual 

investigations and applying economic analysis to distinguish between 

actions that threaten the operation of free markets and those that are benign 

or procompetitive. 

Objective 2.2 	 Stop anticompetitive mergers and business practices through 

law enforcement. 

When the FTC identifies a harmful or potentially harmful merger or business 

practice, it takes enforcement action under the antitrust laws to stop it, either 

through an administrative challenge or in federal court. In many instances, 

the agency is able to reach an agreement with the parties that remedies its 

competitive concerns and avoids litigation. 

50 Performance and Accountability Report—Fiscal Year 2007 
Objective 2.3 	 Prevent consumer injury through education. 

The FTC seeks to prevent anticompetitive activity by educating businesses 

and consumers about the antitrust laws and its efforts to ensure competitive 

markets. 

Objective 2.4 	 Enhance consumer welfare through research, reports, advocacy, 

and international cooperation and exchange. 

The FTC seeks to advance its maintaining competition mission and to 

enhance consumer welfare by gathering, analyzing, and making public 

certain information concerning the nature of competition as it affects 

U.S. commerce. 

II. Strategic Analysis 

Objective 2.1 	 Identify Anticompetitive Mergers and Practices That Cause 

the Greatest Consumer Injury 

Preventing anticompetitive mergers and anticompetitive business conduct 

is the first step in determining which mergers and business practices are 

anticompetitive. 

Our Strategy 

The FTC seeks to identify anticompetitive mergers and practices with as much 

accuracy as possible. While certain business conduct (such as price fixing among 

competitors) is clearly anticompetitive, mergers and many other forms of business 

conduct can benefit, harm, or have no effect on consumers. Consequently, both 

under- and over-enforcement can harm consumers’ interests. The agency seeks to 

take enforcement action against transactions or conduct that harms or is likely to 

harm consumers, but at the same time, avoid taking enforcement action that prevents 

businesses from completing transactions or engaging in practices that fundamentally 

benefit consumers or would have no effect. 

The FTC also tries to identify enforcement targets as efficiently as possible 

so that it can devote the bulk of its resources to further investigation of, and 

possible challenge to, the most problematic mergers and practices. A related, but 

 Performance Section 51 
important, consideration is to conduct the inquiry in a way that minimizes the cost 

or inconvenience to businesses, while still enabling the agency to gather sufficient 

information to support its enforcement decisions.

 Merger Activities. The premerger notification requirements of the Hart-ScottRodino (HSR) Act provide the FTC with an effective starting point for identifying 

potentially anticompetitive mergers, acquisitions, and joint ventures (collectively 

referred to as mergers) before they are consummated. The HSR Act requires 

energY 

In FY 2007, the Commission challenged 

three mergers in the energy industry: 

Western Refining’s acquisition of 

Giant Industries; the buyout of Kinder 

Morgan by its management and a 

group of investment firms, including 

The Carlyle Group and Riverstone 

Holdings; and Equitable Resources’ 

proposed acquisition of The Peoples 

Natural Gas Company. The litigated 

a preliminary injunction actions in 

federal district court to block the 

merger of Western and Giant, but the 

injunction was denied. In the case 

against Equitable and Dominion, the 

Third Circuit granted the injunction 

pending appeal. The Kinder Morgan 

matter was resolved with a consent 

order that makes Carlyle’s and 

Riverstone’s investments in Kinder 

Morgan passive investments. 

companies to report certain proposed mergers to the 

FTC and the DOJ (which jointly enforce the HSR Act) 

and wait for a specified period (usually 30 days) to allow 

for antitrust review. 

The FTC staff examines each transaction to 

determine whether it poses a threat to competition. 

In most cases a reasonable judgement can be made 

about whether the merger has the potential to be 

anticompetitive based on the materials filed with the 

HSR Act notification. A formal request for additional 

information may be requested by the FTC. This 

is referred to as a “second request.” Given that the 

HSR statute permits only one request for additional 

information, an investigation extended by the issuance 

of a second request typically requires a significant 

investment of FTC resources and the parties involved. 

Despite filing thresholds that are now adjusted 

annually for inflation, and some decline in merger 

activity from the historic peak levels reached during 

the late 1990s, the FTC continued to face a demanding 

merger review workload in FY 2007. Steady economic 

growth, together with the increased pace of mergers experienced in the past three 

fiscal years, indicates that merger activity remains on the rise. The agency received 

2,108 HSR filings, which represents a 21 percent increase compared with the same 

period in FY 2006. The dollar value of transactions increased by almost 50 percent 

while the number of second requests issued increased by approximately 10 percent 

from FY 2006 to FY 2007. 

52 Performance and Accountability Report—Fiscal Year 2007 
While the major HSR Act amendments in 2001 reduced the number of mergers 

subject to the advance reporting requirement, they did not change the standard of 

legality for mergers. The vast majority of potentially problematic mergers continue 

to be subject to the revised HSR filing requirements, but smaller merger transactions 

may still be anticompetitive. Consequently, the FTC continues to devote attention 

to the identification of unreported, usually consummated, mergers that could harm 

consumers. This effort involves monitoring the trade press, industry sources, and 

the Internet to stay informed of industry developments; following up on case leads 

from congressional offices, other Executive Branch agencies, and state and local 

governments; and encouraging consumers, businesses, and the bar to notify the FTC 

of possible anticompetitive mergers. 

Nonmerger Activities. In the nonmerger area, agency staff review complaints 

received from consumers, businesses, congressional offices, and elsewhere to identify 

potentially anticompetitive nonmerger business practices. In addition to responding 

to complaints, the FTC has pursued a “positive agenda” of planned initiatives; that 

is, the agency has taken a systematic and proactive approach to identifying specific 

conduct likely to pose the greatest threat to consumer welfare. Fundamentally, 

the focus continues to be on the types of practices, such as agreements among 

competitors, that are most likely to harm consumers. 

Other considerations include whether the relevant sector of the economy, such as 

health care, real estate, high technology, or energy, is one that has a significant impact 

on consumers’ daily lives. Also, the agency considers the deterrent effects of antitrust 

enforcement on businesses, and whether the FTC has enforcement experience in an 

area that will enable the agency to make an impact quickly and efficiently. Finally, 

consideration is given to whether the matter presents an opportunity to contribute 

positively to the development of antitrust law. 

Performance Results 

The two key Performance Measures under this objective relate to obtaining a positive 

outcome in at least 90 percent of HSR requests for additional information (Measure 

2.1.1) and to conclude at least 90 percent of significant nonmerger investigations 

(those with at least 150 hours of investigative effort) with a positive outcome 

(Measure 2.1.3). These two measures were added in the 2006–2011 Strategic Plan. 

 Performance Section 53 
Success on these two key outcome measures indicates that the FTC is effectively 

screening HSR reported mergers and nonmerger investigations to identify those 

that raise significant antitrust issues and warrant further investigation and possible 

enforcement action. 

The three remaining measures (2.1.4, 2.1.5, and 2.1.6) under this objective 

require that the FTC report detailed supplemental information on its merger and 

nonmerger activities. These measures are directly related to Measures 2.1.1 and 2.1.3 

and are intended to facilitate evaluation of the results. 

Key measure: performance measure 2.1.1 

Achieve positive outcomes in matters in which HSR requests for additional information are issued. 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

At least 

90% 100% 60–80% 59% 60–80% 52% 60–80% 55% 60–80% 70% 

Target Exceeded. The FTC obtained a positive outcome in 31 out of 31 second request investigations, or 

100 percent. The FTC obtained 12 consent orders, authorized staff to file three preliminary injunctions in 

federal court seeking to block mergers, raised anticompetitive concerns causing the parties to withdraw five 

transactions, and finally, closed 11 investigations without subsequent events indicating that the transaction 

injured competition. In each of the three cases where staff was authorized to file a preliminary injunction, 

the Commission also issued an administrative complaint; however, for measurement purposes these 

investigations are counted only once. 

For mergers, a positive outcome includes: 

•	 Commission authorization of a complaint for preliminary injunction in federal court 

•	 issuance of an administrative complaint 

•	 acceptance of a consent agreement 

•	 the parties’ voluntary abandonment or restructuring of a proposed transaction based on FTC antitrust 

concerns 

•	 closing of an investigation without subsequent events indicating that the transaction injured 

competition 

54 Performance and Accountability Report—Fiscal Year 2007 
Key measure: performance measure 2.1.3 

Percent of significant nonmerger investigations that result in a positive outcome. 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

At least 

90% 100% 60–80% 40% 60–80% 50% 60–80% 63% N/A N/A 

Target Exceeded. The FTC achieved a positive outcome in 28 out of 28 significant nonmerger 

investigations, or 100 percent. Specifically, the FTC obtained nine consent orders, issued two administrative 

complaints, and closed 17 significant nonmerger investigations without subsequent events indicating that 

the business practice injured competition. 

For nonmergers, a positive outcome includes: 

•	 Commission authorization to file a complaint in federal court 

•	 issuance of an administrative complaint 

•	 acceptance of a consent agreement 

•	 resolution of antitrust concerns without enforcement action 

•	 closing of an investigation without subsequent events indicating that the business practice injured 

competition 

performance measure 2.1.4 

Track the number of enforcement actions for the total mission, for the a) merger and b) nonmerger actions. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

Establish 

Baseline 

a) 22 

b) 11 N/A N/A N/A N/A 

This measure includes Commission authorization of a complaint for preliminary injunction or permanent 

relief in federal court, issuance of an administrative complaint, and acceptance of a consent agreement, and, 

for mergers, the parties’ voluntary abandonment or restructuring of a proposed transaction based on FTC 

antitrust concerns. 

The FTC obtained 22 merger enforcement actions and 11 nonmerger enforcement actions. In addition to 

the 12 merger consent agreements accepted for comment that are cited under measure 2.1.1, which tracks 

the positive outcomes of second request investigations, the FTC obtained two consent agreements, in nonHSR investigations during FY 2007. 

 Performance Section 55 
performance measure 2.1.5 

Report the number of a) second requests, b) reportable transactions for which premerger notifications 

were received, c) HSR investigations that resulted in enforcement action, d) transactions in which antitrust 

issues were resolved through voluntary abandonment or restructuring because of FTC concerns, and 

e) investigations closed because the evidence indicated that a competitive problem was unlikely. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

Establish 

Baseline 

a) 31 

b) 2,108 

c) 20 

d) 5 

e) 11 

N/A N/A N/A N/A 

This measure reports detailed supplemental information on FTC’s merger (key measure 2.1.1) and 

nonmerger activities (key measure 2.1.3), and is intended to facilitate evaluation of the results of those 

measures. 

performance measure 2.1.6 

Track the number of significant nonmerger investigations closed each year, a) with enforcement action and 

b) without enforcement action. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

Establish 

Baseline 

a) 11 

b) 17 N/A N/A N/A N/A 

This measure reports detailed supplemental information on FTC’s merger (key measure 2.1.1) and 

nonmerger (key measure 2.1.3) activities, and is intended to facilitate evaluation of the results of those 

measures. 

56 Performance and Accountability Report—Fiscal Year 2007 
Objective 2.2 	 Stop Anticompetitive Mergers and Business Practices 

Through Law Enforcement 

Law enforcement represents the most direct method by which the FTC 

pursues its goal of stopping mergers and business practices that significantly 

threaten competition and harm consumers. 

Our Strategy 

In both merger and nonmerger enforcement, the FTC focuses primarily on 

transactions or practices most likely to harm consumers, that is, mergers of firms 

competing in the same market or markets, and agreements 

among direct competitors. Other activities, such as 

unilateral action by a single firm, or a merger or agreement 

involving a supplier and customers or between a firm and 

a potential competitor, also may threaten competition and 

therefore are subject to FTC scrutiny. 	

Given the agency’s scarce resources and given that 	

the FTC and DOJ jointly enforce the antitrust laws, the 

FTC directs much of its attention and resources to certain 

segments of the economy that are particularly important to 

consumers and in which it has particular expertise. These 

include energy, health care, pharmaceuticals, real estate, 

and technology. 	

To stop potentially anticompetitive mergers and 	

practices through law enforcement, the FTC seeks 	

legal remedies under the antitrust laws, through federal 

court action, administrative proceedings, or negotiated 

settlements. For mergers, the preferred—that is, the most 

effective and cost-efficient—strategy has been to prevent 

anticompetitive mergers before they occur. The agency has implemented this strategy 

primarily through its authority to seek a federal court injunction preventing the 

transaction. 

In many cases, the merging parties elect not to defend a court challenge and 

instead agree to resolve competitive concerns through a consent agreement. This 

HeAltH cAre merger 

enforcement ActionS 

During FY 2007, the FTC challenged 

eight mergers in the health care 

products and services and medical 

device industries. In order for the 

transactions to proceed, the agency 

ordered the merging parties to 

divest assets that would have 

generated competitive problems or 

restructure their merger agreement 

to resolve the anticompetitive 

problems. These cases include: 

Barr/Pliva, Watson/Andrx, Hospira/ 

Mayne, Actavis/Abrika, Merck/ 

Mylan, Johnson & Johnson/Pfizer, 

Thermo Electron/Fisher Scientific, 

and Fresenius/American Renal 

Association.

 Performance Section 57 
approach is suitable when the competitive problem relates to only a portion of the 

transaction, such that a divestiture of assets will be sufficient to preserve or restore 

competition while allowing other competitively neutral or beneficial aspects of the 

merger to go forward. In other instances, the parties may abandon a transaction after 

assessing the likely outcome of an FTC court challenge. When a merger already has 

been consummated, the FTC generally relies on administrative litigation to restore 

competition lost as a result of the merger. 

In nonmerger matters, the FTC seeks to stop ongoing activity that harms 

competition. The Commission may initiate administrative proceedings before an 

Administrative Law Judge to adjudicate the issues and establish a basis for an order 

that the parties to the proceeding “cease and desist” the conduct. The FTC also 

has authority to seek relief in federal courts, though it historically has used this 

option sparingly in nonmerger matters. Again, the agency is often able to negotiate 

a consent agreement with the parties that remedies the problem without need for 

litigation. 

In both merger and nonmerger matters, thorough investigation, as well as 

sophisticated legal and economic analysis, are of critical importance to ensuring 

accurate assessment of the potential for competitive harm resulting from the 

transaction or conduct in question and, if necessary, demonstrating the likelihood of 

harm before an adjudicative body. When the FTC concludes that the likelihood of 

such harm indicates a law violation, and no settlement is possible, the Commission 

authorizes its staff to litigate the matter. 

The frequency with which the agency obtains positive outcomes is an important 

indicator of its success in producing tangible benefits for consumers. This is not 

to say that the FTC, or any law enforcement agency, should win every case. Some 

cases involve very close issues, on which reasonable minds can and do differ. Other 

cases may be very difficult from a litigation standpoint, but are still worth pursuing. 

All of the FTC’s antitrust challenges are defended by highly competent and wellfinanced counsel. 

In addition, the FTC’s responsibilities include taking action to help shape the 

development of the antitrust laws. To fulfill this duty, the agency inevitably must 

bring cases that pose litigation risks—especially where there is no clear precedent and 

the FTC is seeking to establish a new legal principle. The FTC also helps consumers 

by bringing cases to clarify, or improve upon, existing precedent. 

58 Performance and Accountability Report—Fiscal Year 2007 
The Commission issues complaints when, based on the findings of staff 

investigations, the Commission has “reason to believe” the merger or conduct is 

anticompetitive. The agency’s complaints are also founded

on sound policy considerations. However, the ultimate 

outcomes depend on legal determinations often made 

by courts following appeal of Commission decisions, as 

well as development of a full factual record. The FTC’s 

mission includes bringing cases that highlight difficult 

issues and seeking to persuade the courts of the merit 

of its views on what the law should be. Bringing cases 

that test the boundaries of the law is an important part 

of the FTC’s responsibilities, even though the results are 

far from certain. The target for this key Performance 

Measure reflects the reality that, even when the agency 

brings a meritorious case and litigates it well, success is not

assured. In addition, setting the standard too high could 

be detrimental if the effect were to deter the agency from 

bringing important, but risky, cases. 

Performance Results 

The key Performance Measure (Measure 2.2.1) under this objective tracks obtaining 

a positive result in matters in which it had reason to believe that a merger or a course 

of conduct was anticompetitive. 

Additionally, for both merger and nonmerger enforcement, the agency measures 

the volume of commerce and estimates consumer savings in markets in which 

it takes successful enforcement action as an indicator of the scope of the FTC’s 

antitrust enforcement activities. As noted in the FTC’s 2006–2011 Strategic Plan, 

external factors, such as level of merger activity, may cause the results to fluctuate 

significantly from year to year. Consequently, the two volume-of-commerce targets 

(Measures 2.2.2 and 2.2.3) and the two consumer savings targets (Measures 2.2.5 

and 2.2.6) are each expressed in terms of an aggregate target for the five-year 

strategic plan period, using annual targets as gauges of progress toward the five-year 

target. This is also a result of the fact that duration of nonmerger investigations is 

often measured in years. 

WHAt iS AntitruSt? 

The word “antitrust” dates from 

the late 1800s, when powerful 

companies dominated industries, 

working together as “trusts” to 

stifle competition. Thus, laws 

aimed at protecting competition 

have long been labeled “antitrust.” 

Fast forward to the 21st century: 

you hear “antitrust” in news stories 

about competitors merging or 

companies conspiring to reduce 

competition. The FTC enforces 

antitrust laws by challenging 

business practices that could hurt 

consumers by resulting in higher 

prices, lower quality, or fewer goods 

or services. 

 Performance Section 59 
In addition to measuring consumer savings in absolute terms, the strategic plan 

also establishes efficiency measures that state the FTC will try to save consumers 

more than the amount of agency resources allocated to the merger and nonmerger 

programs. 

Key measure: performance measure 2.2.1 

Positive outcome of cases brought by the FTC due to alleged violations. 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

At least Establish 100% 60–80% 100% 80% 95% 60–80% 100% 100% 80% Baseline 

Target Exceeded. The agency exceeded its target, achieving relief through litigation, reaching a successful 

settlement agreement, or persuading parties not to proceed with an anticompetitive acquisition in 33 out of 

33, or 100 percent, of enforcement matters brought to conclusion during the fiscal year. The FY 2007 actual 

results do not include cases that were not final as of September 30, 2007, or are on appeal. At the end of 

FY 2007, litigation was pending for one significant matter, and the decision of whether or not to continue 

litigation in two additional significant matters was pending. The outcomes of these three significant matters 

will be reflected in the actual results reported in appropriate future fiscal years. 

Positive results include: 

•	 the parties’ abandonment of an anticompetitive transaction after antitrust concerns are identified 

•	 an administrative consent agreement to resolve antitrust concerns 

•	 a successful challenge in court 

Negative results occurs when: 

•	 parties refuse to settle antitrust concerns raised by the agency 

•	 court action fails to achieve the agency’s objectives 

60 Performance and Accountability Report—Fiscal Year 2007 
performance measure 2.2.2 

Achieve savings for consumers through merger enforcement. (Dollars shown in millions.) 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

$500 $805 N/A N/A N/A N/A 

Target Exceeded. The five-year target for consumer savings in markets in which the agency took successful 

action to stop anticompetitive mergers is $2.5 billion, or $500 million per year. As in the case of the volumeof-commerce measure, 2.2.3 below, the FTC has surpassed the yearly target by a significant amount, saving 

consumers an estimated $805 million. If this trend continues to hold, the agency will exceed its five-year 

target, but yearly fluctuations in the level of enforcement activity and in the characteristics of the mergers 

investigated will ultimately determine the level of performance. During FY 2007, the agency also obtained 

an enforcement action in an abandoned merger transaction that produced an estimated consumer savings 

of $3.1 billion. The agency has not included this number in the FY 2007 actual value for measure 2.2.2 

because of the unique nature of the markets involved in this case, which are national in scope and involve a 

relevant product that relates to health care, one of the largest domestic industries. The majority of merger 

enforcement investigations involve more limited geographic markets or involve much smaller relevant 

product markets. Given the anomalous nature of this single case, the agency proposes to closely monitor its 

performance on this measure to determine if the target needs to be adjusted. 

performance measure 2.2.3 

Take action against mergers likely to harm competition in markets with a total of at least $125 billion in sales 

over a five-year period; $25 billion in sales each year. (Dollars shown in billions.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

$25 $42.6 $40 $13.4 $40 $61.8 $40 $8.5 N/A N/A 

Target Exceeded. The agency revised the target for this measure based on an analysis of historical trends 

in volume-of-commerce data from FY 1999 to FY 2006. The FTC’s merger enforcement actions affected 

markets in which the total volume of commerce was $42.6 billion. This means that the FTC has achieved 

approximately one-third of the total five-year target during the first of the five years covered by the strategic 

plan. As explained above for measure 2.2.2, this does not mean necessarily that the overall five-year target 

will be exceeded, because historically the volume of commerce figure has fluctuated considerably from year 

to year. During FY 2007 the agency obtained an enforcement action in an abandoned merger transaction 

that produced an estimated volume of commerce of $158 billion. As explained above, the agency has not 

included this number in the FY 2007 actual value for measure 2.2.3 because of the unique nature of the 

markets involved in this case, which are national in scope and involve a relevant product that relates to 

health care, one of the largest domestic industries. The majority of merger enforcement investigations 

involve more limited geographic markets or involve much smaller relevant product markets. Given the 

anomalous nature of this single case, the agency proposes to closely monitor its performance on this 

measure to determine if the target needs to be adjusted.

 Performance Section 61 
performance measure 2.2.4 

Achieve savings for consumers through nonmerger enforcement. (Dollars shown in millions.) 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

$80 $75 N/A N/A N/A N/A 

Target Not Met. The five-year target for consumer savings in markets in which the agency took successful 

action to stop anticompetitive conduct is $400 million, or $80 million per year. The FTC did not reach its 

yearly target, obtaining just over $75 million in estimated consumer savings in FY 2007, or approximately 95 

percent of the yearly target. As in the case of the three previous measures, this result cannot be assessed 

autonomously, but must be considered in the context of the broader five-year target. 

performance measure 2.2.5 

Take action against anticompetitive conduct in markets with a total of at least $40 billion in annual sales 

over a five-year period; $8 billion each year. (Dollars shown in billions.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

$8 $2.6 $20 $1.4 $20 $19.4 Establish 

baseline 

$2.6 N/A N/A 

62 Performance and Accountability Report—Fiscal Year 2007 

Target Not Met. The five-year target for the volume of commerce in markets benefitting from FTC 

nonmerger enforcement action is $40 billion, or $8 billion per year. The FTC’s nonmerger enforcement 

actions affected markets in which the total volume of commerce was $2.6 billion, approximately 33 percent 

of the yearly target. However, it is difficult to extrapolate from this single data point what the performance 

will be for the next four years that are covered by the current strategic plan. This is especially true if one 

considers the degree to which this measure has fluctuated in the recent past, going from $2.6 billion in FY 

2004 to $19 billion in FY 2005 and back down to $1.4 billion for FY 2006. 
performance measure 2.2.6 

Save consumers at least six times the amount of agency resources allocated to the merger program over a 

five-year period. (Efficiency Measure) 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

600% 2,500% N/A N/A N/A N/A 

Target Exceeded. The ratio of merger enforcement related consumer savings to resources allocated to the 

merger program was approximately 2,500 percent. As in the case of the previously mentioned measures 

2.2.2 and 2.2.3, the agency has far exceeded its yearly target and will likely exceed the five-year target as 

well, which is set at 600 percent. This result is determined by the presence of a single merger enforcement 

case involving a very large relevant product with a national geographic market. As in the case of measures 

2.2.2 and 2.2.3, the agency has not included in the calculation of this ratio the amount of estimated 

consumer savings associated with the abandoned transaction that produced the volume of commerce of 

$158 billion, and $3.9 billion dollars in estimated consumer savings. 

performance measure 2.2.7 

Save consumers at least four times the amount of agency resources allocated to the nonmerger 

enforcement program over a five-year period. (Efficiency Measure) 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

400% 424% N/A N/A N/A N/A 

Target Exceeded. The ratio of nonmerger enforcement related consumer savings to resources allocated 

to the nonmerger program was 424 percent. As in the case of the previously mentioned measures, since 

consumer savings is a five-year target, the FTC’s performance with regard to this measure also cannot be 

fully evaluated on the basis of a single year’s data. 

 Performance Section 63 
competition in 

tHe HeAltH cAre 

mArKetplAce 

Competition in health care 

markets benefits consumers 

because it helps contain 

costs, improve quality, and 

encourage innovation. The 

FTC’s job as a law enforcer is 

to stop firms from engaging in 

anticompetitive conduct that 

harms consumers. The agency 

also provides guidance to 

market participants—including 

physicians and other health 

professionals, hospitals and 

other institutional providers, 

pharmaceutical companies 

and other sellers of health care 

products, and insurers—to help 

them comply with the nation’s 

antitrust laws. 

Objective 2.3 Prevent Consumer Injury Through 

Education 

In addition to its law enforcement activity, the FTC provides 

substantial information to the business community and 

consumers about the role of the antitrust laws and businesses’ 

obligations under those laws. 

Our Strategy 

The FTC uses education and outreach to help prevent 

consumer injury, increase business compliance, and augment 

its law enforcement efforts. The agency pursues this strategy 

through guidance to the business community; outreach 

efforts to federal, state, and local agencies, business groups, 

and consumers; development and publication of antitrust 

guidelines, policy statements, and reports; and speeches 

and testimony. By using these mechanisms to signal its 

enforcement policies and priorities, the FTC deters would-be 

violators of the antitrust laws. 

FTC law enforcement efforts also are made more effective 

by public awareness of what types of conduct are likely to 

be challenged as law violations. The FTC seeks to make its 

law enforcement presence visible and its enforcement policies 

transparent in order to serve its objectives through deterrence. 

Each successful enforcement action not only promotes 

competition in one or more relevant markets, but also serves 

to communicate to the business and legal communities that the FTC can and will 

move successfully to challenge similar transactions or conduct in the future. The 

agency explains the relevant facts and issues of cases in which it obtains a consent 

agreement in press releases and in published “Analyses To Aid Public Comment” so 

the nature of the problem is clear. Through press releases about FTC actions and 

publication of related materials on the agency website, www.ftc.gov, the public facts 

underlying FTC actions provide bases for companies to evaluate the likelihood that 

other transactions would face challenge. 

64 Performance and Accountability Report—Fiscal Year 2007 
The FTC filed five new administrative complaints and continued to pursue five 

other administrative cases that have reached various stages of adjudication and appeal. 

Each of these cases may provide (or has provided) an opportunity for the FTC to set 

out in detail its analysis of important legal issues, and to have that analysis tested in the 

federal courts. Understanding fully the types of transactions or conduct the FTC is 

likely to challenge, and the reasons for the agency’s actions, greatly facilitates antitrust 

lawyers’ counseling of their clients and prevents many anticompetitive mergers from 

being proposed or anticompetitive practices from being implemented. 

In addition, the FTC educates the public through guidelines; congressional 

or other type of testimony (such as testimony to the U.S. Congress); conferences, 

hearings, and workshops (such as the energy markets conference or the hearings on 

Section 2 of the Sherman Act); advisory opinions (addressing issues such as clinical 

integration by physicians); and reports (such as the report on the competition policy 

and the real estate industry). 

As a complement to FTC enforcement activity, the agency also advises, when 

asked, other federal and state government officials about the possible effect that 

various regulatory proposals may have on competition. By providing economic 

analysis and other informed guidance, the FTC can help policymakers better 

understand the impact of their decisions in creating, maintaining, or forestalling 

competitive markets. The FTC has a long and distinguished history in this area. 

The FTC advocates market-based solutions through the publication of studies 

and reports, as well as participation in state and federal legislative and regulatory 

fora. The agency also participates as an amicus curiae (friend of the court) in 

judicial proceedings when substantial questions of antitrust law or competition 

policy are involved, especially when the FTC may add a different perspective to the 

deliberations because of its specialized knowledge or experience. 

Finally, in an increased effort to disseminate to a broader audience of consumers 

and businesses the message of why competition matters, in April 2007 the FTC 

released a brochure titled “Competition Counts: How Consumers Win When 

Businesses Compete.” This publication aims to educate consumers and business people 

on the important role of competition in providing them the most valuable mix of price, 

choice, and innovation. The FTC also released a Bureau of Competition User’s Guide 

and Internet mini-sites on health care, real estate, oil and gas, and technology. 

 Performance Section 65 
Helping conSumerS SAve 

moneY At tHe pump 

Important variables, such as how drivers 

fuel, drive, and maintain their cars, can 

offer increased fuel efficiency and save 

consumers money at the pump. In May 

2006, the FTC released a new website, 

www.ftc.gov/savegas, with a “bumperto-bumper” interactive guide and tips 

for consumers on what they can do to 

conserve gasoline. The FTC also released 

a consumer alert entitled “Saving Money 

at the Pump.” During the past year, the 

FTC released a series of columns at its 

mini-website, www.ftc.gov/ftc/oilgas/, 

summarizing current market conditions 

that may impact gas prices and the FTC’s 

role in petroleum industry enforcement. 

Performance Results 

The FTC uses two measures to assess its 

performance in preventing consumer injury through 

education. The key measure (Measure 2.3.5) 

tracks the number of external print media, such as 

newspapers, magazines, business and trade journals, 

and professional journals that publish articles 

that refer to FTC competition activities, and the 

circulation of the media that publish those articles. 

The second measure (Measure 2.3.2) tracks the 

volume of traffic on the FTC website on antitrustrelated pages that are relevant to policymakers, the 

business and legal communities, and the public at 

large. These measures are a “good indicator” of the 

flow of information provided to the public and are 

designed to keep abreast of the developments in the 

technology of information dissemination. 

Successful outreach and education efforts, as 

reflected by the above measures, will help consumers 

because increased knowledge and understanding 

of the antitrust laws will help businesses stay in 

compliance. These measures also will help ensure 

that the agency engages in consumer, business, and 

international education that advances the culture of competition, which enhances 

consumer welfare. 

The results of these two measures indicate a significant continued public interest 

in the FTC and its Maintain Competition Strategic Goal. In addition, the broad 

and increasing distribution of educational and policy materials through electronic 

channels represents important leveraging of the agency’s resources. These measures 

also help ensure that the agency engages in consumer, business, and international 

education that advances the culture of competition, which enhances consumer 

welfare. 

66 Performance and Accountability Report—Fiscal Year 2007 
performance measure 2.3.2 

Quantify the number of hits on antitrust information on the FTC’s website. (Numbers shown in millions.) 

2007 2006 2005 2004 2003 

Target Actual Target Actual Target Actual Target Actual Target Actual 

At least 

15 million 

15.7 10 10.6 10 9.8 Establish 

baseline 

11.0 N/A N/A 

Target Exceeded. Though the current strategic plan does not set a target for this measure, the FTC identified 

a provisional target by extrapolating from information acquired in the past three fiscal years. Historical data 

suggest that setting a target of at least 15 million visits may be appropriate. However, since rapid changes 

in technology and in the patterns of Internet utilization by the general population may render this target 

obsolete, the FTC will closely monitor this measure and, if necessary, make adjustments on a more frequent 

basis than envisioned by the five-year plan. 

Key measure: performance measure 2.3.5 

Track the a) number of times print media publish articles that refer to FTC competition activities and b) the 

circulation of the media that publish those articles. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

Establish 

Baseline 

a) 2,982 articles 

b) 635 million 

N/A N/A N/A N/A 

This measure tracks the number of external print media, such as newspapers, magazines, business and 

trade journals, and professional journals that publish articles that refer to FTC competition activities, and 

the circulation of the media that publish those articles. The print media that published articles covering 

the competition-related activities of the FTC encompasses publications with varying degrees of territorial 

distribution (from local to national) and with circulation ranging from less than 50 thousand to more than 

one million copies. 

 Performance Section 67 
Objective 2.4 	 Enhance Consumer Welfare Through Research, Reports, 

Advocacy, and International Cooperation and Exchange 

As a complement to its activities aimed at preventing 

consumer injury through education, the FTC provides 

substantial information to the business community 

and consumers about the role of the antitrust laws and 

businesses’ obligations under those laws. 

Our Strategy 

This objective and its related Performance Measures 

are new additions to the FTC’s Strategic Plan, as first 

set forth in the FTC’s 2006–2011 Strategic Plan. The 

FTC has unique jurisdiction to gather, analyze, and 

make public certain information concerning the nature 

of competition as it affects U.S. commerce. The FTC 

uses that authority to hold public hearings, convene 

conferences and workshops, conduct economic studies 

on competition issues of significant public importance, 

and issue reports of its findings. This authority 

advances the competition mission in numerous ways 

and is a fundamental component in the FTC’s strategy 

to enhance consumer welfare. 

The agency uses the information it develops 

internally to refine the theoretical framework for 

analyzing competition issues and the empirical 

understanding of industry practices, which contributes 

substantially to an effective response to changing 

marketplace conditions. The information gained 

through this authority, combined with the agency’s 

professional expertise on competition issues, also 

contributes to a better understanding of business 

practices and their competitive and economic 

implications by various entities, including the business sector, the legal community, 

other enforcement authorities, the judiciary, foreign competition agencies, and 

governmental decision makers and policymakers at the federal, state, and local levels. 

The FTC pursues its objective of enhancing consumer welfare by actively 

developing its international cooperation and exchange program. Staff regularly 

oil & gAS induStrY initiAtive 

www.ftc.gov/ftc/oilgas	

The FTC maintains competition in the 

petroleum industry, and has invoked all 

the powers at its disposal—including 

the investigation of possible antitrust 

violations, the prosecution of cases, the 

preparation of studies, and advocacy 

before other government agencies—to 

protect consumers from anticompetitive 

conduct and unfair or deceptive acts 

or practices in the industry. The FTC’s 

website describes its oversight of the 

petroleum industry, with special sections 

on its activities related to merger 

enforcement, anticompetitive nonmerger 

activity, and gasoline price data. It also 

features reports and economic working 

papers, congressional testimony, 

advocacy work, conference proceedings, 

and studies. Check it often for updates 

and information on new initiatives. 

68 Performance and Accountability Report—Fiscal Year 2007 
participate in dialogue with competition authorities of other countries and 

international organizations on transnational competition issues that affect 

American consumers and businesses and that promote sound consumer welfarebased competition policy. Part of this program includes participating in technical 

assistance missions to countries with new competition regimes. 

Performance Results 

The key measures used to gauge the FTC’s success under this objective are the ones 

relating to the publication of reports and studies on competition issues (Measure 

2.4.2), making advocacy filings (Measure 2.4.3), and international cooperation and 

exchange (Measure 2.4.7). 

These measures, in conjunction with the four additional measures (2.4.1, 2.4.4, 

2.4.5, and 2.4.6) specified under the enhancing consumer welfare objective, help 

to ensure that the agency is engaging in appropriate types and sufficient levels of 

research, reports, advocacy, and international cooperation and exchange and that 

they are relevant to consumers, policymakers, businesses, and the legal community. 

The Strategic Plan establishes the target for these measures by setting a minimum 

level of activity that the agency is expected to achieve. Thus, for example, in the 

case of Measure 2.4.1 the Plan states that the FTC shall “Convene, or participate 

substantively in, at least 20 workshops, conferences, seminars, and hearings involving 

significant competition-related issues over a five-year period.” As expressed in these 

terms, the Strategic Plan recognizes that these output measures relate to processes or 

events whose upper limit is not intrinsically defined, as is instead the case for other 

relative outcome measures for which the Plan states, for example, that the FTC shall 

achieve between 80 to 100 percent of a certain goal. 

performance measure 2.4.1 

Convene or participate substantially in workshops, conferences, seminars, and hearings involving significant 

competition-related issues. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

At least 4 7 N/A N/A N/A N/A 

Target Exceeded. The target is for the FTC to convene or participate substantially in at least 20 conferences, 

workshops, or hearings that are related to significant competition issues over a five-year period, or at least 

four per year. 

 Performance Section 69 
Key measure: performance measure 2.4.2 

Issue studies, reports, and working or issues papers on significant competition-related issues. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

At least 8 18 N/A N/A N/A N/A 

Target Exceeded. The target is for the FTC to issue at least 40 studies, reports, and working papers or issues 

papers on significant competition-related issues over a five-year period, which translates to at least eight 

such reports per year. The FTC issued a total of 12 staff reports, five working papers, and one issues paper 

on competition-related matters, thus meeting the target set by the strategic plan. 

Key measure: performance measure 2.4.3 

Make advocacy filings with other federal and state government agencies urging them to assess the 

competitive ramifications and costs and benefits to consumers of their policies. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

At least 6 11 N/A N/A N/A N/A 

Target Exceeded. The target is for the FTC to make at least 30 advocacy filings with other state and federal 

government agencies urging them to assess the competitive ramifications of their policies over a five-year 

period, or six per year. The FTC filed 11 advocacy filings, thus exceeding the yearly target of at least six filings. 

performance measure 2.4.4 

Issue advisory opinions to persons seeking agency review of proposed business actions. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

At least 2 to 3 2 N/A N/A N/A N/A 

Target Met. The target is for the FTC to issue at least 12 advisory opinions over the five-year period covered 

by the Strategic Plan, or at least two or three per year. The FTC responded to two requests for an advisory 

opinion from a physician independent practice association regarding integrative activities by the participating 

physicians, efficiencies related to the integration, and aspects of the association’s makeup and operations that 

related to the exercise of market power. Two limitations related to the FTC’s performance under this goal are: 

•	 First, the decision to issue advisory opinions is not entirely under the control of the Commission, as they 

are driven by requests made by private parties. 

•	 Second, the target is set over a five-year period and, thus, assessing performance at this early stage 

of the Plan may be premature. Changes in the regulatory framework of specific industries or new 

developments in the business models adopted by private parties may generate temporary or transitory 

spikes in requests for advisory opinions. 

70 Performance and Accountability Report—Fiscal Year 2007 
performance measure 2.4.5 

File amicus briefs with courts addressing competition-related issues. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

At least 

2 to 3 4 N/A N/A N/A N/A 

Target Exceeded. The target is for the FTC to file at least 12 amicus briefs with courts addressing 

competition-related issues in the five years covered by the Strategic Plan, or at least two to three per year. 

The FTC achieved significant advances in antitrust law, filing four amicus briefs, thus slightly exceeding the 

yearly quota of the five-year target. 

performance measure 2.4.6 

Track the volume of traffic on www.ftc.gov relating to competition research, reports, advocacy, and 

international cooperation and exchange. (Numbers in millions.) 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

At least 1.1 1.1 N/A N/A N/A N/A 

Target Met. This Performance Measure relates to the volume of traffic on FTC web pages that relate to 

research, reports, advocacy, and international cooperation. Though the Strategic Plan does not set a specific 

target for this measure, the FTC set a provisional target for each of the remaining years. In FY 2007, there 

were approximately 1.1 million visits that met the criteria of this measure. If the FTC continues to develop its 

activities in the area of research, advocacy, and international cooperation, it is plausible to assume that the 

target for the next four years should be set at a level that surpasses the current fiscal year results. 

 Performance Section 71 
Key measure: performance measure 2.4.7 

Track the a) number of cases on which the FTC cooperated with foreign competition authority, b) number 

of consultations with or comments to foreign competition authorities, c) number of written submissions on 

international fora, d) number of international events attended, and e) number of leadership positions held 

by FTC staff in international competition organization. 

2007 2006 2005 2004 2003 

Target Actual Actual Actual Actual Actual 

Establish 

baseline 

a) 61 d) 48 

b) 70 e) 8 

c) 19 

N/A N/A N/A N/A 

The third key measure under this objective relates to international cooperation and convergence in the 

field of competition enforcement and policy development. Specifically, the Strategic Plan states that 

the Commission shall track the number of cases on which FTC staff cooperated with foreign competition 

authorities, the number of consultations with or comments to foreign competition authorities, the number 

of written submissions to international fora, the number of international events attended, and the number 

of leadership positions held by FTC staff in international competition organizations. During FY 2007, the 

FTC staff cooperated with foreign competition authorities in 61 instances, provided 70 consultations or 

comments to foreign competition authorities, presented 19 submissions to international fora, attended 48 

international events, and held eight leadership positions in international organizations. 

Resources Utilized—Strategic Goal 2 

(Dollars Shown in Millions by Fiscal Year) 

2007 2006 2005 2004 2003 

Full-Time Equivalents 489 457 470 498 489 

Obligations $94 $86 $86 $83 $76 

Differences between these obligations and the Statement of Budgetary Resources are due 

to rounding. 

72 Performance and Accountability Report—Fiscal Year 2007 
Summary of Program Evaluations 

This section summarizes program evaluations conducted during FY 2007. The 

first three are independently-conducted evaluations and the remaining are those 

conducted internally by FTC staff. 

Independent Program Evaluations 

Program Assessment Rating Tool (PART) 

In FY 2007, the FTC received an Effective rating, the highest rating a program can 

achieve, on its first Office of Management and Budget (OMB) PART evaluation. 

OMB uses the PART to indicate how well a program is performing so the public 

can see how effectively tax dollars are being spent. According to OMB, programs 

rated Effective set ambitious goals, achieve results, are well-managed, and improve 

efficiency. Effective programs are categorized as “Performing” on ExpectMore. 

gov, a website developed by OMB and Federal agencies to assess the performance 

of every Federal program and hold themselves accountable for improvement. The 

FTC’s PART assessment can be found at www.whitehouse.gov/omb/expectmore/ 

summary/10003816.2006.html 

The OMB found that the FTC: 

◗ has developed meaningful Performance Measures and ambitious targets that 

will help to achieve its long term goals. The Performance Measures were 

developed to comply with the requirements of the Government Performance 

and Results Act and are included in the FTC Strategic Plan and the annual 

FTC Performance and Accountability Report. 

◗ coordinates effectively with its partners to ensure consistency and prevent 

redundancy in the enforcement of federal laws to protect consumers. For 

example, the program has a memorandum of understanding in place with the 

Antitrust Division of the Department of Justice to ensure that the programs 

do not overlap. 

◗ has good management practices. For example, the FTC has received eleven 

consecutive independent financial audit unqualified opinions, the highest 

audit opinion available.

 Performance Section 73 
OMB asks that an agency undertake actions to improve the performance of 

its program. In FY 2007, the FTC began to implement the program evaluations 

included in its FY 2006-2011 Strategic Plan. In addition, the FTC: 

◗ monitors, reviews, and updates its Performance Measures and targets to 

ensure meaningful and relevant data is available and used by managers to 

achieve the strategic goals of the agency. 

◗ works to ensure that program evaluations are comprehensive, conducted on a 

regular basis, and of sufficient scope to evaluate effectiveness and relevance of 

the program. 

◗ uses the FTC’s Bureau of Economics and Office of Policy Planning expertise 

in evaluations of certain of its cases and activities. 

◗ undergoes annual financial audits, which include tests of internal control and 

compliance with laws and regulations, conducted by independent auditors 

under contract to the OIG cooperates with the OIG on audits of various 

FTC mission and administrative activities throughout the fiscal year. 

◗ looks to evaluations of its programs and initiatives by outside groups for 

independent assessments of its activities. 

The Antitrust Modernization Commission 

After a three-year review of the U.S. antitrust laws, and the policies and practices 

of the FTC and the U.S. DOJ’s Antitrust Division, in April of 2007, the Antitrust 

Modernization Commission (AMC) presented a report to the President and Congress 

analyzing the current statutory framework and identifying ways in which antitrust 

enforcement can be improved. The AMC concluded that the current set of antitrust 

laws achieves the appropriate focus on fostering innovation, promoting competition 

and consumer welfare, rather than protecting competitors, and aggressively punishing 

criminal cartel activity. According to the report, moreover, the laws are sufficiently 

flexible as written to allow for their continued modernization as the world continues 

to change and our understanding of how markets operate continues to evolve 

through decisions by the courts and enforcement agencies. The AMC also concluded 

that U.S. antitrust policy has achieved an appropriate focus. 

The AMC made several recommendations for the antitrust agencies and among 

them are some broad objectives that the FTC also shares. For example, the FTC 

74 Performance and Accountability Report—Fiscal Year 2007 
and the Antitrust Division should, in their merger enforcement policy, (1) take 

appropriate account of the scope and scale that might be needed for a company 

to innovate; and (2) give full weight to merger-specific efficiencies. The agencies 

should engage in merger policy research such as studying any new emerging evidence 

pertaining to the relationship between concentration and market performance and do 

retrospective studies using performance data following earlier enforcement decisions 

to see whether the enforcement decision was the correct one. Finally, the agencies 

should be transparent in merger enforcement. 

Harris Interactive Poll 

According to a recent Harris Interactive Poll, the FTC’s National Do Not Call 

Registry continues to have great success. Just under three-quarters (72 percent) 

of Americans have registered their telephone numbers for the National Do Not 

Call Registry. Of those who have registered, very few people say they get as many 

telemarketing calls as before they signed up (6 percent) and only one percent say 

they get more than before they signed up. One in five (18 percent) report that they 

currently get no telemarketing calls with three in five (59 percent) reporting that they 

still get some, but far less than before they signed onto the Registry, and 14 percent 

saying they get some, but a little less than before they registered. 

Internally Conducted Program Evaluations 

Strategic Goal #1: Protect Consumers 

Objective 1.1	 Identify fraud, deception, and unfair practices that cause the 

greatest consumer injury. 

1. Assess whether the FTC’s law enforcement and education efforts are addressing 

the leading areas identified by the consumer complaint information gathered by 

the agency. 

The large number of consumer complaints and inquiries added to the FTC’s 

Consumer Information System (CIS) database in FY 2007 gave the agency a 

broad view of what consumers who report their complaints are experiencing. 

The database allowed the FTC and its law enforcement partners to identify and 

 Performance Section 75 
develop cases against fraudulent and deceptive operators that cause the greatest 

consumer injury. By analyzing consumer complaints, the FTC refined its enforcement and education efforts to target the top consumer complaints. Not only 

did the FTC’s database help identify the most serious and commonly reported 

consumer protection problems, but it also quickly informed the agency of 

emerging scams so that the agency could move rapidly to stop consumer injury. 

In FY 2007, the FTC’s law enforcement and education efforts addressed the 

leading areas identified by the consumer complaint information gathered by 

the agency. Identity theft remained on top of the list of consumer complaints 

in the FTC’s database, and the agency continued to focus law enforcement 

and education efforts on this area. For example, it unveiled a new business 

education guide on maintaining data security and released a new consumer 

education brochure on laptop security. In addition, the FTC received more 

complaints about debt collectors than any other single industry. To address these 

complaints, the FTC has engaged in aggressive law enforcement, bringing several 

cases involving debt collection this year. 

2.	 Review current functions, determine what changes or upgrades to the database 

would be helpful, and implement those changes. Assess security and integrity 

protections for the database and proposed enhancements to the database and 

evaluate the policies in place. 

In FY 2007, the FTC conducted a complete review of its CIS database as well 

as its secure website, Consumer Sentinel, that makes complaint information 

available to law enforcement agencies. As a result of that review, the agency 

concluded that both CIS and Sentinel needed to be redesigned and upgraded, 

primarily due to the age of the underlying infrastructure of the existing systems. 

As part of this system redesign, the agency is conducting a complete reassessment 

of the security and integrity protections of both CIS and Consumer Sentinel. 

In the interim, the FTC conducted an internal review of current policies and 

procedures involving Consumer Sentinel, particularly focused on the integrity 

of the personally identifiable information included in the database. As a result, 

the agency strengthened its procedures concerning access to and retention of the 

data. The FTC communicated those enhanced procedures to all of its Sentinel 

law enforcement members and posted those new procedures on the website. In 

76 Performance and Accountability Report—Fiscal Year 2007 
addition to strengthening security, the upgrade of systems will ensure easier 


navigation and improved reliability. This in turn will create an added incentive 


for a broader array of partners to enter information into and use the database. 


Objective 1.2	 Stop fraud, deception, unfairness, and other unlawful practices 

through law enforcement. 

1.	 Evaluate whether enforcement activities are tracking the areas of greatest concern 

and injury to consumers and whether there are new practices or technologies that 

require additional consumer protection law enforcement. 

In FY 2007, in response to marketplace developments, consumer protection 


management shifted resources and gave added priority to three areas: identity 


theft; lending and other credit practices, including unfair and deceptive 


practices in the subprime mortgage lending market; and the deployment of 


new technologies in the marketplace. The FTC brought cases involving each 


of these areas in FY 2007, and added staff time and resources in anticipation of 


continued, robust enforcement action in each of them. A workshop was planned 


in FY 2007, and held in October 2007, to provide information on a range of 


issues, including the effects of technological, economic, and legal changes on the 


debt collection industry and whether the Fair Debt Collection Practices Act and 


other laws have kept pace with the developments.


Objective 1.3	 Prevent consumer injury through education. 

1.	 Measure the number of education messages disseminated each year relating to 

high-profile or emerging issues where consumer and business education can help 

alleviate consumer injury. 

In FY 2007, the FTC measured the number of education messages disseminated 


relating to high-profile or emerging issues, such as data security and identity 


theft, where consumer and business education can help alleviate consumer 


injury. In FY 2007, the FTC distributed 9.6 million brochures and 35,000 


education kits to address identity theft. The agency also reviewed the focus of 


FTC education efforts and adjusted them based on changing consumer and 


business needs. During the FY 2007, the agency disseminated new or revised 


 Performance Section 77 
information covering a full range of subjects including gift cards, credit issues, 

buying or selling a home, data security and identity theft, and helping victims of 

the earthquake in Peru. 

2.	 Assess whether the appropriate mix of media is being used to communicate 

consumer education messages and whether the FTC is making the most efficient 

use of available media and technology. 

The FTC determined that an appropriate fix of media is being used to 

communicate consumer education messages. For example, in FY 2007, the 

FTC issued new electronic education tools such as a “teaser” website with tips 

on evaluating online health claims, a new website on information security, and 

new www.onguardonline.gov website modules on wireless and laptop security. 

The FTC also unveiled its new website this year, which is easier for consumers 

and businesses alike to navigate. Moreover, the FTC made innovative use of 

technology to gather information at its workshops. During its workshop on 

“Protecting Consumers in the Next Tech-ade,” the FTC developed “person on 

the street” interviews highlighting technology issues and conducted real-time 

polling of audience members. The FTC also updated its ability to webcast its 

conferences and workshops, using technology to enable online viewers to follow 

speakers and slide shows. For the first time, the FTC also began recording quotes 

from press releases that could be used by radio stations across the country to get 

the FTC’s messages to the public. 

3.	 Determine whether the FTC needs to reach new audiences, in light of any 

changes in demographics, advertising, and marketing practices, and what 

strategies or partnerships may allow the FTC to reach those audiences. Continue 

to assess the consumer information needs of the Spanish-speaking population. 

In FY 2007, the FTC evaluated its efforts and strategies to reach new audiences. 

In one case, this resulted in a partnership between the FTC and the Washington 

Metropolitan Area Transit Authority to place signs from the FTC’s identity theft 

campaign on the back of Metrobuses throughout DC, Virginia, and Maryland. 

Also, in light of continued consumer fraud against Hispanics, the FTC released a 

new bi-lingual compendium of information for the Spanish-speaking population 

and Hispanic organizations, and continues to assess the consumer information 

needs of that audience. 

78 Performance and Accountability Report—Fiscal Year 2007 
Objective 1.4	 Enhance consumer welfare through research, reports, advocacy, 

and international cooperation and exchange. 

1.	 Evaluate whether the FTC is filing comments or otherwise engaging in 

advocacy with state, federal, and foreign government bodies on consumer 

protection policies that will have a significant impact on consumers and whether 

the recipients of these comments give weight to the views expressed in these 

comments in making policy decisions that affect consumers. 

In FY 2007, the FTC’s advocacy comments continued to influence public policy. 


For example, the FTC staff submitted comments to the courts of the state of 


New York addressing proposed rules that would restrict attorney advertising. As 


originally drafted, the rules would have greatly restricted such advertising. In 


early January 2007, the court issued its revised rules, adopting nearly all of the 


recommendations made by the FTC staff. In addition, other federal agencies 


have recognized the FTC’s expertise in various policy issues and invited the 


FTC staff to participate in several interagency projects. Notably, the President 


asked the FTC’s Chairman Majoras to co-chair the President’s Identity Theft 


Task Force. The Task Force released its recommendations in April 2007, and the 


FTC staff continues to be an active voice in an interagency group charged with 


implementing the recommendations. In addition, the FTC was invited to be part 


of the Secretary of Education’s working group on student loans as well as a small 


working group convened by the Department of Defense (DOD) to work on a 


DOD rulemaking on military lending. 


2.	 Assess whether industry gives weight to the FTC’s evaluation, monitoring, and 

advocacy and whether market interests are affected. 

Industry has given great weight to the FTC’s policy efforts. For example, the 


FTC has continued to encourage industry self-regulation in the area of childhood 


obesity. In July 2007, at an FTC workshop, leading food manufacturers released 


details of their pledges to voluntarily restrict their advertising to children under 


12 and committed to limiting their advertising directed to children to food 


products that meet certain nutritional criteria or to refrain from advertising to 


children. Also, the companies committed to restricting their use of third-party 


licensed characters to products that meet these nutritional criteria and to websites 


promoting healthy lifestyles.


 Performance Section 79 
3.	 Determine whether statutory deadlines for reports required by Congress have 

been met. 

In FY 2007, the FTC determined that it had met its statutory deadlines. For 

example, the Energy Policy Act of 2005 required the agency to consider the 

effectiveness of its appliance labeling problem by August 8, 2007. The FTC did 

so, made some changes, and issued a final rule by the statutory deadline. 

Strategic Goal #2: Maintain Competition 

Objective 2.1	 Identify anticompetitive mergers and practices that cause the 

greatest consumer injury. 

1.	 Assess markets where investigations were closed without enforcement action, 

explore whether outcomes remain positive over time, and use this information to 

enhance the agency’s ability to predict likely competitive consequences in future 

investigations. 

In order to evaluate the extent to which markets may have been affected by 

investigations closed without an enforcement action and to explore whether 

outcomes remained positive over time, the agency reviews merger investigations 

that were closed after a significant investigation by agency staff. The purpose of 

this type of analysis is to determine whether staff’s predictions that the mergers 

would not have anticompetitive effects were accurate and to ascertain if there 

are sufficient grounds to change the characterization of a closed investigation 

from a positive to a negative outcome as specified by measures 2.1.1 and 2.1.3. 

Specifically, the agency reviewed the post merger markets in several closed 

investigations, looking at the level of market prices, the number of competitors in 

the market, and the quality of products. For the past fiscal year the agency did 

not identify any significant anticompetitive effects in these markets. 

2.	 Assess the burden imposed on merger parties by the Hart-Scott-Rodino (HSR) 

merger investigation process, explore ways of reducing that burden without 

compromising effectiveness of investigations, and explore methods of measuring 

HSR compliance burden. Assess the FTC’s efficiency in conducting antitrust 

investigations, explore ways to increase efficient use of investigatory resources 

80 Performance and Accountability Report—Fiscal Year 2007 
and reduce burdens on business, and explore whether efficiency in conducting 


investigations can more meaningfully be measured.


With regards to assessing the burden imposed on merger parties by the HSR 


investigation process, in FY 2007 the agency collected detailed data on key 


aspects of each investigation as an integral part of the Merger Review Process 


reforms announced in February of 2006. This process entails closely monitoring 


the type of burden placed on parties (if a voluntary information request was 


made, if a presumptive cap on the number of custodians searched was adopted, 


and if modifications to the second request were made), the amount and type 


of documentary evidence provided by parties (number of people for whom 


documents were submitted, number of boxes of documents received as well 


as an estimate of the Gigabyte equivalent of electronic documents), and the 


outcome of the process, that is for example, if the parties substantially complied 


and if the submission was produced on a rolling basis. Furthermore, in order 


to increase the efficient use of investigatory resources the agency has introduced 


new and innovative software solutions to facilitate the production of electronic 


documentary evidence.


Objective 2.2	 Stop anticompetitive mergers and business practices through 

law enforcement. 

1.	 Assess the scope of the FTC’s annual merger enforcement activities, as reflected by 

the volume of commerce in markets in which the agency took merger enforcement 

action. Determine whether the total volume of commerce in such markets is 

likely to reach $200 billion over the five-year strategic plan period and determine 

whether the level of consumer savings is likely to reach $4 billion. Compare the 

likely consumer welfare impact in these markets to the resources spent on the 

mission. 

Through its review process of merger enforcement actions and an analysis of the 


relevant economic data as it relates to Performance Measures 2.2.3 and 2.2.6, 


the agency is able to determine that the total volume of commerce in the markets 


affected by merger enforcement actions is likely to reach $200 billion in five years 


and that consumer savings is likely to reach $4 billion in the same period. 


 Performance Section 81 
2.	 Assess the scope of the FTC’s annual nonmerger enforcement activities, as 

reflected by the volume of commerce in markets in which the agency took 

nonmerger enforcement action. Determine whether the total volume of 

commerce in such markets is likely to reach $100 billion over the five-year 

strategic plan period and determine whether the level of consumer savings is 

likely to reach $1 billion. Compare the likely consumer welfare impact in these 

markets to the resources spent on the mission. 

Likewise, by analyzing the current fiscal year economic data for nonmerger 

enforcement actions, as specified under Performance Measures 2.2.4 and 2.2.5, 

the agency is able to estimate that the volume of commerce target of $100 billion 

and the consumer savings target of $1 billion is likely to be reached in five years. 

3.	 Assess qualitatively the deterrence value and precedential significance of the 

enforcement actions brought during each year. 

The agency assesses the qualitative deterrence value of its enforcement 

actions brought during each year primarily by ensuring that its decisions and 

enforcement policies are disseminated to the relevant target audiences (both 

general and industry-specific media and, when relevant, geographically-specific 

media) and by subsequently monitoring the extent to which the print media 

publishes articles that cover FTC antitrust actions (Performance Measure 2.3.5). 

Keeping track of the number of speeches and presentations done by agency 

representatives and analyzing the characteristics of the individual target groups 

allows the agency to further assess the potential deterrence affect of its decisions. 

4.	 Conduct periodic retrospective studies of past investigative and enforcement 

activity to determine the extent to which the FTC’s case selection process is 

accurately identifying matters that require FTC intervention. 

As mentioned under Objective 2.1 above, as part of a retrospective analysis 

initiated to assess the current case selection process, the agency began a review 

of recent merger investigations that were closed after a significant investigation 

by agency staff in order to determine whether staff’s predictions that the mergers 

would not have anticompetitive effects were accurate. The agency reviewed the 

post merger markets in several closed investigations, looking at the competitive 

dynamics of the affected markets. Additionally, in one industry, during FY 2007, 

82 Performance and Accountability Report—Fiscal Year 2007 
the agency held a public conference in which it conducted a historical review of 


the FTC’s actions in the grocery store industry, and surveyed current economic 


analysis of grocery and retail competition and recent work on new methods for 


analyzing grocery and retail competition.


5.	 Evaluate litigation performance for lessons that may be applicable to future 

litigation. 

During FY 2007 and FY 2008 the agency conducted and will complete an 


analysis of the FY 2007 completed litigation matters to develop and refine a set 


of best practices staff should adhere to in the course of litigation and to identify 


those processes that can be improved. The litigation staff involved with FY 


2007 cases prepared synopses of “lessons learned” from their cases, both as to 


trial processes/practices that should be adopted and retained to enhance litigation 


outcomes. Bureau management will continue to review these synopses and will 


develop Bureau-wide “best litigation practices” in FY 2008.


6.	 Review the results of major competition research initiatives to identify their 

usefulness in guiding FTC decisions and influencing other policymakers’ 

approaches to competition issues. 

The agency periodically conducts major competition-related research initiatives 


in specific industrial sectors (such as pharmaceuticals, energy markets, and real 


estate) or to analyze how certain provisions of the antitrust laws are interpreted and 


applied (e.g., Hearings on Section 2 of the Sherman Antitrust Act). One of the


primary goals of these initiatives is for the agency to further develop its competence 


in specific sectors of the economy and to initiate dialogue with the private sector, 


the Bar and other government agencies to clarify how the agency intends to 


interpret the antitrust laws. As an example, the agency conducted a real estate 


workshop in FY 2006 and subsequently initiated a series of investigation to assess 


the effects of specific types of conduct on competition and consumer welfare.


Objective 2.3 Prevent consumer injury through education. 

1.	 Evaluate what antitrust content on the FTC website generates the largest amount 

of public interest, and why, and use this information in setting future priorities.

 Performance Section 83 
In order to evaluate which antitrust content on the FTC website generates the 

largest amount of public interest the agency has initiated an analysis of web 

traffic to determine ways to better organize and present information to key 

consumer and business audiences. The analysis tries to identify current users of 

content-specific pages, and assess whether their information needs are being met 

with current offerings. One of the outcomes of this analysis has been to prepare 

individual “fact” sheets on specific topics based on questions or complaints that 

come in from consumers, businesses and the Congress. 

Objective 2.4	 Enhance consumer welfare through research, reports, advocacy, 

and international cooperation and exchange. 

1.	 Seek input from consumer groups, business groups, bar groups, international 

organizations, and others on the value of the agency’s research, reports, advocacy 

submissions, and international activities relating to the competition mission. 

The agency obtains input from its major stakeholders on the value of its reports, 

research, advocacy and international activities through a variety of means: the 

analysis of traffic on the competition-related web pages and tailoring of content 

to satisfy perceived demand; the active participation of private and public 

interest groups to workshops and hearings; the research into the effects of 

advocacy filings; and the filings of submissions on competition-related topics in 

international competition fora. 

2.	 Evaluate whether the FTC is filing comments or otherwise engaging in advocacy 

with state, federal, and foreign government bodies on competition policies that 

will have a significant impact on consumers and whether the recipients of these 

comments have given weight to the views expressed in these comments in making 

policy decisions that affect consumers. 

The agency’s experience and research indicate that policymakers often give 

weight to the FTC’s views, as expressed in its advocacy filings, and that they 

alter their final policy decisions accordingly. The results of a survey conducted 

with recipients of past advocacy filings shows that the majority of policymakers 

assessed the FTC’s comments as useful and stated that the agency’s comments 

affected the policy debate. Often the agency also receives informal feedback 

directly from the recipients of the advocacy filings. 

84 Performance and Accountability Report—Fiscal Year 2007 
Financial Section


85 
Message from the Chief Financial Officer 

iscal year (FY) 2007 was a year of significant 

accomplishment within the financial 

management arena for the FTC. I am pleased 

to report to the American taxpayers that the agency 

conducted its activities in protecting consumers and 

maintaining competition in a fiscally responsible 

manner. 

This report summarizes the agency’s overall 

performance relative to its Strategic Goals and 

Objectives and presents the financial results of 

operations for the fiscal year. The financial section 

that follows summarizes the FTC’s financial position 

as of September 30, 2007, and how financial resources were expended in achieving 

the performance results that are presented in the Performance Section. I am 

grateful to the Chairman, the Commissioners, and senior managers for promoting 

a culture of accountability throughout the agency and am proud of the dedication 

and outstanding efforts of the financial management staff who are diligent stewards 

of public resources. To highlight some key achievements in financial management, 

during FY 2007 the FTC: 

◗ Obtained an unqualified (clean) opinion on the agency’s consolidated 

financial statements for the eleventh consecutive year. Additionally, in their 

reports on Internal Controls and Compliance with Laws and Regulations, 

the auditors confirmed they found no material weaknesses, significant control 

deficiencies, or “non-conformances” with the Federal Managers’ Financial 

Integrity Act and other applicable laws and regulations. 

◗ Collected and returned over $41 million to victims of fraud and scams 

following successful prosecution with court-ordered judgments or settlements. 

◗ Made timely payments, per the Prompt Payment Act, for 99 percent of all 

invoices received from vendors. 

◗ Obtained a green rating from the Department of Treasury on the accuracy 

and timeliness of financial reporting practices involving Fund Balance with 

Treasury transactions. 

Steven A. Fisher 

Chief Financial Officer 

F

86 Performance and Accountability Report—Fiscal Year 2007 
◗ Increased the utilization rate of the agency’s automated travel management 

solution from 15 percent (at the beginning of the year) to an average of more 

than 50 percent of all agency travel transactions for the year. Each selfservice travel transaction that is completed using the automated system costs 

less than 25 percent of the full-service costs utilizing the FTC’s travel agent. 

◗ Exceeded the goal set by Public Law No. 108-183 to allocate a minimum 

of 3 percent of total contract dollars to companies owned and controlled by 

service-disabled veterans. 

◗ Strengthened controls and implemented recommendations from the Inspector 

General’s audit of the purchase card program. 

In FY 2007 the FTC partnered with the Department of the Interior’s National 

Business Center (NBC) to migrate from a legacy accounting system (hosted by the 

NBC) to a modern financial system. Together the FTC and the NBC achieved all 

planned milestones for migrating to the new application (certified by the Financial 

Systems Integration Office for its capability to meet mandatory system requirements). 

In October 2007, the FTC successfully transitioned to a new core financial system 

that will address challenges that the legacy system presented in keeping pace 

with technology. The new system will improve the degree of integration and the 

accessibility and availability of real-time financial information for use by agency 

managers. During FY 2008, the FTC plans to build on success in modernizing 

business systems by further integrating other modules (e.g., procurement) with the 

core financial system. 

Steven A. Fisher 

Chief Financial Officer 

November 14, 2007

 Financial Section 87 
Independent Auditor’s Report


88 Performance and Accountability Report—Fiscal Year 2007

 Financial Section 89 
90 Performance and Accountability Report—Fiscal Year 2007 
 Financial Section 91 
Principal Financial Statements


FEDERAL TRADE COMMISSION 

BALANCE SHEET 

As of September 30, 2007 and 2006 

(Dollars shown in thousands) 

Assets (Note 2): 

Intragovernmental: 

Fund balance with Treasury (Note 3) 

Accounts receivable, Net (Note 5) 

Total intragovernmental 

$ 

2007 

85,848 

23 

85,871 

$ 

2006 

70,139 

55 

70,194 

Cash and other monetary assets (Note 4) 

Accounts receivable, Net (Note 5) 

123,309 

125,185 

100,548 

136,968 

General property, plant, and equipment, net (Note 6) 11,655 14,400 

Total assets $ 346,020 $ 322,110 

Liabilities: 

Intragovernmental: 

Accounts payable 

Other (Note 8) 

Total intragovernmental 

$ 1,557 

4,616 

6,173 

$ 2,213 

20,096 

22,309 

Accounts payable 

Accrued redress receivables due to claimants 

Redress collected but not yet disbursed

Divestiture fund due

Other (Note 8)

Total liabilities (Note 7) 

$ 5,879 

123,974 

 80,180 

 44,570 

 12,641 

273,417 

$ 5,769 

130,513 

 59,267 

 43,054 

 12,063 

272,975 

Net position: 

Unexpanded appropriations —other funds 

Cumulative results of operations —other funds 

Total net position $ 

— 

72,603 

72,603 $ 

14 

49,121 

49,135 

Total liabilities and net position $ 346,020 $ 322,110 

The accompanying notes are an integral part of these statements. 

92 Performance and Accountability Report—Fiscal Year 2007 
FEDERAL TRADE COMMISSION


STATEMENT OF NET COST 

For the Years Ended September 30, 2007 and 2006 

(Dollars shown in thousands) 

Program costs 

Maintain Competition (MC) Strategic Goal: 

Gross costs 

Less: earned revenue 

Net program (revenue) costs (Note 11)

$

2007 

 97,916 

 (145,285)

 (47,369)

$

2006 

 88,275 

 (111,668) 

 (23,393) 

Consumer Protection (CP) Strategic Goal: 

Gross costs

Less: earned revenue 

Net program (revenue) costs (Note 11)

 126,662 

 (21,675)

 104,987 

 119,430 

 (21,776) 

 97,654 

Net cost of operations $ 57,618 $ 74,261 

The accompanying notes are an integral part of these statements.

 Financial Section 93 
FEDERAL TRADE COMMISSION 

STATEMENT OF CHANGES IN NET POSITION


For the Years Ended September 30, 2007 and 2006 

(Dollars shown in thousands) 

Cumulative Results of Operations: 

Beginning balance, adjusted $ 

2007 

49,121 $ 

2006 

50,936 

Budgetary Financing Sources: 

Appropriations used 

Less: Other—recission 

73,688 

— 

77,470 

12,000 

Other Financing Sources (Non-Exchange): 

Imputed financing 7,412 6,976 

Total financing sources

Less: Net cost of operations

Net change

 81,100 

 57,618 

 23,482 

 72,446 

74,261 

 (1,815) 

Cumulative Results of Operations 72,603 49,121 

Unexpended Appropriations: 

Beginning balance, adjusted 14 14 

Budgetary Financing Sources: 

Appropriations received

Less: Appropriations transferred out

Less: Other adjustments (recission)

Less: Appropriations used

 74,608 

 14 

 920 

 73,688 

 78,390 

— 

 920 

 77,470 

Total budgetary financing sources (14) — 

Total unexpended appropriations — 14 

Net position $ 72,603 $ 49,135 

The accompanying notes are an integral part of these statements. 

94 Performance and Accountability Report—Fiscal Year 2007 
FEDERAL TRADE COMMISSION 

STATEMENT OF BUDGETARY RESOURCES


For the Years Ended September 30, 2007 and 2006 

(Dollars shown in thousands) 

2007 2006 

Budgetary Resources: 

Unobligated balance, brought forward, October 1: $ 10,875 $ 13,926 

Recoveries of prior year unpaid obligations 8,299 1,043 

Budget authority 

Appropriation 74,608 78,390 

Spending authority from offsetting collections 

Earned 

Collected 166,992 133,475 

Change in receivables from federal sources (32) (32) 

Change in unfilled customer orders 

Without advance from federal sources 84 (167) 

Subtotal 241,652 211,666 

Nonexpenditure transfers, net, anticipated and actual (14) — 

Temporarily not available (28,561) — 

Permanently not available (920) (12,920) 

Total budgetary resources $ 231,331 $ 213,715 

Status of Budgetary Resources: 

Obligations incurred (Note 13) 

Direct 81,710 69,653 

Reimbursable 138,553 133,187 

Subtotal 220,263 202,840 

Unobligated balance 

Available 4,238 8,187 

Not available 6,830 2,688 

Total status of budgetary resources $ 231,331 $ 213,715 

Change in Obligated Balance: 

Obligated balance, net 

Unpaid obligations, brought forward, October 1 $ 47,250 $ 47,045 

Less: Uncollected customer payments from federal sources, 

brought forward, October 1 (201) (400) 

Total unpaid obligated balance, net 47,049 46,645 

Obligations incurred net 220,263 202,840 

Less: Gross outlays (214,399) (201,592) 

Less: Recoveries of prior year unpaid obligations, actual (8,299) (1,043) 

Change in uncollected customer payments from Federal sources (+/–) (52) 199 

Obligated balance, net, end of period 

Unpaid obligations 44,815 47,250 

Uncollected customer payments from federal sources (253) (201) 

Net Outlays 

Net outlays: 

Gross outlays 214,399 201,592 

Less: Offsetting collections (166,992) (133,475) 

Less: Distributed offsetting receipts (5,962) (10,021) 

Net outlays $ 41,445 $ 58,096 

The accompanying notes are an integral part of these statements.

 Financial Section 95 
FEDERAL TRADE COMMISSION 

STATEMENT OF CUSTODIAL ACTIVITY


For the Years Ended September 30, 2007 and 2006 

(Dollars shown in thousands) 

(Refer to Note 16) 

Revenue Activity: 

Sources of collections: 

Premerger filing fees (net of refunds) (a) 

Civil penalties and fines (b) 

Redress (c) 

Divestiture fund (d)

Funeral rule violations 

Court registry 

Total cash collections 

MC 

Strat Goal 

$ 144,561 

— 

— 

 1,516 

— 

— 

146,077 

CP 

Strat Goal 

$ — 

 5,562 

 71,748 

— 

 31 

 359 

 77,700 

$ 

2007 

144,561 

 5,562 

 71,748 

 1,516 

 31 

 359 

223,777 

$ 

2006 

110,913 

 20,458 

 37,283 

 970 

 170 

— 

169,794 

Accrual adjustments (e) 

Total custodial revenue 

— 

$ 146,077 

 (11,783)

$ 65,917 $ 

 (11,783)

211,994 $ 

 52,613 

222,407 

Disposition of Collections: 

Transferred to others: 

Treasury general fund 

Department of Justice 

Receivers (f) 

Redress to claimants (g) 

Contractor fees net of interest earned (h) 

Attorney fees 

Court registry 

— 

154,787 

— 

— 

— 

— 

— 

 11,436 

— 

3 

 41,304 

 3,826 

 19 

 199 

 11,436 

154,787 

3 

 41,304 

 3,826 

 19 

 199 

 29,402 

109,861 

7 

 14,367 

 905 

— 

 1,600 

(Increase)/decrease in amounts yet to be transferred 8,710 (9,130) (420) (66,265) 

Net Custodial Activity $ — $ — $ — $ — 

The accompanying notes are an integral part of these statements. 

96 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

Note 1—Summary of Significant Accounting Policies 

(a) Reporting Entity 

The Federal Trade Commission (FTC) is an independent United States (U.S.) 

government agency, established by the Federal Trade Commission Act of 1914. The 

FTC enforces a variety of federal antitrust and consumer protection laws. The agency 

is headed by five Commissioners, nominated by the President and confirmed by the 

Senate, each serving a seven-year term. The President chooses one Commissioner to act 

as Chairman. No more than three Commissioners can be of the same political party. 

The FTC has two Strategic Goals, maintain competition and consumer 

protection, which are supported by the Bureau of Competition (BC), the Bureau 

of Consumer Protection (BCP) and the Bureau of Economics (BE). Additionally, 

various offices provide mission support functions and services. 

The majority of FTC staff is located in Washington, DC; however, the FTC’s 

regions cover seven geographic areas. The regions work with the Bureaus of 

Competition and Consumer Protection to conduct investigations and litigation; 

provide advice to state and local officials on the competitive implications of proposed 

actions; recommend cases; provide local outreach services to consumers and business 

persons; and coordinate activities with local, state, and regional authorities. FTC 

regions frequently sponsor conferences for small businesses, local authorities, and 

consumer groups. 

The FTC seeks to ensure that the nation’s markets function competitively and are 

vigorous, efficient, and free of undue restrictions. The FTC also works to enhance 

the smooth operation of the marketplace, by eliminating acts or practices that are 

unfair or deceptive. 

(b) Fund Accounting Structure 

The FTC’s financial activities are accounted for using various funds (i.e., Treasury 

Account Symbols (TAS)). They include the TAS described below for which the FTC 

maintains financial records and consumer redress accounts for which the agency has 

management. 

 Financial Section 97 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

General Funds TAS 29X0100 consists of salaries and expense appropriation 

accounts used to fund agency operations and capital expenditures. 

Deposit Funds TAS 29X6013 consists of monies held temporarily by the FTC 

as an agent for others (e.g., redress funds). 

Suspense Funds TAS 29F3875 represent receipts awaiting proper classification, 

or held in escrow, until ownership is established and proper distributions can 

be made. 

Miscellaneous Receipt Accounts TAS 29 1040 and 29 3220 reflect civil 

penalties and other miscellaneous receipts that by law are not retained by the FTC. 

Cash balances are automatically transferred to the general fund of the Treasury at the 

end of each fiscal year. 

(c) Basis of Accounting and Presentation 

The financial statements present the financial position, net cost of operations, 

changes in net position, budgetary resources, and custodial activities of the FTC, 

in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and 

the Financial Reporting Requirements of the Office of Management and Budget 

(OMB) prescribed in OMB Circular A-136, Financial Reporting Requirements (as 

revised June 2007). They have been prepared from the books and records of the FTC 

and include the accounts of all funds under the control of the FTC. Accounting 

principles generally accepted in the United States encompass both accrual and 

budgetary transactions. Under the accrual method, revenues are recognized when 

earned and expenses are recognized when a liability is incurred, without regard to 

receipt or payment of cash. Budgetary accounting facilitates compliance with legal 

constraints and controls over the use of federal funds. The accompanying financial 

statements are prepared on the accrual basis of accounting. 

In addition, the accompanying statements include information on the activities 

of the agency’s consumer redress program. Independent agents are contracted to 

administer the program under the oversight of FTC program offices, which maintain 

the financial records for consumer redress activity. 

98 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

(d) Budget Authority 

The Congress passes appropriations annually that provide the FTC with authority 

to obligate funds for necessary expenses to carry out mandated program activities. 

These funds are available until expended, subject to OMB apportionment and to 

congressional restrictions on the expenditure of funds. Also, the FTC places internal 

restrictions on fund expenditures to ensure the efficient and proper use of all funds. 

Appropriated funding is derived from various revenues and financing sources. The 

Statement of Budgetary Resources reflects the single fund (e.g., TAS) for which 

the FTC has budget authority and therefore cannot be disaggregated further. The 

FTC’s deposit funds, suspense funds, and miscellaneous receipt funds do not provide 

budgetary resources for the FTC. 

(e) Fund Balances with the U.S. Treasury 

Fund balances with Treasury consist of appropriated funds that are available to pay 

current liabilities and to finance authorized purchase commitments, and restricted 

funds, which include deposit and suspense funds. The FTC’s fund balances with 

Treasury are carried forward until such time as goods or services are received and 

payment is made or until the funds are returned to the Treasury. Cash receipts and 

disbursements are processed by the Treasury, with the exception of (redress) funds 

received and subsequently distributed (in accordance with court orders) by FTC 

agents to claimants. 

(f) Accounts Receivable 

Accounts receivable consist of amounts due from other federal entities and from 

current and former employees and vendors. Non-entity accounts receivable include 

uncollected civil monetary penalties imposed as a result of the FTC’s enforcement 

activities and uncollected redress judgments. Because the FTC does not retain 

these receipts, a corresponding liability is also recorded for non-entity accounts 

receivable. Gross receivables are reduced to Net Realizable value by an allowance for 

uncollectible accounts. (See Note 5 Accounts Receivable.) 

 Financial Section 99 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

(g) Property and Equipment 

The basis for recording purchased general Property and Equipment (P&E) is full 

cost, including all costs incurred to bring the P&E to and from a location suitable for 

its intended use. The FTC’s P&E consists of equipment, leasehold improvements, 

and software. Leasehold improvements include all costs incurred during the design 

and construction phase of the improvement. These costs are amortized over the 

remaining life of the lease, or the useful life of the improvements, whichever is 

shorter. The FTC uses property owned by commercial vendors and the General 

Services Administration (GSA). Owners of commercial buildings charge rent based 

on rates negotiated by the GSA (on the FTC’s behalf). For GSA-owned property, 

the GSA charges the FTC a Standard Level Users Charge that approximates the 

commercial rental rates for similar properties. FTC policy is to capitalize all P&E 

with an initial cost greater than $100,000 and a useful life over two years. 

(h) Cash and Other Monetary Assets 

With the exception of cash held in consumer redress custodial accounts by the FTC’s 

contracted agents, the FTC does not maintain cash in commercial bank accounts. 

(See accompanying Statement of Custodial Activity.) 

(i) Accrued Liabilities and Accounts Payable 

Accrued Liabilities and Accounts Payable represents a probable future outflow or 

other sacrifices of resources as a result of past transactions or events. Liabilities 

are recognized when they are incurred, regardless of whether they are covered by 

budgetary resources. Liabilities cannot be liquidated without legislation that provides 

the resources to do so. Also, the government, acting in its sovereign capacity, can 

abrogate FTC liabilities (other than contracts). See Note 7 for information on 

“Liabilities Not Covered by Budgetary Resources” and Note 8 for information on 

“Other Liabilities.” 

100 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

(j) Employee Health Benefits and Life Insurance 

FTC employees are eligible to participate in the contributory Federal Employees Health 

Benefit Program (FEHBP) and the Federal Employees Group Life Insurance Program 

(FEGLIP). The FTC contributes a percentage to each program to pay for current benefits. 

(k) Post-Retirement Health Benefits and Life Insurance 

FTC employees eligible to participate in the FEHBP and the FEGLIP may continue to 

participate in these programs after their retirement. The Office of Personnel Management 

(OPM) has provided the FTC with certain cost factors that estimate the true cost of 

providing the post-retirement benefit to current employees. The FTC recognizes a current 

cost for these and Other Retirement Benefits (ORB) at the time the employee’s services 

are rendered. The ORB expense is financed by OPM, and offset by the FTC through 

the recognition of an imputed financing source on the Statement of Financing. During 

fiscal years 2007 and 2006, the cost factors relating to FEHBP were $5,572 and $5,229, 

respectively, per employee enrolled. During fiscal years 2007 and 2006, the cost factor 

relating to FEGLIP was 0.02 percent of basic pay per employee enrolled. 

(l) Employee Retirement Benefits 

FTC employees participate in either the Civil Service Retirement System (CSRS) or the 

Federal Employees Retirement System (FERS). Employees hired after December 31, 

1983, are covered by FERS and Social Security, while employees hired prior to January 

1, 1984, may elect to either join FERS or remain in CSRS. Approximately 17 percent 

of FTC employees participate in CSRS. For employees participating in CSRS, the 

FTC contributes 7 percent of the employee’s gross earnings to the CSRS Retirement 

and Disability Fund. For employees participating in FERS, the FTC contributes 

11.2 percent to the Federal Employees’ Retirement Fund. Employees participating in 

FERS are covered under the Federal Insurance Contributions Act (FICA) for which 

the FTC contributes a matching amount to the Social Security Administration. FTC 

contributions are recognized as current operating expenses. The Thrift Savings Plan 

(TSP) is a defined contribution retirement savings and investment plan for employees 

 Financial Section 101 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

covered by either CSRS or FERS. CSRS and FERS participating employees may 

contribute any dollar amount or percentage of basic salary to the TSP, not to exceed an 

annual dollar amount of $15,500, for 2007. CSRS participating employees do not receive 

a matching contribution from the FTC. For FERS employees, the FTC contributes 

1 percent of the employee’s gross pay to the TSP. The FTC also matches 100 percent 

of the first 3 percent contributed and 50 percent of the next 2 percent contributed. 

FTC contributions are recognized as current operating expenses. Although the FTC 

contributes a portion for pension benefits and makes the necessary payroll withholdings, 

it is not responsible for contribution refunds, employee’s retirement benefits, or the 

retirement plan assets. Therefore, the FTC financial statements do not report CSRS and 

FERS assets, accumulated plan benefits, or unfunded liabilities, if any, which may be 

applicable to employees. Such reporting is the responsibility of the OPM. 

However, the FTC recognizes the full cost of providing future pension benefits to 

covered employees at the time the employees’ services are rendered. OPM has provided the 

FTC with certain cost factors that estimate the true service cost of providing the pension 

benefits to covered employees. The cost factors used to arrive at the service cost are 25 

percent of basic pay for CSRS covered employees and 12 percent of basic pay for FERS 

covered employees during fiscal years 2007 and 2006. The pension expense recognized 

in the financial statements equals this service cost to covered employees less amounts 

contributed by these employees. If the pension expense exceeds the amount contributed 

by the FTC as employer, the excess is recognized as an imputed financing cost. The excess 

total pension expense over the amount contributed by the agency must be financed by 

OPM and is recognized as an imputed financing source, non-exchange revenue. 

Pension expenses in 2007 and 2006 consisted of the following: 

2007 Total 

Pension Expense 

2006 Total 

Pension Expense 

Civil Service Retirement System 

Federal Employees Retirement System 

Thrift Savings Plan 

$ 3,774 

9,617 

3,707 

$ 4,029 

8,548 

3,374 

Total $ 17,098 $ 15,951 

102 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

(m) Net Position 

The FTC’s net position is composed of the following: 

Unexpended appropriations include the amount of unobligated balances and 

undelivered orders. Unobligated balances are the amount of appropriations or other 

authority remaining after deducting the cumulative obligations from the amount 

available for obligation. 

Cumulative results of operations represent the net results of operations since 

inception, the cumulative amount of prior period adjustments, the remaining book 

value of capitalized assets, and future funding requirements. 

(n) Revenues and Other Financing Sources 

The FTC’s revenues are derived from spending authority from offsetting collections 

and from direct appropriation. Spending authority from offsetting collections 

is comprised of (1) amounts received for services performed under reimbursable 

agreements and (2) amounts received from collection of fees under the Hart-ScottRodino (HSR) Act and the National Do Not Call Registry. For amounts collected 

under reimbursable work performed, revenue is recognized (accrued) when services 

are performed. Relative to fees, revenues are recognized when fees are earned. (See 

Note 12.) 

In addition to exchange revenue, the FTC receives financing sources through 

direct appropriation from the general fund of the Treasury to support its operations. 

A financing source, appropriations used, is recognized to the extent these 

appropriated funds have been consumed. In fiscal years 2007 and 2006, the FTC 

received a financing source in the form of a direct appropriation that represented 

approximately one-third of total revenues and financing sources realized. 

(o) Methodology for Assigning Cost 

Total costs were allocated to each Strategic Goal based on two components: a) direct 

costs to each Strategic Goal and b) indirect costs based on the percentage of direct 

FTE used by each Strategic Goal. 

 Financial Section 103 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

(p) Use of Estimates 

The preparation of financial statements in conformity with generally accepted 

accounting principles (GAAP) requires management to make estimates and 

assumptions that affect the reported amounts of assets and liabilities at the date of the 

financial statements and the reported amounts of revenues and expenses during the 

reporting period. Actual results could differ from those estimates. 

Note 2—Non-Entity Assets 

The following summarizes Non-Entity Assets as of September 30, 2007 and 2006: 

2007 2006 

Intragovernmental: 

Fund balance with Treasury $ 1,656 $ 12,214 

Cash and other monetary assets (Note 4) 123,309 100,548 

Accounts receivable 125,185 136,968 

Total non-entity assets 250,150 249,730 

Total entity assets 95,870 72,380 

Total assets $ 346,020 $ 322,110 

Non-Entity Fund Balance with Treasury is comprised of undisbursed premerger 

filing fees and deposits held for the consumer redress program. Cash and Other 

Monetary Assets consist of amounts on deposit with FTC distribution agents and 

divestiture fund deposits. 

104 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

Note 3—Fund Balances with Treasury 

Fund balances with Treasury consisted of the following at September 30, 2007 

and 2006: 

2007 2006 

Fund Balances: 

Appropriated funds (general) $ 84,192 $ 57,925 

Suspense fund—undisbursed HSR filing fees 215 10,441 

Deposit funds—redress 1,441 1,773 

Total $ 85,848 $ 70,139 

Status of Fund Balance with Treasury: 

2007 2006 

Unobligated balance 

Available $ 4,238 $ 8,187 

Unavailable 6,830 2,688 

Temporarily not available pursuant to public law 28,561 — 

Obligated balance not yet disbursed 44,563 47,050 

Non-budgetary fund balance with Treasury 

Suspense fund—undisbursed HSR filing fees 215 10,441 

Deposit funds—redress 1,441 1,773 

Total $ 85,848 $ 70,139 

The Obligated Balance Not Yet Disbursed includes accounts payable and 

undelivered orders that have reduced unexpended appropriations but have not yet 

decreased the cash balance on hand. Temporarily Not Available pursuant to Public 

Law represents offsetting collections in excess of appropriated resources. 

Other Information Deposit and suspense funds stated above are not available 

to finance FTC activities and are classified as non-entity assets, and a corresponding 

liability is recorded. 

 Financial Section 105 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Note 4—Cash and Other Monetary Assets 

Cash and other monetary assets held as non-entity assets consist of redress judgment 

amounts on deposit with FTC’s distribution agents and divestiture fund deposits. A 

corresponding liability is recorded for these assets. 

Cash and other monetary assets consisted of the following as of September 30, 

2007 and 2006: 

2007 2006 

Other Monetary Assets 

Redress contractors $ 78,739 $ 57,494 

Divestiture fund 44,570 43,054 

Total other monetary assets $ 123,309 $ 100,548 

Note 5—Accounts Receivable 

Opening judgment receivable (consumer redress and civil penalties) balances reflect 

the Federal Accounting Standards Advisory Board (FASAB) standard for the 

recognition of losses using the collection criterion of “more likely than not.” This 

criterion results in receivable balances that are more conservatively stated than those 

valued by the private sector under GAAP. The Board states that it is appropriate to 

recognize the nature of federal receivables, which, unlike trade accounts of private 

firms or loans made by banks, are not created through credit screening procedures. 

Rather, these receivables arise because of the assessment of fines from regulatory 

violations. In these circumstances, historical experience and economic realities 

indicate that these types of claims are frequently not fully collectible. 

106 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

Accounts receivable consisted of the following as of September 30, 2007 and 2006: 

Entity Assets: 

Intragovernmental— 

Accounts receivable 

Currently Due 

$ 23 

Allowance 

$ — 

2007 Net 

$ 23 

2006 Net 

$ 55 

Non-entity assets: 

Consumer redress 

Civil penalties 

$ 780,121 

6,667 

$ 656,147 

5,456 

$ 123,974 

1,211 

$ 130,513 

6,455 

Total non-entity assets $ 786,788 $ 661,603 $ 125,185 $ 136,968 

Note 6—Property and Equipment, Net 

FTC policy is to capitalize all property and equipment with an initial cost greater 

than $100 and a useful life over two years. Such assets are depreciated using the 

straight-line method of depreciation with service lives range from five to 20 years. 

Additionally, internal use software development and acquisition costs of $100 or 

greater are capitalized as software development in progress until the development 

stage has been completed and the software successfully tested. Upon completion and 

testing, software development-in-progress costs are reclassified as internal use software 

costs and amortized using the straight-line method over the estimated useful life of 

three years. Purchased commercial software that does not meet the capitalization 

criteria is expensed. Capitalized property and equipment, net of accumulated 

depreciation, consisted of the following as of September 30, 2007 and 2006: 

Service Acquisition Accumulated 2007 Net 2006 Net 

Asset Class Life Value Depreciation Book Value Book Value 

Equipment 5–20 yrs $ 7,173 $ 5,702 $ 1,471 $ 2,419 

Leasehold improvements 10–15 yrs 7,338 1,810 5,528 4,492 

Software 3 yrs 13,206 9,550 3,656 3,059 

Software-in-development 

Total 

1,000 — 1,000 4,430 

$ 28,717 $ 17,062 $ 11,655 $ 14,400 

 Financial Section 107 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Depreciation expense was $4,957 and $3,905 for fiscal years ending September 

30, 2007 and 2006, respectively, and is contained in the accumulated depreciation. 

Note 7—Liabilities Not Covered by Budgetary Resources 

A breakout of Intragovernmental Liabilities and Liabilities with the Public not 

covered by budgetary resources as of September 30, 2007 and 2006 are shown below: 

(a) Intragovernmental and with the Public 

2007 2006 

Intragovernmental: 

Undisbursed premerger filing fees due to DOJ $ 215 $ 10,441 

Civil penalty collections due to Treasury 1,211 6,455 

FECA liability 2,356 2,400 

Total intragovernmental 3,782 19,296 

Unfunded leave 8,206 7,696 

With the public: 

Undisbursed redress 80,180 59,267 

Divestiture fund due 44,570 43,054 

Redress receivables accrued and due to claimants 123,974 130,513 

Total liabilities not covered by budgetary resources $ 260,712 $ 259,826 

Total liabilities covered by budgetary resources 12,705 13,149 

Total liabilities $ 273,417 $ 272,975 

108 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

(b) Other Information 

Undisbursed Premerger Filing Fees Liability represents undisbursed filing fees 

collected under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, 

which are due to the Department of Justice in a subsequent period. 

Civil Penalty Collections Due to Treasury represents the corresponding 

liability relative to accounts receivable due for civil monetary penalties, which will be 

transferred to the general fund of the Treasury upon receipt. 

FECA Liability consists of workers’ compensation claims payable to the 

Department of Labor (DOL), which will be funded in a future period, and an 

unfunded estimated liability for future workers’ compensation claims based on 

data provided from the DOL. Unfunded FECA liabilities for 2007 and 2006 were 

$391 and $390, respectively. The actuarial calculation is based on benefit payments 

made over the past 12 quarters, and calculates the annual average of payments. The 

actuarial FECA liabilities for 2007 and 2006 were $1,965 and $2,010, respectively. 

For medical expenses and compensation this average is then multiplied by the 

liability-to-benefit paid ratio for the whole FECA program. 

Unfunded Leave represents a liability for earned leave and is reduced when leave 

is taken. At year end, the balance in the accrued annual leave account is adjusted 

to reflect the liability at current pay rates and leave balances. Accrued annual leave 

is paid from future funding sources and, accordingly, is reflected as a liability not 

covered by budgetary resources. Sick and other leave is expensed as taken. 

Undisbursed Redress includes redress in the FTC’s Treasury deposit account, or 

with FTC redress agents. 

Divestiture Fund Due represents the contra account for the divestiture fund 

held by one of FTC’s redress agents until distribution of the funds are ordered per 

terms of the agreement. 

Redress Receivables Accrued and Due to Claimants represents the contra 

account for accounts receivable due from judgments obtained as a result of the 

agency’s consumer redress litigation. 

 Financial Section 109 
2007 Non- 2007 

Current Current 2007 Total 

Intragovernmental: 

FECA liability $ 2,356 $ — $ 2,356 

Civil penalty collections due to Treasury 104 1,107 1,211 

Accrued benefits — 834 834 

Undisbursed premerger liability — 215 215 

Total Intragovernmental 2,460 2,156 4,616 

Accrued leave — 8,206 8,206 

Accrued salary — 4,435 4,435 

Total other liabilities $ 2,460 $ 14,797 $ 17,257 

2006 Non- 2006 

Current Current 2006 Total 

Intragovernmental: 

FECA liability $ 2,400 $ — $ 2,400 

Civil penalty collections due to Treasury 0 6,455 6,455 

Accrued benefits — 800 800 

Undisbursed premerger liability — 10,441 10,441 

Total Intragovernmental 2,400 17,696 20,096 

Accrued leave — 7,696 7,696 

Accrued salary — 4,367 4,367 

Total other liabilities $ 2,400 $ 29,759 $ 32,159 

Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Note 8—Other Liabilities 

The following summarizes Other Liabilities as of September 30, 2007 and 2006: 

110 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

Note 9—Leases 

Leases of commercial property are made through and managed by the GSA. The 

Commission has leases on four government-owned properties and 10 commercial 

properties. The FTC’s current leases expire at various dates through 2017. Two 

leases provide for tenant improvement allowances totaling approximately $7,300 and 

provide that these costs be amortized over the length of the leases. Under the terms 

of the leases, the FTC agrees to reimburse the landlord for the principal balance 

of the unamortized portion of the tenant improvement allowance in the event the 

agency vacates the space before lease expiration. The FTC rents approximately 

562,679 square feet of space in both commercial and government-owned properties 

for use as offices, storage, and parking. All FTC leases are operating leases. 

Rent expenditures for the years ended September 30, 2007 and 2006, were 

approximately $17,412 and $17,583, respectively. 

Future minimum lease payments due under leases of government-owned property 

as of September 30, 2007, are as follows: 

Fiscal Year 

2008 $ 6,045 

2009 5,605 

2010 17 

2011 4 

2012 — 

Total Future Minimum Lease Payments $ 11,671 

Financial Section 1 11
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Future minimum lease payments under leases of commercial property due as of 

September 30, 2007, are as follows: 

Fiscal Year 

2008 

2009 

2010 

2011 

2012 

Thereafter 

$ 11,367 

11,422 

11,565 

11,716 

9,289 

1,460 

Total Future Minimum Lease Payments $ 56,819 

Note 10—Commitments and Contingencies 

Commitments The FTC is obligated for goods and services that have been ordered 

but not yet received (undelivered orders) at fiscal year end. Undelivered orders, net 

of unfilled customer orders from federal sources, were $31,400 and $33,956 as of 

September 30, 2007 and 2006, respectively. 

Contingencies The FTC is a party in various administrative proceedings, legal 

actions, and claims brought by or against it. In the opinion of FTC management 

and legal counsel, the ultimate resolution of these proceedings, actions, and claims, 

will not materially affect the financial position or the results of operation of the FTC. 

Note 11—Intragovernmental Costs and Exchange Revenues 

For “exchange revenue with the public,” the buyer of the goods or services is a nonfederal entity. For “intragovernmental costs,” the buyer and seller are both federal 

entities. If a federal entity purchases goods or services from another federal entity 

and sells them to the public, the exchange revenue would be classified as “with the 

public,” but the related costs would be classified as “intragovernmental.” The purpose 

112 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

of this classification is to enable the federal government to provide consolidated 

financial statements, and not to match public and intragovernmental revenue with 

costs that are incurred to produce public and intragovernmental revenue. 

Maintain Competition Strategic Goal: 

Intragovernmental gross costs 

Public costs 

Total Maintaining Competition Costs 

2007 

$ 24,449 

73,467 

97,916 

$ 

2006 

22,355 

65,920 

88,275 

Intragovernmental earned revenue 

Public earned revenue 

Total Maintaining Competition net earned revenue 

Maintaining Competition Net (revenue) Costs 

(723) 

(144,562) 

(145,285) 

(47,369) 

(755) 

(110,913) 

(111,668) 

(23,393) 

Consumer Protection Strategic Goal: 

Intragovernmental gross costs 

Public costs 

Total Consumer Protection Costs 

31,626 

95,036 

126,662 

30,244 

89,186 

119,430 

Intragovernmental earned revenue 

Public earned revenue 

Total Consumer Protection net earned revenue 

Consumer Protection Net (revenue) Costs 

(73) 

(21,602) 

(21,675) 

104,987 

(79) 

(21,697) 

(21,776) 

97,654 

Net Cost of Operations $ 57,618 $ 74,261 

Financial Section 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Note 12—Exchange Revenues 

Exchange revenues are earned through the collection of fees under the Hart-ScottRodino (HSR) Act. This Act, in part, requires the filing of premerger notifications 

with the FTC and the Antitrust Division of the Department of Justice (DOJ) 

and establishes a waiting period before certain acquisitions may be consummated. 

Mergers with transaction amounts over $50 million (adjusted annually based on the 

gross national product) require the acquiring party to pay a filing fee. The filing fees 

are based on the transaction amount and follow a three-tiered structure: $45, $125, 

and $280. The FTC retains one-half of the HSR premerger filing fees collected. 

Revenue is recognized when all required documentation under the HSR Act has been 

received by the agency. Fees not retained by the FTC are maintained in a suspense 

fund until transferred to the DOJ and not reported as revenue to the FTC. 

Exchange revenues are also earned through the collection of fees for the National 

Do Not Call Registry. This registry operates under Section 5 of the FTC Act, which 

enforces the Telemarketing Sales Rule (TSR). The Do Not Call Implementation Act, 

Public Law No. 108-010, gives the FTC authority to establish fees for fiscal years 

2003 through 2007 sufficient to offset the implementation and enforcement of the 

provisions relating to the Do Not Call Registry. Telemarketers are required to pay an 

annual subscription fee and download from the Do Not Call Registry database a list 

of telephone numbers of consumers who do not wish to receive calls. Fees are based 

on the number of area codes downloaded. The minimum charge was $56 dollars to 

download one area code. The maximum charge was $15,400 dollars for all area codes 

within the United States. Effective September 1, 2007, the new minimum charge is 

$62 dollars and the maximum charge is $17,050 dollars. Revenue is recognized when 

collected and the telemarketer is given access to download data from the Do Not Call 

database. Fees collected over total costs are retained for use in other FTC Strategic 

Goals. 

Exchange revenue is also earned for services provided to other government 

agencies through reimbursable agreements. The FTC recovers the full cost of 

services, primarily salaries and related expenses. Revenue is earned at the time the 

expenditures are incurred against the reimbursable order. All exchange revenues are 

deducted from the full cost of the FTC’s programs to arrive at net program cost. 

4 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements


For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

Exchange revenue consisted of the following: 

2007 2006 

HSR premerger filing feeds 

Do Not Call registry fees 

Reimbursable agreements 

$ 144,562 

21,602 

796 

$ 110,913 

21,697 

834 

Total $ 166,960 $ 133,444 

Note 13—Apportionment Categories of Obligations Incurred: 

Direct vs. Reimbursable Obligations 

Apportionment Categories of Obligations Incurred 

Obligations incurred reported on the Statement of Budgetary Resources in 2007 

and 2006 consisted of the following: 

Direct Obligations: 

Category A $ 

2007 

81,710 $ 

2006 

69,653 

Reimbursable Obligations: 

Category A 

Category B 

Total Reimbursable Obligations 

137,666 

887 

138,553 

132,610 

577 

133,187 

Total $ 220,263 $ 202,840 

Financial Section 115 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Note 14—Explanation of Differences Between the Statement 

of Budgetary Resources and the Budget of the United States 

Government 

There are no material differences between amounts reported in the Statement of 

Budgetary Resources and the actual amounts reported in the Budget of the United 

States Government. 

Note 15—Explanation of Differences Between Liabilities Not 

Covered by Budgetary Resources and Components Requiring or 

Generating Resources in Future Periods 

FECA Liability and Accrued Leave The changes in both of these balances 

between FY 2007 and FY 2006 are reflected as part of Components Requiring or 

Generating Resources in Future Periods on the Statement of Financing. The increase 

in Accrued Leave of $511 is included in the increase in the Annual Leave Liability 

line on the Statement of Financing, and the increase in FECA Liability of $44 is 

included in the “Other” line as part of the resources that fund future periods. 

Note 16—Custodial Activities 

The FTC functions in a custodial capacity with respect to revenue transferred or 

transferable to recipient government entities or the public. These amounts are not 

reported as revenue to the FTC. The major components of the FTC’s custodial 

activities are discussed below. For its custodial activities, FTC accrues accounts 

receivable and a corresponding liability when a judgment is received from courts or a 

settlement is reached. Administrative expenses are recognized when incurred. 

(a) Premerger Filing Fees 

All Hart-Scott-Rodino (HSR) premerger filing fees are collected by the FTC 

pursuant to section 605 of Public Law No. 101-162, as amended, and are divided 

116 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

evenly between the FTC and the DOJ. The collected amounts are then credited 

to the appropriations accounts of the two agencies (FTC’s “Salaries and Expenses” 

and DOJ’s “Salaries and Expenses, Antitrust Division”). During fiscal years 2007 

and 2006, FTC collected $289,122 and $221,825, respectively, in HSR fees. Total 

collections in the amount of $144,561 were retained for distribution, of which 

$144,561 of this collection was transferred to DOJ in 2007 and $100,633 in 2006. 

As of September 30, 2007, the undistributed collections remaining in the amount of 

$215 represent amounts to be transferred to DOJ in a future period. 

(b) Civil Penalties and Fines 

Civil penalties collected in connection with the settlement or litigation of the FTC’s 

administrative or federal court cases are collected by either the FTC or DOJ as 

provided for by law. The DOJ assesses a fee equivalent to 3 percent of amounts 

collected before remitting them to the FTC. The FTC then deposits these collections 

into the Treasury. Civil penalties collected also include amounts collected for 

undecided civil penalty cases held in suspense until final disposition of the case. 

(c) Redress 

The FTC obtains consumer redress in connection with the settlement or litigation of 

both its administrative and its federal court cases. The FTC attempts to distribute 

funds thus obtained to consumers whenever possible. If consumer redress is not 

practical, the funds are paid (disgorged) to the Treasury, or on occasion, other 

alternatives, such as consumer education, are explored. Major components of the 

program include eligibility determination, disbursing redress to claimants, and 

accounting for the disposition of these funds. Collections made against courtordered judgments totaled $71,748 and $37,283 during fiscal years 2007 and 2006, 

respectively. 

Financial Section 117 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

The sources of these collections are as follows: 

2007 2006 

Agents $ 22,761 $ 4,892 

Receivers 6,740 1,712 

FTC 

Total $ 

42,247 30,679 

71,748 $ 37,283 

(d) Divestiture Fund 

One judgment obtained by the FTC on behalf of its Maintain Competition Strategic 

Goal stipulates the divestiture of assets by the defendants into an interest-bearing 

account to be monitored by the agency. The account balance represents principal and 

related interest held in one of the FTC’s agent accounts as stipulated in the judgment. 

A corresponding liability is recorded. Net interest earned in fiscal year 2007 and 

2006, was $1,516 and $970 respectively. 

Divestiture Fund activity in fiscal years 2007 and 2006 consisted of the 

following: 

Beginning Balance $ 43,054 $ 42,084 

Interest 2,228 1,838 

Expense (712) (868) 

Net Total 1,516 970 

Ending Balance $ 44,570 $ 43,054 

2007 2006 

118 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

(e) Accrual Adjustments 

These adjustments represent the difference between the agency’s opening and closing 

accounts receivable balances. Accounts receivable are the funds owed to the agency 

(as a custodian) and ultimately to consumers or other entities. See Exhibit A for 

computation of accrual adjustments to the Statement of Custodial Activity. 

(f) Receivers 

Funds forwarded to receivers for distribution to consumers was $7 and $8 for fiscal 

years 2007 and 2006, respectively. 

(g) Redress to Claimants 

Redress to claimants consists of amounts distributed to consumers by the FTC, one 

of its contracted agents, the court appointed receiver, or the defendant. In FY 2007 a 

total of $41,304 was distributed to consumers: $34,564 was paid by the FTC and its 

contracted agents, and $6,740 was paid by receivers. In FY 2006, a total of $14,367 

was distributed to consumers: $12,655 was paid by the FTC and its contracted 

agents, and $1,712 was distributed by receivers. 

(h) Contractor Fees Net of Interest Earned 

Collections against monetary judgments are often deposited with one of the agency’s two 

redress agents until distributions to consumers occur. Funds are deposited in interestbearing accounts, and the interest earnings are used to fund administrative expenses. 

Agent expenses for the administration of redress activities and funds management 

amounted to $6,896 and $2,514 during the years ended September 30, 2007 and 2006, 

respectively. Interest earned was $3,070 and $1,608 during fiscal years 2007 and 2006, 

respectively, with the difference of $3,826 and $905 representing net expense. 

Financial Section 119 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

(i) Change in Liability Accounts 

Liability accounts contain funds that are in the custody of the agency or its agents, 

and are owed to others (consumers, receivers for fees, and/or the Department of 

Justice). See Exhibit B for the computation of liability account changes. 

(j) Current Year Judgments 

A judgment is a formal decision handed down by a court. Redress judgments 

include amounts that defendants have agreed, or are ordered, to pay for the purpose 

of making restitution to consumers deemed to have been harmed by the actions 

of the defendant(s) in the case. For purposes of presentation in Exhibit A, redress 

judgments include cases in which the FTC, or one of its agents, is directly involved 

in the collection or distribution of consumer redress. In fiscal years 2007 and 2006 

the agency obtained and reported in Exhibit A monetary redress judgments against 

defendants totaling $250,076 and $315,195, respectively. 

The FTC does not include in the presentation of Exhibit A current redress 

judgment cases in which the FTC, or one of its agents, is not directly involved 

with the collection or distribution of consumer redress. These are cases in which 

the defendant, or other third party, has been ordered to pay redress directly to the 

consumers. In most of these cases, the judgment has ordered redress in the form of 

refunds or credits. 

The agency also obtained civil penalty judgments of $5,943 and $27,360 in fiscal 

years 2007 and 2006, respectively. 

(k) Treasury Referrals and Prior Year Recoveries 

Monetary judgments six months or more past due are referred to the Treasury for 

follow-up collection efforts in keeping with the Debt Collection Improvement Act 

of 1996 (DCIA). Treasury’s Debt Management Services (DMS) administers the 

program, and deducts 18 percent from amounts ultimately collected for its fee. 

Collections, net of fees, are returned to the FTC for distribution either to consumers, 

in the form of redress, or to the general fund of the Treasury as disgorged amounts. 

120 Performance and Accountability Report—Fiscal Year 2007 
Notes to the Financial Statements


For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands)

In fiscal years 2007 and 2006, approximately $200 and $93 (net of fees) were 

collected by the DMS based on FTC referrals and are reported as collections on 

the Statement of Custodial Activity. The FTC refers to the DMS only those cases 

as defined in DCIA. This excludes cases that are in receivership, or bankruptcy 

or foreign debt. During 2007 and 2006, approximately $600 and $176,700 were 

referred to the DMS for collection. 

Prior year recoveries include amounts collected on cases that were written off in 

a previous year. In fiscal years 2007 and 2006, approximately $900 and $1,700 were 

collected. 

(l) Adjustments to the Allowance 

Adjustments to the allowance for redress, totaling $185,724, represent adjustments 

to the provision for uncollectible amounts. Adjustments to the allowance for civil 

penalty, totaling $5,456, represent adjustments to the provision for uncollectible 

amounts. 

Note 17—Undelivered Orders at the End of the Period 

The amount of budgetary resources obligated for undelivered orders at the end of 

September 30, 2007 and 2006, is $32,110 and $33,189, respectively. 

 Financial Section 121 
Notes to the Financial Statements 

For the Years Ended September 30, 2007 and 2006 

(All dollars are stated in thousands) 

Note 18—Reconciliation of Net Cost of Operations to Budget 

122 Performance and Accountability Report—Fiscal Year 2007 

2007 2006 

Resources Used to Finance Activities: 

Budgetary Resources Obligated 

Obligations incurred $ 220,263 $ 202,840

Less: Spending authority from offsetting collections and recoveries (175,344) (134,319) 

Obligations net of offsetting collections and recoveries 44,919 68,521

Other Resources 

Imputed financing from costs absorbed by others 7,412 6,977

Net other resources used to finance activities 7,412 6,977

Total resources used to finance activities 52,331 75,498

Resources Used to Finance Items Not Part of the Net Cost of Operations: 

Change in budgetary resources obligated for goods, services and benefits 

ordered but not yet provided 2,552 (2,057)

Resources that finance the acquisition of assets (2,495) (3,208)

Total resources used to finance items not part of the net cost of operations 57 (5,265)

Total resources used to finance the net cost of operations 52,388 70,233

Components of the Net Cost of Operations That Will Not Require or Generate 

Resources in the Current Period: 

Components Requiring or Generating Resources in Future Periods: 

Increase in annual leave liability 511 113 

Other 44 12 

Total components of Net Cost of Operations that will require or generate 

resources in future periods 555 125 

Components Not Requiring or Generating Resources: 

Depreciation and amortization 4,957 3,906

Losses on disposition of assets—other (282) — 

Total components of Net Cost of Operations that will not require or generate 

resources 4,675 3,906

Total components of Net Cost of Operations that will not require or generate 

resources in the current period 5,230 4,031

Net Cost of Operations $ 57,618 $ 74,264 
--------------CP Strat Goal-------------­

Civil Penalty Redress Subtotal CP 2007 Total 2006 Total

Part 1Judgments Receivable—

Net Beginning $ 6,455 $ 130,513 $ 136,968 $ 136,968 $ 84,355 

Add:

Current year judgments (

Note 16j) 5,943 250,076 256,019 256,019 342,555 

Prior year recoveries (

Note 16k) — 857 857 857 1,719 

Less:

Collections by F

TC/contractors/receivers (5,562) (71,748) (77,310) (77,310) (57,741) 

Collections by D

OJ for litigation fees/other (169) — (169) (169) (631) 

Less:

Adjustments to allowance (

Note 16 l) (5,456) (185,724) (191,180) (191,180) (233,289) 

judgments Receivable—

Net, Ending 

$ 1,211 $ 123,974 $ 125,185 $ 125,185 $ 136,968 

Part 2Judgments Receivable—

Net Ending $ 1,211 $ 123,974 $ 125,185 $ 125,185 $ 136,968 

Judgments Receivable—

Net Beginning 6,455 130,513 136,968 136,968 84,355 

Accrual Adjustment $ (5,244) $ (6,539) $ (11,783) $ (11,783) $ 52,613 

FEDERAL TRADE COMMISSION 

NOTES TO THE STATEMENT OF CUSTODIAL ACTIVITY 

ACCRUAL ADjUSTMENTS EXHIBIT A 

September 30, 2007 and 2006 

(Dollars shown in thousands) 

 Financial Section 123 
MC Strategic Goal CP Strategic Goal 

Civil Subtotal Civil 

Premerger 

Divestiture Penalty MC Penalty Redress Subtotal CP Total 

Liabilities @ 09/30/07 $ 215 $ 44,570 $ — $ 44,785 $ 1,211 $ 204,154 $ 205,365 $ 250,150 Liabilities @ 09/30/06 10,441 43,054 — 53,495 6,455 189,780 196,235 249,730 Change in Liability Accounts $ (10,226) $ 1,516 $ — $ (8,710) $ (5,244) $ 14,374 $ 9,130 $ 420 

MC Strategic Goal CP Strategic Goal 

Civil Subtotal Civil 

Premerger 

Divestiture Penalty MC Penalty Redress Subtotal CP Total 

Liabilities @ 09/30/06 $ 10,441 $ 43,054 $ — $ 53,495 $ 6,455 $ 189,780 $ 196,235 $ 249,730 Liabilities @ 09/30/05 9,389 42,084 — 51,473 332 131,660 131,992 183,465 

Change in Liability Accounts $ 1,052 $ 970 $ — $ 2,022 $ 6,123 $ 58,120 $ 64,243 $ 66,265 

FEDERAL TRADE COMMISSION 

NOTES TO THE STATEMENT OF CUSTODIAL ACTIVITY 

CHANGE IN LIABILITY EXHIBIT B 

September 30, 2007 and 2006 

(Dollars shown in thousands) 

124 Performance and Accountability Report—Fiscal Year 2007 
Other Accompanying Information 

Inspector General-Identified Management Challenges

 Financial Section 125

126 Performance and Accountability Report—Fiscal Year 2007 
 Financial Section 127 
Management’s Responses to IG Challenges


128 Performance and Accountability Report—Fiscal Year 2007

 Financial Section 129 

Appendix A


131

Appendix A: Performance Measures Comparison 


E

ffective FY 2007, the FTC is operating with an updated performance 

framework that better defines and measures its activities. This appendix 

shows how the Performance Measures used to gauge success this fiscal year 

compare to those reported on in FY 2006. 

Goal 1—Protect Customers 

Objective 1.1	 Identify Fraud, Deception, and Unfair Practices That Cause 

the Greatest Consumer Injury 

Performance 

Measure Text Explanation 

1.1.1 Collect and enter complaints and inquiries into the 

consumer database. No change 

1.1.2 

Annual number of consumer complaints and 

inquiries related to identity theft entered into 

database. 

Not in effect in FY 

2007 

1.1.3 

KEY MEASURE: Determine the percentage of the 

agency’s consumer protection law enforcement 

actions that are responsive to the consumer 

complaint information gathered by the agency. 

New for FY 2007 

Objective 1.2 Stop Fraud, Deception, Unfairness, and Other Unlawful 

Practices Through Law Enforcement 

Performance 

Measure Text Explanation 

1.2.1 KEY MEASURE: Stop economic injury to 

consumers each year through law enforcement. No change 

1.2.2 Total expenditures of deceptive or unfair 

advertising campaigns stopped. 

Not in effect in FY 

2007 (Removed 

prior to FY 2006 but 

included in this table 

to show a complete 

sequence) 

1.2.3 

Number of data searches conducted by FTC and 

law enforcement personnel of the FTC’s Consumer 

Sentinel database. 

Not in effect in FY 

2007 

1.2.4 

Number of data searches conducted by law 

enforcement personnel of the FTC’s identity theft 

database. 

Not in effect in FY 

2007 

132 Performance and Accountability Report—Fiscal Year 2007 
Performance 

Measure Text Explanation 

1.2.5 Stop fraudulent and deceptive practices by 

obtaining orders. New for FY 2007 

Objective 1.3 Prevent Consumer Injury Through Education 

Performance 

Measure Text Explanation 

1.3.1 Track consumer protection messages accessed 

online or in print. No change 

1.3.2 Track consumer protection messages, related to 

identity theft, accessed online or in print. No change 

1.3.3 Track consumer protection messages, in Spanish, 

accessed online or in print. No change 

1.3.4 

KEY MEASURE: Track a) the number of times 

print media publish articles that refer to the 

FTC consumer protection activities and b) the 

circulation of media that publish those articles. 

New for FY 2007 

NEW FOR FY 2007


Objective 1.4 Enhance Consumer Welfare Through Research, Reports, 


Advocacy, and International Cooperation and Exchange 

Performance 

Measure Text Explanation 

1.4.1 

KEY MEASURE: Convene or participate 

substantially in workshops and conferences 

on novel or challenging consumer protection 

problems or issues. 

New for FY 2007 

1.4.2 Issue reports on novel or challenging consumer 

protection problems or issues. New for FY 2007 

1.4.3 File public and advocacy comments with other 

federal and state government agencies. New for FY 2007 

1.4.4 

Cooperate with foreign government agencies 

on enforcement matters with cross-border 

components. 

New for FY 2007 

1.4.5 

Provide consumer protection related policy or 

technical input related to foreign government 

agencies or international organizations. 

New for FY 2007 

 Appendix A 133 
Goal 2—Maintain Competition 

Objective 2.1	 Identify Anticompetitive Mergers and Practices That Cause 

the Greatest Consumer Injury 

Performance 

Measure Text Explanation 

2.1.1 

KEY MEASURE: Achieve positive outcomes in 

matters in which HSR requests for additional 

information are issued. 

No change 

2.1.2 Number of nonmerger investigations opened per 

year. 

Not in effect in FY 

2007 (Removed 

prior to FY 2006 but 

included in this table 

to show a complete 

sequence) 

2.1.3 KEY MEASURE: Percent of significant nonmerger 

investigations that result in a positive outcome. No change 

2.1.4 

Track the number of enforcement actions for 

the total mission, for the merger and nonmerger 

programs. 

New for FY 2007 

2.1.5 

Report the number of a) second requests, b) 

reportable transactions for which premerger 

notifications were received, c) HSR investigations 

that resulted in enforcement action, d) transactions 

in which antitrust issues were resolved through 

voluntary abandonment or restructuring because 

of FTC concerns, and e) investigations closed 

because the evidence indicated that a competitive 

problem was unlikely. 

New for FY 2007 

2.1.6 

Track the number of significant nonmerger 

investigations closed each year, a) with 

enforcement action and b) without enforcement 

action. 

New for FY 2007 

Objective 2.2 Stop Anticompetitive Mergers and Business Practices 

Through Law Enforcement 

Performance 

Measure Text Explanation 

2.2.1 KEY MEASURE: Positive outcome of cases 

brought by the FTC due to alleged violations. No change 

2.2.2 Achieve savings for consumers through merger 

enforcement. New for FY 2007 

134 Performance and Accountability Report—Fiscal Year 2007 
Performance 

Measure Text Explanation 

2.2.3 

Take action against mergers likely to harm 

competition in markets with a total of at least $125 

billion in sales over a five-year period; $25 billion in 

sales each year. 

No change 

2.2.4 Achieve savings for consumers through 

nonmerger enforcement. New for FY 2007 

2.2.5 

Take action against anticompetitive conduct in 

markets with a total of at least $40 billion in annual 

sales over a five-year period; $8 billion each year. 

No change 

2.2.6 

Save consumers at least six times the amount of 

agency resources allocated to the merger program 

over a five-year period. (Efficiency Measure) 

New for FY 2007 

2.2.7 

Save consumers at least four times the amount 

of agency resources allocated to the nonmerger 

enforcement program over a five-year period. 

(Efficiency Measure) 

New for FY 2007 

Objective 2.3 Prevent Consumer Injury Through Education 


Performance 

Measure Text Explanation 

2.3.1 Quantify number of education and outreach 

efforts. 

Not in effect in FY 

2007 (Removed 

prior to FY 2006 but 

included in this table 

to show a complete 

sequence) 

2.3.2 Quantify number of hits on antitrust information on 

the FTC’s website. No change 

2.3.3 

Measure and establish appropriate targets for 

the number of hits on the FTC antitrust website 

relevant to business and legal communities. 

Not in effect in FY 

2007 (Removed 

prior to FY 2006 but 

included in this table 

to show a complete 

sequence) 

2.3.4 

Measure and establish appropriate targets for 

the number of hits on the FTC antitrust website 

relevant to policymakers and the general public. 

Not in effect in FY 

2007 (Removed 

prior to FY 2006 but 

included in this table 

to show a complete 

sequence) 

 Appendix A 135 
Performance 

Measure Text Explanation 

KEY MEASURE: Track the number of times 

2.3.5 print media publish articles that refer to FTC 

competition activities and the circulation of the 

New for FY 2007 

media that publish those articles. 

NEW FOR FY 2007 

Objective 2.4	 Enhance Consumer Welfare Through Research, Reports, 

Advocacy, and International Cooperation and Exchange 

Performance 

Measure Text Explanation 

2.4.1 

Convene or participate substantially in workshops, 

conferences, seminars, and hearings involving 

significant competition-related issues. 

New for FY 2007 

2.4.2 

KEY MEASURE: Issue studies, reports, and 

workings or issues papers on significant 

competition-related issues. 

New for FY 2007 

2.4.3 

KEY MEASURE: Make advocacy filings with other 

federal and state government agencies urging 

them to assess the competitive ramifications and 

costs and benefits to consumers of their policies. 

New for FY 2007 

2.4.4 Issue advisory opinions to persons seeking agency 

review of proposed business actions. New for FY 2007 

2.4.5 File amicus briefs with courts addressing 

competition-related issues. New for FY 2007 

2.4.6 

Track the volume of traffic on www.ftc.gov 

relating to competition research, reports, 

advocacy, and international cooperation and 

exchange. 

New for FY 2007 

2.4.7 

KEY MEASURE: Track the a) number of cases 

on which the FTC cooperated with a foreign 

competition authority, b) number of consultations 

with or comments to foreign competition 

authorities, c) number of written submissions 

on international fora, d) number of international 

events attended, and e) number of leadership 

positions held by FTC staff in international 

competition organizations. 

New for FY 2007 

136 Performance and Accountability Report—Fiscal Year 2007 
Acronyms


AMC Antitrust Modernization Commission 

CAN-SPAM Controlling the Assault of Non-Solicited Pornography and Marketing 

CFO Chief Financial Officer 

CIO Chief Information Officer 

CIS Consumer Information System 

CLU Criminal Liaison Unit 

COPPA Children’s Online Privacy Protection Act 

CSRS Civil Service Retirement System 

DCIA Debt Collection Improvement Act 

DMS Debt Management Services 

DNC Do Not Call 

DoD Department of Defense 

DOJ Department of Justice 

DOL Department of Labor 

EFT Electronic Funds Transfer 

ESD Enterprise Service Desk 

FASAB Federal Accounting Standards Advisory Board 

FEGLIP Federal Employees Group Life Insurance Program 

FEHBP Federal Employees Health Benefit Program 

FERS Federal Employees Retirement System 

FICA Federal Insurance Contributions Act 

FISMA Federal Information Security Management Act 

FMFIA Federal Managers’ Financial Integrity Act 

FTC Federal Trade Commission 

FY Fiscal Year 

GAAP Generally Accepted Accounting Principles 

GAO Government Accountability Office 

GSA General Services Administration 

HSR Act Hart-Scott-Rodino Act 

IG Inspector General 

IT Information Technology 

ITM Information and Technology Management 

ITMO Information and Technology Management Office 

MD&A Management’s Discussion and Analysis

 Acronyms 137 
NIST National Institute of Standards and Technology 

OIG Office of Inspector General 

OMB Office of Management and Budget 

OPM Office of Personnel Management 

ORB Other Retirement Benefits 

PAR Performance and Accountability Report 

PART Program Assessment and Rating Tool 

PII Personally Identifiable Information 

P&E Property and Equipment 

PSC Privacy Steering Committee 

SAS Statement on Auditing Standard 

SAT Senior Assessment Team 

SHI Sensitive Health Information 

SNSP Shared Network Space Policy 

TAS Treasury Account Symbol 

TSP Thrift Savings Plan 

TSR Telemarketing Sales Rule 

U.S. United States 

138 Performance and Accountability Report—Fiscal Year 2007 
Contact Information and Acknowledgements


Federal Trade Commission 

Address Federal Trade Commission 

600 Pennsylvania Avenue, NW 

Washington, DC 20580 

General Information Number 202-326-2222 

Internet Home Page www.ftc.gov 

FTC Spanish Home Page www.ftc.gov/ojo 

Strategic Plan Internet Site www.ftc.gov/strategicplan 

Performance and Accountability Report (PAR) Specific 

The FTC welcomes comments or suggestions for improvement of its PAR. Please 

contact the agency to provide feedback or to request additional copies. 

PAR Internet Site www.ftc.gov/par 

PAR Contact Darlene Cossette 

PAR Telephone 202-326-3255 

PAR Fax Number 202-326-2329 

PAR Email Address gpra@ftc.gov 

PAR Mailing Address Use above address with “Atten PAR, 

M/D H-774” 

Regions 

East Central (Cleveland, OH) 216-263-3426 

Midwest (Chicago, IL) 312-960-5600 

Northeast (New York, NY) 212-607-2822 or -2832 

Northwest (Seattle, WA) 206-220-6366 

Southeast (Atlanta, GA) 404-656-1379 

Southwest (Dallas, TX) 214-953-3079 

Western (San Francisco, CA) 415-848-5184 

Western (Los Angeles, CA) 310-824-4380 

Contact Information and Acknowledgements 139 
Consumer Response Center 

General Complaints 1-877-FTC-HELP (1-877-382-4357)


Identity Theft Complaints 1-877-ID-THEFT (1-877-438-4338)


Online General Complaints www.ftc.gov/complaint


Identity Theft Education and


Complaints www.ftc.gov/idtheft


National Do Not Call Registry www.donotcall.gov


Acknowledgements 

The FTC gratefully acknowledges the work of Darlene Cossette, Jill Dunham, 

Nancy Lux, Diane Reinertson, and James Baker of the Financial Management 

Office; Stefano Sciolli and Jeanine Balbach of the Bureau of Competition; and Beth 

Arvan Wiggins, Jonathan Soileau, and Maneesha Mithal of the Bureau of Consumer 

Protection for contributing to the development of this report. Editorial and design 

work was supported by AOC Solutions, Inc., and EEI Communications, Inc. 

140 Performance and Accountability Report—Fiscal Year 2007 


About this Report 

T

he Federal Trade Commission’s FY 2007 Performance and Accountability

Report (PAR) provides the results of the agency’s program and financial 

performance and demonstrates to the Congress, the President, and the

public the FTC’s commitment to its mission and accountability over the 

resources entrusted to it. This report, available at www.ftc.gov/par, includes 

information that satisfies the reporting requirements contained in the following 

legislation: 

◗ Federal Managers’ Financial Integrity Act of 1982 

◗ Government Performance and Results Act of 1993 

◗ Government Management Reform Act of 1994 

◗ Reports Consolidation Act of 2000 

◗ Accountability of Tax Dollars Act of 2002 

◗ Improper Payments Information Act of 2002 

There are three major sections to this report. The first section, Management’s 

Discussion and Analysis (MD&A), provides an overview of the FTC’s organization, 

program, and financial performance centered around the Mission, Strategic Goals, 

and Objectives. The Performance Section contains a more detailed performance 

analysis of the FTC’s programs relative to its Strategic Goals. The Financial Section 

provides the financial details, including the independent auditor’s report and audited 

financial statements. The Financial Section also provides the management challenges 

identified by the Inspector General.
Federal Trade Commission 

For the Consumer 

1-877-ftc-help 

www.ftc.gov