e FTC in 2009

Federal Trade Commission Annual Report, March 2009

The FTC in 2009

March 2009

Federal Trade Commission

Jon Leibowitz, Chairman

Pamela Jones Harbour, Commissioner

William E. Kovacic, Commissioner

J. Thomas Rosch, Commissioner
ii The FTC in 2009

Contents

Letter from the Chairman

A Year in Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section One: Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter 1: Competition Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

A. Health Care Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

B. Energy Industry Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

C. Chemical Industry Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

D. Enforcement in Technology Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

E. Consumer Goods and Services Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

F. Other Enforcement Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Chapter 2: Competition Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

A. Studies and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

B. Hearings, Workshops, and Conferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

C. Advocacy Letters and Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

D. Rulemaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

E. Congressional Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter 3: Competition Education and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Section Two: Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Chapter 4: Consumer Protection Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

A. Fraud, Deception, and Unfair Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

B. Data Security and Privacy Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

C. Consumer Protection Law Enforcement Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chapter 5: Consumer Protection Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

A. Rules and Guides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

B. Studies and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

C. Hearings and Workshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

D. Intergovernmental Task Force............................................67

E. Advocacy Letters, Comments, and Amicus Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

F. Congressional Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Chapter 6: Consumer Protection Education and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Contents iii

Section Three: International Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Chapter 7: Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

A. International Aspects of Competition Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . 81

B. Promoting Convergence Toward Sound Competition Policies . . . . . . . . . . . . . . . . . . . 82

Chapter 8: Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

A. The U.S. SAFE WEB Act and International Law Enforcement Cooperation . . . . . . . . . 85

B. International Consumer Protection Policy Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 87

Chapter 9: Outreach and Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Senior Staff of the FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

FTC 2008 Annual Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Principal Contributors to Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

In Memoriam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Letter from the Chairman

As we face the nation’s dire financial crisis, the 

Commission’s dual mission to protect consumers and 

promote competition is more critical than ever. This 

annual report describes our efforts and initiatives since 

last March. The accomplishments in the following 

pages are the result of our talented and dedicated staff, 

whose hard work has made the FTC one of the most 

remarkable and respected agencies in government.

On the competition side, the Commission has advanced a vigorous 

antitrust enforcement program to prevent anticompetitive mergers and 

business conduct. A leading priority has been attacking collusive “pay-fordelay” settlements in the pharmaceutical industry, where the brand name drug 

company pays the generic drug company to delay its entry into the market. 

These deals cost billions of dollars – for consumers and ultimately for the 

government, which pays almost one-third of the nation’s prescription drug 

costs. In addition, the Commission filed a record number of cases challenging 

proposed and consummated mergers as threatening to harm competition in a 

vast array of markets. Even in “down markets,” the Commission must hold the 

line against industry consolidation that may threaten competitive markets far 

into the future.

On the consumer protection side, there can be no greater priority than 

addressing the credit crisis and protecting consumers in financial distress. 

This year, the Commission increased enforcement efforts against mortgage 

foreclosure “rescue” scams, bogus debt relief and credit repair schemes, unlawful 

debt collection operations, and deceptive credit offers to consumers in the 

subprime market. The FTC also initiated actions against brokers and lenders 

who deceptively advertised mortgages with low “teaser” rates. In addition, the 

FTC charged Bear Stearns Companies and EMC Mortgage Corporation with 

unlawful practices in servicing and collecting mortgage loans; the settlement 

returned $28 million to 86,000 consumers. Beyond financial services, the 

FTC continued its steady workload in the areas of consumer privacy, data 

security, and online behavioral marketing; telemarketing fraud and do not call 

enforcement; deceptive health and weight loss claims; and “green” marketing.
In the global marketplace, antitrust enforcement and consumer protection 

increasingly involve cross-border efforts. The Commission continues to work 

through multilateral organizations to promote convergence toward sound policies 

and has used the tools provided by the 2006 U.S. SAFE WEB Act to increase 

the effectiveness of its cross-border cooperation and enforcement. This year, 

for example, the FTC worked with its global partners on a number of merger 

enforcement cases and shut down one of the largest international “spam gangs.” 

The Commission also expanded its technical assistance program for competition 

and consumer protection agencies around the world.

Finally, the Commission leverages its limited resources beyond law 

enforcement through advocacy and education. The Commission continues 

to advocate for competition and consumers before the courts and government 

agencies; to conduct economic research; and to promote policy development 

through workshops and reports. The FTC also works to educate millions of 

consumers and businesses about their rights and responsibilities under the laws 

we enforce.

As I embark upon my tenure as Chairman, I am proud of the work the 

Commission has completed this past year and confident that we will be able 

to tackle the challenges ahead. I look forward to working with my fellow 

commissioners, the agency’s exceptional staff, and our law enforcement partners 

across the country and around the world, to ensure that the Commission 

continues to protect American consumers.

Jon Leibowitz

Chairman
vi The FTC in 2009
1

The Federal Trade Commission Headquarters building is designed in the Classical Revival style 

of architecture. The buildings within the Federal Triangle were designed according to principles of 

the City Beautiful movement, which espoused the use of formal arrangements, axial streets, and 

monumental, classical public buildings in city planning. Earlier in his career, the FTC building’s 

architect, Edward H. Bennett, was an assistant to prominent architect and planner Daniel H. Burnham, 

a pioneer in city planning responsible for the layout of the 1893 World’s Columbian Exposition in 

Chicago.

Text drawn from General Services Administration website.

A Year in Highlights
2 The FTC in 2009
A Year in Highlights 3

A Year in Highlights

The work of the FTC is critical to protecting consumers and preserving competitive markets. As the only federal agency with both consumer protection and competition jurisdiction in broad sectors of the economy, the FTC’s work touches the economic life of every 

American. The FTC performs its unique 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. 

This year the Commission undertook a number of major initiatives designed to improve the way 

the agency works and to answer pressing needs in the marketplace during these difficult economic 

times. These efforts are part of the Commission’s commitment to protect consumers as they make 

choices in rapidly changing marketplaces, especially those facing difficult decisions, perhaps for the 

first time. They span the agency’s mission and expertise and called upon staff from many parts of 

the agency. Below are some highlights from this year’s activities; while not an exhaustive list, these 

projects reflect the breadth and impact of the FTC’s work on behalf of consumers.

Promoting Competition to Keep Health Care Costs Down. The rising cost of health care is a 

major concern for all Americans. The FTC is dedicated to ensuring health care markets are free and 

competitive so that costs are kept down and there are incentives to provide low-cost, high-quality 

health care. The Commission acted to promote health care competition on several fronts this year. 

The Commission continued to pursue pharmaceutical companies that would rather collude than 

compete, signing “pay-for-delay” agreements to keep lower cost generic drugs off the market, and 

potentially costing consumers and taxpayers billions of dollars a year. The Commission stopped a 

hospital merger that it alleged would have given a Northern Virginia hospital provider nearly 75% 

of beds in the region. The Commission also put an end to conduct by two physicians’ groups that 

it charged boycotted insurance payors to keep reimbursement rates high. The Commission’s health 

care enforcement agenda is as active as it has ever been to ensure that higher health care costs are not 

attributable to anticompetitive conduct or combinations.

Economic Downturn Leads to Increase in Deceptive/Unfair Credit Practices Enforcement. The 

current economic downtown, increased mortgage foreclosures, and restricted access to credit leaves many 

consumers in financial distress and vulnerable to unfair and deceptive business practices. Over the past 

year, the Commission has actively challenged unlawful credit practices, particularly those related to subprime credit or lending. For example, a settlement agreement with CompuCredit Corporation, resolving 

allegations that the company deceptively marketed credit cards to consumers in the subprime market, 

will provide consumers an estimated $114 million in credits and cash refunds. In addition, the Commis-
4 The FTC in 2009

sion filed six actions against businesses promising foreclosure rescue, and it joined with 24 state agencies 

to challenge claims by 36 credit repair operations that they could remove accurate and timely information from a consumer’s credit report. Other enforcement activity targeted discrimination in mortgage 

pricing, deceptive home mortgage advertising, illegal debt collection activities, and certain payday lender 

practices. The Commission also convened a Debt Settlement Workshop to examine the for-profit debt 

settlement industry and the adequacy of existing consumer protections in that area.

Urging Self Regulation by Behavioral Advertisers. The FTC has periodically examined the 

consumer privacy issues raised by online behavioral advertising – the practice of tracking an individual’s online activities to deliver advertising tailored to his or her interests. This year, the FTC staff 

issued a report containing a set of self-regulatory principles to guide industry use of behavioral advertising. The report, Self-Regulatory Principles for Online Behavioral Advertising, discusses the potential 

benefits of behavioral advertising to consumers, including the free online content that advertising 

generally supports and personalization that many consumers appear to value. It also addresses the 

privacy concerns that the practice raises, including the invisibility of the data collection to consumers and the risk that the information collected – including sensitive information regarding health, 

finances, or children – could fall into the wrong hands or be used for unanticipated purposes. Consistent with the FTC’s overall approach to consumer privacy, the report seeks to balance the potential benefits of behavioral advertising against the privacy concerns it raises and to encourage privacy 

protections while maintaining a competitive marketplace.

Record Number of Filed Merger Cases. The Commission continued its vigorous merger 

enforcement program and, despite a decline in the number of Hart-Scott-Rodino (HSR) premerger 

notification filings, filed a record number of preliminary injunction and administrative complaints 

since March 2008. The FTC filed six actions challenging proposed and consummated mergers and 

acquisitions as threatening to harm competition in a range of markets, from hospital services and 

retail goods, to pharmaceuticals and technology products. The Commission remains vigilant in its 

efforts to stop anticompetitive combinations that may lead to higher prices, reduced levels of service, 

fewer choices, or less innovation. Where it cannot resolve its concerns by consent, the Commission 

will file suit. 

FTC Goes Green. The use of “green” marketing claims has expanded rapidly in recent years, as 

consumers become more concerned about environmental and energy issues. Recognizing the importance of ensuring accurate information in the marketplace on energy consumption and the environmental impact of various products and services, the Commission has undertaken a “green” initiative, 

including a review of the Commission’s Guides for the Use of Environmental Marketing Claims 

(Green Guides). In connection with that review, the Commission hosted workshops dealing with 

carbon offsets and renewable energy certificates; green packaging claims; and green claims for tex-
A Year in Highlights 5

tiles and building materials. On the law enforcement front, the FTC has addressed deceptive claims 

for home insulation products and for devices advertised to increase the gas mileage of cars. The 

Commission also has initiated rulemaking proceedings to examine energy labeling for light bulbs, 

televisions, and other consumer electronics, such as personal computers and monitors. Research on 

consumer perception of green marketing claims also is underway, subject to OMB approval, that will 

inform the Commission about how consumers understand words such as “eco friendly,” “sustainable,” and “carbon neutral.”

Expanded International Technical Assistance. Nothing substitutes for face to face interaction when it comes to forging the relationships necessary to support the needs of developing foreign 

competition and consumer agencies and to promote effective enforcement cooperation and policy 

convergence with foreign counterparts. Using its authority under the U.S. SAFE WEB Act of 2006, 

the FTC established an International Fellows and Interns Program to bring foreign agency officials to 

Washington to work side by side with expert FTC staff. This year, for the first time, the Commission 

sent FTC staff to work for a foreign counterpart agency for several months. Finally, the Commission 

funded technical assistance to jurisdictions not previously served, such as Turkey and Brazil.

YouAreHere Website for Kids. Recognizing that spending habits begin at a young age, the FTC 

created YouAreHere, a new website to educate kids about how the market works and how they can 

be informed shoppers. The experiential site allows kids to explore a shopping mall where they can 

design and print advertisements, uncover suspicious claims in an ad, and guess the retail price of various candies based on supply and demand. The food court features lessons on making smart choices 

based on product attributes and price, and includes a movie on the history of the antitrust laws. 

Kids.gov, the official kids’ portal for the U.S. government, chose YouAreHere as Site of the Month 

for November 2008. YouAreHere is a place where anyone can learn about the work of the FTC.

First Annual FTC Microeconomics Conference. The Bureau of Economics hosted a two day, 

academic-style conference that brought together scholars in industrial organization, information 

economics, game theory, quantitative marketing, consumer behavior, and other areas related to the 

FTC’s antitrust and consumer policy missions. The Bureau of Economics, with its staff of 70 PhD 

microeconomists and over a dozen research analysts, organized this conference to provide an opportunity for a critical exchange of ideas on how best to tackle market conduct that threatens consumer 

welfare. Topics included: online advertising; information disclosure; horizontal and vertical mergers; 

bundling, loyalty, and other discounts; dynamic oligopoly; intellectual property; and behavioral and 

experimental economics.

Amendments to the Rules of Practice. The FTC’s role as an independent agency with adjudicative powers demands that it maintain fair rules to determine facts and render timely and sound 
6 The FTC in 2009

decisions in its adjudicative proceedings. This year, the Commission adopted interim final rules 

amending Parts 3 and 4 of the agency’s Rules of Practice. The rule amendments represent a comprehensive and significant revision of the Commission’s adjudicatory process designed to expedite the 

prehearing, hearing, and appeal phases, streamline discovery and motion practice, and ensure that 

the Commission applies its substantive expertise, as appropriate, earlier in the process. The amended 

rules include, for the first time, deadlines for the Commission to resolve appeals of initial decisions 

by the Administrative Law Judges.

Supporting Efforts for FTC Reauthorization. The Commission testified before the Senate 

Committee on Commerce, Science, and Transportation, highlighting the agency’s accomplishments 

and providing comments on the proposed Federal Trade Commission Reauthorization Act of 2008. 

The reauthorization bill included new tools to improve and streamline the FTC’s consumer protection and competition efforts, such as independent litigating authority to obtain civil penalties in 

federal courts and authority to allow the FTC to represent itself before the Supreme Court. The bill 

also would have allowed the agency to hire Administrative Law Judges with specialized experience, 

repealed certain antiquated exemptions to the Federal Trade Commission Act, and granted authority 

to use the streamlined procedures under the Administrative Procedure Act to conduct certain consumer protection rulemaking. Reauthorization legislation is likely to be introduced in this session of 

Congress.
A Year in Highlights 7
8 The FTC in 2009

The FTC at 100: Into Our Second Century

A few years from now, the FTC will reach the one hundredth anniversary of 

 the statute that gave it life. How well is the agency fulfilling the destiny 

 that Congress foresaw for it in 1914? What type of institution should the 

Commission aspire to be when its second century begins in 2014?

This year, Commission staff conducted a self-assessment to consider these and 

other questions. In the late 1960s, the Commission’s performance attracted scalding criticism that raised doubts about its continued existence. Forty years later, the 

agency stands in the front ranks of the world’s competition policy and consumer 

protection institutions. The Commission’s success is based, in part, on a culture that 

understands that becoming a superior institution demands a willingness to ask hard 

questions about the agency’s purposes and performance. Today, the achievements of 

our foreign counterparts provide further motivation to revisit basic questions. 

The FTC at 100 project decoupled the process of self-assessment from any single 

electoral cycle to focus on adjustments that will improve the agency over the long 

term. By targeting the Commission’s centennial, the exercise took a longer-term 

perspective to identify approaches for improvement that are not only good today but 

will be good in the decades to come. The agency conducted extensive interviews and 

held 12 workshops (including seven outside the U.S.) at which expert observers from 

academia, business groups, consumer organizations, and government bodies discussed the Commission’s programs, operations, and organization. The contributions 

of foreign competition and consumer protection agency colleagues and stakeholders 

here at home helped make the report, The Federal Trade Commission at 100: Into Our 

2nd Century, a benchmark not only for the FTC, but also for the world trade community.

The emphasis throughout the study was on institution-building. Although 

discussions about competition law and consumer protection tend to focus on 

doctrinal issues – the “physics” of competition and consumer protection policy – 

these important policy debates can obscure the critical task of creating institutions 

and programs that transform theory and concepts into effective programs. This study 
The FTC at 100: Into Our Second Century 9

was about the “engineering” of competition and consumer protection policymaking. 

It recognized that successful public policy outcomes are the product of good physics 

and good engineering. 

The FTC at 100 report also focused on the special attributes of the Commission: 

its combined competition and consumer protection authority and the wide range of 

tools at its disposal. These include not only litigation, but also policy research and 

development, advocacy, rulemaking, guidelines, guides, advisory opinions, consumer 

and business education, encouragement of appropriate industry self-regulation, and 

domestic and international partnerships and outreach. 

The report offers recommendations on overarching issues, such as clearly articulating and implementing the agency’s mission; improving agency structure, 

leadership, and strategic planning; setting a policy R&D agenda; deploying agency 

resources; and measuring the effectiveness of agency actions. Among then Chairman Kovacic’s specific recommendations are: (1) that each initiative be measured 

by its capacity to improve the range of goods and services available to consumers 

or to strengthen the capacity of consumers to make well-informed choices; (2) that 

the agency explore ways to integrate knowledge and expertise more effectively across 

bureaus; (3) that the agency continue to build formal and informal relationships 

with other public institutions within the U.S., possibly through the establishment of 

domestic competition and consumer protection networks; and (4) that staff, when 

recommending an action, identify how to measure the effectiveness of the action.
10 The FTC in 2009
11

Section One: 

Competition Mission

The design of the Federal Trade Commission building emphasizes the relationship between the 

building and its site. It is located on a triangular parcel of land; the building has an essentially 

triangular footprint with a semicircular portico at one end. The seven-story building sits on a simple 

base of Mount Airy granite. The walls above are clad in large, smooth blocks of Indiana limestone 

laid in a regular pattern. Bays on the midsection of each elevation are divided by pilasters (attached 

columns) or colonnades that form a loggia (open-air, arcaded space). The seventh story is slightly 

recessed. The portico is supported by Ionic columns. Aluminum window and door grilles accent 

the exterior. The low hipped roof is covered with red terra-cotta tiles. An interior courtyard provides 

natural light to interior offices. The building has undergone few changes since its construction.

Text drawn from General Services Administration website.
12 The FTC in 2009

Competition Enforcement Retrospective

As shown here, the 

Commission manages its 

limited resources by addressing anticompetitive mergers and conduct in those 

industries that most impact 

consumers. This year, the 

Commission maintained an 

active workload of merger 

and nonmerger investigations, with some notable 

achievements in its efforts 

to protect consumers by 

promoting competitive 

markets.

A Record Year for Filed Merger Cases

The Commission’s merger enforcement program resulted in the filing of a 

record six preliminary injunction and administrative complaints since March 2008 

challenging proposed and consummated mergers and acquisitions. These cases 

included mergers affecting competition for hospital services, battery separators, 

offshore waste disposal services for oil production, outdoor paving stones, drug 

treatments for heart defects in premature babies, and database systems for estimating 

the cost of auto repairs. Based on actions brought in the first five months of fiscal 

year 2009, the Commission is on pace to have a strong record of enforcement again 

this year. 

The Commission also identified potential competitive problems in an additional 

16 proposed acquisitions since March 2008 that were resolved by consent agreement, 

thereby preserving competition in overlap markets while allowing the companies 

to realize cost savings from their merger. This year’s consent orders preserved 

competition for a variety of generic and brand name pharmaceuticals, specialty 

chemicals, medical devices used in coronary bypass surgery, electronic public records 

services, and several other consumer goods and technology services.

Finally, several proposed mergers and acquisitions were abandoned after 

Commission staff investigated and raised competition concerns over certain aspects 

of the proposed combination. These companies continue to compete in the product 

Enforcement Actions by Sector

FY 05 Through FY 09*

* Represents Fiscal Year 2009 through February 28, 2009.

Health Care & 

Pharmaceutical 41%

Technology 13%

Energy 14%

Other 3%

Consumer & 

Retail Goods 12%

Chemicals 8%

Real Estate 9%
Section One: Competition Mission 13

lines identified, such as terminal services for light petroleum products, and class rings 

and commemorative products.

Holding the Line Against Anticompetitive Conduct

This year, the FTC brought several enforcement actions to challenge harmful 

conduct in the health care, pharmaceuticals, retail goods, real estate, and technology 

sectors. Most of these actions were resolved by consent agreement to stop the 

conduct, and in one case, the Commission sought relief in federal court. Through 

these enforcement actions, the FTC remains at the forefront of developing antitrust 

standards for competitor collaboration and unilateral conduct.

Examples include actions to stop:

3 Payments by branded drug makers to generic rivals in exchange for agreeing 

not to sell a lower priced generic version

3 Multiple Listing Service rules that prevent non-traditional and discount real 

estate professionals from having their listings available on popular websites 

listing homes for sale

3 Joint fee negotiation by physicians groups that keep reimbursement rates high 

without providing benefits to patients

3 A market division agreement between golf merchandise retailers

FTC Competition Enforcement Actions

Fiscal 

Year

Non Merger 

Enforcement Actions

Merger 

Enforcement Actions

Total Consents

Part 3 

Complaints 

and 

Injunctions

Total Consents

Part 3 

Complaints 

and 

Injunctions

Abandoned

2005 4 4 0 14 9 1 4

2006 6 5 1 16 9 0 7

2007 11 9 2 22 14 32 5

2008 4 3 1 21 13 23 6

20091 5 4 1 12 7 4 1

1 October 1, 2008 to February 28, 2009.

2 In FY 2007, the Commission authorized staff to file an administrative complaint and a federal court action in three 

matters. To avoid double counting, these matters are included only once.

3 In FY 2008, in one matter the Commission authorized staff to file an administrative complaint and a federal court 

action. To avoid double counting, this matter is included only once.
14 The FTC in 2009
Section One: Competition Mission 15

Section One:

Competition Mission

Competition is good for consumers – individuals and businesses – and is good for the 

economy. Consumers benefit from open and competitive markets that yield lower prices 

and better quality goods and services. A vigorous marketplace provides the incentive and 

opportunity for the development of new ideas and innovative products and services. In times of 

economic downturn, the Commission is vigilant in its efforts to stop anticompetitive mergers or 

conduct that would rob American consumers of the innovation, productivity, growth, and low cost 

products and services that are the result of robust competition. The Commission uses a variety of 

tools to promote competition and protect consumers from anticompetitive mergers and business 

conduct. Through enforcement, study, advocacy, and education, the FTC protects consumers by 

promoting competitive markets.

Chapter 1: Competition Law Enforcement

The FTC is first and foremost an enforcement agency, dedicated on the competition side to preventing anticompetitive mergers and business conduct. The Commission reviews premerger notification filings, trade press articles, business and consumer complaints, and other information to uncover 

evidence of acquisitions and business practices that may restrain competition. When necessary, the 

Commission acts through its administrative process or in federal court. Moreover, the Commission 

seeks to deter harmful conduct by bringing enforcement actions with broad impact and by providing 

guidance to businesses on how to comply with the law.

The Commission manages its limited resources by focusing on industries that most directly affect 

consumers, such as health care, energy, chemicals, technology, and consumer goods and services. 

Since March 2008, the FTC’s merger and nonmerger enforcement actions in these industry sectors 

demonstrate that much of the Commission’s competition work has a direct impact on consumers 

by maintaining competition for the products and services they regularly purchase. From generic 

drugs and groceries, to garden paving stones and auto repair shop software, the Commission seeks 

to prevent the kinds of anticompetitive mergers and conduct in markets large and small that affect 

consumers every day.
16 The FTC in 2009

A. Health Care Enforcement

The rising cost of health care is a matter of concern for consumers, employers, insurers, and the 

nation as a whole. Spending on health-related products and services is expected to total $2.6 trillion 

in 2009, an amount equal to about 17% of U.S. Gross Domestic Product. Public and private money 

spent on prescription drugs alone is projected to be more than $260 billion in 2009. 

Every day, more Americans are forced to delay or forego health care services because they cannot afford them. Competition is a very important part of keeping consumer health care costs down. 

The Commission is committed to doing everything it can to promote price competition, choice, and 

innovation in health care markets. The Commission works to promote competition in health care 

by preventing anticompetitive health care mergers, stopping harmful joint conduct by health care 

providers, and eliminating impediments to entry by generic drug producers. 

Exclusion Payment Agreements. Competition from generic pharmaceutical manufacturers provides consumers enormous savings. Thus, any restriction on the market for generic drugs can 

have a big impact on the nation’s spending on drugs. To ensure this market remains free and competitive, the Commission continues to actively pursue agreements between branded drug companies 

and generic drug companies that 

prevent or delay the introduction 

of lower cost generic formulations. 

These agreements, referred to as 

“pay-for-delay” patent settlements, 

or “exclusion payments,” prevent 

competition from new generic drugs 

that can drive prices for the branded 

equivalent down as much as 90%. 

These agreements allow branded 

manufacturers to share the profits from their branded drugs with 

potential generic rivals in exchange 

for delaying the roll out of a lower 

priced generic and also prevent other generic manufacturers from entering the market.

The Commission challenged such an agreement between Solvay Pharmaceuticals, Inc., maker of 

AndroGel, and two generic drug manufacturers to abandon their patent challenges and delay marketing a generic formulation for nine years, until 2015. Androgel is Solvay’s branded testosteronereplacement drug, a prescription pharmaceutical with sales of more than $400 million a year. The 

“This is yet another example of pharmaceutical 

companies turning competition on its head. Congress enacted the landmark 1984 Hatch-Waxman 

Act to encourage early generic entry and save 

consumers money, but these anticompetitive deals 

threaten to destroy that benefit and make crucial 

portions of the Hatch-Waxman Act extinct in all but 

name.”

Concurring Statement of Chairman Jon Leibowitz

in FTC et al v. Watson Pharmaceuticals, Inc.

(press release, February 4, 2009)
Section One: Competition Mission 17

Commission charged that, by agreeing to the delay in exchange for payment, Watson Pharmaceuticals, Inc. and Par Pharmaceutical Companies, Inc. were cooperating with Solvay on the sale of AndroGel, sharing the monopoly profits rather than competing. The case, which was filed jointly with 

the California Attorney General, is pending in the Central District of California. The Commission 

also continues to press its case against Cephalon, Inc. in the federal court in Philadelphia to block its 

exclusion payment agreement with four generic rivals.

Pharmaceutical and Medical Device Mergers. Again this year, the Commission reviewed 

many proposed and consummated acquisitions in the pharmaceutical and medical device industries. 

In total, the Commission reviewed acquisitions in these industries valued in excess of $41 billion, 

and took the following actions to preserve competition that would otherwise be lost in the proposed 

merger or to restore competition in the case of a merger that has already taken place. 

3 Drug Treatment for Heart Defects in Premature Babies. The Commission is seeking a 

permanent injunction to remedy harmful effects from Ovation Pharmaceuticals’ 2006 acquisition of the rights to sell NeoProfen, a drug with FDA approval for the treatment of patent 

ductus arteriosus, a congenital heart defect usually found in severely underweight premature 

babies. At the time of the acquisition, Ovation sold Indocin, the only other drug used to 

treat the same condition, which affects approximately 30,000 babies per year in the U.S. The 

Commission alleged that the acquisition of NeoProfen secured Ovation’s monopoly and permitted it to raise the price of Indocin from $36 to $500 per vial, forcing desperate consumers 

to pay artificially inflated prices to treat this potentially fatal condition. The Commission’s 

complaint, filed in federal court in Minnesota, seeks divestiture of assets related to one of 

the two treatments and disgorgement of all unlawfully obtained profits. The trial is slated to 

begin in September 2009.

Commissioner Harbour 

The availability of follow-on biologics (FOBs) – which replicate biologic 

substances such as enzymes or hormones – will increase access to life-saving 

medicines. Commissioner Harbour has called for legislation to create a regulatory pathway for abbreviated FOB approval, by leveraging current FDA knowledge 

about existing products (as is done for generic drugs). In May 2008, the Commission sent Congress a letter explaining how an abbreviated FOB approval 

process could enhance competition, lower prices, and accelerate innovation, so 

long as unintended consequences are avoided. In Spring 2009, the Commission plans to issue a 

report on its November 2008 workshop on FOB competition issues.
18 The FTC in 2009

3 Generic Anticonvulsants. The Commission charged that Sun Pharmaceutical Industries 

Ltd.’s proposed acquisition of Taro Pharmaceuticals Industries, Ltd. would substantially 

reduce competition and likely result in higher prices for three distinct generic formulations 

of the anticonvulsant drug carbamazepine, used widely to prevent and control seizures. In 

order to remedy these concerns, Sun agreed to divest all of its rights and assets needed to 

develop three generic forms of carbamazepine.

3 IV-Iron Drugs Supplied to Dialysis Clinics. The Commission challenged Fresenius Medical Care’s proposed purchase from Daiichi Sankyo Company of an exclusive sublicense to 

manufacture and supply Venofer to U.S. dialysis clinics. Venofer is an intravenously administered iron sucrose preparation used primarily to treat iron-deficiency anemia in dialysis patients with chronic kidney disease. The Commission alleged that the agreement would have 

given Fresenius, the largest operator of dialysis clinics in the country, the ability to artificially 

inflate its internal costs for Venofer and, because of its market presence, effectively increase 

the amount Medicare pays for the drug. The Commission issued a consent order requiring 

Fresenius to report an objective market-based price for Venofer to Medicare.

3 Generic Drugs. The Commission settled antitrust concerns raised by the proposed $8.9 billion acquisition of Barr Pharmaceuticals by Teva Pharmaceutical Industries. The Commission charged that the proposed acquisition would have lessened competition in the markets 

for 17 commonly used generic medications, including drugs used in the treatment of cancer, 

bacterial infections, diabetes, acid reflux, and depression, as well as several varieties of oral 

contraceptives. The Commission’s consent agreement requires both Teva and Barr to sell 

assets in 29 U.S. markets to either Watson Pharmaceuticals or Qualitest Pharmaceuticals to 

preserve competition for these generic drugs.

3 Oral Long-Acting Opioids. The Commission issued a consent order to protect competition 

in the market for oral long-acting opioids (LAOs) in connection with King Pharmaceuticals’ 

proposed $1.6 billion acquisition of rival drug maker Alpharma Inc. The transaction would 

have joined the two leading producers of morphine sulfate oral LAOs in the U.S., a $4 billion market which is already highly concentrated. The Commission’s consent order requires 

King to divest its Kadian business to Actavis, a company which already manufactures the 

drug for King and which could then produce a generic equivalent of the drug sooner than 

would have been permitted under King’s patent.

3 Endoscopic Vessel Harvesting Devices. The Commission charged that Getinge AB’s proposed $865 million acquisition of rival Datascope Corporation would give the combined 

company a near-monopoly share of the U.S. market for endoscopic vessel harvesting (EVH) 
Section One: Competition Mission 19

devices used in coronary bypass surgeries. EVH devices are used to remove veins from the 

patient’s leg or arm to be used to bypass blocked coronary arteries. The companies are the 

two principal suppliers of these products, which allow for minimally invasive vessel harvesting, resulting in less pain and scarring, lower risk of infections, and reduced hospital stays for 

coronary bypass patients. To settle charges that the proposed acquisition would be anticompetitive, Datascope agreed to sell its EVH product line to an FTC-approved buyer.

Hospital Mergers. Competition between hospitals helps control health care costs and provides vital incentives to improve services to patients at their most vulnerable times. The cost of 

providing quality health care services through hospitals is a major expense for health insurance plans, 

employers, unions, and ultimately individual patients, many of whom may be forced to reduce or 

even drop their health insurance coverage as costs increase. This year brought two important developments in the Commission’s efforts to promote competition among hospitals.

3 Inova Health System/Prince William Health System. The Commission successfully 

blocked Inova Health System’s proposed acquisition of Prince William Health System, after 

filing an administrative complaint and an action for a preliminary injunction in the Eastern 

District of Virginia. The Commission’s federal court complaint, filed 

jointly with the Virginia Attorney 

General, alleged that the acquisition 

would have reduced competition for 

general acute care inpatient hospital 

services in the Northern Virginia area, 

leading to higher prices for consumers 

and reduced incentives for improved 

services. The Commission charged that 

the merger, which would have given 

Inova control of 73% of the licensed 

hospital beds in Northern Virginia and 

six of the ten hospitals in the region, 

would have eliminated the beneficial competition that allows health care plans in that area to 

negotiate for lower prices. Soon after the FTC filed its complaint, the companies announced 

their decision to abandon their merger plans. 

3 Evanston Northwestern Healthcare Corp./Highland Park Hospital. The Commission 

issued its final opinion and order to restore competition that was lost when Evanston Northwestern Healthcare Corporation (ENH) acquired rival Highland Park Hospital. In 2007, the 

washingtonpost.com > Health

PRINCE WILLIAM HEALTH SYSTEM

FTC Challenge Blocks Inova Merger

By Kristen Mack

Washington Post Staff Writer

Saturday, June 7, 2008; Page B05

Northern Virginia's largest hospital chain yesterday

abandoned its plans to merge with Prince William

Hospital in Manassas, citing a legal challenge from the

Federal Trade Commission to block the deal.
20 The FTC in 2009

Commission affirmed an October 2005 ruling by an administrative law judge that found that 

ENH’s acquisition of Highland Park Hospital was anticompetitive and had increased the cost 

of hospital services in the Chicago environs. The Commission order requires ENH to establish separate negotiating teams – one for Evanston and Glenbrook hospitals, and another 

for Highland Park – to set payor insurance reimbursement rates for inpatient and outpatient 

services. The order also requires ENH to use separate teams unless a payor specifically opts 

to negotiate for services at all ENH hospitals. At the request of a payor, ENH must submit 

price disputes, first to mediation and then to arbitration, to determine fair prices or terms.

Anticompetitive Conduct by Physicians Associations. The Commission continues to 

monitor joint price setting behavior by physicians organizations and takes action to stop those collective activities that seek to keep reimbursements rates high without offering the benefits of integrated health care delivery. The Commission brings actions to stop collective bargaining with payors 

through a physicians organization when the conduct amounts to price fixing or a group boycott to 

enforce a price fixing agreement. Last year, the U.S. Court of Appeals for the Fifth Circuit upheld a 

Commission decision that North Texas Specialty Physicians (NTSP), a group of independent competing physicians based in Fort Worth, had restrained competition among its member physicians. 

NTSP had orchestrated a price agreement among its physicians, negotiated price terms in payor contracts on 

behalf of its physicians, and refused 

to deal with payors except on collectively agreed-upon terms. The Court 

agreed with the Commission that 

the anticompetitive effects of NTSP’s 

practices were “obvious.” Per remand 

by the Court, the Commission modified one provision of its remedial 

order, issuing a Final Order in September 2008. The Supreme Court declined to review the decision.

The Commission also settled two similar claims this year. In Boulder Valley Individual Practice 

Association and All Care IPA, the Commission obtained consent agreements to restore competition among physicians in Boulder County, Colorado and Modesto, California. The consent orders 

prohibit each physician group from entering into agreements between or among physicians: 1) to 

negotiate on behalf of any physician with any payor; 2) to refuse to deal, or threaten to refuse to deal, 

with any payor; 3) to designate the terms, conditions, or requirements upon which any physician 

deals, or is willing to deal, with any payor, including, but not limited to price terms; and 4) not to 

“NTSP’s challenged practices erect barriers between payors and physicians who would otherwise 

be willing to negotiate directly with those payors. 

It also erects obstacles to price communications 

between payors and physicians. The Commission 

concluded, and we agree, that NTSP engaged in 

concerted action to increase its bargaining power.” 

Judge Priscilla R. Owen, North Texas Specialty Physicians v. 

FTC, Civil Action No. 06-60023 (5th Cir. May 14, 2008)
Section One: Competition Mission 21

deal individually with any payor, or not to deal with any payor through any arrangement other than 

one involving the individual practice association.

B. Energy Industry Enforcement

The petroleum industry plays a crucial role in our economy. Indeed, few issues are more important to American consumers and businesses than the decisions being made about current and future 

energy production and use. Not only do changes in gasoline prices affect consumers directly, but the 

price and availability of gasoline also influence many other economic sectors. No other industry’s 

performance is more deeply felt, and no other industry is more carefully scrutinized by the FTC.

Energy Mergers. While the FTC does not regulate energy market prices, the agency plays a 

critical role in maintaining competition and protecting consumers in energy markets. The Commission has been particularly vigilant regarding mergers in the oil industry that could harm competition. 

It examines any merger and any course of conduct in the industry that has the potential to decrease 

competition and thus raise the price of gasoline or other petroleum products. In 2008, the Commission reviewed 27 HSR filings regarding proposed acquisitions in the energy industry. These included 

a joint venture among natural gas pipeline companies and an acquisition of retail gas station dealers 

in several western states. In two matters, the parties abandoned the proposed mergers in light of 

Commission action.

3 Oil and Natural Gas Waste Disposal Services. The FTC issued an administrative complaint to block the proposed $85 million acquisition of Newpark Environmental Services by 

CCS Corporation, a subsidiary of Red Sky Holdings LP. The Commission charged that the 

proposed consolidation of two of the leading providers of offshore exploration and production waste disposal services 

to major oil and gas companies in the Gulf Coast 

Region was anticompetitive and would lead to high 

prices and decreased service 

levels. The Commission successfully blocked the transaction when CCS abandoned 

the merger following the 

issuance of the Commission’s 

complaint.

“We were fully prepared to present at trial the 

strong evidence that [CCS’ acquisition of Newpark] 

was anticompetitive and would have resulted in 

higher prices and diminished service. The abandonment of the deal in the face of our challenge is a 

victory for consumers.”

David Wales, Acting Director, BC

(press release, November 24, 2008)
22 The FTC in 2009

3 Light Petroleum Products Terminals. In one of its larger recent efforts in the energy sector, 

the Commission investigated Marathon Oil Company’s proposed acquisition of CITGO Petroleum’s light petroleum products terminals in a number of Ohio cities, as well as CITGO’s 

interest in the Inland Pipeline, an intrastate products pipeline. The Commission closed its 

investigation following notification by the parties that they had abandoned the transaction.

Industry Monitoring. In addition to investigating mergers and acquisitions, the FTC undertakes other antitrust enforcement work in the energy industry. For example, in a project unique to 

the petroleum industry, the Commission actively monitors retail and wholesale prices of gasoline 

and diesel fuel, scrutinizing price movements in 20 wholesale regions and approximately 360 retail 

areas across the country. Where unusual price movements are identified, the Commission examines 

whether any such movements might result from anticompetitive conduct that violates Section 5 of 

the FTC Act. 

As part this monitoring project, the Commission reviews daily data from the Oil Price Information Service, a private data collection agency, and receives information weekly from the public gasoline price hotline maintained by the Department of Energy (DOE). Using an econometric model to 

determine whether current retail and wholesale prices are anomalous in comparison to the historical 

price relationships among cities, the project alerts the staff to unusual changes in gasoline and diesel 

prices so that timely inquiries can be made. When price increases do not appear to be market-driven, the Commission consults with the Energy Information Administration of the DOE and offices of 

appropriate state Attorneys General.

Based on information gleaned through the agency’s gasoline and diesel fuel price monitoring 

project and other sources, the Commission identified and examined the following pricing anomalies.

3 Bulk Supply. The agency investigated the bulk supply and demand conditions and markets 

for gasoline and diesel fuel throughout the Pacific Northwest region, with a particular focus 

on price anomalies in western and eastern Washington State and supply conditions in Petroleum Administration for Defense Districts IV and V. Through the analysis of large quantities of documents and data, as well as investigational hearings and witness interviews, the 

Commission sought to identify refinery, transportation, and terminal disruptions that may 

have affected bulk supply of gasoline and diesel to the region during the relevant period. The 

investigation identified no evidence of illegal collusion or unilateral conduct. Observed price 

anomalies were most likely the result of a series of identified, unrelated events, including 

longer-than-expected refinery maintenance and unplanned disruptions to refinery operations.

3 Diesel and Jet Fuel. The Commission conducted an analysis of price increases for diesel 

fuel and jet fuel, with particular focus on why diesel and jet fuel prices had risen relative to 
Section One: Competition Mission 23

gasoline prices. The 

Commission collected data from a 

variety of sources, including information 

on refinery capacity 

utilization, imports 

and exports, trends in 

local prices for diesel 

fuel and gasoline, and 

refinery profitability. 

The analysis concluded that a number 

of significant market 

factors, not anticompetitive conduct, drove the price increases.

3 Retail Gasoline. The Commission continues to evaluate reported differences in gasoline 

prices between Cape Cod and off-Cape locations, gathering and analyzing a wide range of relevant data, trade press reports, and other information. The Commission is working with the 

Massachusetts Attorney General’s office on this matter. The Commission also is examining 

recent, higher-than-expected gasoline prices in and around Buffalo and in northern Vermont.

3 Hurricane Ike. When Hurricane Ike made landfall, with its potential for affecting the energy infrastructure of the U.S. Gulf Coast, the Commission established a Hurricane Ike Task 

Force to track and analyze gasoline price trends and supply information. The Commission 

consulted daily with DOE about complaints it received on the DOE Gasoline Price Hotline. 

The Commission also consulted with the offices of state Attorneys General in affected states 

regarding pricing issues; this support continues today.

C. Chemical Industry Enforcement

This year an unusually large number of transactions in the chemical industry raised competitive 

concerns. The Commission reviewed several proposed acquisitions between chemical companies 

manufacturing products used in high performance applications. In addition, the Commission succeeded in obtaining a divestiture to restore competition in markets for specialty and industrial storage tanks after a federal appeals court upheld a Commission order.

Mike Vita - BE

Since joining the Bureau of Economics 

in 1984, Mike has contributed significantly to 

the antitrust mission of the FTC with important 

research as well as with economic analysis 

of the Commission’s antitrust investigations. 

Mike’s published research includes articles 

on health care competition, the competitive impact of gasoline 

divorcement policies, and vertical antitrust policy. Appointed an 

Assistant Director for Antitrust II in 2000, Mike has been actively 

involved in many of the FTC’s recent major antitrust analyses 

and litigations including: Evanston/ENH, Inova/Prince William 

Hospital, Google/DoubleClick, and Whole Foods/Wild Oats. 
24 The FTC in 2009

3 Specialty Epoxy Resins. The Commission intervened in Hexion’s proposed $10.6 billion acquisition of Huntsman Corporation to preserve competition in the North American markets 

for specialty epoxy resins and methyl diisocyanate (MDI). Epoxy resins are used in a variety 

of applications including aerospace composites, wind turbine blades, and electric power generation. MDI is a chemical used in a range of applications including construction insulation, 

refrigeration, and composite wood products. The Commission charged that the proposed 

acquisition would eliminate the rivalry between Huntsman and Hexion and increase the 

likelihood of coordinated interaction among the remaining competitors. The Commission’s 

consent order requires Hexion to divest its specialty epoxy business to Spolek Pro Chemickou 

A Hunti Vyrobu or another FTC-approved buyer.

3 Sodium Silicate. The Commission intervened in the proposed acquisition by Carlyle Partners IV, L.P. of INEOS Group Ltd., alleging that the deal would be anticompetitive in the 

highly concentrated Midwestern market for sodium silicate. Sodium silicates are used in 

detergents and other products and are important chemicals used by the pulp and paper 

industry. The acquisition would have joined market leader PQ Corporation, which is owned 

by Carlyle, with INEOS, the third-largest sodium silicate provider. Under the Commission’s 

order, Carlyle must divest PQ’s sodium silicate plant in Utica, Illinois, and transfer all associated intellectual property required to operate the plant to Oak Hill Company within five 

days of consummating the transaction.

3 Battery Separators. The Commission issued an administrative complaint challenging 

Polypore International Inc.’s February 2008 acquisition of Microporous Products based on 

anticompetitive effects in the global market for battery separators. According to the Commission’s complaint, the acquisition led to decreased competition and higher prices in North 

American markets in four different battery separator markets. Additionally, the Commission 

alleged that Polypore engaged in anticompetitive conduct by entering into a joint marketing 

agreement with a competitor, restricting the competitor’s entry into one separator market. 

The Commission also charged that Polypore sought to maintain monopoly power through 

anticompetitive means in several battery separator markets. This proceeding is now before 

the Commission’s Administrative Law Judge.

3 Acrylic Monomers. The Commission issued an order requiring divestitures before Dow 

Chemical Company can proceed with its proposed $18.8 billion acquisition of rival chemical 

manufacturer Rohm & Haas Company. The order requires Dow to sell a range of assets to 

an FTC-approved buyer, including its acrylic monomer, hollow sphere particle, and acrylic 

latex polymer businesses; chemicals used to make paints, adhesives, coated paper products; 

and super-absorbent polymers used in personal care and hygiene products. In the event 
Section One: Competition Mission 25

of these divestitures, Dow also must create procedures to ensure it does not have access to 

competitively sensitive non-public information regarding any businesses it acquires from 

Rohm & Haas. The Commission charged that Dow’s proposed acquisition of Rohm & 

Haas threatens competition in the highly concentrated North American markets for certain 

acrylic monomers – including glacial acrylic acid, butyl acrylate, and ethyl acrylate – as well 

as hollow sphere particles and acrylic latex polymers for traffic paint used to mark lines on 

streets and highways. The deal would have reduced the number of significant competitors 

from four to three, with the combined Dow/Rohm & Haas having a significant share of each 

market.

3 Rust Inhibitors. To restore competition in the U.S. market for chemical rust inhibitors, the 

Commission required Lubrizol Corporation to transfer the oxidate assets it acquired from 

rival Lockhart Company and to eliminate a non-compete covenant that kept Lockhart from 

engaging in any business that competes with the assets it sold to Lubrizol. The Commission 

charged that Lubrizol’s 2007 acquisition of Lockhart’s oxidate assets created a monopoly in 

the sale of rust preventatives containing oxidates, which have become the industry standard 

for long-term rust and corrosion prevention. To establish a viable competitor, the Commission’s order requires Lubrizol to divest assets, including a non-exclusive license to make 

certain Lubrizol formulations, to Additives International.

3 Industrial Storage Tanks. The Commission approved Chicago Bridge & Iron’s divestiture 

of certain tank business operations and contracts to Matrix Service Company, bringing to 

a close a merger enforcement action stemming from the company’s purchase of Pitt-Des 

Moines, Inc. in 2001. A Commission divestiture order required CB&I to create two separate, stand-alone divisions capable of competing in four relevant markets and to divest one 

of those divisions. On January 25, 2008, the U.S. Court of Appeals for the Fifth Circuit 

upheld the Commission’s decision and order, finding that the acquisition was anticompetitive 

because it significantly reduced competition in four separate markets involving the design and 

construction of various types of field-erected specialty and industrial storage tanks in the U.S.

Global Competition Review: FTC One of Top Three Elite Agencies

The Global Competition Review named the FTC one of the top three elite competition 

agencies in the world, “In absolute terms, it is without question one of the world’s best 

enforcement agencies. With 304 non-administrative staff focused on competition, an 

antitrust budget equivalent to €60 million and some of the world’s foremost antitrust experts 

on the payroll, it is a force to be reckoned with.”
26 The FTC in 2009

D. Enforcement in Technology Sector

Competition in the high technology sector, including products such as computer hardware and 

software, is critical to consumers and the economy. The development of technologically complex 

products and processes helps drive economic expansion by lowering costs and improving our quality 

of life. These markets often have only a few firms capable of supplying the highly specialized goods 

or services. Thus mergers in technology markets pose particularly challenging questions about the 

potential impact on consumers and the ability of others to enter the market in the future. The Commission’s merger enforcement efforts this year sought to preserve competition in high tech markets 

and protect existing incentives to develop new generation products or services. 

In addition, the Commission has remained vigilant against conduct that seeks to distort competition in these dynamic markets and has been particularly attentive to opportunistic conduct by 

members of standard setting organizations that distorts competition from competing technologies far 

into the future. The Commission continued this year to prosecute its monopolization claims against 

Rambus, Inc., filing a petition for certiorari with the Supreme Court, which was denied.

Mergers Involving Technology Products. Acquisitions subject to merger review increasingly involve products that are made possible by advancing technology. These mergers can involve 

highly complex behavior and relationships among competing firms in rapidly changing, technologically advanced markets. The FTC took the following actions with respect to proposed mergers and 

acquisitions in this sector.

3 Unemployment Compensation and Management Services. The Commission intervened 

in a series of acquisitions by TALX Corporation, a subsidiary of Equifax, Inc., that it charged 

lessened competition in the markets for outsourced unemployment compensation management (UCM) and verification of income and employment (VOIE) services. Unemployment 

compensation management services consist of the administration of unemployment compensation claims filed with a state or territory. Verification of income and employment services 

consists of providing income and employment information on behalf of employers to third 

parties, such as lenders or other creditors. The Commission charged that a series of acquisitions by TALX from 2002 to 2005 substantially reduced competition in the nationwide 

provision of VOIE services and outsourced UCM services. Under the Commission consent 

order, TALX has agreed to allow certain customers to terminate their agreements and to give 

notice before acquiring or entering a management contract with a UCM or VOIE service 

provider.
Section One: Competition Mission 27

3 Electronic Public Records Services. The Commission intervened in Reed Elsevier’s $4.1 

billion proposed acquisition of ChoicePoint, which would have combined the two leading 

providers of electronic public record services to U.S. law enforcement customers. Public 

records services compile public and non-public records about individuals and businesses, 

including credit data, criminal, motor vehicle, property, and employment records used by law 

enforcement to investigate a wide variety of crimes. The transaction, as proposed, allegedly 

would have removed the intense rivalry that had led to lower prices, product innovations, 

and improved services and support for law enforcement customers by eliminating the competition between Reed Elsevier’s LexisNexis product and ChoicePoint’s AutoTrackXP and 

CLEAR products. The Commission required divestiture of ChoicePoint’s product lines to 

Thomson Reuters Legal Inc. The Commission worked with the Attorneys General of 18 

states on this investigation.

3 Estimatics and Total Loss Valuation Systems for Auto Repairs. The District Court for 

the District of Columbia issued a preliminary injunction blocking the proposed $1.4 billion 

merger of CCC Information Services Inc. and Mitchell International Inc., two of the three 

U.S. providers of “estimatics,” a software system used by auto insurers and repair shops to 

estimate costs of repairs, and total loss valuation systems, used to value passenger vehicles 

that have been totaled. After a nine-day evidentiary hearing, the court found that the Commission had raised serious and substantial questions that the proposed merger would substantially lessen competition in these two markets. The parties have notified the Commission 

of their plan to abandon the merger.

Commissioner Rosch

Commissioner J. Thomas Rosch believes the current financial crisis has 

undermined the Chicago school of economics that has so heavily influenced 

antitrust enforcement over the past forty years and has broad implications for the 

FTC’s mission. Markets are not perfect; imperfect markets do not always correct 

themselves, and business people do not always behave rationally. Commissioner Rosch believes the Commission may need to move more towards “behavioral 

economics” and must provide competition law enforcement at least as strict 

as during times of prosperity. Lax antitrust enforcement during economic recession can result in a 

deepening of contraction. Competition, which spurs innovation, productivity, growth, and cost effectiveness, must be protected. Equally important is providing meaningful and consistent protection 

to consumers in the financial services sector and providing that leadership through a proven, existing 

consumer protection agency like the FTC.
28 The FTC in 2009

3 Waterjet Cutting Systems. The Commission intervened in Flow International Corporation’s proposed $109 million acquisition of rival waterjet manufacturer OMAX Corporation. 

Both companies develop, manufacture, and sell computerized waterjet cutting systems which 

use pressurized water mixed with abrasive garnet particles to cut various materials, including 

steel and stone. The Commission alleged that the proposed acquisition would have united 

the two largest competitors in the market for the manufacture and sale of computerized waterjet cutting systems and allowed Flow to exercise market power and increase prices. Furthermore, the Commission charged that new entry would be very unlikely because OMAX 

received two broad patents relating to the control systems for waterjet cutting systems. The 

Commission approved a consent agreement requiring OMAX to grant any request for a 

royalty-free license for its controller patents.

E. Consumer Goods and Services Enforcement

The Commission also focuses its enforcement resources on mergers and anticompetitive business practices that threaten competition in a wide variety of consumer goods and real estate markets 

because these markets have great impact on consumers every day. The Commission’s merger investigations in such cases can be very time and resource intensive because they require the examination of 

market conditions in dozens, or sometimes hundreds, of local markets and often involve the analysis 

of extensive retail pricing data. This year, the Commission brought new merger enforcement actions to protect competition in markets for such products as spices, bulk fertilizer, and paving stones. 

In addition, it challenged a market division agreement between two golf equipment retailers and 

brought another case challenging the rules of a real estate Multiple Listing Service.

3 Premium Natural and Organic Supermarkets. The Commission brought to a successful 

close its challenge to Whole Foods Market, Inc.’s 2007 acquisition of Wild Oats Markets, 

Inc., through a consent order that will substantially restore competition among premium 

natural and organic supermarkets in 17 geographic markets impacted by the merger. Whole 

Foods agreed to settle FTC charges 

that the acquisition violated the 

antitrust laws by transferring or 

divesting rights in 32 Wild Oats 

stores, along with intellectual 

property and related assets, to one 

or more Commission-approved 

buyers. The consent order concludes the Commission’s adminSaturday, March 7, 2009

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Whole Foods to Sell 31 Stores in FTC Deal

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Whole Foods Market Inc. agreed Friday to disgorge many of the Wild Oats Markets Inc. stores it

purchased in 2007, settling with the Federal Trade Commission a long-running case over the

$565 million deal.

THE WALL STREET JOURNAL.
Section One: Competition Mission 29

istrative proceeding and 

federal court action before 

the U.S. District Court for 

the District of Columbia.

3 Vodka. The Commission intervened in Pernod 

Ricard SA’s proposed $9 

billion acquisition of V&S 

Vin & Spirit to preserve 

competition among suppliers of “super-premium” 

vodka. The Commission 

charged that the proposed 

deal would have merged 

the two leading brands, 

Absolut and Stolichnaya, 

and would have allowed Pernod to raise prices on both brands. Additionally, the Commission contended that as a result of the proposed acquisition, markets for cognac, domestic cordials, coffee liqueur, and popular gin also would be subject to anticompetitive effects because 

sensitive pricing and promotion information for Beam Global Brands, a competitor in these 

product markets, would be available to Pernod as a result of Beam’s joint venture with V&S. 

The Commission settled the charges by requiring Pernod to divest its distribution interests in 

Stolichnaya Vodka and to erect a firewall to prevent the sharing of any competitively sensitive 

information from Beam Global Brands with Pernod employees.

3 Spices. The Commission intervened in McCormick & Company’s $605 million acquisition 

of Lawry’s and Adolph’s brands of seasoned salt products from Unilever N.V., alleging that the 

transaction would be detrimental to competition in the highly concentrated U.S. market for 

seasoned salts. According to the Commission’s complaint, the proposed deal would combine 

the two companies that comprise almost the entire $100 million market for seasoned salt, 

increasing the likelihood that McCormick would be able unilaterally to increase prices. McCormick agreed to divest its Season-All business to Morton, an FTC-approved buyer, within 

10 days of completing the acquisition.

3 Class Rings and Commemorative Products. As a result of the Commission’s investigation 

into potential anticompetitive effects in the market for the manufacture and sale of comNorman Armstrong, Jr. - BC

As Acting Deputy Director of the Bureau 

of Competition, Norm has overseen some of 

the Bureau’s most important merger matters, 

including Whole Foods/Wild Oats, CRH/Pavestone, Dow/Rohm and Haas, and Herff Jones/

American Achievement Corporation. Norm 

started as a staff attorney with the Bureau in 1995 and has 

been involved in over thirty investigations in various industries 

including pharmaceuticals, defense, medical devices, energy 

and consumer goods. In 2007, he was appointed Counsel to the 

Director. Shortly thereafter, he was appointed Deputy Assistant 

Director of the Mergers IV Division where he played an integral 

role in, among other things, the Inova/Prince William Hospital 

litigation.
30 The FTC in 2009

memorative products, including class rings, Herff Jones abandoned its proposed acquisition of 

American Achievement Corporation.

3 Concrete Hardscape Products. The Commission issued an administrative complaint to 

challenge Oldcastle Architectural’s proposed $540 million acquisition of Pavestone Companies, claiming the acquisition was likely to have anticompetitive effects in markets for drycast 

concrete hardscape products sold to home center retailers such as The Home Depot, Lowe’s, 

and Wal-Mart Stores. These products, such as concrete pavers, segmented retaining wall blocks, and 

concrete patio products, are used by 

consumers in do-it-yourself outdoor 

projects. The Commission charged 

that the acquisition would have 

combined the only two companies 

capable of competing on a national 

scale, giving them significant cost 

advantages compared to regional 

competitors and giving Oldcastle a 

90% market share for the manufacture and sale of these drycast products to home centers in nearly 300 metropolitan areas in 40 states and the District of Columbia. The Commission successfully blocked the transaction when the companies abandoned 

their merger plans after the complaint was filed.

3 Consumer Pregnancy Tests. The Commission eliminated the restraint on future competition allegedly created when Inverness Medical Innovations purchased assets related to the 

development of a new water-soluble dye based consumer pregnancy test from ACON Laboratories in order to protect its monopoly power in the market for consumer pregnancy tests. 

Inverness, the maker of brand name consumer pregnancy tests such as ClearBlue, Accu-Clear, 

and FactPlus, has 70% of sales. The Commission charged that Inverness restrained competition by: (1) preventing ACON from developing new digital consumer pregnancy tests by 

issuing covenants not to compete, taking profits from an ACON joint venture to develop 

new tests, and acquiring intellectual property rights in the technology from the joint venture; 

and (2) limiting product innovation by purchasing, but not using, ACON’s water-soluble 

dye test technology. The Commission’s consent order ended any restrictions Inverness had 

“We were ready to present at trial compelling 

evidence that the combination of Oldcastle and 

Pavestone would have led to higher prices and other 

harmful effects in the sale and manufacture of drycast concrete hardscapes used in walkways, patios, and garden walls. The parties’ decision to not 

proceed with the transaction in the face of our court 

challenge is a win for those do-it-yourselfers and 

other consumers who buy these products for their 

home improvement projects.” 

David Wales, Acting Director, BC

(press release, January 15, 2009)
Section One: Competition Mission 31

placed on ACON’s joint venture and required that Inverness divest its assets relating to the 

water-soluble dye technology.

3 Bulk Fertilizer Stores. The Commission charged that Agrium, Inc.’s $2.65 billion proposed acquisition of UAP Holding Corporation would substantially lessen competition in 

the market for the retail sale of bulk fertilizer and, in some cases, related services by farm 

stores, in several local markets in Michigan and Maryland. The proposed acquisition allegedly would eliminate important competition between Agrium and UAP, allowing Agrium to 

increase prices to fertilizer buyers. The Commission’s order requires the divestiture of seven 

farm stores, five UAP stores in Michigan, and two Agrium locations on the eastern shore of 

Maryland.

3 Golf Merchandise Stores. The Commission issued a consent order to settle concerns that 

Golf Galaxy, a subsidiary of Dick’s Sporting Goods Inc., entered into an illegal agreement 

with Golf Canada to allocate the market for golf merchandise in the U.S. and Canada. The 

agreement barred Golf Canada from opening stores in the U.S. in exchange for privileged 

business information from Golf Galaxy, including blueprints, merchandising plans, and 

sales reports. The Commission’s consent order prevents Golf Galaxy from further dividing 

or allocating the market and rendered its 2004 non-compete agreement with Golf Canada 

unenforceable.

3 Multiple Listing Service Rules. Over the past several years, the Commission has maintained an active enforcement program to challenge restrictive rules of real estate MLS organizations that impede competition from non-traditional and discount real estate professionals. 

This year, the Commission heard oral arguments in the staff’s appeal of a December 2007 de the Commission heard oral arguments in the staff ’s appeal of a December 2007 decision by an FTC administrative law judge dismissing an administrative complaint charging 

Realcomp with violating Section 5 of the FTC Act. Realcomp is an MLS operating in Southeastern Michigan that prevented information on Exclusive Agency listings and other forms of 

nontraditional listings from being transmitted from its multiple listing service to public real 

estate websites. This year, the Commission also challenged the conduct of West Penn MultiList, operator of the only MLS service for the Pittsburgh metropolitan area, alleging that the 

restrictions on access to its MLS services were anticompetitive. West Penn, the complaint 

charged, limited brokers who utilized its services by requiring each broker to have a traditional full-time listing agreement with its sellers, thus restricting the use of valuable MLS services 

by non-traditional and discount brokers. To remedy the antitrust concerns, the Commission issued a consent order that prohibits West Penn from adopting or enforcing rules that 

(1) require brokers to comply with the MLS form contract and submit copies of their list-
32 The FTC in 2009

ing contracts to the MLS, and (2) discourage brokers and home sellers from contracting for 

services for terms of less than a year. 

3 Musical Instrument Trade Association Pricing Exchange. The National Association of 

Music Merchants (NAMM) agreed to settle FTC charges that it encouraged members to 

share information about prices and business strategy, 

which enhanced members’ ability to coordinate price 

increases for musical instruments. The Commission alleged that NAMM, a group of 9,000 makers, distributors 

and dealers of musical instruments, organized meetings 

at which competing retailers discussed strategies for raising prices, including how to implement manufacturers’ 

minimum advertised pricing policies. Under the Commission’s order, NAMM is barred from coordinating 

the exchange of pricing information among competing 

retailers, and must implement an antitrust compliance 

program.

F. Other Enforcement Matters

3 Premerger Filing Violations. The FTC administers the HSR premerger notification program for both the FTC and Department of Justice (DOJ) Antitrust Division. This program 

is a critical tool in the government merger enforcement program and is used to identify and 

investigate proposed acquisitions that may be anticompetitive. The Commission is dedicated 

to investigating potential violations of the HSR rules and bringing civil penalty actions when 

appropriate to preserve this important program. This year, the Commission filed, with DOJ 

authorization, a civil penalty action against two investment funds for violating the premerger 

reporting requirements of the HSR Act. ESL Partners, L.P. and ZAM Holdings, L.P. paid 

$525,000 and $275,000, respectively, to settle charges that the two had acquired voting 

securities in Autozone, Inc., without filing the necessary premerger notification forms. The 

Commission alleged that the purchases, when added to earlier purchases of Autozone, Inc.

securities, met the financial thresholds for reportability under the HSR Act.

3 Subpoenae Compliance. The Commission sought a federal court order for Take-Two 

Interactive Software, Inc. to produce documents requested by a Commission administrative 

subpoena and a Civil Investigative Demand issued during an investigation of the proposed 

acquisition of Take-Two by Electronic Arts Inc. The federal court for the District of ColumIncreases in Maximum

Civil Penalties

The Commission published updated 

maximum amounts for certain civil 

penalty provisions, based on changes 

in the Consumer Price Index, as 

required by the Federal Civil Penalties 

Inflation Act. The revisions include 

increased penalty amounts up to 

$16,000 a day for a violation of an FTC 

rule or administrative order or of the 

premerger filing requirements of the 

HSR Act.
Section One: Competition Mission 33

bia issued an order to show cause to Take-Two, and the company subsequently produced 

documents and witnesses on matters responsive to the initial requests.

3 Order Modification. The Commission granted, in part, a petition from Nine West Group, 

Inc. to modify a 2000 order prohibiting the women’s footwear company from fixing retail 

prices with dealers. The modified order, which follows the Supreme Court’s recent decision 

in Leegin Creative Products, Inc. v. PSKS, Inc., allows Nine West to engage in resale price 

maintenance (RPM) agreements with dealers and requires the company to provide periodic 

reports on its use of RPM agreements so the Commission can analyze the effects of such 

agreements on competition.

Chapter 2: Competition Policy Tools

To support its enforcement work and promote competitive outcomes in other markets, the FTC 

uses a wide variety of policy tools, such as rulemakings, research and reports, workshops, advocacy 

filings, amicus briefs, speeches, and testimony before Congress. This work helps inform the Commission and others about emerging legal and economic issues affecting competition enforcement. 

Through “competition R&D,” the agency invests in its resources to maintain its expertise, and shares 

important information with other policymakers, the antitrust bar, businesses, and the general public, 

thereby continuing to provide leadership on competition policy.

A. Studies and Reports

The Commission continues to address antitrust issues of national importance through conducting research 

and issuing reports. In the past year, 

Commission staff worked on a number 

of projects relating to health care, as well 

as staff working papers on evolving legal 

standards for single-firm conduct.

3 Hospital Merger Retrospectives. In late 2008 and early 2009, the Bureau of Economics 

released three separate studies that examined the effect of consummated hospital mergers 

on inpatient prices. Each study used detailed insurance claims data to compare post-merger 

price changes for the merging parties to the price changes for a set of control group hospitals. 

The studies examined consummated hospital mergers in Oakland, California, Evanston, Illinois, and Wilmington, North Carolina.

“A vital aspect of the FTC’s mission is to exercise the unique mix of institutional capabilities 

that Congress has entrusted to it... which include 

law enforcement, administrative adjudication, 

advocacy, the collection of data, the preparation 

of reports, and rulemaking.” 

Federal Trade Commission at 100: Into Our 2nd Century

(January 2009)
34 The FTC in 2009

3 Medicare Prescription Drug Agreements. The Commission issued its annual summary of 

agreements filed with the agency in fiscal year 2007 by generic and branded drug manufacturers under the Medicare Prescription Drug, Improvement, and Modernization Act. According to the report, of the 33 final settlements filed, nearly half included both compensation to the generic company and a restriction on the generic’s ability to market its product. 

Of those, 79% involved agreements with first-filer generic companies. Another finding in 

the report is that most of this year’s agreements that contained restrictions on generic entry 

did not include a side deal involving elements not directly related to the resolution of the 

patent dispute. Instead, the majority involved compensation to the generic firm through an 

agreement by the branded firm not to sponsor or compete with an authorized generic product for some period of time.

3 Merger Investigations Data. To promote transparency in merger enforcement, the FTC 

released an update of horizontal merger investigations data that describes the transactions 

that took place between fiscal years 1996 and 2007. The update expands the set of mergers 

analyzed by adding two more years to the agency’s database.

3 Merger Efficiencies Paper. The Bureau of Economics released an economic issues paper 

outlining the treatment of efficiencies in FTC merger matters. The study examined the 

10 years following the 1997 issuance of the expanded efficiencies section in the Horizontal 

Merger Guidelines. The paper considers 186 mergers reviewed by the FTC, reporting on 

how efficiencies claims were analyzed within the agency.

3 Authorized Generics Study. The Commission is conducting a special study on authorized 

generic drugs. The study is intended to help understand the circumstances under which 

innovator companies launch generics; to provide data and analysis regarding the effects of 

authorized generics on short-run price competition, particularly during the Hatch-Waxman 

Act’s exclusivity period, and on long-term prospects for generic entry; and to add to the 

research on the effect of generic drug entry on prescription drug prices. In 2008, branded 

and generic pharmaceutical manufacturers and marketers responded to information requests 

specified in Commission orders. Staff is preparing a report that will present the study’s findings.

3 Single-Firm Conduct and Section 2 of the Sherman Act. Commission staff published 

four working papers based on discussions from the joint FTC and DOJ Hearings on Enforcement of Section 2 of the Sherman Act. The first paper surveys Section 2 cases during a sevenand-a-half-year period and discusses the benefits and costs of pursuing clear rules, including 

an analysis of the false positives/false negatives debate. The second evaluates frameworks 
Section One: Competition Mission 35

that have been proposed 

for analyzing single-firm 

conduct: the Microsoft 

rule-of-reason approach 

and its “disproportionality” 

variant; the no-economicsense and profit-sacrifice 

tests; the equally-efficientcompetitor test; and the 

impairing-rivals’-efficiencytest. A third paper examines the meaning of 

monopoly power and the 

challenges posed in defining markets in Section 2 

contexts. Finally, in a paper titled Cheap Exclusion: Role and Limits, staff examines the legal 

and policy issues raised by using Section 2 to challenge deceptive conduct and other similar 

practices collectively known as “cheap exclusion.”

B. Hearings, Workshops, and Conferences

The Commission organizes public hearings, workshops, and conferences to gain a deeper understanding of the complex economic and legal issues surrounding various antitrust issues and to help 

it develop effective policy research and development tools. These events generally bring together 

experts from various legal, business, academic, and government backgrounds to exchange ideas, challenge positions, and reflect on new issues to study.

3 The Evolving IP Marketplace. The FTC is hosting a series of workshops to explore the 

evolving market for intellectual property (IP). To date, there have been three hearings to 

examine changes in IP law, patent-related business models, and new learning about the operation of the IP marketplace since the issuance in October 2003 of the Commission report 

To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy. The 

first hearing consisted of three panels that addressed different issues related to the evolving 

IP marketplace including business models, proposed changes in remedies law, and application of legal doctrine to the value and licensing of patents. The second focused on damages 

in patent cases, and the third discussed recent changes in permanent injunction and willful 

James Baker – OED

As Assistant Chief Financial Officer for 

Budget, James works with the Bureaus and 

Offices, the Chairman and Commissioners, 

the OMB examiners, and Congressional appropriators to ensure that the FTC’s budget 

needs are met and the taxpayers’ money is 

spent appropriately. He also helps draft the agency’s Strategic 

Plans, Performance Plans, and the Performance and Accountability Report (PAR), for which the agency won the Association 

of Government Accountants Certificate of Excellence Accountability Reporting (CEAR) Award in 2008. James received the 

Outstanding Team Award in 2003; the Richard C. Foster Award in 

2007, the Janet D. Steiger Award in 2008.
36 The FTC in 2009

standards in the wake of the eBay and Seagate decisions. Additional workshops will be held 

in 2009.

3 Emerging Health Care Competition and Consumer Issues. The FTC held two roundtables on emerging health care competition and consumer issues. The first focused on the 

competitive significance of health care quality information. The second roundtable featured 

a discussion of competition that could be provided by developing an abbreviated regulatory 

approval pathway for follow-on generic biologic drugs. The Commission issued a Federal 

Register notice requesting public comments on both events.

3 Clinical Integration in Health Care: A Check-Up. The Commission hosted a public workshop to discuss developments in “clinical integration,” a type of collaboration among health 

care providers that may improve quality and contain cost.

3 Innovations in Health Care Delivery. In a one-day public workshop, the Commission 

examined the competition and consumer issues raised by recent health care delivery trends. 

In particular, workshop participants discussed: (1) limited service clinics, also called retail 

health facilities or retail clinics; (2) price and quality transparency; and (3) health information technology.

3 Hart-Scott-Rodino Workshop. In recognition of the 

30th Anniversary of the implementation of the HSR 

Antitrust Improvements Act, the Commission held a 

workshop on the basics of HSR premerger notification, covering such topics as how to determine whether 

premerger notification is required and how to prepare an 

HSR filing. Experts on HSR Rules provided answers to 

common questions and discussed hypothetical transactions to illustrate common filing scenarios. The session was attended by lawyers who are new 

to the process of completing premerger notification forms; a webcast of the training session 

can be viewed on the workshop webpage.

3 Section 5 as a Competition Statute. The FTC held a public workshop to explore the full 

scope of the prohibition against unfair methods of competition outlined in Section 5 of the 

FTC Act. The workshop focused on three subject areas: (1) the history of Section 5, including enactment, FTC enforcement, and the reaction of various courts; (2) the range of possible interpretations of Section 5; and (3) examples of business conduct that may be unfair 

methods of competition under Section 5.
Section One: Competition Mission 37

3 Resale Price Maintenance.

The FTC is hosting a series 

of public workshops on 

RPM to examine, for the 

purposes of enforcing Section 1 of the Sherman Act 

and Section 5 of the FTC 

Act, how best to distinguish between uses of RPM 

that benefit consumers and 

those that do not. The first 

two sessions, held in February, focused on theories 

of economic benefits and 

harms of RPM. Additional 

RPM workshops will be held in 2009.

C. Advocacy Letters and Comments

Providing policymakers with a framework to analyze competition issues is an important component of the Commission’s mission to promote competition for the benefit of consumers. Government imposed impediments can be among the most durable and effective restraints on competition. 

Thus, in response to requests, the FTC advises state and federal entities on the potential competitive 

impact of pending governmental actions that may have a major impact on consumers’ wallets.

3 Limited Service Clinics. The Commission staff provided comments on proposed Illinois 

legislation to establish regulatory requirements for LSCs, sometimes referred to as retail 

health care facilities or retail clinics. The letter noted such facilities may expand access to 

health care and recommended that ambiguous, potentially anticompetitive provisions be 

clarified. Further, the letter suggested that certain other provisions that appeared unduly 

burdensome to certain competitors be struck or, alternatively, narrowly tailored to meet 

documented policy needs if there were evidence of health or safety risks associated with retail 

clinic practice.

3 Certificate of Need. The Commission submitted written testimony to the Florida Senate on 

a bill that would eliminate certificate of need (CON) requirements for several categories of 

health providers. The testimony supported the bill’s effort to reduce the scope of the Florida 

CON regime and noted such laws can be a barrier to entry. Also in 2008, a joint FTC/

Christopher Grengs – OPP

As an Attorney Advisor in the Office of 

Policy Planning, Chris works with staff across 

the Commission coordinating research and 

advocacy efforts on a wide variety of complex legal and economic policy issues. As 

a member of the FTC’s Internet Access Task 

Force, he has been a substantial contributor to staff reports on 

the Municipal Provision of Wireless Internet and Broadband 

Connectivity Competition Policy. Notably, Chris also worked on 

recent staff comments before the Federal Reserve on mortgage 

lending and the Department of Housing and Urban Development 

on mortgage disclosure reform, as well as staff’s Noerr-Pennington report.
38 The FTC in 2009

DOJ statement to the Illinois Task Force on Health Planning Reform stated that CON laws 

generally undercut consumer choice, stifle innovation, and weaken markets’ ability to contain 

health care costs.

3 State Energy Comments. The FTC commented on the Pennsylvania Public Utility Commission’s proposed Energy Efficiency and Conservation Program for electric power companies. The FTC recommended that the PUC: (1) encourage real-time or other dynamic 

pricing programs that increase economic efficiency; (2) urge utilities to design and market 

dynamic pricing programs that appeal to customers; (3) eliminate regulatory provisions that 

financially penalize power suppliers if they facilitate efficient dynamic pricing; (4) offer fair 

standby pricing policies for customers with onsite generation investments; and (5) advocate 

for demand response bid flexibility. The Commission also submitted comments to the Arizona Corporation Commission (ACC) on similar issues concerning retail electricity competition. The comment, which referenced the FTC’s comments to the Pennsylvania PUC, 

encouraged the ACC to consider the recommendations of the five-agency report to Congress 

(to which the Commission contributed) on electric market competition and to examine dynamic pricing as a means to address a wide array of electric system problems.

3 Federal Energy Comments. The Commission submitted two separate comments to the 

Federal Energy Regulatory Commission (FERC), one concerning that agency’s proceeding 

to set standards of conduct for transmission providers, and the other concerning proposals to 

strengthen competition in organized electric power markets. The FTC encouraged FERC to 

consider structural alternatives to the behavioral approach on which FERC has relied. The 

FTC also encouraged FERC to facilitate improvements in pricing and direct load control – 

collectively known as “demand response.” The Commission stated, “a focus on removal of 

regulatory obstacles to efficient real-time price signals and demand response at the federal 

and state levels can be an important step toward appropriate, efficient reliance on conventional price mechanisms to handle scarcity and guide investment.”

3 Taxi/Land Transportation Permits. The FTC staff provided comments to the Colorado 

Public Utilities Commission concerning a revised application process to provide taxi service. 

In situations where an applicant initially demonstrates its operational and financial fitness, 

the comments conclude new entry is highly unlikely to harm the public interest and, in some 

instances, has generated consumer benefits in the form of lower prices and improved service. 

The FTC staff noted that although special issues have sometimes arisen following regulatory 

reform, as in the case of taxicab stands at airports, they do not provide an argument against 

new entry, generally.
Section One: Competition Mission 39

3 LaGuardia Congestion Management. In comments to the Federal Aviation Administration (FAA), the FTC staff supported a proposed congestion management rule for LaGuardia 

Airport, under which the FAA would auction a limited number of landing and take-off slots 

for a 10-year ownership period. The Commission staff argued that slot auctions could help 

relieve airport congestion and efficiently allocate scarce airport capacity and urged the FAA to 

consider other market-based solutions, such as congestion pricing.

3 Unauthorized Practice of Law. The FTC and DOJ filed joint comments with the South 

Carolina Supreme Court, advising that certain proposed guidelines for residential and commercial real estate closings be modified to foster competition between non-attorneys and attorneys.

D. Rulemaking

3 Rulemaking on Manipulation in Oil and Gasoline Industry. Rising energy prices gripped 

the nation last summer, and the Commission tasked attorneys, economists, and other staff 

throughout the agency to assess the need for a Commission rule to address price manipulation in petroleum markets. In May, the Commission issued an Advance Notice of Proposed 

Rulemaking and elicited the views of a wide spectrum of consumer groups, businesses, academic experts, and other informed sources on the issue of how to define and prosecute market manipulation. In August, the Commission issued a Notice of Proposed Rulemaking with 

the text of a proposed rule, inviting further public comment on the specifics of the proposal. 

The Commission then held a public workshop, featuring more than 20 panelists representing 

diverse interests and views. The Commission is currently considering these views.

E. Congressional Testimony

3 Small Business Competition Policy. In 

September 2008, the Commission presented testimony before the U.S. House 

Committee on Small Business titled Small 

Business Competition Policy: Are Markets 

Open for Entrepreneurs? The testimony 

emphasized that while the FTC does not 

prefer large firms or small ones, small 

businesses benefit from the Commission’s 

goal of ensuring an open and honest marketplace where all businesses can compete for the consumer dollar.

“A successful competitive economy requires open markets – markets that are open 

to new ideas, and to succeeding waves of 

innovation and entrepreneurs that will challenge old ideas and outdated ways of doing 

things. Small businesses can be an important vehicle for these competitive forces, but 

only if the antitrust laws protect, and require, 

open markets and competition for all.”

Then Chairman Kovacic, Testimony before

 the House Committee on Small Business,

September 25, 2008.
40 The FTC in 2009

Chapter 3: Competition Education and Outreach

To fulfill its competition mission, the Commission uses education and outreach to help prevent 

consumer injury, increase business compliance with the antitrust laws, and augment its law enforcement efforts. Through its outreach efforts, the Commission provides transparency and answers 

questions about the agency’s competition mission. The Commission targets its message to particular 

audiences to help explain the antitrust laws and its work. Resources are available in print and online 

for use by consumers, businesses, attorneys, and international, federal, state, and local agencies.

3 FTC Guide to the Antitrust Laws. The Commission introduced a 

new resource to answer general questions about the antitrust laws. 

The Guide to the Antitrust Laws is a web-based resource, with links to 

statutes, competition enforcement actions, and other guidance 

materials available from the Commission, such as the Horizontal Merger Guidelines, Guidelines for Collaborations Among 

Competitors, and other policy statements. The Guide contains 

downloadable Fact Sheets on Dealings Among Competitors, 

Dealings in the Supply Chain, Single Firm Conduct, and Mergers, with case examples and answers to Frequently Asked Questions. The Guide is available on the agency’s website at

ftc.gov/bc/antitrust/. 

3 Bureau of Competition User’s Guide. The User’s Guide describes 

the work of the Bureau of Competition and who to contact about 

competition issues. The User’s Guide contains information about 

the Offices and Divisions of the Bureau of Competition, describes 

the type of investigations conducted by each shop, and includes 

contact information for managers and staff. The User’s Guide, 

updated annually, is available in print and online.

3 YouAreHere Website. The FTC’s new website for kids and tweens contains lessons and 

information about how all consumers benefit from competition among businesses at our 

virtual mall. In the food court, kids can learn about the benefits of price and non-price competition among pizza vendors, and how a merger between ice cream vendors can affect prices 

and variety.

Learn how the FTC helps businesses compete and consumers buy smart.
Section One: Competition Mission 41

3 Website Improvements. The FTC continues to improve the competition resources available 

on the FTC’s website. This year, the Commission revamped its HSR webpages to provide 

easy access to the resources most used by HSR practitioners. The site also includes new tip 

sheets to answer basic questions about the HSR statute and rules. In October, in recognition of the 30th anniversary of 

the implementation of the HSR 

premerger notification program, 

the staff of the Premerger Notification Office held a Back to 

Basics workshop. Staff helps HSR practitioners comply with HSR notification requirements; 

each year they respond to thousands of telephone calls seeking information concerning the 

reportability of transactions under the HSR Act and the details involved in completing and 

filing the Notification and Report Form.

3 FTC Competition Enforcement Actions Database. This spring, the Commission will 

introduce a web-based resource that catalogs its competition enforcement actions by the type 

of violation (merger/nonmerger), action (consent order, injunction, or administrative complaint), sector, and date. Users will be able to view short descriptions of each action, with 

click-through access to related documents, such as press releases and case filings.
42 The FTC in 2009
43

Section Two: 

Consumer Protection 

Mission

This bas relief, designed by Chaim Gross, is one of a series of four over door stone panels on the 

Federal Trade Commission building, known collectively as Americans at Work, Past and Present. 

The work was commissioned by the Treasury Department’s Section of Painting and Sculpture; each 

sculptor was asked to select a subject suggesting the nation’s enterprise. Gross chose Industry, as 

illustrated by the steelworkers he saw laboring day and night in New York City. The other bas reliefs 

included Shipping by Robert Laurent, Agriculture by Concetta Scaravaglione, and Foreign Trade

by Carl Schmitz. Initially, Gross submitted two sketches of welders for the panel. In response, the 

Section of Painting and Sculpture suggested he consider depicting a riveter and his assistant.

Text drawn from General Services Administration website
44 The FTC in 2009
Section Two: Consumer Protection Mission 45

Section Two: 

Consumer Protection Mission 

The FTC works to protect consumers from fraudulent, deceptive, and unfair practices in 

the marketplace. During the past year, enforcement efforts have targeted problems in the 

rapidly changing financial markets, including deceptive practices in the subprime lending 

and mortgage servicing markets; fraudulent claims by mortgage foreclosure rescue and credit repair 

operations; and illegal discriminatory lending practices. The Commission has also continued vigorous efforts to combat deceptive claims about health care products, telemarketing fraud in its various forms, illegal payment processing systems, fraud in the sale of business opportunities, and fraud 

perpetrated against small businesses. 

In addition, consumer privacy and the protection of consumer data remain a significant focus 

of the Commission’s ongoing efforts. Enforcement actions have targeted various deceptive or unfair 

data security practices. 

The Commission also recognizes the importance of ensuring that there is accurate information 

in the marketplace with respect to energy consumption and the environmental impact of various 

products and services. Therefore, the FTC has embarked on a major “green marketing” initiative 

to address this area – a project that combines law enforcement with studies, workshops, rulemaking 

proceedings, and consumer and business education.

In these and other areas, enforcement actions remain the primary focus of the consumer protection mission. However, the Commission also employs a variety of other tools – rulemaking, consumer education and business guidance, research and reports, public hearings and workshops, and 

the encouragement of self-regulatory initiatives. These efforts combine to inform policymakers, the 

business community, and consumers in ways that are vital to the success of the mission.

Chapter 4: Consumer Protection Law Enforcement

A. Fraud, Deception, and Unfair Practices 

Combating fraud, deception, and unfair practices in the marketplace is one of the FTC’s highest priorities. From March 2008 through February 2009, the FTC filed 64 actions in federal district 

court and obtained 83 judgments and orders requiring defendants to pay more than $371.2 million 

in consumer redress or disgorgement of ill-gotten gains. In addition, cases referred to DOJ resulted 
46 The FTC in 2009

in 15 civil penalty orders and $9.6 million in assessed civil penalties, of which nearly $8.3 million 

has been collected. Furthermore, the FTC approved the issuance of 18 administrative orders. In 

many of its cases, the FTC worked closely with other law enforcement authorities – local, state, federal, and foreign – to achieve the best results for consumers.

Consumer Credit and Related Financial Services. In the current economy, with tightened restrictions on access to capital, the costs and availability of credit are more important than ever 

to cash-strapped consumers. The FTC’s role – to protect consumers from unfair and deceptive credit 

schemes and ensure that they get the information needed to make informed choices about the use 

of credit – remains paramount. Therefore, the FTC continues to be active in the areas of subprime 

credit, payday lending, fair lending, mortgage advertising and servicing, and debt collection and 

settlement.

3 Subprime Credit. The Commission has acted to protect consumers from deceptive practices in the subprime credit card market. A settlement agreement with CompuCredit Corporation requires the company to reverse fees charged to eligible accounts, thus providing 

consumers an estimated $114 million in credits and cash refunds. The Commission’s complaint alleged that CompuCredit had violated the FTC Act by deceptively marketing credit 

cards, primarily through mail solicitations that misrepresented the amount of credit available 

to consumers and also failed to disclose important information about the cost of that credit. 

The FTC closely coordinated its action with related lawsuits filed by the Federal Deposit 

Insurance Corporation.

3 Mortgage Servicing. The Commission announced settlement of the most recent of 23 

actions filed during the past decade alleging deceptive or unfair practices by mortgage brokers, lenders, and servicers. Bear Stearns Companies, LLC and its subsidiary, EMC Mortgage Corporation, agreed to pay $28 million to settle charges that they engaged in unlawful 

practices in servicing home mortgage loans, many of which were subprime loans. The FTC’s 

complaint alleged that Bear Stearns and EMC misrepresented the amounts borrowers owed, 

charged unauthorized fees, and engaged in unlawful and abusive collection practices. In addition to paying $28 million in redress to injured consumers, the companies must cease the 

challenged conduct and institute a data integrity program to ensure the accuracy and completeness of consumer loan information.

3 Foreclosure Rescue. With the recent rapid increase in mortgage delinquencies and foreclosures, the FTC has intensified its efforts to protect consumers from mortgage foreclosure 

rescue scams. The Commission filed six law enforcement actions against defendants allegedly 

engaged in foreclosure rescue fraud, Safe Harbour Foundation of Florida, Inc., Mortgage
Section Two: Consumer Protection Mission 47

Foreclosure Solutions, Inc.,

Foreclosure Solutions, LLC,

National Financial Solutions, LLC, United Home 

Savers, and National Foreclosure Relief, Inc. These 

companies and their principals were charged with 

falsely representing that 

they will stop foreclosure in 

all or nearly all instances, 

and, in some cases, that 

they will refund most or 

all of the fees where foreclosure cannot be stopped. 

Consent judgments have 

been entered in two of the cases. In addition, the Commission has formed or joined seven 

task forces in cities with high foreclosure rates – Tampa, Atlanta, Cleveland, Detroit, Chicago, Los Angeles, and San Francisco – in order to coordinate its efforts with those of state 

and local enforcement agencies.

3 Fair Lending. In its first action charging lender discrimination in mortgage pricing, the 

Commission obtained an order against Gateway Funding Diversified Mortgage Services, L.P. 

and Gateway Funding, Inc. settling charges that the companies violated the Equal Credit 

Opportunity Act in pricing both prime and subprime mortgage loans. The complaint alleged that Gateway gave loan officers discretion to charge, in addition to a risk-based price, 

“overages” that included higher interest rates and higher up-front charges, resulting in higher 

prices for African-American and Hispanic borrowers because of their race or ethnicity. The 

settlement bars the defendants from engaging in discriminatory lending practices and requires them to implement a fair lending training program, as well as a monitoring program 

to analyze disparities in loan prices. The settlement also imposed a $2.9 million judgment, 

with all but $200,000 suspended based on defendants’ inability to pay.

3 Mortgage Advertising. Continuing its efforts to eliminate deception in home mortgage 

advertising, the FTC settled actions against three mortgage lenders, American Nationwide 

Mortgage Co., Michael Gendrolis, d/b/a Good Life Funding, and Shiva Venture Group, Inc., 

d/b/a Innova Financial Group, for ads touting low interest rates and low monthly payments, 

Jan Charter - WRSF

An FTC attorney since 1985, Jan has 

recently applied her energy, tenacity, and skills 

as a litigator to the Commission’s efforts to 

combat scams that target consumers who are 

facing mortgage foreclosure. For example, she 

led the successful litigation team on one of 

the FTC’s first cases in this area, National Hometeam Solutions. 

Jan has worked tirelessly with other federal, state, and local 

agencies to protect vulnerable consumers during this period 

of economic distress and also helped to draft timely consumer 

education materials. Jan’s talents are evident in other assignments. During 2008, Jan spent five months with consumer 

protection and antitrust officials in Peru and Colombia, advising 

them on an array of issues.
48 The FTC in 2009

but not disclosing key, required loan terms. The companies were charged with violating the 

FTC Act by failing to disclose adequately that the low rates and payment amounts would 

increase after a limited period of time. The Commission also charged the advertisers with 

violating the Truth in Lending Act (TILA), and its implementing Regulation Z, by failing 

to disclose repayment terms and the annual percentage rate (APR) in ads stating periodic 

payment amounts. The consent orders bar the companies from advertising a rate lower than 

the rate at which interest actually accrues and listing a monthly payment amount without 

disclosing the time period for which that amount applies.

3 Debt Collection. The Commission obtained its largest civil penalty in a debt collection 

case. Academy Collection Service, Inc. and its owner agreed to pay $2.25 million to settle 

charges that Academy and its collectors violated the FTC Act and the Fair Debt Collection 

Practices Act (FDCPA) by misleading, threatening, and harassing consumers; disclosing their 

debts to third parties; and depositing postdated checks early. The Commission’s agreement 

with CompuCredit also settled charges that its debt collection subsidiary, Jefferson Capital 

Systems, LLC, violated the FTC Act by misrepresenting when credit would be available on 

a credit card promised as part of a debt repayment plan, and violated the FDCPA by engaging in abusive collection practices, such as calling individual consumers more than 20 times 

a day. Jefferson Capital is prohibited from engaging in such deceptive or abusive practices in 

the future.

3 Payday Lending. The Commission actively seeks to ensure that consumers receive the information they need to understand the substantial costs of payday loans. Two payday loan lead 

generators, We Give Loans, Inc. and Aliyah Associates, LLC, d/b/a American Advance, settled 

FTC charges that their Internet advertising stated payday loan costs and repayment periods 

without disclosing required APR information. The administrative consent orders prohibit 

the companies from advertising certain credit offers without also providing key, required 

disclosures, such as the APR. Additionally, the FTC and the State of Nevada together filed a 

federal court action against 10 related Internet payday lenders and their principals, based in 

both the U.S. and the United Kingdom. Cash Today, Ltd. and other entities were charged 

with violating the TILA and Regulation Z by failing to provide U.S. consumers with key 

“Thank you very much for being there for 

consumers . . . we need organizations like 

you to protect people from the crooks. I really 

appreciate your services!!”

Consumer in Virginia
Section Two: Consumer Protection Mission 49

loan terms in writing before consummating their loans. The defendants also were charged 

with violating the FTC Act by using unfair and deceptive collection tactics, including falsely 

threatening consumers with arrest or imprisonment. Pending trial, the Nevada district court 

entered a preliminary injunction against the defendants based in the U.S.

3 Operation Clean Sweep. The FTC and 24 state agencies targeted 36 credit repair operations, charging that they deceptively claimed they could remove accurate and timely negative 

information from consumers’ credit reports. In 10 FTC actions, most of which are currently 

in litigation, the defendants were sued in federal district courts, pursuant to the FTC Act and 

the Credit Repair Organizations Act. The 24 state agency actions included lawsuits filed in 

state or federal court, issuance of cease and desist orders, and initiation of public investigations.

Deceptive Health, Safety, and Weight Loss Claims. Many consumers fall victim to 

deceptive health marketing because they are desperate for help – whether to lose weight, prevent 

or treat colds, or cure very serious diseases, such as cancer or diabetes. Between March 2008 and 

February 2009, the Commission initiated or resolved 25 law enforcement actions challenging false or 

deceptive claims for a variety of products, many of them promoted as treatments for cancer or other 

serious diseases.

3 Operation “False Cures” Cancer Sweep. The FTC announced actions charging 11 companies or individuals with making false or unsubstantiated claims that their products – including laetrile, black salve (a corrosive ointment), essiac tea and other herbal mixtures, coral 

calcium, and shark cartilage – cure or treat cancer. Some complaints also alleged that companies falsely touted clinical or scientific proof for their products. Six of the 11 actions have 

been resolved through settlements that bar future false or unsubstantiated claims and require 

notification to purchasers that little or no scientific evidence exists to demonstrate product 

effectiveness in treating or curing cancer. The letters to consumers urged consultation with 

their doctors about these products. Four of the settlements also required a monetary payment. A default judgment was entered in another matter, and the remaining four cases are 

in litigation before an administrative law judge. The cancer cure cases were the result of an 

Internet surf coordinated among the FTC, the U.S. Food and Drug Administration (FDA), 

and the Canadian Competition Bureau.

3 Cold and Flu Products. As part of a broader investigation into dietary supplements purported to prevent or treat colds or flu, the Commission settled charges that Airborne Health, 

Inc. disseminated false and unsubstantiated claims that Airborne Effervescent Health Supplement prevents or treats colds, protects against exposure to germs in crowded environments, 
50 The FTC in 2009

and is a clinically proven cold remedy. The settlement included payment of at least $23.25 

million, and possibly up to $30 million, for consumer redress, to be administered through 

the redress program for a private class action previously settled in 2007.

3 Diabetes Prevention and Treatment. The FTC resolved charges against Glucorell, Inc., 

Anafit, Inc., and their officers for promoting two products, Insulow and Glucorell R, as effective for preventing and treating diabetes. The Stipulated Order contains an injunction and 

a judgment, suspended based on inability to pay, for $493,543, the total amount of sales for 

the two products.

3 Weight Loss Supplements. A federal district judge imposed monetary judgments of more 

than $15.8 million and issued permanent injunctions against marketers of three dietary 

supplements. National Urological Group, Inc., Hi-Tech Pharmaceuticals, Inc., and other 

corporate and individual defendants were found liable for deceptive sales of purported weight 

loss products Thermalean and Lipodreme, as well as Spontane-ES, a purported treatment for 

erectile dysfunction. The court also held the companies’ medical expert liable for $15,454 

for his deceptive endorsement of Thermalean.

3 Ab Belts. In 2003, the FTC filed an administrative complaint alleging that Telebrands Corporation and its principal, Ajit Khubani, made unsubstantiated claims that their Ab Force 

belt causes loss of weight, inches, or fat; creates well-defined abdominal muscles; and affords 

an effective alternative to conventional exercise. In 2005, the Commission upheld an administrative law judge’s ruling that the ads were false and deceptive, and in 2006, the U.S. Court 

of Appeals for the 4th Circuit affirmed that decision. Pursuant to Section 19 of the FTC 

Act, the Commission then filed a federal court action seeking redress for consumers. The 

defendants have paid $7 million to settle the redress claim.

Telemarketing Fraud. The Commission continues its aggressive efforts to combat telemarketing fraud. A number of significant actions were filed or resolved during the past year.

3 Operation Tele-PHONEY. In the largest sweep ever led by the FTC to target telemarketing fraud, more than 180 cases were filed by the Commission and law enforcement partners, 

including more than 30 federal, state, and local enforcement agencies, as well as Canadian 

authorities at both the national and provincial level. The cases are both civil and criminal, 

alleging fraudulent schemes that harmed thousands of consumers and resulted in losses of 

millions of dollars. The Commission was responsible for 13 of these cases, which involved 

alleged fraudulent representations regarding medical or prescription discount plans marketed 

to the elderly; advance fee loans or credit cards; overpriced household goods supposedly tied 

to charitable causes; magazine subscriptions; and offers of grants, tax refunds, free gift cards, 
Section Two: Consumer Protection Mission 51

or merchandise in exchange 

for consumer bank account 

information. One of these 

cases, Handicapped & 

Disabled Workshops, Inc., 

resulted in a $13.4 million 

judgment, much of it suspended based on inability 

to pay, against defendants 

alleged to have falsely represented to elderly consumers that the purchase of 

overpriced light bulbs and 

garbage bags would benefit 

handicapped and disabled 

people.

3 Suntasia Marketing, Inc. Fourteen defendants in this massive telemarketing scheme have 

agreed to pay more than $16 million to settle FTC charges that they deceptively marketed a 

series of negative option programs, including discount buying and travel clubs. The Commission had alleged that consumers were offered free trial memberships, then deceived into 

disclosing bank account information that was used to make unauthorized debits from their 

accounts. A settlement between the Office of the Comptroller of the Currency and Wachovia Bank, which allegedly processed thousands of unauthorized demand drafts on behalf of 

Suntasia, will provide an additional $33 million to Suntasia victims.

Payment Systems. The 

Commission pursued actions against 

various kinds of operations for 

extracting money from consumers’ 

accounts without authorization or 

padding otherwise legitimate bills. 

3 Neovi, Inc.-Qchex.com. The 

FTC won summary judgment against a company offering online check creation 

services that provided fraud 

“The evidence shows that the launch of Qchex.

com was a ‘dinner bell’ for fraudsters and resulted 

in a high number of accounts frozen for fraud . . . . 

Defendants’ own records show that their failure to 

employ and maintain adequate verification procedures, over approximately six years, led to substantial losses for consumers that had unauthorized 

checks drawn on their bank accounts.”

Judge Janis L. Sammartino, 

FTC v. Neovi, Inc., d/b/a Neovi Data Corp. and Qchex.com, 

Case No. 06CV1952 (S.D. Cal. Sept. 16, 2008), Order Granting 

Plaintiff’s Motion for Summary Judgment.

Debbie Matties – BCP 

Debbie was the Division of Marketing 

Practices’ lead attorney in the Qchex.com 

(Neovi) litigation, targeting an online check 

creation and delivery service that operated 

without any safeguards to prevent fraud. 

Debbie conceived, planned, supervised, and 

took an active part in every aspect of this litigation, successfully 

arguing the motion for summary judgment. Debbie’s hard work, 

her toughness, and her level-headed good judgment, planning, 

and litigation skill resulted in an important district court decision 

that adds significantly to the Commission’s unfairness authority under Section 5. Debbie has just accepted a position as 

Attorney Advisor to Chairman Leibowitz and will concentrate on 

consumer protection issues.
52 The FTC in 2009

operators the means to take money from unwitting consumers’ bank accounts. The company 

was required to disgorge more than $535,000 in revenue from the check creation operation 

and ordered to take specific future steps to verify customer identities and authority over accounts for which they order checks. 

3 Nationwide Connections. The Commission obtained orders prohibiting the cramming of 

unauthorized charges onto telephone bills by the owners and officers of three companies that 

allegedly had billed more that $30 million in bogus collect charges to millions of consumers. 

As a result of the FTC’s lawsuit, the court also permanently banned one of the individual 

defendants from all billing on local telephone bills.

3 Global Marketing Group. A district court granted summary judgment against an individual 

and entered default judgments against 22 corporations that ran an international paymentprocessing operation. The defendants illegally debited millions of dollars from consumers’ 

bank accounts on behalf of Canadian telemarketers selling non-existent credit cards to U.S.

consumers. The final court order imposes an $8.6 million judgment and permanently bars 

the defendants from engaging in telemarketing and payment processing activities.

Fraud Against Small Businesses. The perpetrators of fraud frequently target small businesses. The Commission brought actions against several such operations.

3 WebSource Media, LLC. The defendant was ordered to pay $4.1 million and halt the illegal 

practice of cramming unauthorized charges, for unordered Website services, onto the telephone bills of small businesses and non-profit organizations.

3 Merchant Processing, Inc. The FTC charged marketers of a debit and credit card processing 

services operation with false promises that they could save merchants hundreds or thousands 

of dollars in credit card processing fees. The defendants agreed to a judgment of more than 

$26 million.

3 Datacom Marketing Inc. A federal court ordered two individuals to pay more than $49 

million for their role in a Canada-based operation that deceived U.S. businesses into paying 

for business directories and listings they did not order. The FTC brought the case with the 

assistance of several Canadian law enforcement authorities.

Business Opportunity Schemes. The Commission charged Westbrook Marketing Associates, LLC, Richard Guadagno, and affiliated entities with violating the FTC Act and the Franchise 

Rule by misrepresenting potential profits and earnings in their sale of vending machine business 

opportunities. The court entered summary judgment against most of the defendants and ordered 

them to pay more than $4 million. The Commission also filed a federal court complaint against 
Section Two: Consumer Protection Mission 53

BurnLounge, Inc. and several of its 

principals, alleging a pyramid scheme 

that involved misrepresentations 

to recruit others into selling online 

digital music. One defendant entered a settlement that contained an 

injunction and a judgment of nearly 

$118,000, much of it suspended 

based on inability to pay. Litigation 

against other defendants is ongoing. 

In another matter, Davison Design 

and Development, Inc., the owners 

of an invention promotion operation 

agreed to pay $10 million in consumer redress to settle FTC charges that 

they deceived consumers who paid 

up to $12,000 for misrepresented invention promotion services.

Hispanic Law Enforcement Initiative. The FTC continues aggressively to combat consumer fraud against Hispanics. Since the introduction of the Hispanic Law Enforcement Initiative in 

2004, the FTC has filed 47 actions against 163 businesses and individuals alleged to have fraudulently sold a variety of products and services to Spanish-speaking consumers. Examples of such actions 

this year include: 

3 Prepaid Phone Card Initiative. The Commission filed complaints in federal court against 

two sellers of prepaid telephone calling cards, Clifton Telecard Alliance and Alternatel, Inc., 

alleging misrepresentation of the actual number of minutes purchasers could use and failure 

to disclose other material terms. Both companies marketed to Hispanic consumers placing 

calls to Latin America. To settle the charges, Alternatel has agreed to pay $2.25 million and 

to be bound by an injunction that prohibits future misrepresentations and requires disclosure 

of all fees.

3 International Marketing. The FTC filed suit against the marketer of a work-at-home 

scheme that promised Spanish-speaking consumers earnings of up to $1500 a week for stuffing envelopes. The court found that the defendant’s earnings claims were false and entered 

a default judgment holding him liable for monetary relief to compensate consumers who 

purchased the envelope-stuffing opportunity.

Significant Redress Orders

CompuCredit Corporation $114,000,000

Datacom Marketing Inc. $49,235,402

Kevin Trudeau $37,616,161

EMC Mortgage Corporation $28,000,000

Merchant Processing, Inc. $26,480,041

Suntasia Marketing, Inc. $16,406,335

National Urological Group, Inc. $15,897,890

Handicapped & Disabled Workshops, Inc. $13,477,029

Davison Design and Development, Inc. $10,080,285

Global Marketing Group $8,615,185

Telebrands $7,000,000

QVC, Inc.* $6,000,000

* In addition to $1.5 million in civil penalties.
54 The FTC in 2009

3 Enterprise Who’s Who. The FTC obtained preliminary relief from a federal court to stop 

a Canadian operation from billing businesses in the continental U.S. and Puerto Rico for 

unordered directory listings. The Commission alleged that the defendants, posing as the local telephone company, called businesses to verify contact information and then billed those 

businesses for Internet directory listings. Many of the calls were conducted in Spanish.

Order Enforcement. The FTC's enhanced order enforcement program continues to aggressively monitor compliance with administrative and federal court orders entered in consumer 

protection cases. These enforcement efforts aim to identify violators quickly in order to limit consumer harm, to obtain compensation for injured consumers, and to modify orders when necessary 

to provide additional protection for consumers. Particularly egregious violators are also referred for 

criminal prosecution.

3 Trudeau. Last November, a district court affirmed its 2007 civil contempt finding against 

Kevin Trudeau. The Court found that Trudeau misrepresented the content of his book, The 

Weight Loss Cure “They” Don’t Want You To Know About, by claiming in infomercials that the 

weight loss protocol 

in the book was “easy” 

and ultimately enabled consumers to eat 

“everything” without 

gaining weight. In 

fact, the protocol 

contains hundreds of 

strict mandates, as well 

as life-long dietary restrictions. The Court 

entered a $37.6 million judgment against Trudeau to compensate consumers harmed by his 

infomercials and banned him for three years from disseminating infomercials for books in 

which he has an interest. 

3 QVC. On behalf of the Commission, DOJ previously had filed suit against home shopping 

channel QVC, charging that it violated a 2000 Commission order by making unsubstantiated claims for various dietary supplements. These supplements included weight loss products and Bee-Alive, made with a substance secreted by bees and allegedly promoted to reduce 

fatigue and increase energy in users who have had surgery or suffer from illnesses such as 

fibromyalgia, Lupus, and Epstein Barr virus. The complaint further alleged that QVC violated Section 5 of the FTC Act by making unsubstantiated claims for an anti-cellulite cream. 

“. . . Mr. Trudeau has made abundantly clear that 

nothing short of a complete ban . . . will achieve 

compliance with the court’s previous directives to 

limit the content of his infomercials to non-misleading claims about his books.”

Judge Robert W. Gettleman, 

FTC v. Kevin Trudeau, Case No. 03 C 3904

 (N.D. Ill. Aug. 7, 2008), Memorandum Opinion and Order.
Section Two: Consumer Protection Mission 55

QVC settled the charges by agreeing to pay the Commission $6 million, which may be used 

for consumer redress, and an additional $1.5 million in civil penalties.

3 Timothy Jackson. The FTC initiated a civil contempt action against Jackson for violating a 

2001 federal court order by falsely promising consumers that they could easily obtain government grants for personal uses such as home repair and payment of medical bills. The FTC is 

seeking nearly $8 million for harmed consumers.

3 Walter Rines and Sanford Wallace. The Commission obtained a contempt finding against 

Rines and Wallace for violating a 2006 Order by phishing for consumers’ personal information on the social networking site, MySpace. The court also found Rines in contempt for 

failing to obtain a required bond. The court ordered both contempt defendants to disgorge 

more than $500,000.

3 Express Consolidation. The FTC initiated a civil contempt action against Express and its officers for violating a 2008 order by entering into debt consolidation contracts with consumers in states where the defendants were not authorized to conduct such business. The FTC 

seeks to return to consumers the fees they paid in connection with these illegal contracts.

Criminal Liaison Unit. The FTC created its Criminal Liaison Unit (CLU) six years ago to 

spur an increase in consumer fraud prosecutions through systematic coordination between the FTC 

and criminal law enforcement authorities. From March 2008 through February 2009, federal and 

state criminal authorities have charged 38 FTC defendants and their associates with crimes arising 

from acts investigated or prosecuted by the Commission. During this period, 41 such defendants 

and their associates were convicted or pled guilty. Sentences imposed totaled more than 296 years in 

prison, including five sentences of 20 to 29 years and one 50 year sentence.

3 Kimoto. In 2003, the FTC obtained a $106 million judgment and stringent injunctive relief 

against Kyle Kimoto for his role in a massive international, advance-fee credit card scam. 

Given the magnitude and nature of Kimoto’s fraud, CLU referred the matter to, and worked 

closely with, the U.S. Attorney’s Office in Southern Illinois. In 2007, that office obtained an 

indictment against Kimoto for mail fraud, wire fraud, and conspiracy. On April 18, 2008, a 

federal jury found Kimoto guilty on all 14 counts of the indictment. Based on the enormity 

and audacity of his fraudulent behavior, he received a 29 year prison sentence.

3 MacArthur. In February 2005, the FTC sued Russell MacArthur – a second time – for operating a fraudulent business opportunity, American Entertainment Distributors, Inc. Because 

of MacArthur’s repeated hardcore fraud, CLU referred the case to DOJ’s Office of Consumer 

Litigation (OCL). Later that year, OCL and the U.S. Attorney for the Southern District of 

Florida used evidence developed by the FTC to indict MacArthur and seven others. MacAr-
56 The FTC in 2009

thur had bragged that he could evade law enforcement by running a scam for a year, shutting 

it down, then starting all over again. The cooperative efforts of federal prosecutors, the U.S.

Postal Inspection Service, and CLU proved him wrong. On May 26, 2008, he was sentenced 

to 23 years in prison for mail fraud, wire fraud, and contempt of a 2002 FTC Order.

B. Data Security and Privacy Law Enforcement

Data security and the protection of consumer privacy remain a central focus of the FTC’s consumer protection mission. New technologies undoubtedly provide enormous benefits to consumers. 

At the same time, however, these technologies pose new threats to sensitive consumer data and the 

security of personal computers and email. The FTC is vigorous in its efforts to protect consumers 

from these threats.

Data Security Enforcement. The FTC enforces several laws, in addition to the FTC Act, 

to address data security issues. The Safeguards Rule, under the Gramm-Leach-Bliley Act, contains 

data security requirements for financial institutions. The Fair Credit Reporting Act (FCRA) requires 

consumer reporting agencies to use reasonable procedures to ensure that the entities to which they 

disclose sensitive information have a permissible purpose for obtaining that information. The FCRA 

also imposes safe disposal obligations on entities that maintain consumer report information. To 

date, the FTC has brought 25 enforcement actions challenging inadequate security practices by companies that handle sensitive consumer data.

3 TJX Companies, Inc. The Commission announced a settlement with TJX, which operates 

more than 2,500 stores worldwide, resolving allegations that the company failed to use reasonable and appropriate security measures to prevent unauthorized access to personal information on its computer networks. An intruder exploited these failures to obtain information 

from tens of millions of credit and debit payment cards used to make purchases at the stores, 

as well as the personal information of approximately 455,000 consumers who returned store 

merchandise.

3 Reed Elsevier, Inc./Seisint, Inc. In addition to its challenge to the merger of rivals Reed 

Elsevier and Choice Point, the Commission also reached a settlement agreement with Reed 

Elsevier with respect to data security breaches. Reed Elsevier conducts its data broker business through its LexisNexis division and its subsidiary, Seisint. The companies collect and 

store information about millions of consumers, including names, addresses, dates of birth, 

drivers license numbers, and Social Security numbers. The Commission alleged that because 

of security failures, identity thieves obtained access to sensitive information concerning at 
Section Two: Consumer Protection Mission 57

least 316,000 consumers. This information was used to activate credit cards and open new 

accounts.

Both the TJX and Reed Elsevier settlements require the companies to establish and 

maintain comprehensive security programs designed to protect the personal information they 

collect. In addition, the companies must retain independent, third-party security auditors 

to assess these programs on a biennial basis for 20 years. The auditors must be able to certify 

that company security programs meet or exceed FTC order requirements and operate effectively to afford reasonable assurance of protection for consumers’ personal information.

3 CVS Caremark. The FTC reached a settlement agreement with the largest pharmacy chain 

in the U.S., resolving allegations that the company failed to take reasonable and appropriate 

security measures to protect sensitive financial and medical information concerning customers and employees. The Commission alleged that the information was left in unsecured 

dumpsters in locations across the country. In bringing this action – the first data security 

case involving a health care provider and the first to challenge security practices with respect 

to employee data – the Commission proceeded jointly with the Department of Health and 

Human Services.

3 Gregory Navone. The Commission filed a complaint in district court charging this defendant with violation of the FCRA by disposing of consumer reports, and information derived 

from such reports, in a manner that failed to protect the information against unauthorized 

access. The complaint alleges that Navone disposed of approximately 40 boxes of consumer 

records – including tax returns, mortgage applications, bank statements, photocopies of 

credit cards and drivers’ licenses, and at least 230 credit reports – in a publicly accessible 

dumpster. The matter is currently in litigation in district court in Nevada.

3 Rental Research Services. Rental Research Services, a consumer reporting agency that 

sells tenant screening reports to landlords, has agreed to settle FTC charges that it violated 

the FCRA by failing to screen prospective customers appropriately and, as a result, sold at 

HP/International Association of Privacy Professionals

Privacy Innovation Award

The Hewlett-Packard/International Association of Privacy Professionals Privacy 

Innovation Award was granted to the FTC for its innovative work in protecting personally 

identifiable information. “Creating this sort of enthusiasm and involvement leads to a real 

and positive privacy mindset among employees,” said one judge. Another admired the FTC 

program as, “a very creative idea that achieved a serious and proven result.”
58 The FTC in 2009

least 318 consumer reports to identity thieves. The settlement requires the company and its 

principal to implement new procedures to ensure that consumer reports are provided only to 

legitimate businesses for lawful purposes, to establish and maintain a comprehensive information security program, and to obtain audits by an independent third-party security professional every other year for 20 years. A civil penalty of $500,000 has been suspended due to 

the defendants’ financial condition.

Spyware and Adware. The FTC obtained a temporary restraining order to halt 

a massive “scareware” scheme by Innovative 

Marketing, Inc. According to the Commission’s complaint, the defendants falsely 

claimed that scans had detected viruses, 

spyware, and illegal pornography on consumers’ computers, thereby tricking more than 

1,000,000 people into buying their computer 

security products.

Do Not Call Rule Enforcement. The Do Not Call and related privacy provisions of the 

Telemarketing Sales Rule prohibit most commercial telemarketing to consumers who place their telephone numbers on the National Do Not Call Registry. Over the past five years, the agency has filed 

53 enforcement actions against 101 individuals and 122 corporate defendants for rule violations. 

In 43 of those cases, judgments required payment of more than $17.8 million in civil penalties and 

more than $11 million in consumer redress. During the past year, the Commission announced 

settlements with telemarketers for mortgage and refinancing services (Srikanth Venkataraman, d/b/a 

Scorpio Systems, Ltd.; Software Transformations, Inc.); satellite television systems (Star Satellite, 

LLC; Planet Earth Satellite, Inc.); and vacation packages (Westgate Resorts, Ltd.; All in One Vacations).

CAN-SPAM. The FTC has a long track record in the fight against unsolicited commercial 

email or “spam.” Since 1997, the FTC has pursued deceptive and unfair spam practices through 95 

law enforcement actions against 259 companies and individuals. Of these actions, 32 have targeted 

violators of the CAN-SPAM Act of 2003, which prohibits deceptive sender and subject lines in commercial email and provides consumers the right to opt out of future commercial email campaigns. 

The FTC continued its aggressive enforcement efforts during the past year. In Lance Atkinson, the 

Commission obtained a federal court order halting the operation of a vast international spam network, known as the “Herbal Kings,” that marketed prescription drugs and bogus male-enhancement 

products. New Zealand authorities, working in tandem with the FTC, also took action against this 

Significant Civil Penalty Cases

ValueClick, Inc. $2,900,000

Academy Collection Service, Inc. $2,250,000

QVC, Inc.* $1,500,000

Sony BMG Music Entertainment $1,000,000

Westgate Resorts, Ltd. $900,000

Cyberheat, Inc. $413,000

All in One Vacation Club, Inc. $275,000

* In addition to $6 million in redress.
Section Two: Consumer Protection Mission 59

operation. The FTC also settled 

two cases, Cyberheat and ATM 

Global, as part of its crack-down 

against companies that illegally 

expose unwitting consumers, 

including children, to graphic, 

sexual spam content. Civil penalties in the two matters totaled 

nearly $500,000. Finally, in the 

FTC’s first action under the U.S.

SAFE WEB Act of 2006, which 

strengthens the agency’s ability 

to cooperate and share information with foreign counterparts, the Commission reached a settlement 

with Spear Systems, Inc. and other defendants, located throughout the U.S., Canada, and Australia, 

that used spam email to sell weight loss supplements. 

Children’s Privacy and Security. To make the Internet more secure for children, the FTC 

actively enforces the Children’s Online Privacy Protection Act of 1998 (COPPA) by bringing civil 

penalty actions against operators of child-directed and general audience websites that fail to obtain 

parental consent prior to collecting, using, or disclosing personal information obtained from children 

under age 13. Since the enactment of COPPA, the FTC has brought 14 enforcement actions and 

obtained $2.97 million in civil penalties. In the Commission’s most recent COPPA case, Sony BMG 

Music Entertainment, a subsidiary of Sony Corporation of America, paid a $1 million civil penalty 

to resolve allegations that it knowingly collected a broad range of personal information from at least 

30,000 underage children, who registered on 196 of its music fan sites, while failing to notify parents 

or obtain their consent before collecting or disclosing such information.

C. Consumer Protection Law Enforcement Tools

In an ongoing effort to improve its methods for identifying fraud and deception, as well as 

privacy and data security violations, the FTC maintains various databases for collecting and analyzing information about consumer experiences in the marketplace. Some of these databases, as well 

as other resources, are made available to other law enforcement agencies to enhance their efforts to 

investigate and stop illegal practices.

3 Consumer Response Center. The Consumer Response Center collects key information 

from, and provides key information to, consumers and law enforcement authorities. Last 

year, the CRC handled more than 38,000 inquiries and complaints from consumers and 
60 The FTC in 2009

businesses each week. These contacts come via the FTC’s toll-free numbers (1-877-FTCHELP and 1-877-ID-THEFT), the FTC’s website, and by mail.

3 Consumer Sentinel. Complaint information collected by the FTC is entered into a secure, 

online database within the Commission’s Consumer Sentinel Network. The agency shares 

the nearly 13 million consumer fraud, identity theft, financial, and Do Not Call Registry 

complaints that it collected through December 31, 2008 with 

more than 1,700 law enforcement organizations in the U.S., 

Canada, and Australia. The database enables the FTC and 

its law enforcement partners to spot trends quickly, target the most serious illegal practices reported by consumers, and coordinate law enforcement efforts with its 

counterparts.

3 Do Not Call Registry. The Registry protects consumers from receiving unwanted commercial telemarketing calls. In 2008, the fees collected from telemarketers, sellers, and service 

providers were adjusted in accordance with the Do Not Call Registry Fee Extension Act of 

2007. The Commission also submitted a report to Congress that outlined efforts taken to 

improve the accuracy of the Registry and described new procedures to remove disconnected 

and reassigned numbers. At the end of February 2009, the Registry contained more than 

182 million telephone numbers. In addition, the Registry collects Do Not Call consumer 

complaints that are shared with other law enforcement agencies through Consumer Sentinel. The Registry serves as a model for other countries, and similar programs now operate in 

Australia, Canada, and Mexico.

3 Identity Theft Tools. Since 2002, the FTC, the U.S. Secret Service, and DOJ have provided 

local and state law enforcement officers with practical tools to assist victims of identity theft, 

investigate the crime, and work with local prosecutors. To date, the FTC and its partners, 

now including the U.S. Postal Inspection Service, the American Association of Motor Vehicle 

Administrators, and the FBI, have conducted 35 seminars, training more than 4,600 law 

enforcement officers from more than 1,500 agencies.

3 Spam Database. For more than 10 years, the FTC has maintained an electronic address to 

which consumers and businesses can forward unsolicited commercial email or “spam.” From 

March 2008 through February 2009, this mailbox, spam@uce.gov, received approximately 

188,000 pieces of spam daily. The total amount of spam received by the FTC increased from 

more than 500 million pieces last year to more than 567 million this year. The spam database is important to the Commission’s CAN-SPAM Act enforcement program, as well as to 

cases brought by other federal and state agencies.
Section Two: Consumer Protection Mission 61

Chapter 5: Consumer Protection Policy Tools

In addition to bringing law enforcement actions, the FTC promotes consumer protection interests through several other policy tools. These include engaging in rulemaking proceedings; issuing 

reports; conducting hearings and workshops to explore policy options through dialogue with outside experts and organizations; participating in the work of inter-governmental task forces; testifying before Congress; and making the Commission’s views known through letters or comments to 

other agencies or amicus briefs filed in court. These activities enable the FTC to work with industry 

members, other government agencies, the media, and the public to gather information and establish 

policies that protect consumers.

A. Rules and Guides 

3 Risk-Based Pricing. The FTC and the Federal Reserve Board published proposed regulations that would require a creditor to give a consumer a risk-based pricing notice when, based 

in whole or in part on the consumer’s credit report, the creditor offers or provides credit to 

the consumer on terms less favorable than the terms it offers or provides to other consumers. 

Under the rules, a risk-based pricing notice would be given to the consumer after the terms 

of credit have been set, but before the consumer becomes contractually obligated. The proposed rules also include certain exceptions to the notice requirement. The most significant 

exception permits creditors, in lieu of giving a risk-based pricing notice to those consumers 

Top Consumer Complaints in 2008

Category Number %

Identity theft 313,982 26

Debt collection (third party & creditor) 104,642 9

Shop-at-home and catalog sales 52,615 4

Internet services 52,102 4

Foreign money offers & counterfeit checks 38,505 3

Credit bureaus, information furnishers, credit report users 34,940 3

Prizes, sweepstakes, and lotteries 33,340 3

Television and electronic media 25,930 2

Banks and lenders 22,890 2

Telecom equipment and mobile services 22,387 2

Computer equipment and software 21,442 2

Business opportunities, employment agencies, work-at-home plans 20,286 2
62 The FTC in 2009

who receive less favorable terms, to provide all of their consumers with their credit scores and 

explanatory information. 

3 Guides on Use of Endorsements and Testimonials in Advertising. The Commission published a Federal Register notice seeking public comment on proposed changes to the guides. 

One proposed revision explains that when ads using consumer testimonials convey that the 

endorser’s experience is representative of what consumers generally will achieve, and the advertiser does not possess adequate substantiation for this claim, the advertiser should clearly 

and conspicuously disclose the results consumers actually can expect to achieve, rather than 

simply inserting a disclaimer of typicality.

3 Telemarketing Sales Rule Amendments. The Commission amended the Telemarketing 

Sales Rule to prohibit, as of September 2009 and with certain narrow exceptions, telemarketing sales calls that deliver pre-recorded messages unless the seller has previously obtained the 

recipient’s signed, written agreement to receive such calls. In addition, effective now, at the 

outset of all pre-recorded messages, call recipients must be provided an automated key press 

or voice activated opt-out mechanism.

3 CAN-SPAM Rule Amendments. The Rule was amended to clarify what commercial email 

senders must and must not do to afford recipients the opportunity to opt out of future 

emails. Recipients cannot be required to pay a fee, provide information other than an email 

address and opt-out preferences, or take any steps other than sending a reply email message 

or visiting a single Internet Web page to opt out of receiving future emails from a sender.

Chairman Leibowitz

Childhood obesity is now an alarming problem. In speeches, statements, 

and meetings, Chairman Jon Leibowitz has called on food companies to reformulate their products and reform their advertising to children. In September 2008, 

he testified before Congress: “[W]hether or not food and beverage marketers are 

part of the problem . . . they have to be part of the solution: industry can play an 

instrumental role in influencing children’s food choices and helping to curb the 

obesity epidemic.” Chairman Leibowitz urged more companies to participate in 

self-regulatory programs like the CBBB’s Children’s Food and Beverage Advertising Initiative, and 

others to strengthen their self-regulatory pledges and improve their nutritional standards for foods 

marketed to children.
Section Two: Consumer Protection Mission 63

B. Studies and Reports

3 Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation. The Commission issued a report to Congress based on its study 

of the 2006 advertising expenditures and activities directed to children and teenagers by 44 

major food and beverage marketers. The companies spent approximately $1.6 billion on 

marketing to young people ages 2 to 17, with about $870 million of that amount targeted 

to children under 12. An 

additional $427 million 

was spent on toy premiums 

distributed by quick-service 

restaurants. Television 

advertising dominates the 

landscape of food marketing to kids, accounting for 

46% of the total. However, 

most marketing campaigns 

are fully integrated across 

multiple venues and techniques that also include 

product packaging, supermarket or restaurant 

displays, and the Internet 

– where kids can enter 

contests, play online games, 

and participate in viral marketing. Often food or beverage marketing campaigns involve 

cross-promotions tied to movie releases, TV programs, or video games. The report concludes 

with a number of recommendations for food and beverage companies, media and entertainment companies, and self-regulatory initiative programs. In particular, the Commission recommends that all food and beverage companies adopt meaningful nutrition-based standards 

for products marketed to children under 12.

3 Security in Numbers: Social Security Numbers and Identity Theft. The FTC issued a 

report recommending five measures to help prevent identity theft using Social Security 

numbers. Principal among these recommendations is that Congress consider taking action 

to strengthen the procedures that private-sector organizations use to authenticate their customers’ identities. The Commission concluded that nationwide standards for businesses and 

Reported Total Youth Marketing Expenditures

by Promotional Activity Group

(In Millions of Dollars)

Source: FTC report Marketing Food to Children and Adolescents: A Review of Industry Expenditures, 

Activities, and Self-Regulation. 

Traditional Measured Media

$852.9

 53%

In-Store and Packaging/Labeling

$195.4

12%

Other Traditional Promotions

$241.2

15%

New Media

$76.6

5%

Premiums

$66.9

4%

In-School

$185.5

11%
64 The FTC in 2009

other organizations to verify the identity of new and existing customers would make it more difficult for identity 

thieves to use SSNs and other stolen information to consummate their fraud. The FTC report also recommends 

that Congress consider national standards designed to 

reduce the unnecessary display and transmission of SSNs, 

as well as national standards for data security and breach 

notification. Finally, the report recommends increased 

outreach to consumers and businesses on the protection 

of SSNs, and enhanced coordination and informationsharing among organizations that routinely use SSNs.

3 Online Behavioral Advertising Principles. The Commission staff report recommends four self-regulatory 

principles for online behavioral advertising – the practice 

of tracking consumers’ activities online to provide targeted advertisements. The report was prepared after a 2007 

Town Hall meeting and a subsequent request for comments on proposed principles. Comments came from 87 

stakeholders, including industry members, consumer and 

privacy advocates, academics, and individual consumers. 

3 Debt Collection Workshop Report. The Commission 

issued its report on the 2007 workshop that explored the 

need for changes in the debt collection system to afford 

greater protection to consumers. The report reflects the 

Commission’s determination that the debt collection legal 

system needs to be reformed and modernized to reflect 

changes in consumer debt, the debt collection industry, 

and technology. As explained in the report, the Commission concluded that (1) major problems exist in the flow 

of information within the debt collection system; (2) debt 

collection laws need to be modernized to take account of 

changes in technology; (3) certain debt collection litigation and arbitration practices appear to raise substantial 

consumer protection concerns; (4) debt collection law 

must evolve to include a regulatory process that ensures 

4 Self-Regulatory 

Principles for Online 

Behavioral Advertising

1. Companies collecting data 

for behavioral advertising 

should provide clear, 

concise, and prominent 

disclosure that information 

about consumers’ online 

activities is being collected 

and that consumers can 

choose not to have their 

information collected.

2. Companies that collect and/

or store consumer data 

for behavioral advertising 

should provide reasonable 

security for the data and 

retain data only as long 

as necessary to fulfill a 

legitimate business or law 

enforcement need.

3. Companies must keep prior 

promises regarding the 

handling or protection of 

consumer data and obtain 

consumers’ affirmative, 

express consent before 

using previously collected 

data in a materially different 

way. 

4. Companies should 

collect sensitive data for 

behavioral advertising only 

after obtaining affirmative, 

express consent from 

consumers.
Section Two: Consumer Protection Mission 65

legal requirements keep pace with changes in the marketplace; and (5) debt collection enforcement must be pursued aggressively to deter collectors from engaging in conduct that 

harms consumers.

3 Self-Regulation in the Alcohol Industry. The Commission report examines industry efforts 

to reduce the likelihood that alcohol advertising will target those under the federal minimum 

legal drinking age of 21. This report, which compiles data provided by 12 major alcohol 

suppliers, is the first to present detailed information about how alcohol companies allocate 

promotional dollars. In addition, it provides data on compliance with the industry advertising placement standard, discusses the status of complaint review by external review boards, 

and describes the Commission’s education program to reduce teen access to alcohol.

3 Negative Option Report. The FTC staff issued a report based on its workshop analyzing negative option marketing. The report 

describes the highlights of the workshop 

and, based on the panelists’ recommendations and recent Commission cases, identifies five principles to guide marketers in 

complying with Section 5 of the FTC Act 

when marketing negative option plan offers.

3 Protecting Consumers in the Next Techade. The Commission issued a staff report 

highlighting the challenges of consumer 

protection in the face of emerging and 

evolving technologies in the next 10 years. 

The report summarizes the proceedings of 

the FTC’s three-day public hearings describing how changing technology will inform its consumer protection efforts in the next decade.

C. Hearings and Workshops

3 Phishing Education Roundtable. About 60 experts from business, government, the technology sector, consumer advocacy groups, and academia took part in an FTC roundtable 

discussion about phishing – i.e., the use of deceptive spam that appears to come from a legitimate source to trick consumers into divulging sensitive or personal information. The subse5 Guiding Principles for Marketing 

Negative Option Plans

1. Disclose the material terms of the offer in 

an understandable manner.

2. Make the appearance of disclosures 

clear and conspicuous.

3. Disclose material terms before 

consumers pay or incur a financial 

obligation.

4. Obtain consumers’ affirmative consent to 

the offer.

5. Don’t impede the effective operation of 

promised cancellation procedures.
66 The FTC in 2009

quent staff report highlights possible ways to change consumer behavior to combat phishing 

attempts and notes the various efforts of the participants to fight phishing.

3 Debt Settlement Workshop. FTC staff convened a workshop to examine the growth of the for-profit debt settlement 

industry and the effectiveness of existing consumer protections related to that industry. Participants, including consumer advocates, industry representatives, and state and federal regulators, explored the history and development of the 

industry, regulation and legal developments, advertising and 

marketing of debt relief services, and consumer education. The workshop concluded with a 

panel discussion about the adequacy of existing laws addressing this industry. FTC staff is 

using information gleaned from the workshop to evaluate possible changes in law or policy 

that might assist the agency in protecting consumers who seek debt settlement services.

3 Protecting Personal Information: Best Practices for Business. FTC staff organized three 

public workshops, in Chicago, Los Angeles, and Dallas, on how businesses can secure the 

personal information they collect from consumers. The workshops featured business people, 

attorneys, government officials, privacy officers, and 

other experts discussing data security issues, best 

practices for developing an appropriate data security 

program, and appropriate responses to security problems, including data breaches.

3 RFID workshops. The FTC held two workshops on privacy and security issues associated 

with RFID (radio frequency identification) applications. Both followed up on issues raised 

at the FTC’s 2004 RFID workshop, as well as 

at the Tech-Ade hearings held in 2006. Pay on 

the Go was a Town Hall meeting held in Seattle 

that focused on “contactless” payment applications 

and their implications for consumers. The Transatlantic RFID Workshop on Consumer Privacy and Data 

Security, held in Washington, D.C., explored the deployment of two 

RFID applications – “contactless” payment and item-level tagging in the retail sector – in 

Europe and the U.S., as well as strategies for protecting consumer privacy as the technology 

becomes more prevalent.
Section Two: Consumer Protection Mission 67

3 Consumer Information and the Mortgage Market. This conference, organized by the 

Commission’s Bureau of Economics, brought together academic and research experts from 

several specialties, including 

real estate finance and economics, consumer behavior, 

and information regulation, 

to discuss how consumer 

information and information 

regulation affects consumer 

choices, mortgage outcomes, 

and consumer welfare.

3 Beyond Voice: Mapping the Mobile Marketplace. The Commission hosted a two-day 

town hall meeting to explore the evolving mobile commerce marketplace and its implications 

for consumer protection policy.

3 Fraud Forum. The Commission hosted a two-day forum to explore how the FTC can protect consumers more effectively against fraud in the marketplace.

D. Intergovernmental Task Force

3 President’s Identity Theft Task Force Report. The Task Force, led by the Attorney General 

and the FTC Chairman, released a report documenting the federal government’s progress in 

addressing the problem of identity theft. The Report discusses expansion of the Task Force’s 

existing data security and identity theft business and consumer education campaign; improvement of consumer authentication processes to prevent the use of stolen information to 

commit identity theft; launching new initiatives to help identity theft victims; and improving 

law enforcement tools to investigate and prosecute identity thieves.

E. Advocacy Letters, Comments, and Amicus Briefs

3 Altria Group, Inc. v. Good. The FTC joined in an amicus brief filed in the Supreme Court 

by the United States. The brief urged the Court to reject Altria’s argument that, as a result of 

certain actions taken by the FTC, state law claims brought by a consumer against a cigarette 

company had been impliedly pre-empted. The brief explained that this argument was based 

on a mischaracterization of the role that the Commission has played with respect to the advertising of the tar and nicotine yields of cigarettes. The Court’s decision was consistent with 

the Commission’s position. 

“Economically sound solutions to these problems require an understanding of why current consumer protection policies may have failed, as well 

as an assessment of the likely long-run effects of 

alternative proposed policies on consumer choice 

and competition in mortgage markets.”

Michael Baye, then Director, BE, 

Consumer Information and the Mortgage Market Conference, 

May 29, 2008.
68 The FTC in 2009

3 Cigarette Test Method. The FTC announced its rescission of guidance issued in 1966 that generally permitted 

statements concerning tar and nicotine yields if they were 

based on the Cambridge Filter Method, sometimes also 

referred to as the “FTC Method.” The Commission stated 

that advertisers should no longer use terms suggesting 

the FTC’s approval or endorsement of any specific test 

method. In its announcement, which followed a public 

comment period, the FTC noted the current scientific 

consensus that machine-based measurements of tar and 

nicotine yields based on the Cambridge Filter Method do 

not provide meaningful information to consumers and 

stated that the underlying premise for the 1966 guidance 

was no longer valid. The Commission indicated that it 

would not allow its stamp of approval on a test method 

that is confusing or misleading to consumers.

3 Mortgage Lending. FTC staff submitted comments to 

the Federal Reserve Board on proposed rules under the 

TILA and the Home Ownership and Equity Protection 

Act. The staff comments supported proposed restrictions 

on appraisal servicing and advertising practices, as well as 

revised requirements for the timing of disclosures to consumers. The comments noted that proposed restrictions 

on higher-cost loans appeared reasonably balanced, but 

suggested that the Board continue to weigh costs and benefits based on empirical evidence. Finally, the FTC staff 

raised concerns that proposed mortgage broker compensation disclosures might be more harmful than beneficial 

to consumers and harm competition. Accordingly, the 

Commission staff recommended that the Board consider 

alternative approaches.

FTC staff also provided comments to the Department 

of Housing and Urban Development (HUD) concerning 

proposed revisions to the mortgage settlement disclosures 

required under the Real Estate Settlement Procedures 

FTC Privacy Program

The FTC has a comprehensive, 

award-winning privacy 

program that serves as 

a model for other federal 

agencies. Under the direction 

of Chief Privacy Officer Marc 

Groman, the FTC continues 

to assess privacy risks and 

expand its efforts to safeguard 

data. 

Over the past year, for 

example, the FTC established 

a new process for receiving, 

tracking, and responding to 

complaints concerning privacy; 

streamlined privacy impact 

assessment procedures 

for new technologies; and 

concluded a comprehensive 

review of the agency’s Privacy 

Act system of records notices 

and online privacy policy. 

The cornerstone of the FTC’s 

privacy program remains the 

annual agency-wide “Privacy 

Week.” This week-long series 

of seminars, activities, and 

contests put privacy center 

stage at the FTC. 

In September 2008, the FTC 

received the HP/IAPP Award 

for Innovation in Privacy for the 

Privacy Week program. 
Section Two: Consumer Protection Mission 69

Act. The staff noted 

that while some of the 

revisions could improve 

consumer understanding and facilitate comparison shopping, other 

proposals might further 

complicate the already 

complex mortgage lending process. The staff 

suggested that consumers 

would benefit most from 

a comprehensive effort to 

reform mortgage disclosures and recommended 

that HUD collaborate with the Federal Reserve Board to develop a single mortgage disclosure document.

3 Home Valuation. FTC staff submitted comments to the Federal Home Loan Mortgage 

Corporation (Freddie Mac) regarding its proposed settlement agreement with the Federal 

National Mortgage Association (Fannie Mae), the New York Attorney General, and the Office of Federal Housing Enterprise Oversight (now the Federal Housing Finance Agency) 

regarding the related Home Valuation Code of Conduct. Under the settlement, as of May 

2009 Freddie Mac and Fannie Mae will no longer purchase single-family home mortgage 

loans, unless government insured, from originators that do not adopt the Code. The comments expressed general support for efforts to improve the lending process, but warned that 

certain Code provisions – such as prohibiting mortgage brokers from ordering appraisals – 

could result in higher prices for consumers.

F. Congressional Testimony

3 Prepaid Calling Cards. The Commission testified before both the Senate Committee on 

Commerce, Science, and Transportation and the House Subcommittee on Commerce, Trade 

and Consumer Protection of the Committee on Energy and Commerce regarding FTC efforts to combat the deceptive advertising of prepaid phone cards. The Commission expressed 

support for pending legislation that would require calling card providers and distributors to 

disclose, clearly and conspicuously, the dollar value of their calling cards or the number of 

Claudia Simons - OCR

An attorney in the Office of Congressional 

Relations, Claudia serves as the Commission’s 

liaison to Congress on a wide range of consumer protection issues. Claudia coordinates 

briefings for Congressional staff, provides 

drafting assistance to Members’ offices and 

helps to prepare FTC witnesses to testify before Congress on 

issues ranging from mortgage lending and credit reports to 

childhood obesity. Claudia has coordinated the Commission’s 

input into numerous legislative initiatives that affect consumers and consumer privacy, including bills addressing identity 

theft, data security, the Fair Credit Reporting Act, and the Gramm 

Leach Bliley Act.
70 The FTC in 2009

minutes provided by the cards, as well as other fees, conditions, or limitations attached to use 

of the cards.

3 Food Marketing to Children and Adolescents. The Commission testified before two Subcommittees of the Senate Committee on Appropriations regarding the Commission’s efforts 

to address childhood obesity and the findings and recommendations contained in the Commission’s food marketing report.

3 Subprime Lending. The Commission testified before the Subcommittee on Interstate Commerce, Trade, and Tourism of the 

Senate Committee on Commerce, 

Science, and Transportation about 

the Commission’s continuing efforts 

to protect subprime mortgage borrowers. The Commission described 

its areas of focus – deceptive mortgage advertising, deceptive or unfair 

servicing practices, discrimination 

in lending, and foreclosure rescue 

scams – noting that in the past decade the Commission has brought 22 actions in the mortgage area, with particular attention 

to the subprime markets. 

3 Behavioral Advertising. The Commission testified before the Senate Committee on Commerce, Science, and Transportation about the privacy issues raised by online behavioral 

advertising, as well as the potential benefits to consumers of such targeted advertising.

3 Spyware and Other Malware. The Commission testified before the Senate Committee on 

Commerce, Science, and Transportation that legislation authorizing the Commission to seek 

civil penalties in spyware cases could add a potent remedy to other enforcement options – 

such as seeking consumer redress or disgorgement of ill-gotten gains – already available to the 

Commission.

3 Call Centers. The Commission testified before the House Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection, regarding a bill that 

would require call center employees to disclose, in telephone calls with consumers, the physical location of the call center. The Commission described its telemarketing fraud enforcement program, but noted that its experience did not touch upon the labor and foreign trade 

issues at the heart of the proposed legislation.

“The Commission is committed to using all 

means at its disposal to protect mortgage borrowers 

from those who would prey on their financial turmoil, 

and to provide information to help these consumers 

confront the challenges they face.”

Lydia Parnes, then Director, BCP, testimony before the Senate Committee on Commerce, Science, and Transportation, 

Subcommittee on Interstate Commerce, Trade, and Tourism, 

April 29, 2008.
Section Two: Consumer Protection Mission 71

3 Credit Crisis. The FTC testified before the Senate Committee on Commerce, Science, and 

Transportation, on how it protects consumers from harmful acts and practices at every stage 

of the credit life-cycle, from when credit is first advertised to when debts are collected. The 

Commission emphasized its recent law enforcement actions in the areas of debt collection, 

deceptive credit card marketing, mortgage advertising, mortgage foreclosure rescue scams, 

and credit repair.

Chapter 6: Consumer Protection Education and 

Outreach

The FTC educates consumers and businesses using a variety of products and techniques: print 

publications, websites, videos, interactive quizzes, tutorials, and presentations. The FTC’s resources 

give people tools to make informed decisions and educate businesses on their rights and responsibilities in the marketplace. Since March 2008, the FTC has distributed 11.7 million print publications 

in English and Spanish and logged more than 37.8 million accesses to materials on Commission 

websites.

In 2008, the FTC developed initiatives to help consumers manage their financial circumstances; 

to stay safe online, safeguard their personal information, and protect their identities; to avoid fraud, 

like deceptive telemarketing schemes and cancer treatment scams; and to be aware of emerging scams 

or other consumer issues. 

3 Department of Defense Financial Readiness Challenge Events. The FTC is working with 

the Department of Defense to distribute thousands of copies of Commission materials at a 

series of Financial Readiness Challenge Events at military installations around the country. 

The events range from small lunch meetings to larger presentations and major information 

fairs for service members and their families. 

3 Credit Repair Sweep. As part of the Operation Clean Sweep crackdown on deceptive credit 

repair operations, the FTC prepared two consumer publications, Credit Repair: How to Help 

Yourself and Credit Repair: How to DIY and Avoid a Scam; a series of short web videos; and 

public service announcements and classified ads sent to radio stations and newspapers in every state. The campaign also reached out to personal finance blogs and provided a syndicated 

“drop-in” article to more than 10,000 community newspapers.

3 OnGuard Online. In conjunction with the FTC’s Phishing Roundtable, the agency announced three online videos to alert consumers 

to phishing scams. The videos have been accessed over 960,000 times 
72 The FTC in 2009

through the FTC’s website, YouTube, and Facebook. The FTC also unveiled the revamped 

OnGuard Online website and its Spanish-language counterpart, Alerta En Linea. Since the 

site launch in 2005, visitors have logged more than 9 million visits. The new Web 2.0 redesign allows users to grab and embed games and videos, search for topics on the site, and have 

a more interactive experience while getting useful tips and information.

3 Identity Theft: Deter-Detect-Defend Campaign. The Commission has developed a 

second consumer education toolkit with everything an organization needs to host a “Protect Your Identity Day.” The kit has information and materials on how to deter, detect, and 

defend against identity theft, including handouts to customize and print, videos, a speech, 

a PowerPoint presentation, answers to frequently asked questions, and materials to use for 

outreach to community partners and local media – in both English and Spanish. Since the 

campaign launch in 2006, the FTC has distributed nearly 100,000 consumer education kits, 

over 26,000 Protect Your Identity Day kits, more than 3.5 million copies of the victim assistance guide, more than 4.5 million copies of a brochure, and more than 500,000 copies of a 

special brochure for military personnel and their families. In February 2008, the U.S. Postal 

Service mailed the FTC’s Deter, Detect, Defend brochure to 121 million households with a 

cover letter from the Postmaster General.

3 Naval Criminal Investigative Service. NCIS, the Navy’s primary law enforcement and 

counterintelligence arm, is using FTC resources on its identity theft prevention campaign 

that runs from January through March 2009. NCIS is distributing hundreds of thousands 

of copies of FTC materials to Navy and Marine installations and ships around the world and 

creating audio and video products to distribute through several military media 

outlets.

3 Who’s Calling? Recognize & Report Phone Fraud. The Phone Fraud campaign shows people how to recognize and report telemarketing scams and encourages them to register their phone numbers on the National Do Not Call 

Registry for a tried and true way to stop most unwanted telemarketing calls.

“I received an automated phone call attempting 

to obtain my credit card number and two other 

pieces of sensitive information. I did not provide 

any information . . . I already know, thanks to the 

FTC’s publicity about identity theft, that this was a 

fraudulent attempt to gain sensitive information.”

Consumer in Washington, DC
Section Two: Consumer Protection Mission 73

3 Cure-ious? Ask. The Commission launched the Cure-ious? Ask campaign to raise awareness 

about cancer treatment scams, resulting in nearly 170 mentions in blogs related to health or 

cancer. People with cancer, their families, caregivers, and medical teams can visit the site for 

information about products on the Internet that claim to cure or treat cancer; download or 

embed a 90-second video that shows how to recognize a likely scam; or grab the web buttons 

and free content for other sites, blogs, newsletters, or magazines.

3 Who Cares: Sources of Information About Health Care Products and Services. Who 

Cares is a resource guide that points older consumers and their caregivers, family, and friends 

to reliable sources of information on a variety of health topics, including generic drugs, hormone therapies, hiring caregivers, medical ID theft, hearing aids, and alternative treatments.

Who Cares explains how to find dependable health information online and where 

to file a complaint, in addition to advising readers to talk over health decisions with 

their doctor. 

3 Numbers to Know & Places to Go Bookmark. The Commission released the 

Numbers to Know bookmark, which is organized by topic and provides a one-stop 

reference of phone numbers and websites for the FTC’s most popular resources. The 

FTC has distributed more than 425,000 bookmarks in English and Spanish.

3 Green Lights, Red Flags. In 2008, FTC staff, and local partners held workshops in 

Nashville, Dallas, and Minneapolis to teach businesses how to comply with federal 

truth-in-advertising laws.

2008 Service to America Finalist

FTC’s Division of Consumer and Business Education and its Associate Director, Carolyn 

Shanoff, were named as finalists for the Partnership for Public Service’s Citizen Services 

Medal for their work in preventing identity theft by educating more than 120 million American 

households about the crime. “[T]he agency has armed thousands of local law enforcement 

officials with tools to help identity theft victims, equipped tens of thousands of local 

organizations with materials to educate their members about avoiding identity theft, and 

distributed millions of publications directly to consumers. . . . Carolyn Shanoff and her team 

at the FTC are giving U.S. consumers the tools they need to fight back and reduce their 

chances of becoming victims of this devastating crime.”
74 The FTC in 2009

The Commission also issues warnings of new and emerging scams and advice on new consumer 

issues as they arise. For example, in A Scam Based on Relative-ity: Would-Be Grandchildren Bilking 

Honest Grandparents, the FTC warns consumers that scammers may be impersonating family members to convince them to wire money. In addition, the FTC offers parents a quick guide to online 

virtual worlds and how to help kids avoid content or virtual spaces that might be inappropriate for 

them with the alert, Virtual Worlds and Kids: Mapping the Risks.
Section Two: Consumer Protection Mission 75
76 The FTC in 2009

FTC Goes Green

I

n response to a virtual tsunami of green 

marketing, the Commission initiated a 

review of its Guides for the Use of Environmental Marketing Claims (Green Guides) 

a year earlier than planned. Given the breadth 

and importance of green marketing claims, the 

Commission then launched an ambitious information gathering, law enforcement, and 

rulemaking plan.

Studies and Information Gathering 

3 Green Guides Review. In November 2007, the Commission published a Federal 

Register notice seeking public comment on the applicability of the Green Guides 

to the current market and the need, if any, for changes to meet current challenges.

3 Workshops. The Commission hosted three workshops on green marketing, 

bringing together industry members, consumer advocates, environmental groups, 

and academics to focus on particular green marketing issues. Specifically, the 

Commission hosted the Carbon Offset and Renewable Energy Certificate Workshop, the Packaging Workshop, and the Textile and Building Workshop.

3 Study. The Commission announced that it would conduct consumer perception 

research focusing on particular green marketing claims, such as “eco friendly,” 

“sustainable,” and “carbon neutral.” 

Enforcement

3 Gas Saving Devices. The Commission filed two federal court actions, Sullivan

and Dutchman Enterprises, against marketers of “miracle” devices advertised to 

dramatically increase gas mileage in ordinary cars. In each case, the Commission 

alleged that the claims for the device violate basic scientific principles.

3 R-Value. The FTC recently initiated three civil penalty actions alleging that marketers of home insulation products deceived consumers by overstating the insu-
Section Two: Consumer Protection Mission 77

lating properties, i.e., 

the R-value, of their 

products. In two of 

the cases, Meyer Enterprises and Enviromate, 

the defendants have 

settled with the FTC. 

The Department of 

Justice has filed the 

third case, Sumpolec, 

at the Commission’s request. 

Rulemaking

3 Lamp Light Labeling. Pursuant to the Energy Independence and Security Act 

of 2007 (EISA 2007), the Commission has initiated a rulemaking proceeding to 

examine energy labeling for light bulbs. To aid in this endeavor, staff hosted a 

roundtable discussion with stakeholders, and based on information obtained at 

that discussion, the FTC is in the process of conducting research on alternative 

labeling approaches. 

3 Television and Consumer Electronics. Recognizing that some new televisions 

use as much energy as refrigerators, the Commission initiated a rulemaking 

proceeding to explore energy labeling for televisions. Pursuant to EISA 2007, 

the Commission is also seeking comment on energy labeling for other consumer 

electronics, such as personal computers and monitors. This type of labeling could 

assist consumers seeking to make more energy efficient choices. 

Consumer Education

3 The 411 on Disposing of Your Old Cell Phone. In this consumer alert, the FTC 

gives tips for erasing data and disposing of old cell phones and other mobile communication devices and discusses the options that include recycling, reselling, and 

donating.

“Many people care about saving 

energy and money these days, and better 

insulated homes can help them do both. 

The FTC polices deceptive R-value claims 

to make sure that companies advertise 

truthfully and that people can buy insulation with confidence.”

Eileen Harrington, Acting Director, BCP 

(press release, March 5, 2009).
78 The FTC in 2009
79

Michael Lantz made dozens of monumental, figurative, and memorial sculptures for government 

buildings, churches, and other sites around the United States. In 1938, at age 29, Michael Lantz 

won a $45,600 commission for two monumental stone sculptures. Entitled Man Restraining Trade, 

each depicts a burly figure reining in a bucking horse. Mr. Lantz studied at the National Academy of 

Design and the Beaux Arts Institute in New York. He served as the president of the National Sculpture 

Society, was editor of the Sculpture Review, and taught at the National Academy School of Fine Arts in 

New York.

Text drawn from General Services Administration website

Section Three: 

International Activities
80 The FTC in 2009
Section Three: International Activities 81

Section Three: 

International Activities

Today, commerce knows no borders. Consumers and businesses around the world buy and 

sell products, share information, and explore their common interests without reference 

to geography. People who speak different languages have created a whole new language 

in this truly global marketplace: they can chat, friend, share, tweet, and blog, on a vast network of 

devices that collapse the distances between them.

Globalization has created unprecedented opportunities for commerce but also great challenges 

for law enforcement agencies around the world, including the FTC. The FTC works in several 

ways to meet these challenges and protect consumers in the global marketplace. First, the FTC 

coordinates with international law enforcement agencies to find the source of unfair, deceptive, or 

anticompetitive conduct, wherever the individual or company may be located, and to obtain necessary evidence to support its enforcement actions. Second, the FTC engages established competition 

and consumer protection agencies in other countries, as well as multilateral organizations, to provide 

policy leadership and promote sound approaches to common problems. Finally, the Commission 

reaches out to new or recently established competition and consumer protection authorities to help 

them develop their institutions and train their staff to deal with their own particular challenges in 

evolving to a market-based economy. 

Chapter 7: Competition 

The FTC continues to build cooperative relationships with foreign antitrust agencies to support 

its competition enforcement workload, to ensure close collaboration on cross-border cases, and to 

promote convergence toward sound competition policies worldwide. As part of these efforts, the 

FTC cooperates on multi-jurisdictional investigations, provides policy leadership through bilateral 

consultations and participation in multilateral competition organizations, and sponsors technical 

assistance to promote the establishment of successful new competition authorities in developing 

economies, such as China and India.

A. International Aspects of Competition Law Enforcement 

The FTC seeks to improve coordination in cases of suspected unilateral anticompetitive conduct, 

and to produce more effective review of multi-jurisdictional mergers. The FTC cooperates with 
82 The FTC in 2009

its international counterparts on merger and nonmerger cases in each of the industries in which it 

focuses its competition enforcement activities: health care, energy, chemicals, technology, retail, and 

consumer goods. Examples of cases in which the FTC worked with other competition agencies in 

the past year include:

3 Dow/Rohm & Haas. The Commission worked with the European Commission (EC), 

the Canadian Competition Bureau, and the Mexican Federal Competition Commission to 

resolve competitive concerns raised by Dow Chemical’s proposed $18.8 billion acquisition 

of rival Rohm & Haas. The FTC and the Canadian Competition Bureau worked with the 

companies on a coordinated divestiture package that resolved U.S. and Canadian competition issues should the merger take place.

3 Hexion/Huntsman. The FTC worked with the EC, the Canadian Competition Bureau, and 

the Mexican Federal Competition Commission to resolve charges that Hexion’s proposed 

$10.6 billion acquisition of Huntsman Corp. would substantially lessen competition in the 

markets for high performance and specialty epoxy resins used in aerospace, power generation, 

and wind turbine applications. The FTC and EC accepted compatible consent orders with the 

parties. 

B. Promoting Convergence Toward Sound Competition 

Policies 

An important goal of the FTC’s international program is to promote convergence of sound policy approaches around the world building consensus around sound policy choices. The Commission 

works to achieve this goal by participating in bilateral negotiations and consultations and through its 

membership in a variety of multilateral organizations.

Commissioner Kovacic

Since the creation of the federal antitrust system in the late 19th century, 

economic crises have inspired policies that suppressed competition in the name 

of spurring recovery. Means to this end have included measures that curb entry 

by new entrepreneurs, forestall imports, or mandate industry-wide cooperation on 

pricing, output, or product introduction. These steps failed to alleviate economic 

hardship in the short-term and retarded economic growth after the crisis had 

passed. In the past, the FTC has served the nation well by speaking against these 

policies. No duty of the Commission is more important today than doing so again.
Section Three: International Activities 83

 Bilateral Projects. Tools for building more effective bilateral relationships include regular 

discussions and case coordination with international partners. The FTC worked during the past 

year on policy and enforcement issues with agencies from the European Union (EU) and its member 

states, Australia, Brazil, Canada, Israel, Korea, Mexico, New Zealand, Switzerland, and other jurisdictions. In addition, then Chairman Kovacic led formal bilateral consultations with competition 

agencies from the EU, Japan, and Korea, and met with counterparts from many others including 

Panama, Taiwan, the United Kingdom, and Zambia. The FTC also provides input when requested 

by foreign agencies regarding their competition policies. 

3 China and India. The FTC is participating in U.S. efforts to encourage the adoption of 

sound antitrust policies and enforcement practices as its counterparts in India and China 

begin to implement their new antitrust laws. After China’s Antimonopoly Law took effect 

in August 2008, for example, FTC and DOJ staff visited China several times to work with 

the staff of the Chinese agencies on implementation issues. The FTC also contributes to the 

cabinet-level Strategic Economic Dialogue between the U.S. and China. The FTC has maintained a dialogue with the Competition Commission of India as it moves toward implementing India’s new Competition Act.

3 Free Trade Agreements. U.S. free trade agreements often include provisions regarding competition issues. The FTC participates in the U.S. delegations that negotiate these provisions 

as they arise.

Participation in Multilateral Competition Fora. Multilateral competition organizations 

provide valuable opportunities to promote international cooperation and convergence and for competition officials to share ideas on law enforcement and policy initiatives. The FTC has strengthened 

the roles that it plays in the International Competition Network (ICN) and the competition bodies 

of the Organization for Economic Cooperation and Development (OECD), the United Nations 

Conference on Trade and Development (UNCTAD), and the Asia-Pacific Economic Cooperation

(APEC) forum.

3 International Competition Network. The FTC has taken a leadership 

role at the ICN from its inception. Currently consisting of 103 competition agency members from 92 jurisdictions, the ICN is a key venue for 

antitrust authorities to exchange ideas and to work together to promote substantive and procedural convergence through the development of best practices. The FTC plays a lead role in 

several significant ICN projects, such as co-chairing the Unilateral Conduct Working Group, 

which during the past year produced recommended practices on the assessment of substantial market power and the application of unilateral conduct rules to state-created monopo-
84 The FTC in 2009

lies. The FTC is co-hosting an ICN workshop in March 2009 on Assessing Dominance/

Substantial Market Power and Evaluating Unilateral Conduct. The FTC chairs the ICN 

subgroup on Merger Notification and Procedures, which is developing guidance on information requests in merger investigations. This group has had great success in fostering implementation of its recommended practices, which have become an international benchmark. 

The Commission also plays an important role in the ICN’s working group on Competition 

Policy Implementation, which assists recently established antitrust authorities in developing 

their institutional capabilities, chairing the group that launched the ICN’s successful training 

conference calls. Under the auspices of the ICN’s Partnership program, the FTC established 

a consultative partnership with the Barbados Fair Trading Commission under which the FTC 

and Barbadian staff hold regular telephone conference calls and consult as needed. Finally, in 

January 2009, then Chairman Kovacic was named the ICN’s Vice Chair for Outreach. 

3 OECD. The OECD Competition Committee is a valuable forum for competition officials from developed countries to share experiences and discuss 

best practices. Its recent sessions addressed topics including bundling and 

loyalty rebates, resale price maintenance, market studies, monopsony, and 

vertical relations in gasoline retailing. Most U.S. submissions to the Committee are available on the FTC’s website. In February 2009, the FTC participated in the OECD’s Global 

Forum on Competition with representatives from almost 90 agencies in non-member developing countries. The Forum included a program on challenges faced by recently established 

competition agencies that featured then Chairman Kovacic. The FTC also continues to 

participate in regional OECD programs for non-members, including the Latin American 

Competition Forum.

3 UNCTAD. The Commission participates in UNCTAD’s Intergovernmental Group of Experts on Competition Law and Policy and in 

regional competition programs, which in the past year have included programs on agency 

independence and accountability, intellectual property, and the abuse of dominance.

Chapter 8: Consumer Protection

The emergence of new consumer markets and consumer policy models around the world, as well 

as the continuing evolution of technology, raise complex global consumer protection challenges. 

Spam, phishing, spyware, telemarketing fraud, identity theft, data security, and privacy breaches 

can be international in scope. The resulting enforcement and policy challenges require the FTC to 

work closely with counterparts in foreign agencies and international organizations, particularly with 
Section Three: International Activities 85

respect to one of the FTC’s highest priorities – combating fraud and deception in the marketplace. 

The growth of Internet and mobile based business-to-consumer commerce, technology-enabled 

consumer-to-consumer interactions, and the effects of the current financial crisis also raise numerous 

consumer protection and privacy concerns. The FTC addresses these challenges with a broad-based 

international program that focuses on protecting consumers in the global marketplace while maximizing economic benefits and consumer choice.

A. The U.S. SAFE WEB Act and International Law 

Enforcement Cooperation

The FTC continues to expand its international enforcement cooperation, using the tools provided by the U.S. SAFE WEB Act. The Act enhances the FTC’s ability to cooperate with foreign law 

enforcement authorities on consumer protection enforcement matters that cross national borders, 

including spam, spyware, and telemarketing fraud, misleading health and safety claims, and privacy 

and security breaches. In the past year, the FTC shared information and assisted in cross-border 

investigations, exchanged staff with foreign authorities, cooperated with the DOJ’s Office of Foreign 

Litigation, and worked toward international mutual assistance agreements with Canada and the 

European Community. 

3 Information Sharing. The FTC focuses its new information sharing and investigative assistance authority on matters that have substantial impact in the marketplace and the greatest 

potential benefit for consumers.  In the past year, the FTC has acted vigorously to protect 

consumers from fraud and deception in the global marketplace. For instance, the FTC has 

“I have not been victimized. Thanks to 

your web site, I was able to identify the fraud 

before I acted.”

Consumer in New York

The 2008 Certificate of Excellence in Accountability Reporting (CEAR)

The FTC was one of only 17 agencies to receive the CEAR award for excellence in 

accountability reporting. “Given public perceptions about government fiscal accountability 

and transparency, the achievement of this year’s CEAR recipients is even more significant,” 

said Relmond P. Van Daniker, Association of Government Accountants. “The agencies and 

departments being honored today truly represent an elite group within the government 

financial reporting community.”
86 The FTC in 2009

responded to 31 requests to share information from 13 foreign enforcement agencies in six 

countries. The FTC has used its U.S. SAFE WEB Act authority to share information with 

10 foreign agencies from five countries in response to 13 requests in cross-border consumer 

protection matters, including fraudulent telemarketing scams, deceptive mail schemes, pyramid schemes, and spam cases.  The FTC has also used its new investigative assistance authority to issue six civil investigative demands on behalf of four foreign agencies. 

3 Enforcement Actions. During the past year, the FTC filed or obtained judgment in the federal courts in at least 15 cases with a major international aspect, including cases that involved 

significant cooperation with counterparts in Australia, Canada, Colombia, Egypt, El Salvador, Mexico, New Zealand, Panama, Peru, Ukraine, and the U.K. For example, based on reciprocal information sharing with law enforcement colleagues in Australia, Canada, and New 

Zealand, the FTC shut down and froze the assets of a vast international spam email network 

in Lance Atkinson, a case filed in federal district court in Illinois. The network, which has 

been identified as the largest “spam gang” in the world by the anti-spam organization Spamhaus, is charged with peddling prescription drugs and bogus male-enhancement products. 

The FTC received more than three million complaints about spam messages connected to 

this operation and estimates that it may have been responsible for sending billions of illegal 

spam messages.  New Zealand authorities, working in tandem with the FTC, filed a civil case 

against members of the spam operation in the New Zealand courts. The FTC’s strong bilateral and multilateral relationships with consumer protection and other law enforcers around 

the world also played a key role in many of the significant law enforcement actions highlighted in this report, such as Operation Tele-PHONEY, Operation “False Cures” Cancer Sweep,

Innovative Marketing, Inc., Enterprise Who’s Who, Spear Systems, Inc., Alternatel, Inc., and

Clifton Telecard Alliance.

3 Reaching Foreign Assets. The FTC continues to develop common programs with domestic counterparts to deepen the impact of its international programs. Taking advantage of 

the U.S. SAFE WEB Act’s framework to expand cooperation with DOJ, the Commission 

detailed an attorney to work part-time at DOJ’s Office of Foreign Litigation on matters in 

which the FTC has a law enforcement interest. Through this effort, the FTC hopes to reach 

foreign assets for consumer redress, an FTC priority. 

3 Cross-Border Efforts with Canada. The FTC works closely with consumer protection and 

other law enforcement officials in Canada, to confront the problem of cross-border massmarketing fraud. The FTC participates in regional partnerships with Canadian and other 

U.S. enforcers in Montreal, Toronto, Vancouver, Alberta, and the Atlantic Provinces and 

has hosted two Canadian officials as part of the FTC’s International Fellows and Interns 
Section Three: International Activities 87

program. These cooperative efforts have paid off 

in numerous cases this 

year, including those 

filed in Operation TelePHONEY, the largest 

telemarketing sweep ever 

coordinated by the FTC. 

The sweep included eight 

cross-border telemarketing fraud actions brought 

by the Canadian Competition Bureau and the 

British Columbia Business 

Practices and Consumer 

Protection Authority.

3 International Enforcement Organizations. The FTC has continued to expand relationships with consumer protection law enforcement partners in international organizations. For 

example, the FTC is active in the International Consumer Protection Enforcement Network

(ICPEN). This year, the FTC supported ICPEN’s operations by coordinating its working 

group on Deceptive/Fraudulent Advertising and hosting the ICPEN intranet and 

econsumer.gov, a multi-agency, multilingual site for cross-border e-commerce complaints. 

The FTC also helps lead the London Action Plan (LAP), a global network of industry representatives and law enforcement agencies from more than 20 countries working together 

to fight spam, phishing, and other online threats. In October 2008, FTC helped organize 

LAP’s annual meeting, held jointly with the 6th German Anti-Spam Summit.  The conference 

included a detailed discussion by officials from Australia, New Zealand, Canada, and the 

FTC on coordinating multi-agency anti-spam actions. 

B. International Consumer Protection Policy Cooperation

Global trends require the FTC to engage in policy efforts to develop flexible, market-oriented 

standards to address long-standing and emerging consumer protection issues. To achieve these goals, 

the FTC is committed to bilateral cooperation with its counterparts, in addition to active participation in international organizations.

Stacy Feuer – OIA

As Assistant Director for International 

Consumer Protection in the Office of International Affairs, Stacy coordinates the FTC’s 

efforts to combat cross-border fraud, working 

with agency litigators, building strong relationships with foreign counterparts, and implementing the 2006 U.S. SAFE WEB Act. She also represents the 

FTC and the U.S. in international organizations on such issues 

as e-commerce, identity theft, and consumer dispute resolution 

and redress. Stacy helped organize international conferences 

and drafted guidelines that have influenced national policies. 

She started her FTC career prosecuting false advertising cases 

and working on media violence issues. Stacy received the 

Outstanding Team Award in 2000 and the Janet D. Steiger Award 

in 2005.
88 The FTC in 2009

Bilateral Relationships. The FTC is working to strengthen cooperation and coordination 

with foreign counterparts by negotiating bilateral consumer protection agreements. The Commission is currently negotiating international mutual assistance agreements with Canada and the EC 

using authority under the U.S. SAFE WEB Act.  The proposed agreement with the EC was a formal 

agenda item at the December 2008 Transatlantic Economic Council, and the U.S. and EC negotiators are working to conclude an agreement.

Participation in International Consumer Policy Organizations. The FTC has a long 

track record in international consumer policy fora and continues to play a leadership role in the 

OECD’s consumer protection policy work. The FTC worked with other U.S. and foreign agencies on policy guidance supporting the OECD’s June 2008 Ministerial meeting on the Future of the 

Internet Economy. The meeting addressed numerous international consumer protection technology 

and internet-related issues, including protecting and empowering consumers in communication 

services, radio frequency identification (RFID), online identity theft, and emerging issues related to 

mobile commerce. The FTC also regularly submits comments in response to requests from foreign 

counterparts, such as April 2008 comments in response to the U.K.’s consumer law review. The FTC 

continues to work with international organizations such as the Organization of American States on 

consumer policy work, including a U.S. proposal on cross-border consumer dispute resolution and 

redress. The FTC’s expertise and knowledge in the international policy arena also led to international interest and participation in some of the agency’s key policy initiatives with global dimensions, 

such as the online behavioral advertising principles and the mobile marketplace workshops.

Emphasis on Privacy and Security Issues. The FTC continues to strengthen international cooperation on protection of consumer privacy and data security matters. This year, the FTC 

sponsored several events to gather information and discuss different approaches to these issues.

3 Radio Frequency Identification. FTC staff submitted comments to the EC in response to 

its draft recommendation on the implementation of privacy, data protection, and information security principles in applications supported by RFID. Among other things, the staff 

expressed its views that enforcement of existing laws, coupled with industry self-regulation, 

is the best way to address consumer privacy and data security concerns related to the deployment of RFID technology.

3 Securing Personal Data. The FTC, in conjunction with APEC and 

the OECD, hosted an international conference titled Securing Personal 

Data in the Global Economy, which addressed how companies can 

manage personal data security issues in a global information environ-
Section Three: International Activities 89

ment where data can be 

stored and accessed from 

multiple jurisdictions.

3 Cross-Border Data 

Transfer. The FTC 

continues to participate, along with other U.S. government agencies, in a pilot project 

to develop a system for 

cross-border data transfers under the Asia Pacific 

Economic Cooperation 

Privacy Framework.

Chapter 9: Outreach and Technical Assistance

More than 100 jurisdictions now have competition or consumer protection laws. Therefore, the 

FTC has expanded its long-standing program of technical assistance to help newer agencies apply 

their laws in ways that support free markets. The FTC and DOJ continue to work with other U.S.

government funders, including the U.S. Agency for International Development (USAID), the U.S.

Trade and Development Agency (USTDA), and the Commerce Department’s Commercial Law 

Development Program (CLDP), to provide technical assistance. For example, in 2008, the FTC 

sent 41 staff experts to 21 countries on 31 technical assistance missions. These included continued 

USAID funded work in the 10-nation ASEAN community (including Indonesia and Vietnam), and 

training programs in Argentina, CARICOM (the Caribbean Community), Central America, China, 

Colombia, Egypt, Romania, and Turkey. The most significant technical assistance opportunities and 

challenges involve the world’s most populous country. The FTC’s engagement with China includes 

joint FTC/DOJ support for an extensive public/private sector program of technical assistance for the 

three Chinese antitrust enforcement agencies. Partially funded by USTDA, this program has already 

provided programs on merger remedies and horizontal agreements.

Long-standing players in the technical assistance arena, like USAID, have taken the lead in 

providing support to developing countries. Understandably they are not able to serve all countries 

and all needs. Accordingly, this year, the FTC funded technical assistance programs to countries not 

typically served by USAID and addressed topics typically outside the ambit of the existing 

Alex Tang - OGC

A key resource on administrative law 

issues, Alex has been an attorney on the legal 

counsel side of the General Counsel’s Office 

for almost 25 years. As a Vice Chair of the 

agency’s Privacy Steering Committee, he is 

the office’s chief expert on the Privacy Act of 

1974 and other federal privacy and information security requirements, including digital and electronic statutes such as the 

E-GOV and E-SIGN Acts. In addition, he provides legal, ethical, 

and procedural advice to agency officials and staff on a wide 

range of other matters, including investigational, rulemaking, 

and adjudicatory proceedings, procurement, appropriations, and 

personnel issues.
90 The FTC in 2009

FTC/DOJ program funded by USAID. Specifically, the agency funded technical assistance to Brazil 

and Turkey and addressed consumer protection topics of concern to recipient agencies. 

As part of its ongoing effort to build effective relationships, the FTC’s International Fellows and 

Interns program provides opportunities for staff from counterpart foreign agencies to spend several 

months at the FTC to work directly with FTC staff on investigations, subject to appropriate confidentiality protections. During the past year, the FTC hosted 12 International Fellows and Interns 

from Argentina, Australia, Austria, Brazil, Canada, Egypt, Hungary, Israel, Mexico, and Turkey.

As another means by which to strengthen relationships, the Commission, for the first time, used 

its new U.S. SAFE WEB Act authority to send select staff members to work directly for foreign 

counterpart agencies for three to six months. Similar to how details from other agencies function in 

the U.S., these assignments provide invaluable opportunities for FTC staff members to obtain a keen 

understanding of their international partners’ laws and challenges. This knowledge provides critical 

support for coordinated enforcement efforts and ultimately benefits U.S. consumers. This year an 

FTC Office of International Affairs attorney spent six months working for the international section 

of the U.K.’s Office of Fair Trading. Plans for the coming year include sending an economist to 

work for the U.K. Competition Commission and a merger attorney to work for the EC’s Directorate 

General for Competition. 

Technical Assistance Missions 

Long Term Advisors

Other In-country Programs
Section Three: International Activities 91

Finally, the FTC also has broadened its assistance program this year by placing two resident 

advisors in Latin America, who divided their time between Peru and Colombia, and one resident 

advisor in South Africa. These resident advisors provide training and guidance to local agency staff 

on investigative techniques and policies.

Champions of Veterans Enterprise Award

The FTC was awarded the 2008 Champions of Enterprise Award from the U.S. 

Department of Veterans Affairs for the work of its Acquisitions Branch in putting veterans 

and service-disabled veterans first in the agency’s contracts. The award honors government 

organizations that have opened doors of opportunity for veterans in business through 

unique, innovative, or comprehensive support.
92 The FTC in 2009
93

Looking Ahead

The Federal Trade Commission building is significant as the last building completed within the 

Federal Triangle. The Triangle includes such buildings as the Italian Renaissance inspired Commerce 

Department to the west and the French classic New Post Office on Pennsylvania Avenue at 11th

Street. These earlier constructed buildings contain lavishly finished public spaces and executive 

suites. By contrast, the Federal Trade Commission building reflects the relative austerity of the period 

1937-1938. Earlier schemes for a Beaux Arts derived building were simplified in form to achieve a 

design of greater economy, both in actuality and in symbolism. Erected during the worst years of the 

Depression, the building’s budget was twice reduced with the result that the interiors display a simple 

but refined functionalism.

Drawn from General Services Administration website
94 The FTC in 2009
Looking Ahead 95

Looking Ahead

This has been a year of taking stock. Through the FTC at 100 project, the Commission has 

examined what direction the FTC should take as it embarks upon its second century; what 

the agency does well; what can be improved; and how the institution and its essential ties 

with other public and private institutions both here and abroad can be strengthened. It has also been 

a year of addressing the many “here and now” challenges presented by the deteriorating economy. 

Increased globalization, rapid changes in technology, and the ever deepening recession have required 

the Commission to adapt and respond quickly. These same challenges will likely continue to demand the Commission’s attention in the coming year. The Commission will continue to consider 

how it can build on its institutional strengths and, as it carries out its antitrust and consumer protection missions, it will continue to emphasize financial services, health care, privacy, energy, and 

technology – those areas of greatest impact on American consumers.

On the antitrust side, deteriorating economic conditions demand that the Commission remain 

ever vigilant in protecting competition, which spurs innovation, productivity, growth, and cost effectiveness. With the rapidly rising cost of health care, the FTC will continue to work to eliminate 

threats to competition that deprive consumers of low-cost drugs. The agency will work to stop anticompetitive agreements among physicians, and monitor hospital, pharmaceutical, and other mergers that threaten to raise the cost of health care. The Commission will stop attempts to manipulate 

prices through unlawful unilateral or collective action. It will continue to study and provide guidance to businesses in technology industries, to ensure that competitive forces provide incentives for 

investment in new ideas. The Commission will act on evidence of market conduct that unreasonably 

interferes with the innovative process, so that consumers have the final choice in which products succeed in the marketplace. 

On the consumer protection side, the Commission will continue to protect cash-strapped consumers from unfair and deceptive credit schemes and ensure they get the information they need to 

make informed decisions about the use of credit in this challenging economy. Addressing the full 

life cycle of financial services transactions affecting consumers, the Commission will work to protect consumers in the areas of subprime credit, payday lending, fair lending, mortgage advertising 

and servicing, and debt collection and settlement. It will also continue its empirical work on how 

consumers absorb financial information and how they perceive disclosures associated with routine 

financial transactions, so consumers can be armed with understandable information with which to 

protect themselves. As the nation considers how it can control the impact of its consumption on the 
96 The FTC in 2009

environment, the Commission will be at the forefront of ensuring that consumers are getting truthful information about how products affect the environment. 

To ensure that American consumers are the recipients of truthful, nondeceptive information 

and are on equal footing so they can participate fully in this global economy, the Commission will 

continue to devote significant resources to building relationships and processes that foster crossborder cooperation and, where appropriate, convergence towards best practices. Building strong 

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

given the increasingly cross-border nature of fraud, spam, spyware and privacy issues. To provide 

leadership in establishing best practices to protect competition in the global marketplace, the Commission will continue its critical work with larger multinational networks like the ICN and OECD 

and bilateral partners like the EU Directorate for Competition and Canadian Competition Bureau. 

Through the continued expansion of its technical assistance programs, the Commission will help 

build the capacities of the competition and consumer protection agencies of developing countries so 

that they can become full partners with the Commission. The Commission will continue to work to 

ensure a safe, competitive global marketplace for the benefit of all Americans. 
Senior Staff of the FTC 97

Senior Staff of the FTC

Chief of Staff Joni Lupovitz

Executive Director Charles Schneider

Deputy Executive Director Sonna L. Stampone

Acting Director, Bureau of Competition David P. Wales

Deputy Directors Kenneth L. Glazer

Marian Bruno

Acting Deputy Director Norman Armstrong, Jr.

Acting Director, Bureau of Consumer Protection Eileen Harrington

Acting Deputy Director Mary Engle 

Acting Director, Bureau of Economics Pauline Ippolito

Deputy Directors Mark Frankena

Paul Paulter

Acting General Counsel David Shonka

Director, Office of International Affairs Randy Tritell

Deputy Directors Elizabeth Kraus

Hugh Stevenson

James Hamill

Director, Office of Congressional Relations Jeanne Bumpus

Acting Director, Office of Policy Planning James Cooper

Acting Director, Office of Public Affairs Claudia Bourne Farrell

Secretary of the Commission Donald Clark

Inspector General John Seeba
98 The FTC in 2009

FTC 2008 Annual Awards

Chairman’s Award

Lucy Morris, BCP 

Lifetime Achievement Award

Pauline Ippolito, BE

Louis D. Brandeis Award

Leslie Melman, OGC

Janet D. Steiger Team Award 

FOCUS Team

Food Marketing Report Team

Inova/Prince William Hospital Merger Team

International Competition Network Team

Mortgage Foreclosure Rescue Team

Richard C. Foster Award

Edwin Acajabon, BCP

Charles King, OED

Richard Levy, BC

Maria Villaflor, BE

James M. Mead Award

Joel Nguyen, OED

Ashley Vo, BCP

James Whitelaw, BC

Paul Rand Dixon Award 

Wallace Easterling, BC

Karen Grimm, OGC

Chetan Sanghvi, BE

Brian Telpner, BC

Tracy Thorleifson, NWR

Monica Vaca, BCP

Joannie Wei, OGC/MWR

Mary Gardiner Jones Award

Harold Saltzman, BE

Excellence in Supervision Award 

Sara Dillon, BC

Margaret Mech, OED

Suzanne Michel, BC

Jessica Rich, BCP

Christopher Taylor, BE

Otis B. Johnson Award

Kathleen Claffie, BCP

Nathan Hawthorne, BC

Dolores Wood, OED

The Francis Walker Award

Steven Tenn, BE

Outstanding Scholarship 

Daniel Hosken, BE

Stephen Nye Award 

Danica Noble, BC 

Sandhya Prabhu, BCP

A. Leon Higginbotham, Jr. Award 

Armando Irizarry, BC 

Rosario Mendez, BCP 

Edwin Rodriguez, BCP 

Leonor Velazquez, BC

Eleanor F. Greasley Award 

Christopher Bryan, OGC

Ossie Neal, BC

Regina Williams, BCP
Principal Contributors to Report 99

Principal Contributors to Report

Kelly Signs and Patricia F. Bak Project Coordinators

Dawne E. Holz and Jessica Skretch Graphics and Design

Jeanine Balbach and Stefano Sciolli Bureau of Competition

Carol J. Jennings Bureau of Consumer Protection

J. Elizabeth Callison Bureau of Economics

Russell W. Damtoft Office of International Affairs

Christopher M. Grengs Office of Policy Planning

William P. Golden and Rachel Miller Dawson Office of the General Counsel

Contributing staff members also include Jo Acosta, Kathy French, Claudia Bourne Farrell, 

Marc Groman, Nathan Hawthorne, Peter Kaplan, Daniel Kaufman, Tara Isa Koslov, Joni Lupovitz, 

Maria Mayo, TJ Peeler, John H. Seesel, Holly L. Vedova, Beth Arvan Wiggins, and Marc Winerman. 

Special thanks to Sarah Mathias.
100 The FTC in 2009

In Memoriam

Frank Douglass

Jacques Feuillan

Marvin F. Hendershot

Shirley Jones

Ira Kaye

Basil Mezines

Russ Porter 

Grace Stern

Jerome Tintle

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

ftc.gov