The FTC in 2007:

A Champion for 

Consumers and Competition

Federal Trade Commission 

Deborah Platt Majoras, Chairman

Pamela Jones Harbour, Commissioner

Jon Leibowitz, Commissioner

William E. Kovacic, Commissioner

J. Thomas Rosch, Commissioner
The online version of this report contains hyperlinks to news releases, reports, cases, campaigns, and other 

information referenced in this report. The report is available at www.ftc.gov/os/2007/04/ChairmansReport2007.pdf.

“May this permanent home of the Federal Trade Commission 

stand for all time as a symbol of the purpose of the Government 

to insist on a greater application of the Golden Rule to the 

conduct of corporations and business enterprises in their 

relationship to the body politic.”

Franklin D. Roosevelt

Address at the Cornerstone Laying Ceremonies for the New Federal 

Trade Commission Building, July 12, 1937
Contents

Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

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

Section One: Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chapter 1. Competition Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

A. Merger Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

B. Nonmerger Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

C. Guidance, Transparency, and Process Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Chapter 2. Competition Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

A. Research and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

B. Hearings and Workshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

C. Advocacy Letters and Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

D. Amicus Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

E. Congressional Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Chapter 3. Competition – Consumer and Business Education and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Section Two: Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Chapter 4. Consumer Protection Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

A. Fraud and Deception Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

B. Privacy and Data Security Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

C. Consumer Protection Law Enforcement Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Chapter 5. Consumer Protection Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

A. Rulemaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

B. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

C. Hearings and Workshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

D. Inter-governmental Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

E. Advocacy Letters and Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

F. Amicus Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

G. Congressional Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter 6. Consumer Protection - Consumer and Business Education and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Section Three: International Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Chapter 7. Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

A. Promoting Cooperation and Convergence Through Bilateral Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

B. Promoting Convergence Through Multilateral Competition Fora . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Chapter 8. Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

A. The U.S. SAFE WEB Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

B. International Law Enforcement Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Chapter 9. International Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Senior Staff of the FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

FTC Annual Awards - October 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Principal Contributors to Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
In Memoriam

Sally Dean McGhee (1952 - 2007)

Martha Stringer Schoenborn (1947 - 2007)
Letter from the Chairman

The Federal Trade Commission is responsible for ensuring that competition 

in U.S. markets is free of distortion and that consumers are protected not from

the workings of markets but through the workings of markets unburdened 

by anticompetitive conduct and government-imposed restrictions. We 

enforce our nation’s antitrust and consumer protection laws, which act as 

complements, each bringing discipline and strength to the other. This work is 

critical, indeed central, to the well-being of the American people.

This Annual Report reflects the agency’s achievements and 

accomplishments over the past year and demonstrates our continued 

commitment to championing consumers by promoting competition and 

consumer welfare in U.S. markets – from traditional “brick and mortar” 

industries to emerging technology markets.

The Digital Decade is here, and the Internet has fundamentally changed 

our lives. It has made the world bigger in the sense that it expands our reach in 

offering and acquiring knowledge, opinions, or goods and services, and smaller 

in the sense that it makes communicating and transacting around the globe 

a cinch. It has provided a wide array of new and unique products and services 

for consumers, but at the same time, presents new challenges for consumers 

and, thus, law enforcement agencies. The very role of 

consumers themselves is rapidly evolving in response 

to new technologies. Consumers are no longer the 

passive recipients of commercial messages. New 

technologies give consumers greater options 

concerning when, where, and how they receive 

commercial messages, and consumers are 

increasingly engaged in the marketplace of ideas 

on the Internet, too, sharing non-commercial 

content and ideas as well as building 

communities.

As an agency with broad general 

jurisdiction, the FTC is often at the forefront 

of new markets, new technologies, and 

unfortunately, new illegal practices. We 

tackle our responsibilities through what 

a sports enthusiast would describe as a 

combination of various offensive and defensive 

schemes. Our offense includes aggressive 

law enforcement that must adapt quickly to 

changing schemes and be able to execute the 

“fast break.” The Commission then combines 

a “zone defense,” through our cooperative 

efforts with partners both private and 

public, domestic and international, with a 



The FTC in 2007: A Champion for consumers and competition
“prevent defense,” through our consumer and business education that helps 

to make sure that consumers and businesses have good equipment to protect 

themselves.

The accomplishments discussed in this Report reflect our implementation 

of these strategies. The relatively small size of the Commission necessitates 

that we use these strategies to extend the reach of what we accomplish. And 

by bringing competition enforcement actions in industries such as energy, 

real estate, health care, and technology, we protect competition in areas of our 

economy that are most vital to consumers. Developing consumer education 

to help educate people about avoiding scams is essential, but we can greatly 

extend the reach of our messages when we partner with other federal, state, 

and local agencies, trade associations, consumer groups, and foreign entities. 

True competition requires fair play. The FTC is committed to improving our 

effectiveness, strengthening our work with strategic partners, and increasing 

our knowledge and understanding of new and emerging technologies. At its 

core, the goal of our work is to improve consumer welfare, and we will continue 

to work toward that critical goal.

Deborah Platt Majoras

Chairman

ii

Federal Trade Commission
“... the FTC 

leverages its 

limited resources 

by focusing its 

efforts on industries 

and practices that 

most directly affect 

consumers.”

A Year in Highlights

The Federal Trade Commission (FTC or Commission), the only federal 

agency with both consumer protection and competition jurisdiction in broad 

sectors of the economy, is committed to ensuring that American consumers 

are protected from deceptive, unfair, and anticompetitive trade practices that 

harm consumer welfare. To accomplish this goal, the agency embraces its dual, 

but complementary, missions. First, the FTC aggressively enforces the nation’s 

antitrust laws to protect consumers from anticompetitive mergers and 

business conduct. Second, the Commission actively engages in enforcement 

efforts to protect consumers from fraudulent, deceptive, and unfair business 

conduct, and to safeguard consumers’ privacy and personal information. 

While the FTC’s competition and consumer protection missions focus on 

different types of conduct, they share the same overall goal: that consumers 

obtain truthful information about products and services that they can then 

use to make purchase decisions in a competitive marketplace in which their 

personal information is safeguarded. This purpose has assumed even greater 

importance in this dynamic, digital, and global marketplace.

To accomplish these goals, the FTC leverages its limited resources by 

focusing its efforts on industries and practices that most directly affect 

consumers; by buttressing its enforcement and advocacy work through 

coordination with other federal and state agencies, criminal authorities, and 

international partners; by utilizing its broad array of databases and other 

resources to support its enforcement work; by informing itself of consumers’ 

concerns and business conduct through hearings, workshops, and public 

comments; by promoting its pro-consumer agenda through speeches, reports, 

advocacy comments, amicus briefs, and testimony; and by educating consumers 

and businesses with practical guidance on a wide range of marketplace 

issues on paper and online, in English and in Spanish. The FTC efficiently and 

effectively utilizes all of these tools to protect competition and consumers.



The FTC in 2007: A Champion for consumers and competition
In the past year, the FTC accomplished a great deal in a broad spectrum of 

industries, while making improvements to its organization and processes. For 

example, the Commission: 

Protected consumers’ access to low cost generic drugs by policing 

noncompetition agreements between branded and generic drug 

manufacturers.

Continued to protect consumers against deceptive health, safety, and 

weight loss schemes, business opportunity fraud, and deceptive lending 

and other credit scams. 

Encouraged greater competition in the real estate brokerage industry 

by challenging efforts to prevent lower cost, nontraditional listings 

from being posted on Multiple Listing Services or the Internet.

Evaluated the impact of technological 

innovation on consumer protection 

policy through its Tech-ade hearings. 

Lowered heath care costs by 

challenging agreements among 

physicians to fix prices and boycott 

health care payers, and by advocating 

for competition in lieu of regulation 

for pharmacy benefit managers.

Protected consumers’ privacy and information security through 

aggressive enforcement against spyware, adware, and spam under the 

FTC Act and the CAN-SPAM Act.

Resolved the Rambus case, holding that the company engaged in 

anticompetitive “hold up” in the computer memory industry after 

engaging in deceptive conduct before an industry standards-setting 

body, and preventing Rambus from charging monopoly rates to license 

its technology. 

Developed a strategic plan for the federal government to better prevent 

identity theft through the FTC’s leadership role in the President’s 

Identity Theft Task Force, and began to implement the Task Force’s 

interim recommendations at the agency.

Preserved competition in energy industries, and expanded public 

understanding of energy markets, by challenging a merger in the 

natural gas market and an acquisition in the terminaling of gasoline 

market, issuing reports on gasoline price manipulation and ethanol 

market concentration, and organizing a public forum for discussing 

competition in energy markets.



















Federal Trade Commission

“Our competition and consumer protection missions 

are not wholly separate functions that just happen to 

reside in one agency. Rather, they are related sets of 

tools designed to accomplish the same goals – promoting 

efficiency and preventing consumer harm.”

Chairman Majoras

Remarks before the Dallas Bar Association Antitrust and Trade 

Regulation Section

(Jan. 18, 2005)
Analyzed the antitrust implications of single-firm conduct under 

Section 2 of the Sherman Act through a series of hearings organized 

with the Department of Justice. 

Issued a report on childhood obesity that included recommendations 

on the nutritional profiles of foods marketed to children, and that led 

to the adoption of a self-regulatory initiative by 11 major companies to 

promote healthier eating choices and lifestyles. 

Created the Office of International Affairs to better coordinate the 

FTC’s international competition, consumer protection, and technical 

assistance programs, and to best utilize the agency’s new authority 

under the U.S. SAFE WEB Act.

Improved the transparency of its public actions by issuing the FTC 

Volumes of Decision for the years 1969 through 2005 online.

Gave the FTC’s website a new look to make it easier for visitors to 

navigate the site and created new industry-specific mini-websites, 

including one for the petroleum industry, to provide information 

specific to those sectors. 

Appointed the Commission’s first Chief Privacy Officer to coordinate and 

strengthen the FTC’s own privacy and data security policies.

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

as a champion for consumers and competition. The agency’s integrity and 

effectiveness have recently earned it several distinctions: a ranking as one 

of the “most trusted federal agencies” to safeguard personal information 

in a Ponemon Institute study; an Office of Government Ethics award for 

outstanding ethics program; and the Office of Management and Budget’s 

highest rating in a performance assessment of federal agencies. The FTC will 

continue to do its utmost to maintain such high standards as it confronts new 

challenges in the future.















The FTC in 2007: A Champion for consumers and competition
“Aggressive 

competition ... 

gives consumers 

the benefits of 

lower prices, higher 

quality products and 

services, additional 

choice, and greater 

innovation.”

Section One: Competition Mission

Competition is critical to maintaining the free and open markets that are 

the foundation of a vibrant economy. Aggressive competition among sellers 

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

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

goal of the FTC’s competition mission 

is to remove the obstacles that 

impede competition and prevent its 

benefits from flowing to consumers. 

The Commission’s competition 

mission continues to be highly 

productive and focuses on industries 

that most directly affect consumers, 

such as health care, energy, real 

estate, and technology. In the past 

year, the Commission pursued 

a broad range of merger and 

nonmerger enforcement actions 

in these and other industries. For 

example, on the merger front, the 

FTC has taken action to guarantee 

consumers greater access to 

generic drugs and other key 

medical devices and services, and to 

prevent higher prices and preserve 

services in the natural gas and industrial gas markets. Prompt FTC action has 

also caused transactions in other key areas – such as in the energy industry 

– to be withdrawn when the parties involved have not been able to resolve 

competitive concerns. 

The FTC’s nonmerger enforcement efforts have also been active, 

particularly in the real estate, health care, and technology markets. For 

example, the FTC has safeguarded consumers by challenging anticompetitive 

practices that limited the ability of home buyers and sellers to obtain low-cost 



Federal Trade Commission

Total Yearly Enforcement Actions

by Sector FY 2004

Health Care and

Pharmaceuticals

35%

Energy

15%

Services & NonHealth Care

Professions

12%

Technology

23%

Other

15%

FY 2005

Health Care and

Pharmaceuticals

37%

Energy

21% Other

26%

Technology

0%

Services & NonHealth Care

Professions

16%

FY 2006

Services & NonHealth Care

Professions

9%

Other

9% Energy Technology 18% 9%

Health Care and

Pharmaceuticals

55%

FY 2007*

Energy

16%

Other

0%

Services & NonHealth Care

Professions

42%

Technology

10%

Health Care and

Pharmaceuticals

32%

* Represents Fiscal Year 2007 through March 31, 2007.
real estate brokerage services. In the health care industry, the FTC continued to 

bring cases against physician groups engaged in price fixing agreements, and 

successfully challenged the existence of a noncompetition agreement aimed 

at delaying the entry of generic drugs into the marketplace. In the technology 

area, the FTC issued important decisions in the Rambus case resolving complex 

issues involving standards-setting in the computer memory industry.

Chapter 1. Competition Law Enforcement

A. Merger Enforcement

The FTC’s merger enforcement workload has steadily increased in the last 

three years. Compared to FY2004 levels, in FY2006 the agency experienced an 

increase of almost 30 percent in the number of filings and an even greater 

increase in the percentage of second requests issued. Based on data for the first 

six months of FY2007, the FTC anticipates that the merger review process will 

continue to play an increasingly demanding role in the year to come.

1. Health Care Merger Enforcement

The health care industry plays a crucial role in the U.S. economy in terms 

of the impact that it has on consumer spending and welfare. Health care 

expenditures in the U.S. represent almost $2 trillion annually and have been 

increasing steadily for the last 30 years. Consumers feel the sting of increasing 

health care costs most prominently in their escalating insurance premiums 

and in the cost of medicines and medical procedures. During the past year, 

the FTC protected consumers by vigorously reviewing proposed merger 

transactions in the health care industry and taking action to prevent potential 

anticompetitive effects. The Commission challenged seven mergers and 

obtained substantial relief by obtaining consent orders in the areas of generic 

HSR Transactions, Second Requests, 

and Merger Enforcement Actions

Fiscal

Year

HSR Transactions Second Requests 

Issued

Merger 

Enforcement 

Actions

#

% Change 

from 

previous 

year

#

% Change 

from 

previous 

year

#

% Change 

from 

previous 

year

2004 1377 42% 20 33% 15 -29%

2005 1610 17% 25 25% 14 -7%

2006 1746 8% 28 12% 16 14%

2007* 983 19%** 18 80%** 11 83%**

* Represents Fiscal Year 2007 through March 31, 2007.

** The % change is calculated using data for the first six months of FY 2006.



The FTC in 2007: A Champion for consumers and competition
drugs, over-the-counter (OTC) medications, injectable analgesics, and medical 

devices and diagnostic services. 

Generic and Nonprescription Pharmaceuticals. Generic preparations 

exert considerable competitive pressure on branded pharmaceuticals by 

making available lower-cost generic drugs that are identical in chemical 

composition and therapeutic value to the branded drug. The FTC is committed 

to ensuring that consumers are able to reap the maximum benefit from 

generic competition while at the same time recognizing the need to protect 

relevant intellectual property rights. The FTC similarly protects competition 

for non-prescription and OTC drugs.

Barr/Pliva. The FTC settled charges in this matter with a consent 

order finalized in December 2006. The complaint alleged that Barr 

Pharmaceuticals’ (Barr) proposed $2.5 billion acquisition of Pliva would 

have eliminated current or future competition between the firms 

in certain markets for generic pharmaceuticals. The consent order 

required Barr to sell its generic antidepressant trazodone and its 

generic blood pressure medication triamterene/HCTZ, divest either 

Pliva’s or Barr’s generic drug for use in treating ruptured blood vessels in 

the brain, and divest Pliva’s branded organ preservation solution.

Watson/Andrx. In order to maintain competition in the markets for 

13 generic drug products, in December 2006 the FTC approved a final 

consent order with the parties in this matter. Watson was required to 

end its marketing agreements with Interpham Holdings, divest Andrx’s 

right to develop, make, and market generic extended release tablets 

that correct the effects of type 2 diabetes, and divest Andrx’s rights 

and assets related to the developing and marketing of 11 generic oral 

contraceptives.

Hospira/Mayne Pharma. In January 2007, the FTC accepted a 

consent order subject to public comment requiring the companies 

to sell assets used to manufacture and supply five generic injectable 

pharmaceuticals, including those for injectable opioid analgesics and 

for an injectable treatment for acute iron poisoning and chronic iron 

overload.

Johnson & Johnson/Pfizer. The FTC had concerns about 

anticompetitive issues in the markets for OTC H-2 blockers used to 

prevent and relieve heartburn, hydrocortisone anti-itch products, 

nighttime sleep aids, and diaper rash treatments, in the matter of 

Johnson & Johnson’s proposed $16.6 billion acquisition of Pfizer’s 

Consumer Health Division. The issues were settled with a final consent 

order approved in January 2007, requiring that Pfizer sell its Zantac, 

Cortizone, and Unisom divisions, and that Johnson & Johnson sell its 

Balmex division.









“The FTC is 

committed to 

ensuring that 

consumers are 

able to reap the 

maximum benefit 

from generic 

competition while 

at the same time 

recognizing the 

need to protect 

relevant intellectual 

property rights.” 



Federal Trade Commission
Medical Devices and Diagnostic Systems. The FTC also aggressively 

policed mergers in the medical device and diagnostic systems industry to 

ensure that health care consumers receive the benefits of lower cost and higher 

quality products.

Boston Scientific/Guidant. The FTC approved a final consent order in 

July 2006 in the matter of the proposed $27 billion acquisition of Guidant 

Corp. by Boston Scientific Corp. The two companies were the largest 

market share holders in several coronary medical device markets in 

the U.S., together accounting for 90% of the U.S. PTCA balloon catheter 

market and 85% of the U.S. coronary guidewire market. The consent 

order required the divestiture of Guidant’s vascular business to an FTCapproved buyer.

Hologic/Fischer Imaging. In August 

2006, the Commission approved a 

final consent order to ensure the 

maintenance of competition in 

the market for prone stereotactic 

breast biopsy systems (SBBSs). The 

Commission had challenged this 

merger, which was consummated in 

2005. The order required Hologic to 

divest Fischer’s prone SBBS assets to 

Siemens, a company well positioned 

to become a competitor in this 

market.

Thermo Electron/Fisher Scientific. To maintain competition in the 

market for centrifugal vacuum evaporators (CVEs), a tool used in the 

health care industry, the FTC approved a final order in December 2006 

to settle charges that Thermo Electron Corporation’s proposed $12.8 

billion acquisition of Fisher Scientific International, Inc. would have 

greatly decreased competition in the industry. The order requires that 

Thermo Electron divest Fisher’s Genevac division, which includes all CVE 

operations for the company. 

Hospitals and Other Institutional Providers. The FTC also reviews 

carefully mergers between the nation’s hospitals to preserve competition. 

In May 2006, the Commission heard oral arguments in the appeal of the 

Evanston Northwestern Healthcare Corp. matter. In October 2005, the FTC’s 

Administrative Law Judge found that Evanston’s acquisition of an important 

competitor, Highland Park Hospital, resulted in higher prices and a substantial 

lessening of competition for acute-care inpatient services in parts of Chicago’s 

northern suburbs, and ordered the divestiture of Highland Park Hospital. The 

FTC is currently reviewing the competitive effects of several other announced 

hospital mergers.







The FTC in 2007: A Champion for consumers and competition

“If there is one thing that I have learned, it is that we 

cannot take for granted what we have. Free market and 

competition principles are continually under attack and 

need powerful champions. And it is not enough to simply 

bring good enforcement cases. Being a forceful advocate 

for competition also means fulfilling our special public 

charter of fostering a culture of competition here at home 

and around the world.” 

Chairman Majoras

Creating a Global Competition Culture

(Sept. 7, 2005)
2. Energy Merger Enforcement 

The energy sector is one of the pillars of the United States and world 

economies. The FTC closely scrutinizes this industry for anticompetitive 

activity, devoting substantial resources to investigate proposed mergers and 

acquisitions, and litigating against such mergers when appropriate. These 

endeavors ensure that harmful conduct is stopped and strong remedies are 

imposed when a transaction is likely to lessen competition, while permitting 

transactions that are unlikely to harm or may benefit competition. To achieve 

this goal, the FTC carefully reviews proposed mergers between firms engaged 

in, for example, the production and distribution of oil, gasoline, diesel, coal, 

natural gas, and natural gas liquids (NGLs). NGLs are light hydrocarbons – such 

as ethane, propane, and butane – that are used as fuel for heating or industrial 

processes, in blending components for gasoline, and as feedstocks in the 

production of plastics. The FTC’s enforcement actions are aimed at maintaining 

competition and ensuring that Americans enjoy competitive prices for all 

energy products and their derivatives.

Equitable Resources/Dominion Peoples. In March 2007, the 

Commission filed an administrative complaint challenging Equitable 

Resources’ proposed acquisition of The Peoples Natural Gas Company, a 

subsidiary of Dominion Resources. Equitable Resources and Dominion 

Peoples are each other’s sole competitors in the distribution of natural 

gas to nonresidential customers in certain areas of Allegheny County, 

Pennsylvania, which includes Pittsburgh. The complaint alleges that the 

proposed transaction would result in a monopoly for many customers 

who now enjoy competition.

Kinder Morgan/Carlyle Group and Riverstone Holdings. In January 

2007, the Commission challenged the terms of a proposed $22 billion 

deal whereby energy firm Kinder Morgan would be taken private by its 

management and a group of investment firms, including The Carlyle 

Group and Riverstone Holdings. The Commission’s complaint alleged 

that Carlyle and Riverstone held significant positions in Magellan 

Midstream, a major competitor of Kinder Morgan in the terminaling of 

gasoline and other light petroleum products in the southeastern U. S., 

and that the proposed transaction would threaten competition in those 

markets. In settling the Commission’s complaint, Carlyle and Riverstone 

agreed to turn their investment in Magellan passive and to restrict the 

flow of sensitive information between Kinder Morgan and Magellan.

EPCO/TEPPCO. In October 2006, the FTC issued a final consent order 

settling charges related to Enterprise Product Partners’ (EPCO) $1.1 billion 

acquisition of TEPPCO Partners’ NGLs salt dome storage businesses. The 

FTC’s order required TEPPCO to divest its interests in the world’s largest 

NGLs storage facility in Mont Belvieu, Texas, to an FTC-approved buyer. 

In February 2007, the Commission approved that divestiture following a 

public comment period.







Staff Profile

Peter Richman

BC/Mergers III

Deputy Assistant 

Director of the Mergers 

III Division, Peter recently 

supervised the drafting 

of the Commission’s 

important report to 

Congress, “Investigation 

of Gasoline Price 

Manipulation and PostKatrina Gasoline Price 

Increases.” The report 

documents the supply 

and demand dynamics 

in several energy 

markets in the aftermath 

of hurricanes Katrina 

and Rita, and informs 

policy makers regarding 

securing energy supplies 

in the future. 

Peter has led 

litigation and 

investigation teams in 

numerous Commission 

petroleum matters 

over the past 17 years, 

including Marathon/

Ashland, Exxon/Mobil, 

Chevron/Texaco, and 

Valero/UDS. Peter’s 

energy expertise 

contributes to FTC 

initiatives to promote 

competition in critical 

energy markets.



Federal Trade Commission
Chevron/USA Petroleum. In November 2006, Chevron and USA 

Petroleum abandoned a transaction in which Chevron would have 

acquired most of the retail gasoline stations owned by USA Petroleum, 

the largest remaining chain of service stations in California not 

controlled by a refiner. The FTC was concluding its investigation of the 

proposed acquisition at the time and USA Petroleum’s president stated 

that the parties abandoned the transaction because of resistance from 

the FTC.

3. Defense and Security Industry Merger Enforcement

Given America’s vital interests and significant investments in our military 

and national security industries, the FTC scrutinizes proposed mergers in these 

industries for anticompetitive effects.

Boeing/Lockheed Martin. In October 2006, the Commission 

intervened in the formation of United Launch Alliance (ULA), a 

proposed joint venture between Boeing and Lockheed Martin. The FTC’s 

complaint alleged that the formation of ULA as originally structured 

would have reduced competition in the markets for U.S. government 

medium to heavy launch services and space vehicles. In settling the 

Commission’s charges, the parties agreed to take certain actions (such 

as implementing nondiscrimination requirements and firewalls) 

to address ancillary competitive harms not inextricably tied to the 

national security benefits of ULA. 

General Dynamics/SNC Technologies. In December 2006, the 

Commission challenged General Dynamics’ proposed $275 million 

acquisition of SNC Technologies. The FTC’s complaint alleged that the 

planned deal would have undermined competition by bringing together 

two of only three competitors providing the U.S. military with meltpour load, assemble, and pack services used during the manufacture 

of ammunition for mortars and artillery. Under the terms of the 

consent agreement, General Dynamics was required to sell its interest in 

American Ordinance to an FTC-approved buyer.

4. Other Merger Enforcement

In the past year, the FTC also investigated and took enforcement action with 

respect to mergers in other industries where necessary to protect competition.

Linde/BOC Group. Industrial gases such as oxygen, nitrogen, and 

helium play a crucial role in many segments of our economy, including 

health care, oil and gas, agriculture, and manufacturing. In August 

2006, the FTC approved a final consent order relating to the proposed 

$14.4 billion acquisition of the BOC Group by Linde requiring Linde to 

divest air separation units, bulk refined helium assets, and other assets 

in eight localities across the U.S. The consent order aims to maintain 











The FTC in 2007: A Champion for consumers and competition
competition for liquid oxygen, liquid helium, and bulk refined helium in 

several U.S. markets.

Service Corp International (SCI)/Alderwoods. In January 2007, 

the Commission approved a final consent order settling charges that 

SCI’s proposed acquisition of Alderwoods Group likely would lessen 

competition in certain markets for funeral and cemetery services. 

Under the settlement, SCI agreed to sell funeral homes in 29 markets 

and cemeteries in 12 markets across the United States.

B. Nonmerger Enforcement

In the last year, the FTC has continued to pursue aggressively nonmerger 

matters in the health care and real estate sectors, as well as in the market 

for computer memory technology. The agency has utilized a combination of 

enforcement, policy, and outreach tools to educate businesses and consumers 

on how potentially restrictive business practices are evaluated under the law. 

Moreover, the FTC has designed appropriate tools to educate consumers on 

how these practices can affect them directly. 

1. Health Care Nonmerger Enforcement

The FTC continues to be vigilant in the detection and investigation of 

agreements between drug companies that delay generic drug entry. The 

Commission also actively brought enforcement actions against agreements 

among physicians designed to boycott third-party payers and fix prices. 

Further, the agency successfully fought off a challenge to an administrative 

decision in a case in which it has alleged anticompetitive practices that 

were detrimental to children’s dental care. By challenging these kinds of 

anticompetitive practices, the FTC strives to ensure that essential health 

care services will be available to consumers at prices established in an open, 

competitive market.

Agreements That Delay Generic Entry. The Commission continues to 

vigorously investigate agreements between pharmaceutical companies that 

delay the entry of generic drugs to the detriment of consumers.

Warner Chilcott/Barr Labs. In November 2005, the Commission filed 

a complaint in federal district court challenging an agreement between 

Warner Chilcott and Barr Laboratories in which Barr had agreed not to 

market a lower-priced generic version of Warner Chilcott’s Ovcon 35, an 

oral contraceptive drug, in exchange for $20 million. In September 2006, 

under the threat of a preliminary injunction sought by the Commission, 

Warner Chilcott waived the exclusionary provision in its agreement, 

and the next day Barr announced its intention to start selling generic 

Ovcon in the U.S. Under the terms of the October 2006 order settling 

the Commission’s charges, Warner Chilcott agreed to certain terms to 

protect generic entry into the market. Though Warner Chilcott settled, 

the FTC’s case against Barr continues. 





10

Federal Trade Commission

Under the threat 

of a preliminary 

injunction sought 

by the Commission, 

Warner Chilcott 

waived the 

provision in its 

agreement that 

kept the generic 

competition off the 

market.

FTC to Subpoena Drug 

Firms In Probe of 

Industry's Practices

March 30, 2006
The Commission also continues to investigate patent settlements between 

pharmaceutical companies that are required to be filed with the Commission 

under the Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003. Some of these settlements may be anticompetitive. For example, 

in “exclusion payment settlements,” the brand name firm pays its potential 

generic competitor to abandon a patent challenge and delay entering the 

market, essentially sharing the brand’s profits between them, and postponing 

consumers’ access to lower-priced generic drugs.

Physician Price Fixing. In the past year, the FTC challenged three separate 

matters alleging illegal agreements whereby competing physicians jointly set 

their prices and collectively agreed to withhold their services if health care 

payers did not meet their fee demands. This conduct harms competition and 

consumers by raising prices for health care services and health care insurance 

coverage and by reducing consumers’ choices. In each case, the Commission’s 

consent order prohibits the physician groups from, among other things, 

facilitating agreements among competing physicians that restrict the ability of 

any physician to deal individually with a health plan payer.

Puerto Rico Association of Endodontists. In August 2006, the 

Commission approved a final consent order settling charges alleging 

that 30 competing association members acted unlawfully by agreeing to 

set the prices they would charge dental insurance plans and by refusing 

to deal with plans that would not accept the collectively determined 

prices.

New Century Health Quality Alliance. In October 2006, following 

the public comment period, the Commission approved a final consent 

order settling Commission charges alleging that two independent 

practice associations and 18 member physician practices in the Kansas 

City, Missouri, area refused to deal with health care plans, except on 

collectively agreed-upon prices and other terms. 

Advocate Health Partners. In February 2007, the Commission 

approved a final consent order settling the FTC’s challenge against 

the conduct of several organizations representing more than 2,900 

independent Chicago-area physicians for agreeing to fix prices and 

for refusing to deal with certain health plans except on collectively 

determined terms. The FTC continues to monitor a clinical integration 

plan set up by respondents for any anticompetitive effects. 

Anticompetitive Practices Affecting Children’s Dental Care. During 

the past year, the Commission also prevailed against a challenge to the 

Commission’s June 2004 interlocutory opinion in South Carolina State Board 

of Dentistry that denied state action immunity to a state board of dentistry. 

The Commission alleged that the state board engaged in anticompetitive 

conduct that restricted the availability of preventive dental services to 

school-aged children in South Carolina. The court of appeals agreed with the 







11

The FTC in 2007: A Champion for consumers and competition

The Commission 

continues to 

challenge physician 

price fixing 

schemes that harm 

“competition and 

consumers by 

raising prices for 

health care services 

and health care 

insurance coverage 

and by reducing 

consumers’ 

choices.”
Commission’s request to dismiss the appeal for lack of jurisdiction, and the 

Supreme Court denied the board’s petition for certiorari.

2. Real Estate Nonmerger Enforcement

Purchasing or selling a home is one of the most significant financial 

transactions most consumers will ever make. The FTC has actively investigated 

restrictive practices in the residential real estate industry, including efforts by 

private associations of brokers to impede competition from brokers who use 

non-traditional listing arrangements. In this last year alone, the FTC brought 

eight enforcement actions against associations of realtors or brokers who 

adopted rules that withheld the valuable benefits of the association-controlled 

Multiple Listing Services (MLSs) from consumers who chose to enter into 

non-traditional, and often less expensive, listing contracts with real estate 

brokers. Such association policies limit home sellers’ ability to choose a listing 

type that best serves their specific needs.

Austin Board of Realtors. In September 

2006, the FTC entered into a final consent 

order settling charges against the Austin 

Board of Realtors (ABOR) for its practice 

of preventing consumers with listing 

agreements for potentially low-cost, 

unbundled brokerage services from 

marketing their listings on public real 

estate-related Internet sites. In settling the 

charges, ABOR is prohibited from adopting 

or enforcing any rule that treats one type 

of real estate listing agreement more 

advantageously than any other or from 

interfering with its members’ ability to enter 

into any lawful listing agreement with home 

sellers.

Real Estate Competition Law Enforcement Sweep: Williamsburg 

Area Association of Realtors, Inc.; Monmouth County Association 

of Realtors; Northern New England Real Estate Network,Inc.; 

Realtors Association of Northeast Wisconsin, Inc.; Information 

and Real Estate Services, LLC; RealComp II Ltd; MiRealSource, 

Inc. In October 2006, the FTC’s Bureau of Competition filed its first law 

enforcement sweep, which challenged rules in seven jurisdictions that 

withheld valuable benefits of the MLSs they control from consumers 

who chose to enter into non-traditional listing contracts with real 

estate brokers. Six of the seven rules blocked non-traditional, lessthan-full-service listings from being transmitted by the MLS to a wide 

range of popular Internet sites, while the seventh blocked such nontraditional brokerage contracts from the MLS entirely. The Commission 

announced in October 2006 consent agreements with five of the groups 





12

Federal Trade Commission

“The real estate industry is critical to our 

citizens. For many, the purchase of a home 

represents tangible fulfillment of the American 

dream, the reward for hard work and dedication, 

sometimes spanning decades. ... Competition in 

the real estate industry, therefore, is not merely 

of interest to those involved in the real estate 

industry... but to anyone who has ever bought 

or sold, or is thinking about buying or selling, a 

house.”

Chairman Majoras

Opening Remarks at FTC/DOJ Workshop on 

Competition in the Real Estate Industry

(Oct. 25, 2005)
operating MLSs in parts of Colorado, New Hampshire, New Jersey, 

Virginia, and Wisconsin that agreed to stop discriminating against 

non-traditional listing arrangements. Two real estate groups in the 

Detroit, Michigan, area did not settle, and the FTC issued administrative 

complaints alleging anticompetitive practices against the groups. In 

February 2007, the Commission settled with one of these Michigan 

groups, which agreed to abandon the challenged practices.

3. Technology Nonmerger Enforcement 

The Commission also places great emphasis on safeguarding competition 

in the high technology sector, such as the computer hardware and software 

industries.

Rambus. During the past year, the FTC issued two decisions resolving its 

administrative complaint alleging anticompetitive conduct in the markets 

for computer memory technology. In July 2006, the FTC issued an opinion by 

Commissioner Pamela Jones Harbour concluding that Rambus, Inc. unlawfully 

monopolized markets for four computer memory technologies that have been 

incorporated into industry standards for dynamic random access memory 

(DRAM) chips. DRAMs are widely used in personal computers, servers, printers, 

and cameras. The Commission found that, through a course of deceptive 

conduct, Rambus was able to distort a critical standard-setting process and 

engage in an anticompetitive “hold up” of the computer memory industry. The 

Commission held that Rambus’ acts of deception constituted exclusionary 

conduct under Section 2 of the Sherman Act and contributed significantly to 

Rambus’ acquisition of monopoly power in the four relevant markets.

In February 2007, Chairman Majoras issued the opinion of the 

Commission on remedy. In that opinion, the Commission prescribed 

a set of remedies barring Rambus from making misrepresentations 

or omissions to standard-setting organizations, requiring Rambus to 

license its SDRAM and DDR SDRAM technology and setting limits to the 

royalty rates it can collect under its licensing agreements including with those 

firms that may have already incorporated its DRAM technology. The order 

also requires Rambus to employ a Commission-approved compliance officer 

to ensure it discloses relevant patent information to any standard-setting 

organizations in which it participates. 

4. Retail Goods Nonmerger Enforcement 

The FTC also guards against anticompetitive conduct in the retail sector 

and brings enforcement cases where necessary.

Missouri Funeral Board. In March 2007, the Commission announced 

for public comment a proposed order settling charges that the Missouri 

State Board of Embalmers and Funeral Directors illegally restrained 

competition by defining the practice of funeral directing to include 



13

The FTC in 2007: A Champion for consumers and competition
selling funeral merchandise to consumers on an at-need basis. The 

Board’s regulation permitted only licensed funeral directors to sell 

caskets to consumers on an at-need basis, thereby discouraging other 

retailers from selling caskets. The Board ended the restriction last year 

and agreed that it will not prohibit or discourage the sale of caskets, 

services, or other funeral merchandise by unlicensed persons. 

C. Guidance, Transparency, and Process Improvements

During the last year, the FTC implemented two measures aimed at 

streamlining the merger review process: merger review process reform and 

e-filing.

Merger Review Process Reform. In February 2006, Chairman Majoras 

announced significant merger process reforms aimed at streamlining the 

review process and reducing the costs borne by both the FTC and merging 

parties. During the past year, the FTC has implemented these reforms 

including reducing the number of custodians for which parties must search 

for information, reducing the time period during which parties are required 

to provide documents, allowing parties to preserve fewer back-up tapes under 

certain circumstances, and significantly reducing the amount of information 

required in the parties’ privilege logs.

E-filing. In June 2006, the FTC and the DOJ Antitrust Division, 

implemented an electronic filing system that provides merging 

parties the option to submit premerger notification filings required 

by the Hart-Scott-Rodino (HSR) Act via the Internet. With this new 

process, electronic filings may be submitted quickly and easily, 

eliminating the time and expense entailed in duplicating and 

delivering paper documents.

Chapter 2. Competition Policy Tools

The FTC’s competition enforcement mission is complemented 

by a broad series of activities, including research and reports, 

workshops, advocacy filings, and amicus briefs. Through this work, 

the Commission learns about emerging and important issues 

and shares this information with other policymakers, businesses, 

the antitrust bar, and the public in order to provide leadership on 

significant antitrust-related matters.

A. Research and Reports

During the last year, the FTC continued to develop its policy agenda by 

performing research and publishing reports on a wide scope of relevant 

competition issues. These include topics of perennial interest, such as energy 

and health care, as well as increasingly important topics such as Internet access. 

14

Federal Trade Commission
1. Energy 

Report on Gasoline Price Manipulation and Post-Katrina 

Gasoline Price Increases. In May 2006, the FTC released the findings 

of a Congressionally-mandated investigation into whether gasoline 

prices nationwide were “artificially manipulated by reducing refinery 

capacity or by any other form of market manipulation or price gouging 

practices,” as well as into gasoline pricing in the aftermath of Hurricane 

Katrina. In its investigation, the FTC examined evidence relating to a 

broad range of possible forms of manipulation and found no instances 

of illegal market manipulation that led to higher prices during the 

relevant time periods. While the Commission did find 15 examples of 

pricing fitting the relevant legislation’s definition of evidence of “price 

gouging,” it concluded that other factors – such as regional or local 

market trends – appeared to explain the increased prices in nearly all 

cases.

Report on Ethanol Market Concentration. In December 2006, the 

Commission issued a report that examined the current state of ethanol 

production in the U.S. and measured market concentration using 

capacity and production data. The study, which is the second in a series 

of annual reports, concluded that U.S. ethanol production currently 

is not highly concentrated and that market concentration based on 

production capacity decreased over the past year. The study also 

examined the possible effect on concentration of agreements between 

ethanol producers and third-party marketers. The study concluded that 

current concentration levels in ethanol production do not indicate that 

a single firm, or a small group of firms, could wield sufficient market 

power to set or coordinate price or output levels.

2. Health Care 

Authorized Generics Study. In March 2006, the FTC staff initiated 

a 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-term 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. Currently, staff is 

reviewing public comments on the proposed methodology for the study.

3. Technology 

Wi-Fi Report. In September 2006, the FTC published a staff report, 

“Municipal Provision of Wireless Internet,” which provided a decisiontree framework to policymakers considering whether and how 

municipalities should provide Internet service. The report identifies the 









PXQLFLSDOSURYLVLRQRI

ZLUHOHVVLQWHUQHW IWFVWDIIUHSRUW

VHSWHPEHU

15

The FTC in 2007: A Champion for consumers and competition
potential benefits and risks to competition and consumers associated 

with municipal provision of wireless Internet service. The report was 

the first publicly released work from the FTC’s Internet Access Task 

Force, which was convened by Chairman Majoras in August 2006. 

Second Report on Intellectual Property and Competition. In 

Spring 2007, the FTC and DOJ are issuing the second report addressing 

issues arising at the intersection of antitrust and intellectual property 

law and policy. The Report will make recommendations for competition 

law and policy, and follows an initial report issued in 2003 after extensive 

hearings on this issue.

4. Other 

Noerr-Pennington Report. In November 2006, the Commission 

released a report that provided enforcement perspectives on the 

Noerr‐Pennington doctrine, which precludes application of the antitrust 

laws to certain private acts that urge government action. The report 

provided the staff’s views on how best to apply the doctrine to conduct 

that imposes significant risks to competition, but does not further 

the important First Amendment and governmental decision-making 

principles underlying the doctrine. 

Report on Horizontal Merger Investigation Data, Fiscal Years 

1996-2005. To promote greater transparency in merger enforcement, 

the Commission published a report in January 2007 showing the trend 

in merger enforcement investigations for the fiscal years 1996-2005. 

Staff analyzed certain market structure information in connection with 

the Commission’s decision whether or not to seek relief in the specific 

markets investigated. Further, for those investigations involving 

three or fewer markets, staff tabulated the Commission’s enforcement 

decisions based on the presence or absence of “hot documents,” “strong 

customer complaints,” and “entry conditions.”

B. Hearings and Workshops

Hearings and workshops organized by the FTC represent a unique 

opportunity for the agency to develop policy research and development tools 

and to help foster a deeper understanding of the complex issues involved in 

the economic and legal analysis of antitrust law. Typically, these events bring 

together representatives reflecting a wide range of perspectives and provide 

an opportunity for experts from the legal, business, academic, and government 

communities to share ideas, confront positions, and identify new areas of 

interest.







16

Federal Trade Commission
1. Hearings

Single-Firm Conduct Hearings. Starting in June 2006, the FTC and DOJ 

Antitrust Division held a series of joint public hearings – in Washington, 

D.C., Berkeley, California, and Chicago, Illinois – to study the antitrust 

implications of single-firm conduct. The hearings have sought public 

input regarding how best to analyze whether and when specific types of 

single-firm conduct may be anticompetitive and violate Section 2 of the 

Sherman Act, and whether and when conduct is pro-competitive and 

lawful. The hearings have specifically focused on the identification and 

analytical meaning of monopoly power; circumstances that determine 

exclusionary conduct; unilateral refusals to deal; predatory pricing; 

loyalty and bundled discounts; exclusive dealing; tying; misleading 

and deceptive conduct; remedies; historical and strategic business 

perspectives; the use of empirical data; and international perspectives. 

After the hearings conclude, agency staff will prepare a report of the 

hearings’ results and relevant research.

2. Workshops

Competition in Energy Markets. In April 2007, the FTC hosted a 

public conference to explore a range of energy issues of importance to 

American consumers, as well as to the U.S. and global economies. The 

three-day conference, “Energy Markets in the 21st Century: Competition Policy 

in Perspective,” covered topics such as the relationship between market 

forces and government policy in energy markets; the dependence of the 

U.S. transportation sector on petroleum; the effects of electric power 

industry restructuring on competition and consumers; technological 

developments in the industry; the security of U.S. energy supplies; and 

the government’s role in maintaining competition and protecting 

energy consumers.

Broadband Connectivity Competition Policy. In February 2007, the 

FTC hosted a public workshop to explore the many competition and 

consumer protection issues relating to broadband Internet access, 

including so-called “network neutrality.” Among the topics discussed 

were the current and future state of competition in the market for 

broadband Internet access; the capabilities and incentives of broadband 

Internet service providers to discriminate against, degrade, block, 

or charge fees for prioritized delivery of unaffiliated content and 

applications; and the potential effects of network neutrality regulation 

on innovation and competition in the market for broadband Internet 

access. The FTC plans to release a report based on this workshop later 

this year.

Economics in the Pharmaceutical Industry. In October 2006, the 

FTC’s Bureau of Economics hosted a non-public conference discussing 

recent economic research related to competition and consumer 









)('(5$/75$'(&200,66,21

$1'

'(3$570(17 2)-867,&(

$17,75867 ',9,6,21

SECTION 2 HEARINGS

b r o a db a n d

connect v ty

compet t on pol cy

17

The FTC in 2007: A Champion for consumers and competition

in the 21st century:

Competition Policy in Perspective

energy markets

in the 21st century:

Competition Policy in Perspective

energy markets
“... broadband is 

an ‘information 

service’ – not 

a ‘common 

carrier service’ 

exempt from FTC 

jurisdiction ...”

protection issues in the pharmaceutical industry. The discussion 

included the economic impact of direct-to-consumer advertising, 

spillovers and mergers in pharmaceutical research and development, 

and economic incentives for new drug development.

C. Advocacy Letters and Comments

The promotion of competition principles to policymakers is a fundamental 

complement to the agency’s enforcement activities. Experience has shown 

that government-imposed restrictions are among the most effective and 

durable constraints on competition. The Commission’s competition advocacy 

program applies rigorous antitrust analysis and empirical evidence to provide 

information to government officials with the goal to limit or eliminate public 

impediments to competition that may harm consumers. Over the last year, the 

FTC’s advocacy filings generally have sought to achieve one of three objectives: 

(1) facilitating entry, (2) eliminating perverse market incentives, or (3) making 

it easier for consumers to get useful information. The FTC’s recent advocacy 

efforts have contributed to several positive consumer outcomes. 

Wine Direct Shipping. In 2006, FTC staff filed comments on legislation 

in Florida and Ohio that would allow direct shipment of wine from 

out-of-state manufacturers to consumers in those states, provided that 

certain requirements were met. The proposed legislation was designed 

to bring Florida and Ohio law into compliance with the recent Supreme 

Court decision in Granholm v. Heald, which held (relying on the FTC’s 2003 

Wine Report) that states may not discriminate against out-of-state, 

and in favor of in-state, wineries. Staff concluded that, if enacted, the 

proposed legislation would benefit consumers by providing greater 

wine selection and lower prices, while also allowing each state to meet 

its other public policy goals, such as preventing underage access to 

alcohol and collecting taxes. Staff also noted that the provision which 

limits the ability of large producers to import wine into Florida would 

likely reduce the benefits to consumers.

Patent Rules of Practice. In May 2006, the FTC submitted comments 

to the U.S. Patent and Trademark Office (PTO) in response to the PTO’s 

statement of proposed rulemaking regarding its proposed rules on 

continuations, whereby patent applicants may amend their claims or 

present additional arguments and evidence supporting patentability. 

The Commission supported the PTO’s proposed rules and urged their 

adoption, as they accommodate the legitimate uses of continuations, 

limit abuses that can harm the competitive process, and promote the 

patent system’s ability to provide incentives to innovate to the extent 

they reduce the pendency of patent applications.

Online Auction Trading Assistants. In May 2006, FTC staff provided 

comments on proposed Louisiana state legislation exempting 

individuals and firms assisting consumers in selling goods through 







Online Initiatives

 In an August 2006 

speech, Chairman Majoras discussed several 

FTC initiatives to protect 

competition and consumers in the online world, 

including the creation of 

the FTC’s Internet Access 

Task Force to educate 

the Commission on Internet access issues. She 

also reiterated the Commission’s position that 

it may assert jurisdiction 

to challenge deceptive or 

anticompetitive conduct 

by broadband service 

providers, noting that 

broadband is an “information service” – not a 

“common carrier service” 

exempt from FTC jurisdiction – a position reflecting recent judicial and 

regulatory developments.

18

Federal Trade Commission
online auction houses (e.g., eBay) to hold an auctioneer’s license. The 

comments noted that the use of trading assistants lowers the price for 

consumers to use online auction houses and that staff had found no 

evidence of consumer harm from the use of such trading assistants.

Online Attorney Matching Services. In May 2006, FTC staff filed 

comments with the Texas Bar Association’s Professional Ethics 

Committee providing analysis of the likely effects on consumers of 

the bar association’s opinion finding it unethical for Texas attorneys 

to participate in online legal matching services. Staff concluded that 

such a restriction likely would harm Texas consumers by increasing 

the costs associated with finding legal representation and, ultimately, 

the price for legal services. The comments further noted that there is 

no evidence that online legal matching services have caused consumer 

harm that would justify banning them.

Unauthorized Practice of Law. In June 2006, the FTC and DOJ jointly 

filed comments with a committee in the New York State Assembly 

opposing proposed legislation to expand the scope of activities 

constituting the unauthorized practice of law. In particular, parties 

to a real estate transaction in New York presently routinely rely on 

non-attorneys to conduct title abstracting and to prepare basic 

transactional documents. The proposed legislation would define 

all such work as the practice of law and by definition exclude nonattorneys from nearly all aspects of real estate transactions. The 

agencies believe that non-attorneys should be permitted to compete 

with attorneys in such matters, “except where specialized legal 

knowledge and training is demonstrably necessary to protect the 

interests of consumers.” 

Pharmacy Benefit Managers. In October 2006, FTC staff provided 

comments on legislation in Virginia that would regulate the contractual 

relationship between pharmacy benefit managers and health benefit 

plans. The comments argued that such regulation would limit the 

ability of the parties to enter into efficient, mutually advantageous 

contracts and might increase pharmaceutical prices. For example, 

according to FTC staff, the bill likely would hamper initiatives by health 

plans to encourage consumers to use certain lower-priced drugs, and 

ultimately might decrease the number of consumers with insurance 

coverage for pharmaceuticals without producing offsetting benefits. 

D. Amicus Briefs 

In one of the most active Supreme Court terms for antitrust cases in 

decades, the FTC participated in several amicus briefs submitted to aid the Court 

in analyzing and resolving competition-related issues. The matters in which 

the agency intervened range from Section 2 cases, to price fixing matters, to 

vertical price restraints.







19

The FTC in 2007: A Champion for consumers and competition
Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber. In two joint 

amicus briefs, filed in May and August 2006, the FTC and DOJ urged the 

U.S. Supreme Court to grant certiorari and reverse the Ninth Circuit Court 

of Appeals decision which: 1) held that the standard for a predatory 

pricing claim articulated by the Supreme Court in Brooke Group Ltd v. 

Brown & Williamson Tobacco Corp. did not apply to a case in which the 

plaintiff alleged “predatory bidding” in violation of Section 2 of the 

Sherman Act; and 2) approved instructions that allowed a jury to find 

a violation based on assessments of factors such as “fairness” and 

“necessity.” In February 2007, a unanimous Supreme Court agreed with 

the government and vacated the Ninth Circuit’s decision, holding that 

the Brooke Group test applies to predatory bidding claims.

Latino Quimica-Amtex S.A., v. Atofina S.A. In June 2006, the 

Commission and DOJ filed jointly an amicus brief in this case which 

involved an international price fixing conspiracy by manufacturers 

of two chemicals. The chemicals, sodium monochloroacetate 

and monochloroacetic acid, are used in manufacturing foods, 

pharmaceuticals, herbicides, and plastics. At issue was the Sherman 

Act claims of several foreign companies that purchased the chemicals 

from manufacturers located outside the U.S., for delivery outside of the 

United States. In keeping with the position previously advanced in the 

Empagran litigation, the brief urged the Second Circuit to affirm the 

dismissal of the complaint for lack of jurisdiction. Shortly after the brief 

was filed, the parties withdrew the appeal.

Leegin Creative Leather Products, Inc. v. PSKS, Inc. In January 2007, 

the DOJ and FTC filed a joint amicus brief in the U.S. Supreme Court 

addressing the question whether an agreement between a supplier 

and its dealer that sets the dealer’s minimum retail price constitutes 

a per se violation of Section 1 of the Sherman Act or is instead properly 

analyzed under the rule of reason. The brief argued that the per se rule 

against vertical minimum resale price maintenance established in Dr. 

Miles Medical Co. v. John D. Park & Sons Co. is irreconcilable with the Court’s 

modern antitrust jurisprudence and should be overruled.

Credit Suisse First Boston v. Glen Billing. In January 2007, the FTC, DOJ, and 

Securities and Exchange Commission (SEC) jointly filed an amicus brief 

addressing the application of the antitrust laws to activities subject 

to SEC regulation. The brief argued that collaborative underwriting 

activities occurring during the initial public offering of securities that 

are expressly or implicitly authorized under the securities laws, as well 

as conduct inextricably intertwined with such activities, are immune 

from the antitrust laws. At the same time, the brief cautioned that 

not all underwriting activities occurring in connection with an initial 

public offering enjoys a blanket antitrust exemption. The brief urged 









The Commission’s 

argument in the 

government’s 

amicus brief in 

Weyerhaeuser

— that the test 

which applies to 

claims of predatory 

pricing also 

applies to claims of 

predatory bidding 

— was subsequently 

adopted by a 

unanimous Supreme 

Court.

20

Federal Trade Commission
the Court to vacate the lower court rulings, neither of which struck 

the appropriate balance between the interests of the antitrust and 

securities laws. 

Commission staff also participated in discussions with the DOJ and other 

federal agencies regarding the position taken by the United States as amicus in 

several cases involving intellectual property, which had important implications 

for competition and consumer interests. In the cases decided to date, the 

Supreme Court has vacated or reversed lower court rulings that threatened 

consumer interests by taking an unduly rigid approach to patent litigation and 

remedies.

E. Congressional Testimony

During the last year, the Chairman and other Commissioners, as well as 

senior Commission staff, provided key testimony on a number of significant 

competition-related subjects, including health care, energy, real estate 

brokerage, and patent law reform. 

Health Care. From July 2006 through 

February 2007, Commissioners and other 

FTC staff presented prepared testimony on 

health care-related issues on four separate 

occasions. The topics included enforcement 

and advocacy activities regarding branded 

and generic pharmaceutical competition, 

including potentially anticompetitive 

payments used to settle patent disputes, FTC 

interventions against physicians adopting 

collective price fixing and boycotting 

agreements, and the oversight of competition 

in the contact lens market. 

Energy. Chairman Majoras provided testimony in May 2006 discussing 

major issues addressed in the FTC’s report concerning gasoline price 

manipulation, presenting the Commission’s findings and related policy 

implications, and offering recommendations for Congress to consider 

in its ongoing efforts to protect consumers in petroleum markets. 

The testimony focused on market forces and competitive dynamics 

affecting gasoline prices, including general price-gouging issues, as well 

as the repercussions and disruptions in the petroleum industry caused 

by Hurricane Katrina.

Real Estate Brokerage. Senior Commission staff testified in July 

2006 regarding competition in the real estate brokerage industry. The 

testimony addressed the recent growth in alternative, Internet-based 

business models in the industry, as well as actions on the part of 

competitors and state governments that make it more difficult for 







“In our advocacy work, we also frequently 

weigh in on proposed federal legislation, and are 

frequently successful in preventing the passage of 

legislation that would impede competition or protect 

market participants from antitrust enforcement.”

Chairman Majoras

Remarks at 2005 ABA Annual Meeting

(Aug. 6, 2005)

21

The FTC in 2007: A Champion for consumers and competition
such alternative models to compete against traditional brokers. The 

FTC reiterated that it will continue to aggressively bring enforcement 

actions against anticompetitive conduct and advocate against 

legislation detrimental to consumers in this industry. 

Patent Law Reform. Commission staff testified in February 2007

that patent policy stimulates innovation by providing an incentive to 

develop and commercialize inventions, but that invalid or questionable 

patents can increase costs and hinder competition. The staff testified 

that implementing the patent reform recommendations the FTC made 

in its 2003 report, “To Promote Innovation: The Proper Balance of Patent and 

Competition Law and Policy,” would increase the likelihood that issued 

patents are valid and that challenges to invalid patents will proceed 

more efficiently.

Chapter 3. Competition – Consumer and Business 

Education and Outreach

In addition to its aggressive law enforcement and advocacy efforts, the 

FTC is committed to enhancing consumer confidence in the marketplace 

through public education and outreach. In the past year, Commission staff 

launched a multi-dimensional outreach campaign emphasizing that antitrust 

enforcement helps consumers reap the benefits of competitive markets by 

keeping prices low and the quality of services high, and by encouraging more 

choices in the marketplace. The Commission is building a library of brochures, 

fact sheets, articles, reports and other products – both in print and online – in 

its efforts to reach consumers, attorneys, and business people. Further, the FTC 

plans to partner with other public and private organizations to broaden the 

dissemination of this important message.

Competition Counts. “Competition Counts: How Consumers 

Win When Businesses Compete” is a brochure that introduces 

consumers and businesses to the importance of competition, 

and the role that antitrust enforcement plays in benefitting 

both the economy and our nation’s citizens.

New industry-specific mini-websites. The Commission’s 

website continues to grow in size and scope with resources 

on competition policy in a variety of vital industries. This year, 

the FTC launched new industry-specific websites for oil and 

gas, health care, real estate, and, most recently, technologyrelated issues. These mini-websites serve as a convenient 

place for consumers and businesses to learn about the FTC’s 

efforts to advance competition in these important business 

sectors. For example, these websites include the FTC’s latest 

law enforcement actions, detailed staff reports, conference 

schedules, and “tip sheets” for consumers. 







22

Federal Trade Commission
Case-related consumer education. In the past year, the Commission 

continued to integrate its competition enforcement activities with 

consumer and business education, so that the public can better identify 

the signs of anticompetitive behavior and understand the economic 

impact of corporate mergers or other restrictive business practices. 

In conjunction with the initiation or settlement of enforcement 

cases, the Commission issued practical tips for consumers in a wide 

variety of industries, including how to select a real estate agent and 

shop for funeral services and generic drugs, as well as “plain language” 

information on oil and gas availability and pricing.

Expanding media coverage. In the past year, news coverage of FTC 

competition activities has grown due to both the increasing interest 

in antitrust enforcement, as well as the implications enforcement 

activities have on consumers. For example, major metropolitan daily 

newspapers reported on the FTC’s suits in several states against real 

estate groups that blocked access by discount brokers to Multiple 

Listing Services. National publications, including The Wall Street Journal,

reported on FTC enforcement actions in the health care industry, 

covering news of several health care merger cases that resulted in 

divestitures, and reported on Commission testimony before the Senate 

concerning potentially anticompetitive conduct between generic and 

branded drug firms in settling patent disputes. Gasoline pricing was 

the most widely covered competition issue during the past year, and 

reporters covering the latest trends in the energy industry consulted 

the Commission’s oil and gas mini-website. The FTC’s competition 

advocacy work was also widely reported with several magazines 

running stories on the competition for legal services, wine, and contact 

lenses.





Staff Profile

Shira 

Pavis Minton

Office of the 

General Counsel

As the Assistant 

General Counsel for 

Ethics, Shira helps 

administer the FTC’s 

Ethics Program 

which this year won 

the U.S. Office of 

Government Ethics’ 

Award for Outstanding 

Achievement in 

Managing an Ethics 

Program. The FTC 

is committed to the 

highest level of ethical 

conduct, and Shira and 

the ethics staff provide 

ethics training for all FTC 

employees. 

In speaking at 

the National Ethics 

Conference recently, 

Shira emphasized that 

the main reason for 

the success of the FTC 

Ethics Program is the 

“culture of compliance” 

that flows from the very 

highest level of the 

agency.

23

The FTC in 2007: A Champion for consumers and competition
“The FTC uses its 

law enforcement 

powers to actively 

fight fraudulent 

and deceptive 

practices that harm 

consumers.”

Section Two: Consumer Protection 

Mission

The FTC’s consumer protection mission is to protect the public from 

fraud, deception, and unfair practices in the marketplace. During the past 

year, the agency focused on issues of 

critical importance to consumers, 

including misleading credit and debtrelated practices, deceptive health 

claims, business opportunity schemes, 

spyware, data security, pretexting, 

unwanted telemarketing calls, protecting 

children online, and spam. In some cases, 

enforcement can culminate in a referral 

by the FTC’s Criminal Liaison Unit, which 

works with criminal authorities to seek the 

prosecution of the worst offenders.

The agency’s law enforcement 

efforts are supported by information 

gathering tools that help the agency stay 

at the forefront of emerging technologies 

and consumer threats, and inform 

policymakers, businesses, and the public 

as a whole. The FTC’s tools include workshops, rulemakings, reports, and 

complaint databases.

Chapter 4. Consumer Protection Law 

Enforcement

A. Fraud and Deception Law Enforcement

The FTC uses its law enforcement powers to actively fight fraudulent and 

deceptive practices that harm consumers. From April 2006 through March 2007, 

the FTC filed 59 actions in federal district court and obtained 120 judgments 

24

Federal Trade Commission

Sentinel Top Complaint Categories

January 1 – December 31, 2006

Identity Theft

48%

Shop-at-Home,

Catalog Sales

9%

Prizes, Sw eepstakes,

Lotteries

9%

Internet Services,

Computer Complaints

8%

Internet Auctions

6%

Foreign Money Offers

4%

Advance-Fee Loans,

Credit Protection

2%

Other

10%

Telephone Services

2%

Magazines,

Buyers Clubs

2%

Percentages are based on the number of Sentinel complaints (513,955) received by the FTC between January 1 and December 31, 2006,

where a specific Sentinel product/service category was reported. 160,399 Sentinel complaints were not coded under any specific category.

Source: “Consumer Fraud and Identity Theft Complaint Data” report issued February 2007.
The “ABCs” of 

Financial Practices

In a February 2007 

speech before the Consumer Federation of 

America, Chairman Majoras emphasized the 

Commission’s ongoing 

commitment to protecting 

consumers in the financial 

services marketplace. In 

announcing the Commission’s agenda, Chairman Majoras stated that 

the Division of Financial 

Practices will focus on 

the “ABCs” of financial 

practices:

Alternative mortgages. 

The Commission will continue to target deceptive 

or unfair mortgage lending 

practices, particularly the 

deceptive advertising of 

nontraditional or alternative mortgages that entice 

consumers with lower 

initial payments, but often 

pose significant long-term 

financial risks.

Bad debt collection. 

The Commission will 

continue to guard against 

deceptive and abusive 

debt collection practices, 

and will hold a workshop 

in the Fall 2007 to examine current practices in 

this industry. 

Credit-related deception. 

The FTC will maintain 

its vigilance in challenging deceptive debt negotiation and similar credit 

repair schemes.

ordering defendants to pay $414 million in redress to consumers, and $12 million 

in civil penalties. In many of these cases, the FTC worked with other law 

enforcement entities to achieve effective results. The following are examples 

of enforcement actions initiated by the Bureau of Consumer Protection 

challenging different types of illegal conduct in various industries.

Deceptive Lending and Other Credit Schemes. The FTC targets abusive, 

deceptive, and unfair financial practices, including abusive debt collection 

practices, deceptive debt reduction claims, and misleading loan promises. 

These practices can have severe consequences for consumers, including 

high cost loans, ruined credit histories, and unwarranted fears of arrest and 

incarceration. 

Debt Collection. In January 2007, the FTC charged a collection agency, 

Rawlins & Rivera, Inc., and its principals with falsely threatening and 

illegally harassing consumers to pay their debts. The FTC also alleged 

the defendants had improper communications with third parties 

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

and continued collection activities after receiving timely dispute 

letters from the consumers. In March 2007, the Commission obtained a 

preliminary injunction to halt the unlawful and abusive practices.

Debt Negotiation. In August 2006, a federal district court granted 

the FTC’s request for an ex parte temporary restraining order and asset 

freeze against several related debt negotiation companies, including 

National Support Services. The complaint charged that the defendants 

falsely claimed that they could reduce a consumer’s unsecured debts 

by as much as 40 to 60 percent. The FTC alleged that many consumers 

who enrolled in the defendants’ program saw their credit ratings 

worsen substantially and their debts grow as a result of following the 

defendants’ advice to stop making payments on their debts. Similarly, 

in January 2007, the FTC filed a complaint against Select Management 

Solutions and its director alleging that the defendants falsely promised 

they could lower consumers’ credit card rates thereby saving them 

thousands of dollars, and in February 2007 obtained a preliminary 

injunction against the defendants. The Commission worked jointly with 

its Canadian partners to halt this unlawful scheme.

Mortgages Para Hispanos.Com. In September 2006, a mortgage 

broker settled FTC charges that he promised customers with little 

or no English proficiency one set of loan terms verbally in Spanish, 

while requiring them to sign English-only closing documents with less 

favorable terms. One feature of the settlement requires the broker and 

his company to provide Spanish-speaking consumers with a Spanish 

disclosure statement and consumer education brochure.

Deceptive Health, Safety, and Weight Loss Claims. The FTC continues 

to combat the deceptive marketing of health products, particularly products 







25

The FTC in 2007: A Champion for consumers and competition
making disease prevention or weight loss claims, and products targeted to 

children. From April 2006 through March 2007, the FTC initiated or resolved 

14 law enforcement actions challenging 27 products as making such claims. 

Two of the actions were part of the FTC’s Hispanic Initiative and six involved 

marketing in languages other than English.

Q-Ray Bracelet. In September 2006, a federal district court found that 

the defendants’ claims for their purported pain relief ionized bracelets 

were false and unsubstantiated. At trial, the defendants argued that 

the bracelets had a placebo effect, but the court ruled that even if they 

had a placebo effect, consumers were “duped.” The court required the 

individual and corporate defendants to pay up to $87 million in refunds 

to consumers.

Xenadrine EFX, CortiSlim, TrimSpa, and Bayer’s One-A-Day 

WeightSmart. In January 2007, the Commission announced 

in four separate cases that the marketers of these extensively 

advertised products had settled charges that they had made false or 

unsubstantiated weight loss or weight-control claims. In settling, the 

marketers surrendered cash and other assets collectively worth at least 

$25 million and agreed to limit their future advertising claims.

Business Opportunity Sweep. For more than 

a decade, the FTC has spearheaded a federal-state 

partnership to combat business opportunity and workat-home frauds, and to educate the public to detect 

and avoid these scams. In December 2006, the FTC 

announced Project FAL$E HOPE$, which consisted of more 

than 100 law enforcement actions brought by the FTC, 

DOJ, Postal Inspection Service, and state law enforcers. 

The FTC contributed nine new cases, in each of which 

it successfully obtained temporary relief to halt the 

fraud alleged. Project FAL$E HOPE$ also announced the 

continuing successes of the 2005 business opportunity sweep, Project Biz Opp 

Flop. In 2006, 23 individuals charged in Project Biz Opp Flop were convicted and 

28 defendants were sentenced to prison terms ranging from one year to more 

than 15 years.

Deceptive Sweepstakes Scams. In October 2006, the FTC filed an action 

in federal district court against the National Prize Information Group Corp. and 

its owner alleging that they bilked consumers upwards of $9 million through 

misleading claims that consumers had won large sweepstakes prizes that 

could be collected for a small fee. The court found the defendants’ disclaimers 

inadequate and issued a preliminary injunction and an asset freeze.

Misleading Gift Cards. In March and April 2007, the Commission 

announced its first two enforcement actions involving gift cards. Both Kmart 

Corp. and Darden Restaurants, Inc. (which owns Red Lobster and Olive Garden) 





26

Federal Trade Commission

Significant Civil Penalty Cases

 April 2006 - March 2007

Richard L. Prochnow $5.4 million

Bayer Corporation $3.2 million

The Broadcast Team, Inc. $1.0 million

Xanga.com, Inc. $1.0 million
Another Multimillion 

Dollar Judgment

The Commission 

brings enforcement actions against all sorts of 

fraudulent money-making 

schemes. For example, 

in Davison & Associates, 

the Commission charged 

that the defendants had 

engaged in deceptive 

practices in connection 

with their invention promotion business. 

After a three-week 

trial, the court ordered 

the defendants to pay 

$26 million in consumer 

redress. Based on the 

record of “blatant, varied, 

and repeated misrepresentations,” the court 

also ordered that in future 

dealings with consumers, 

the company make specific, detailed disclosures 

about their track record in 

helping inventors market 

their ideas.

“... the court 

ordered the 

defendants to 

pay $26 million 

in consumer 

redress.”

allegedly promoted their gift cards as equivalent to cash, but failed to disclose 

adequately fees assessed when a gift card is not used for 24 consecutive months. 

Kmart also allegedly misrepresented that its gift cards never expire. In settling, 

both companies agreed to disclose dormancy fees prominently in future 

advertising, disclose the existence of such fees on the front of their gift cards, 

and provide refunds to affected consumers.

Hispanic Law Enforcement Initiative. The FTC continues to combat 

consumer fraud against Hispanics aggressively. Since the introduction of its 

Hispanic Initiative in 2004, the FTC has filed 39 actions against 131 businesses 

and individuals alleged to have fraudulently sold a myriad of purported 

products and services to Spanish-speaking consumers. During the April 2006 

Hispanic Multimedia Surf, conducted by law enforcement partners across the 

United States and in five Latin American countries, the FTC identified numerous 

potentially deceptive ads and sent warning letters to 166 advertisers and 77 

media outlets. Further, as part of this initiative, the Commission co-hosted an 

Hispanic outreach workshop with other agencies in September 2006 to identify 

problems of particular concern to the Hispanic community and to discuss 

solutions.

QTX. In September 2006, the FTC obtained preliminary relief in federal 

court which shut down a work-at-home scheme that promised Spanishspeaking consumers earnings of $500 a week for assembling “bead 

houses.” The Commission alleged that the defendants routinely rejected 

the work of the purchasers even when they managed to fully assemble 

one of the items. In February 2007, the Commission settled with one of 

the main defendants, permanently halting this deceptive scheme.

Project Scofflaw. This FTC initiative 

focuses on individuals and companies 

that are already subject to FTC and federal 

court orders as a result of prior FTC law 

enforcement actions. The FTC places a high 

priority on enforcing orders against repeat 

offenders as well as against those who act in 

concert with them.

Gumpel. The FTC initiated a civil 

contempt action in January 2007 

against Julian Gumpel and related 

businesses for allegedly violating the core provisions of a 1998 federal 

court order issued in connection with an invention promotion scheme. 

The Commission charged that the contempt defendants violated 

the prior order by falsely claiming that consumers would reap huge 

financial benefits by using their invention promotion services. By 

charging consumers $5,000 to $40,000 for their services, defendants 

netted more than $60 million. The court ordered preliminary relief, 

froze the defendants’ assets, and appointed a receiver.





27

The FTC in 2007: A Champion for consumers and competition

Project Scofflaw - 2006

Criminal Contempt 

Prosecutions

3 defendants sentenced

25 years in prison

more than $18 million in total 

criminal restitution ordered
The Commission filed or settled other contempt actions between 

April 2006 and March 2007, including Neiswonger, which involved a 

business opportunity scheme; Lane Labs, involving a purported cure 

for male infertility and a so-called “superior” calcium supplement; 

ConsumerInfo.com, relating to nationwide television ads for a 

credit monitoring service; and Vocational Guides, Inc. concerning 

government grants.

Criminal Liaison Unit. The Criminal Liaison Unit coordinates the 

FTC’s work with criminal authorities to prosecute the criminal activity that 

underlies many of the FTC’s more serious consumer fraud cases. From April 

2006 to March 2007, the FTC assisted in the criminal prosecution of 130 FTC 

defendants or their associates, many of which resulted in convictions and 

substantial sentences ranging from one year to more than 17 years in prison. In 

several cases, FTC attorneys were designated as Special Assistant United States 

Attorneys in order to directly prosecute the offenders. 

American Entertainment Distributors. Based on an FTC referral, 

the DOJ brought criminal charges against ten defendants who sold 

fraudulent DVD kiosk business opportunities that cost 400 consumers 

a total of $19 million. The FTC filed a parallel civil case against some of 

the same defendants, as well as a motion to hold one defendant in civil 

contempt for violation of a prior FTC injunction. That defendant, who 

also faces a criminal contempt charge, is incarcerated in Costa Rica and 

is awaiting extradition. In the past year, eight defendants involved in 

this scheme were sentenced to prison terms ranging from one year to 

more than ten years.

B. Privacy and Data Security Law Enforcement

Protecting consumers’ privacy and data security continues to be a central 

part of the FTC’s consumer protection mission. While the explosive growth 

of the Internet and sophisticated computer systems have provided huge 

benefits to consumers, the public will lose faith in these technologies unless 

their personal information is protected. The FTC has taken the lead to protect 

consumers from technology-driven threats to the security of their personal 

data, computers, and email. Privacy concerns range from protecting consumers 

from unwanted pornographic email to protecting children from the collection 

of their personal information. The Commission’s Division of Privacy and 

Identity Protection (DPIP), created a little over one year ago, spearheads law 

enforcement and related policy work in this area. 

Spyware and Adware. Since April 2006, the FTC has announced five new 

cases involving software programs that take control of or damage consumers’ 

computers, or send high volumes of disruptive advertising. These cases 

reinforce three important principles: (1) a consumer’s computer belongs to him 

or her, not to the software distributor; (2) buried disclosures do not work, just 

as they have never worked in more traditional areas of commerce; and (3) if a 





28

Federal Trade Commission

Staff Profile

Kellie

Cosgrove Riley

BCP/Division of 

Privacy and Identity 

Protection

An attorney in the 

Division of Privacy and 

Identity Protection, 

Kellie has worked on a 

number of privacy, ID 

Theft, and credit-related 

projects. For example, 

Kellie represents the 

FTC on the Public Sector 

Data Security working 

group of the President’s 

Task Force on Identity 

Theft, and serves on the 

FTC’s Privacy Steering 

Committee. 

Kellie has also 

been responsible for 

rulemaking projects 

under the Fair and 

Accurate Credit 

Transactions Act and 

the Gramm-Leach-Bliley 

Act, and planned the 

FTC’s public forum, “The 

Consumer and Credit 

Scoring.” 
Digital Rights 

Management

In January 2007, Sony 

BMG Music Entertainment

settled FTC charges that 

it failed to disclose adequately to consumers that 

some of its music CDs installed digital rights management (DRM) software 

that limited how consumers could use the CDs. 

Among other things, the 

software prevented consumers from making more 

than three copies of the 

music and from playing 

the music on many portable digital devices. 

The settlement requires 

future disclosure of DRM 

limitations on product 

packaging. In announcing 

the consent agreement in 

this case, Chairman Majoras emphasized that if 

new technologies contain 

material limitations on 

their use, including that 

they are not interoperable 

so that the product does 

not perform as expected, 

then it may be deceptive 

to fail to disclose adequately the restrictions to 

consumers.

“The settlement 

requires future 

disclosure of 

DRM limitations 

on product 

packaging.”

distributor puts a program on a consumer’s computer that the consumer does 

not want, the consumer must be able to uninstall or disable it.

Zango. In November 2006, this company, formerly known as 

180solutions, settled FTC charges that through distributors it 

surreptitiously installed its adware on millions of consumers’ computers 

and deliberately made the adware programs difficult for consumers to 

identify and remove. Zango agreed to disgorge $3 million in ill-gotten 

gains, stop sending ads to consumers affected by its previous practices, 

obtain consumers’ express consent before downloading software onto 

consumers’ computers, and implement user-friendly complaint and 

uninstall mechanisms.

ERG Ventures. The FTC filed a complaint in October 2006 alleging 

that the defendants tricked millions of consumers into downloading 

malevolent software by hiding it within seemingly innocuous free 

software. The software allegedly degraded computer performance, 

disabled anti-spyware programs, and exposed consumers to a barrage 

of disruptive ads. The FTC obtained preliminary injunctions enjoining 

the defendants’ deceptive and unfair practices and freezing their assets.

Seismic Entertainment Productions. The FTC concluded its 

litigation against a group of spyware purveyors who downloaded 

onto unsuspecting consumers’ computers spyware that changed the 

computers’ default settings, hijacked their search engines, and then 

bombarded consumers with messages offering to sell them additional 

software to fix the very problem the defendants had caused. In May

and November 2006, the court entered permanent injunctions with 

monetary relief against all defendants and ordered the mastermind of 

the scheme, Sanford Wallace, to disgorge over $4 million. 

Data Security and Identity Theft. Data security breaches continued 

to make headlines this past year, with successive press reports on companies 

and government agencies that suffered losses or thefts of sensitive consumer 

information. The FTC has taken a multi-faceted approach to protecting the 

privacy and security of consumers’ personal information, focusing on all phases 

of the life cycle of personal data, including its collection, storage, use, and 

disposal. The FTC’s tools include laws and regulations such as the Safeguards 

Rule issued under the Gramm-Leach-Bliley Act which requires financial 

institutions to take reasonable measures to protect customer data, and the 

Disposal Rule under the FACT Act which requires companies to dispose of credit 

report data in accord with a set of practices designed to prevent others from 

using that data without authorization. To date, the FTC has brought 14 cases 

challenging inadequate security practices by companies that handle sensitive 

consumer data.

Nations Title Agency. In May 2006, the FTC announced a settlement 

with Nations Title and related parties resolving charges that the 









29

The FTC in 2007: A Champion for consumers and competition
Data Security for 

Business

In receiving the 2007 

RSA Conference Award 

for Public Policy in February 2007, Chairman 

Majoras emphasized 

that “companies must 

maintain reasonable and 

appropriate measures to 

protect sensitive consumer information.” 

For example, businesses must: 

make sure claims 

about data security are 

accurate.

be aware of, and 

protect against, wellknown and common 

security threats.

know with whom 

they are sharing their 

customers’ sensitive 

information.

not retain sensitive 

consumer information 

that they do not need.









“... companies 

must maintain 

reasonable and 

appropriate 

measures to 

protect sensitive 

consumer 

information.” 

company tossed consumer home loan applications in an open dumpster 

and allowed hackers to gain access to its computer network. The 

settlement bars the company from making deceptive claims about 

privacy and security, bars future violations of several federal privacy and 

security rules, and requires the company to implement a comprehensive 

information security program and obtain independent biennial security 

audits for 20 years.

Guidance Software. In November 2006, the FTC announced a 

settlement resolving allegations that this software company failed to 

implement simple, inexpensive, and readily available security measures 

to protect consumers’ personal information, contravening express 

claims about security precautions on its website. According to the 

FTC’s complaint, hackers were able to exploit the company’s security 

vulnerabilities (such as its practice of permanently storing sensitive 

data in readable text on its servers) and access sensitive credit card 

information for thousands of consumers. The settlement requires a 

comprehensive information security program and security audits.

Pretexting Sweep. The FTC also focused its law enforcement resources in 

the last year on the use of pretexting and other illegal practices to obtain and 

sell consumers’ telephone and financial records. In May 2006, the FTC filed five 

complaints in federal court against online data brokers who allegedly obtained 

confidential telephone records without consumers’ knowledge or consent and 

then sold the records to third parties. The FTC alleged that the data brokers 

committed unfair practices by disclosing customer phone records without 

their knowledge or consent. In October 2006 and February 2007, two of those 

lawsuits settled with the defendants agreeing to permanent injunctions 

halting the sale of phone records and to disgorge their ill-gotten gains.

Do Not Call. This past year, the FTC vigorously enforced the Telemarketing 

Sales Rule (TSR), including the Do Not Call (DNC) provisions that prohibit most 

telemarketing to consumers who place their telephone numbers on the 

National Do Not Call Registry, as well as provisions prohibiting “abandoned calls” 

which fail to connect consumers to a live operator within two seconds. Since 

the FTC began enforcing compliance with the Registry in October 2003, the 

agency has filed 25 enforcement actions against 52 individual and 73 corporate 

defendants, alleging that they had called consumers protected by the Registry. 

In 19 of those cases, the FTC obtained settlements with orders requiring 

payment in the aggregate of more than $8 million in civil penalties and more 

than $8 million in consumer redress. Compliance with the Registry has been 

high and American consumers have praised its effectiveness. 

The Broadcast Team. The FTC successfully resolved litigation against 

The Broadcast Team, Inc. (TBT), a telemarketer that specialized in 

broadcasting prerecorded calls. The DOJ filed a civil penalty action on 

the FTC’s behalf in December 2005 alleging that TBT called numbers 

on the Registry and made millions of abandoned calls. Prior to this 





30

Federal Trade Commission
filing, TBT had preemptively challenged the FTC’s authority to 

apply the TSR’s call abandonment provision to prerecorded 

charitable solicitation calls made by for-profit telefunders. In 

April 2006, a federal district court granted the Commission’s 

motion to dismiss TBT’s suit. In February 2007, TBT and its 

owners settled the DOJ action, agreeing to comply with the TSR 

and pay a $1 million civil penalty.

Peoples Benefit Services. In June 2006, the FTC filed 

the first case that highlighted the application of the 

DNC provisions to corporate affiliates. The defendants 

asserted that they were permitted to call consumers on 

the DNC Registry on the basis of a purported established 

business relationship between the consumers and the 

seller’s corporate affiliates, but the FTC contended the 

relationship did not meet the “consumer expectation” test 

for allowing such calls. The Commission also challenged 

the defendants’ access of the Registry via a separately 

incorporated affiliate as a failure to pay the access fees. 

The defendants settled this suit and agreed to pay $350,000 

in civil penalties.

COPPA. The Children’s Online Privacy Protection Act (COPPA) and the FTC’s 

implementing rule give parents the power to determine whether and what 

information is collected online from their children under age 13, and how such 

information may be used. 

Xanga.com. In September 2006, the FTC filed its 12th COPPA action, 

a civil penalty settlement with the social networking site Xanga.

com, Inc. and its principals. The FTC’s complaint alleged that Xanga 

collected, maintained, and disclosed the personal information of over 

one million children under age 13 by creating over 1.7 million separate 

online accounts for those children without first obtaining the required 

parental consent or complying with other COPPA Rule requirements. 

The settlement requires Xanga.com to comply with the rule, delete all 

information collected in violation of the rule, and pay civil penalties of $1 

million, the largest penalty ever collected for a COPPA violation. 

CAN-SPAM Act/Adult Labeling Rule. Since 1997, when the FTC brought 

its first case involving unsolicited commercial email (spam), the FTC has 

aggressively pursued deceptive and unfair spam practices through 89 law 

enforcement actions against 241 individuals and companies, 26 of which 

targeted violators of the CAN-SPAM Act. In the past year, it brought eight new 

law enforcement cases challenging deceptive spam. The Act generally prohibits 

deceptive sender and subject-line content in commercial email and provides 

consumers with the right to opt out of future commercial email campaigns. 

The Adult Labeling Rule mandates warning labels on email that contains 

sexually explicit material.





FTC Fines Xanga

for Violating

Kids' Privacy

$1 million penalty against social 

networking site is largest under 

1998 law

September 7, 2006

31

The FTC in 2007: A Champion for consumers and competition

Significant Redress Orders

 March 2006 - March 2007

Seasilver USA, Inc. $119.2 million

Q-Ray Company $87.0 million

Transnet Wireless Corp. $48.1 million

Telecard Dispensing Corp. $28.6 million

Davison and Associates $26.0 million

Internet Marketing Group, Inc. $15.0 million

Robert Chinery, Jr. $12.8 million

Window Rock Enterprises Inc. $12.0 million

Peter J. Salzano $10.0 million
Jumpstart Technologies. In March 2006, the FTC settled an action 

and obtained $900,000 in civil penalties against Jumpstart Technologies, 

which allegedly promised “free” movie tickets to consumers if they 

divulged the email addresses of several friends. According to the 

complaint, Jumpstart then repeatedly emailed those friends, making 

the messages appear as if they originated from the consumer’s own 

email address. The FTC alleged that Jumpstart’s use of misleading 

“from” information and subject lines violated the CAN-SPAM Act. The 

settlement also prohibits the company from engaging in future email 

campaigns with deceptive sender information or content. The civil 

penalty is the largest obtained by the FTC for illegal spam.

TJ Web Productions. In December 2006, a federal court approved a 

settlement in a Commission case alleging that the defendant’s affiliates 

sent sexually explicit emails that violated the CAN-SPAM Act and the 

Adult Labeling Rule. The FTC obtained $465,000 in civil penalties, and the 

defendant is required to monitor closely any affiliates (or email “button 

pushers”) who it hires to send commercial email messages.

C. Consumer Protection Law Enforcement Tools

The FTC’s tools for identifying fraud and deception, as well as privacy and 

data security violations, involve the collection and analysis of information 

about consumer experiences in the marketplace. This function – carried out 

through various databases and other Commission resources – is critically 

important to the FTC’s consumer protection mission.

Consumer Response Center. The 

Consumer Response Center (CRC), which 

recently celebrated its 10th anniversary, remains 

a vital resource for both consumers and law 

enforcement. Each week, the CRC handles 

more than 31,000 inquiries and complaints 

from consumers and businesses. These 

contacts come via the FTC’s tollBfree numbers 

(1­‐877-FTC-HELP and 1-877-ID-THEFT), the FTC’s 

website, and the mail.

Consumer Sentinel. Consumer Sentinel, 

the FTC’s fraud and identity theft complaint 

database, contains over 3.5 million fraud and 

identity theft complaints and is accessible to 

1,650 law enforcement agencies which use the database to share information, 

coordinate investigations, and pursue leads.

National Do Not Call Registry. The Registry continues to protect 

consumers from unwanted commercial telemarketing calls. As of April 2007, 

consumers have placed more than 142 million telephone numbers on the 





32

Federal Trade Commission

“(Company X) installed malware/spyware on my 

computer. ... tried to charge me to remove it, and 

required me to spend 5 hours and $100 to get it 

removed. This is criminal that companies like this 

can continue to prey on people and try to blackmail a 

payment out of them.”

New York Consumer

April 2006
Registry, which continues to accept new telephone numbers. Additionally, 

the Registry collects do not call complaints from consumers and shares them 

through Consumer Sentinel. The National Registry has provided a model for 

the international community: in the past eighteen months, the Canadian and 

Australian governments have authorized their own do not call programs.

Identity Theft Tools. Identity theft continues to be the leading 

consumer fraud complaint received by the FTC. Consumers file complaints 

and receive advice concerning identity theft from the FTC’s toll-free hotline 

and website operated by the CRC. Nearly 1,550 law enforcement agencies have 

access to identity theft complaints through Consumer Sentinel. The FTC 

also coordinates ID theft law enforcement training for state and local law 

enforcers. To date, the FTC, in conjunction with its partners, has conducted 24 

training seminars attended by more than 3,240 officers from more than 1,075 

agencies.

Spam Database. “Spam,” the popular name for unsolicited commercial 

email, remains a significant source of concern for Internet users. The FTC has 

maintained since 1998 an electronic address to which the agency encourages 

consumers and businesses forward spam (spam@uce.gov). This address now 

receives approximately 250,000 pieces of spam daily. The total amount of spam 

33

The FTC in 2007: A Champion for consumers and competition

Commissioner Rosch

Thoughts on the Future of the Commission’s Consumer Protection 

Mission

In a January 2007 speech before ABA Section of Antitrust Law, Consumer 

Protection Conference, Commissioner J. Thomas Rosch discussed his “wish list” for 

the Commission’s consumer protection mission for the next several years:

First, the Commissioner would like to see the Commission and its international counterparts 

coordinate their efforts so that the international flow of data and personal information — so 

crucial to global commerce — are subject to consistent rules. 

Second, he expressed a desire that the Commission take full advantage of its authority under the 

newly-enacted U.S. SAFE WEB Act and work with other consumer protection agencies to better 

combat cross-border fraud.

Third, he would like to see the Commission and its international counterparts modernize their 

arsenal of law enforcement remedies so that they can combat effectively high-tech threats — 

such as spam, spyware, and data security vulnerabilities — that injure consumers.

Fourth, he would like the Commission, along with the Department of Agriculture, state and local 

school authorities, and the media, to encourage the food and beverage industries to make serious 

efforts to combat the national epidemic of childhood obesity. In particular, he noted that the 

snack food and fast food industries must increase their efforts to protect the health of our young 

people. 

Fifth, and finally, he noted that on the antitrust front, he would like to see more elements of 

consumer welfare theory integrated into the Bureau of Competition’s law enforcement and 

educational initiatives.










received by the FTC has increased by 100 million in the past year to more than 

407 million. The spam database remains vital to the development of the FTC’s 

CAN-SPAM Act enforcement activities as well as cases brought by other federal 

and state agencies.

Chapter 5. Consumer Protection Policy Tools

The FTC applies a distinctive set of policy tools to complement its consumer 

protection law enforcement efforts. The FTC works with industry, other 

government entities, the media, and the public to collect and disseminate 

information to establish policies that protect consumers.

A. Rulemaking 

The FTC carefully engages in rulemakings so that its rules are consistent 

with its statutory authority, and with the aim to benefit consumers without 

overly burdening business.

FACT Act “Red Flags.” In July 2006, pursuant to the Fair and Accurate 

Credit Transactions Act of 2003 (FACT Act), the FTC, together with 

several financial regulatory agencies, published proposed regulations 

that would require financial institutions and creditors to implement 

procedures to detect, prevent, and mitigate identity theft in connection 

with account openings and existing accounts. The proposed regulations 

include lists of patterns and specific forms of activity that might 

raise a “red flag” signaling a possibility of identity theft, e.g., a request 

for a change of address which is followed closely by a request for a 

replacement credit card. 

Franchise Rule. In January 2007, following extensive input from 

the public, the FTC approved final amendments to this rule. The 

modifications harmonize federal and state franchise pre-sale disclosure 

laws; address changes in the marketing and 

sale of franchises, including online; and reduce 

unnecessary compliance costs by, among other 

things, creating exemptions for sophisticated 

prospective franchisees. The revised rule will go 

into effect in July 2007.

Business Opportunity Rule. In April 2006, 

the Commission proposed a rule to protect 

consumers from unfair and deceptive 

practices in the sale of non-franchise business 

opportunities. Among other things, the 

proposed rule would require a one-page 

disclosure document. Until a final decision is 

made, those portions of the original Franchise 

Rule that dealt with non-franchise business 

opportunities continue to apply.







“I came across an ad for vending machines; 

the ad also promised locations and free training 

... I could go on and on about the outright lies 

[the company] made to me ... the businesses [the 

company’s recommended locator] found were 

neither “high traffic” nor were they “prearranged” 

... while [the company] did not guarantee any 

income, the company represented that the national 

average for the machine I purchased was $90 net 

profit per week per machine. On my best week, 

I did not even make $9 per machine. I hope that 

other consumers will learn from my experience and 

not fall victim to this type of scam.”

Pennsylvania Consumer

December 2006

34

Federal Trade Commission
0DUNHWLQJ9LROHQW(QWHUWDLQPHQW

WR&KLOGUHQ

$)LIWK)ROORZXS5HYLHZRI

,QGXVWU\3UDFWLFHVLQWKH0RWLRQ3LFWXUH

0XVLF5HFRUGLQJ	(OHFWURQLF*DPH,QGXVWULHV

$5HSRUWWR&RQJUHVV

)HGHUDO7UDGH&RPPLVVLRQ

$SULO

perspectives on 

marketing, 

self-regulation, 

& 

childhood obesity 

A Report on a Joint Workshop of 

the Federal Trade Commission & 

the Department of Health & Human Services 

April 2006 

Appliance Labeling Rule. In January 2007, the FTC 

proposed improving the familiar yellow and black 

Energy Guide label for major consumer appliances. 

Based on substantial consumer research, the FTC’s 

proposed label features operating cost as the most 

prominent measure of energy performance.

B. Reports

The FTC analyzes marketplace issues affecting consumers, often after 

holding public hearings or workshops involving industry and consumer 

representatives, and publishes its findings in reports.

Childhood Obesity Report. In April 2006, following a two-day 

workshop, the FTC and the Department of Health and Human Services 

issued a joint report that looked at ways to encourage industry and 

media companies to promote healthier foods and beverages to 

children. The report recommended that industry members improve 

the nutritional profiles of foods they promote to children and that 

the Council of Better Business Bureau’s (CBBB) Children’s Advertising 

Review Unit consider setting minimum nutritional standards for 

foods marketed to children. Since the report’s issuance, 11 major food 

manufacturers have agreed to participate in a self-regulatory initiative 

through the CBBB that seeks to shift the mix of advertising to children 

under age 12 to encourage healthier eating choices and lifestyles. 

Media Violence Report. In April 2007, the FTC released its sixth report 

analyzing the marketing to children of violent entertainment products 

by the motion picture, music recording, and video game industries. 

The report encourages enforceable self-regulatory restrictions on the 

advertising of violent R-rated movies, explicit content recordings, and 

M-rated games. It notes the substantial improvement of video game 

retailers in restricting the sale of M-rated games to unaccompanied 

children, as opposed to retailers of R-rated DVDs and explicit content 

recordings who failed to improve significantly. It also reports that an 

FTC survey shows that most parents are familiar with the video game 

ratings system and use it regularly, although a significant minority 

believe it could provide better information. 

C. Hearings and Workshops

As new developments arise in the marketplace, the FTC holds hearings 

and workshops to study emerging issues that may cause consumer injury and 

to learn from the experiences of consumers, businesses, academia, as well as 

government and other experts in various fields.

 “Tech-ade" Hearings. In November 2006, as a follow-up to its 1995 

Global Hearings, the FTC held “Protecting Consumers in the Next Tech‐ade” 









35

The FTC in 2007: A Champion for consumers and competition
hearings to discuss the impact of technological innovation on consumer 

protection policy over the next decade. More than 100 panelists spoke 

over the course of three days about new technologies on the horizon 

and their potential effect on consumers, including the widening gap 

between older and younger consumers in their use of technologies. 

During an additional non-public day, government officials, including 

foreign representatives, discussed how they can work together more 

effectively to protect consumers. In February 2007, the Chairman 

announced a series of Tech-ade Town Hall meetings to solicit public 

input into this issue, and the Commission intends to issue a report later 

this year discussing the key findings from the hearings and meetings, 

and recommending changes in consumer protection law, practice, and 

procedure. Finally, the FTC is developing a Technology Research and 

Policy Development Plan for 2008 that will include all of the hearings, 

workshops, conferences, and similar events related to technology that 

the Commission intends to hold during the year.

Mortgage Lending Workshop. The FTC 

sponsored a public workshop in May 2006, 

“Protecting Consumers in the New Mortgage 

Marketplace,” to explore the financial 

benefits and risks of new residential mortgage products. Participants 

focused on the two types of alternative mortgage products that have 

experienced the greatest growth in popularity and market share in the 

past two years: interest-only loans and payment option adjustable rate 

mortgages.

Negative Option Workshop. In January 2007, the FTC hosted a 

workshop analyzing the marketing of goods and services through 

offers with negative option features – i.e., offers where sellers interpret 

a consumer’s failure to take an affirmative action to reject goods or 

services, or to cancel a sales agreement, as acceptance of the offers. 

Participants discussed the costs and benefits of such offers, the online 

marketing of such offers, and ways to make effective disclosures when 

such offers are made online.

Identity Authentication Workshop. In the fight against identity 

theft it is crucial to address not only how personal information is stolen 

but also how businesses can prevent thieves from using stolen data 

successfully to impersonate their victims. The Commission will host a 

two-day public workshop in April 2007, “Proof Positive: New Directions for ID 

Authentication,” to explore the role of verification and authentication of a 

consumer’s identity in financial and other commercial transactions.

Rebate Workshop. In April 2007, the Commission 

will host a workshop in San Francisco, California, 

to address the costs and benefits of mail-in rebate 

offers by manufacturers and retailers. Topics will 









April 27, 2007

San Francisco 

rebate debate

 an FTC Conference

PROTECTING CONSUMERS

The Next Tech-ade IN

36

Federal Trade Commission

Proof

New Directions for ID Authentication

Positive April 23-24, 2007

FTC public workshop

protecting

new mortgage

in the

marketplace

consumers
FTC’s Own Privacy 

Initiatives

As a corollary to its 

law enforcement efforts 

challenging commercial 

practices that threaten 

consumer privacy, the 

Commission has intensified its efforts to 

strengthen its own privacy and data security 

policies and to raise the 

awareness of Commission staff about privacy 

issues. In the past year, 

the agency implemented 

new policies and procedures that address the 

collection, use, storage, 

sharing, retention, and 

disposal of consumer and 

corporate data generally, 

with a particular emphasis 

on personally identifiable 

information and sensitive 

health information. To 

coordinate these efforts, 

the Chairman appointed 

Marc Groman as the 

FTC’s first Chief Privacy 

Officer in September 

2006, and expanded the 

role of the agency-wide 

Privacy Steering Committee. As part of the agency’s expanded employee 

outreach, in March 2007 

the FTC kicked off its 

inaugural “Privacy Week” 

– a week-long series of 

programs, events, and 

training designed to further embed privacy into 

the workplace culture of 

the FTC.

I N F O

H A N D L E

WITH CARE

include deceptive and unfair practices, as well as “best practices,” in the 

offering and fulfillment of rebates.

D. Inter-governmental Task Force

The FTC plays a role in improving government practices by working with its 

fellow federal and state agencies to tackle significant consumer-related issues, 

such as identity theft. 

Identity Theft Task Force. In May 2006, the President created 

an Identity Theft Task Force, chaired by the Attorney General and 

co-chaired by the Chairman of the FTC, and comprised of 18 federal 

agencies. Its goals are to develop a strategic plan for the federal 

government to better prevent identity theft, coordinate prosecution, 

educate citizens on how to avoid becoming victims and businesses 

on steps to protect personal data, and ensure recovery for victims. 

In September 2006, the Task Force delivered an interim set of 

recommendations that addressed, among other things, how federal 

agencies respond when they have data breaches, how they safeguard 

sensitive consumer data, and how they collect and use Social Security 

numbers as identifiers. The interim recommendations also addressed 

the development of an online “universal police report” that identity 

theft victims can use to help restore their identities. In December 

2006, the Task Force solicited public comments on ways to improve the 

effectiveness and efficiency of federal government efforts to reduce 

identity theft. 

E. Advocacy Letters and Comments

The agency also lends its expertise to other federal and state agencies 

that are considering rules or other actions that affect consumers. Advocacy 

continues to be an important adjunct to law enforcement in order to advance 

the FTC’s consumer protection mission.

Attorney Advertising. In September 2006, FTC staff submitted a 

comment to the New York State Unified Court System regarding 

proposed restrictions on attorney advertising. According to staff, some 

of the proposals would have prevented non-misleading advertising that 

may convey useful information to consumers. The court subsequently 

issued revised rules, adopting nearly all of staff’s recommendations. 

In March 2007, FTC staff submitted comments to the Louisiana State 

Bar Association and the Florida Bar urging those entities to reconsider 

their proposed restrictions on attorney advertising, which staff argued 

were unnecessarily broad and potentially harmful to competition and 

consumers.

Whole Grain Labeling. In April 2006, FTC staff provided a comment 

letter to the FDA regarding its draft guidance for labeling statements 







37

The FTC in 2007: A Champion for consumers and competition
about the whole grain content of food products. The comment 

recommended that the FDA reconsider allowing claims such as “good 

source” of whole grain or provide other means to give consumers 

context as to the amount of whole grain in a product, consider 

establishing definitive percentage content standards for making 

unqualified claims such as “whole grain” or “made with whole grain,” and 

seek relevant consumer research.

State Child Protection Registry. In March 2006, at the request of 

a Hawaii State Senator, FTC staff provided a comment regarding a 

proposal to establish a state-based Child Protection Registry and to 

make it unlawful to send a registrant spam advertising products 

minors cannot legally buy or containing adult content. The comment 

recommended against creation of the registry, explaining that the 

registry can easily be abused by pedophiles and that publishing a list of 

verified email addresses could unintentionally increase the amount of 

spam received by registrants. The Hawaii legislature ultimately did not 

adopt this bill.

F. Amicus Briefs

The Commission also regularly files amicus briefs as an important adjunct 

to its core enforcement mission, and to aid appellate courts in the proper 

interpretation of consumer protection-related statutes.

Safeco Ins. Co. v. Burr; GEICO Gen. Ins. Co. v. Edo. In November 2006, the 

FTC joined in an amicus brief filed in the Supreme Court by the United 

States in these consolidated cases, urging vacatur and remand in 

Safeco, and reversal in GEICO. The brief argued that, under the Fair Credit 

Reporting Act (FCRA), the phrase “willful noncompliance” encompasses 

both knowing violations and reckless disregard for the law. The brief 

also argued that an insurance company must provide an applicant with 

an adverse action notice whenever that company offers a consumer 

a higher insurance rate than it would have offered if the consumer’s 

report had been more favorable.

Whitfield v. Radian Guaranty, Inc. In March 2006, the FTC filed an amicus

brief supporting consumers in this case arising under the FCRA. The 

brief argued that the district court erred in holding that a mortgage 

insurance company was not required to provide a consumer with an 

FCRA adverse action notice even though, as a result of information in a 

consumer report, the insurance company charged a higher premium for 

mortgage insurance. The brief explained that the FCRA requires such a 

notice because the insurance company’s action relates to the consumer, 

even though the consumer is not the beneficiary of the policy. 







38

Federal Trade Commission
G. Congressional Testimony

Commissioners and senior Commission staff presented congressional 

testimony in the past year on a wide range of important consumer protectionrelated issues, including privacy, data security, and other Internet-related issues.

Social Networking Websites. In June 2006, testifying for the FTC, 

Commissioner Pamela Jones Harbour told a House subcommittee 

that there is a need for social networking websites to develop and 

implement safety features to protect children who visit their sites.

Broadband Internet Access Services. Testifying for the FTC in 

June 2006 before the Senate Judiciary Committee, Commissioner 

William E. Kovacic told Congress that it should preserve the FTC’s 

existing authority to protect consumers against deceptive practices 

and to maintain competition in the broadband services industry. 

The testimony also urged Congress to eliminate the gap in the FTC’s 

jurisdiction created by the telecommunications common carrier 

exemption, because that exemption is likely to frustrate the FTC’s ability 

to stop deceptive and unfair practices. 

“Whois” Databases. In July and September 2006, BCP Deputy Director 

Eileen Harrington and Commissioner Jon Leibowitz testified, 

respectively, before congressional subcommittees regarding Whois 

databases – the directories that contain information about website 

operators. The testimony noted that Whois provides information 







Commissioner Harbour

Protecting Children On Social Networking Websites

In testimony before Congress and at the Commission’s Tech-ade hearings, 

Commissioner Pamela Jones Harbour discussed the newfound benefits and risks 

to children and teens created by the online social networking phenomenon. While 

acknowledging the positive sense of camaraderie and community that such 

websites can provide, Commissioner Harbour also warned that social networking websites 

raise heightened privacy and security concerns for children and teens, especially from sexual 

predators. She emphasized that “parents, children, industry, and government have a shared 

interest and responsibility in creating a safe and secure online environment.” 

Commissioner Harbour strongly encouraged a meaningful and immediate industry response 

to the risks online social networking poses for children and teens, including the creation of 

industry best practices. At the same time, she emphasized the Commission’s aggressive 

law enforcement efforts against website operators who collect, use, and disclose personal 

information in violation of the Children’s Online Privacy Protection Act and Section 5 of the 

FTC Act. By combining law enforcement, industry self-regulation, and consumer education, 

the Commission is committed to helping create a safer online experience for children and all 

consumers.

39

The FTC in 2007: A Champion for consumers and competition
Helping Consumers 

Save Money at the 

Pump

Important variables, 

such as how drivers fuel, 

drive, and maintain their 

cars, can offer increased 

fuel efficiency and save 

consumers money at the 

pump. In May 2006, the 

FTC released a new website, www.ftc.gov/savegas, with a “bumper-tobumper” interactive guide 

and tips for consumers 

on what they can do to 

conserve gasoline. The 

FTC also released a consumer alert entitled “Saving Money at the Pump.” 

During the past year, the 

Commission released a 

series of columns at its 

mini-website, www.ftc.

gov/oilandgas, summarizing current market conditions that may impact 

gas prices and the FTC’s 

role in petroleum industry 

enforcement.

In August 2006, the 

Commission also announced a settlement 

with International Research and Development 

Corp. and its principal 

for falsely claiming that 

their magnetic “FuelMAX” 

device would reduce 

automobile emissions 

and increase gas mileage. 

The defendants agreed 

to pay $4.2 million in 

consumer redress and are 

banned from selling or 

manufacturing magnetic 

fuel savings devices.

critical to the FTC’s consumer protection investigations, and 

recommended that the organization responsible for Whois data not 

limit public access and consider measures to improve the accuracy and 

completeness of domain name registration information.

Phone Pretexting. In September 2006 and March 2007, DPIP Associate 

Director Joel Winston and BCP Director Lydia Parnes testified before a 

congressional subcommittee and committee, respectively, concerning 

the Commission’s aggressive law enforcement efforts against firms 

engaging in pretexting to obtain consumers’ telephone records and 

other personal information. They also discussed legislative proposals 

that would assist the FTC’s efforts to curtail telephone records 

pretexting.

Chapter 6. Consumer Protection - Consumer and 

Business Education and Outreach

The FTC’s plain-language consumer and business education materials 

provide practical guidance on a wide range of topics relevant to day-to-day 

marketplace activities. Education enhances law enforcement efforts and 



Commissioner Leibowitz

Protecting Against Deceptive Internet Schemes

Commissioner Jon Leibowitz has been an outspoken 

advocate of the Commission’s efforts to protect the 

online experience for consumers. The Commission 

continues its aggressive law enforcement efforts to 

stop a wide variety of Internet-related abuses, ranging 

from deceptive spam, spyware, and unauthorized adware to Internet 

auction fraud, illegal pyramid schemes, and business opportunity 

scams. In June 2006, Commissioner Leibowitz represented the 

Commission at an ICANN conference in Morocco to raise concerns 

about proposed limitations to the use of Whois databases, which 

provide contact information for website operators. Commissioner 

Leibowitz stated that the Commission relies strongly on these 

databases to protect consumers’ privacy and welfare, for example, by 

identifying targets in spyware and spam cases. He emphasized that: 

“The FTC believes that the Whois databases, despite their 

limitations, are nevertheless critical to the agency’s consumer 

protection mission, to other law enforcement agencies around 

the world, and to consumers.... The FTC is concerned that 

any attempt to limit Whois... will put its ability to protect 

consumers and their privacy in peril.”

These efforts are part of the Commission’s broad commitment 

to ensuring that consumers enjoy the benefits of the Internet while 

being protected against online fraud, deception, and invasions of 

privacy. 

40

Federal Trade Commission
empowers consumers. Between April 2006 and March 2007, the FTC distributed 

more than 11.8 million print publications in both English and Spanish and 

logged more than 41.2 million accesses to the Commission’s publications 

online. In addition, the FTC worked through the media and other partners to 

reach millions more. The FTC also takes a leading role in promoting its law 

enforcement and education efforts during National Consumer Protection Week

in February. 

“Deter, Detect, Defend” Campaign 

Targets ID Theft. In May 2006, 

the FTC launched this campaign 

in both English and Spanish to let 

consumers know how to reduce 

their risk of identity theft and how 

to respond if it happens. The FTC’s 

ID Theft Consumer Education Kit includes a 10-minute video with tips 

from the FTC and consumers who have dealt with identity theft and 

its consequences, a brochure, and tips for community education events. 

Hundreds of organizations, including those assisting older consumers, 

are distributing the FTC’s information on identity theft and linking 

to the redesigned www.ftc.gov/idtheft website. In the past year, the 

FTC has distributed more than 4.4 million copies of its identity theft 

publications and logged over 5.7 million accesses to its identity theft 

website.

“We Don’t Serve Teens.” In October 2006, the FTC launched this 

campaign to reduce underage drinking by encouraging adults to stop 

providing teens with access to alcohol. The campaign’s centerpiece is 

www.DontServeTeens.gov, a website sponsored by a coalition of public 

and private sector organizations. It features information on the risks 

of underage drinking, ways to talk to teens and other parents about 

the issue, and ideas for community outreach. The bottom line message 

to neighbors, relatives, and friends who may serve teens: “Don’t serve 

alcohol to teens. It’s unsafe. It’s illegal. It’s irresponsible.”

OnGuardOnline. OnGuardOnline.gov – an interagency website 

managed by the FTC to help computer users guard against Internet 

fraud, secure their computers, and protect 

their personal information – added new 

modules on social networking and online 

investment scams. Since its launch in late 

2005, OnGuardOnline has attracted more 

than 3.5 million visits. Many of the most popular social networking 

websites link to OnGuardOnline’s module on social networking, making 

it the most viewed page on OnGuardOnline.

FTC Encourages Bilingual Consumer Literacy. In January 2007, the 

FTC released “Read Up! How to be an Informed Consumer” (“(Entérate! Cómo ser









41

The FTC in 2007: A Champion for consumers and competition
un consumidor informado”) – a new bilingual compendium of information 

for Spanish-speakers and Hispanic organizations on consumer rights, 

managing finances, making major purchases, avoiding scams and 

rip-offs, and being safe and secure online – and related materials to help 

organizations incorporate consumer information into their outreach 

programs.

Business Education Program. Educating business executives and 

their attorneys about advertising and marketing is an FTC priority. 

The FTC continues to spread the word about business compliance at 

legal education events, trade shows, industry conferences, and Better 

Business Bureau meetings across the nation.

Business Guide for Data Security. The FTC also provides guidance 

to businesses to assist them in protecting consumers’ information. For 

example, the Commission published “Protecting Personal Information: A 

Guide for Business,” a how-to handbook on data security.

Teaser Site on Health Claims. In October 2006, the FTC posted a 

“teaser” website for Glucobate, a purported all-natural diabetes remedy 

at www.wemarket4u.net/glucobate. When consumers click for more 

information, they are taken to the FTC’s “Be Smart. Be Skeptical” website 

with tips on evaluating online health claims. Numerous blogs, bulletin 

boards, and newsgroups have used the Glucobate story to warn about 

deceptive product claims. This site follows the success of another teaser 

site, FatFoe, that purported to sell a product that guaranteed weight loss 

with no diet or exercise. 







ProtectingPERSONAL INFORMATION

FEDERAL TRADE COMMISSION

A Guide for Business

glucobate

How to be an 

Informed

Consumer

Read Up!

Federal Trade Commission www.ftc.gov

42

Federal Trade Commission
“Through the 

OIA, the FTC will 

continue to build 

a strong network 

of cooperative 

relationships 

with foreign 

competition and 

consumer protection 

agencies....”

Fostering 

International 

Cooperation

The FTC continues to 

promote sound policy with 

nations that are at the 

early stages of developing 

market-based competition 

and consumer protection laws. Last April, for 

example, Chairman Majoras became the first FTC 

Chairman to visit China. 

She met with government officials and National 

People’s Congress representatives responsible for 

developing the first comprehensive competition 

law in China, as well as 

with agencies in charge of 

enforcing China’s consumer protection laws. 

Last month, she also 

led an FTC delegation to 

Hungary and Romania, 

both of which are longterm beneficiaries of the 

FTC’s technical assistance 

program and which have 

recently joined the European Union. 

Her work to strengthen 

these relationships helps 

to foster greater cooperation in the FTC’s competition and consumer protection missions.

Section Three: International

Activities

“Competition and consumer protection are complements, and both 

have gone global.” With these words, Chairman Majoras launched the FTC’s 

new Office of International Affairs (OIA) in January 2007 to coordinate more 

effectively the full range of the FTC’s international activities. The OIA brings 

together formerly separate international antitrust, consumer protection, and 

technical assistance programs under one office whose Director, Randolph W. 

Tritell, reports to the Chairman. The OIA will bring increased prominence to 

the FTC’s international work, and will enhance the FTC’s ability to coordinate its 

enforcement efforts effectively to promote convergence toward best practices 

with our counterpart agencies around the world.

Through the OIA, the FTC will continue to build a strong network of 

cooperative relationships with foreign competition and consumer protection 

agencies, and to play a lead role in key multilateral fora. One of the OIA’s first 

priorities will be to take advantage of new opportunities provided by the U.S. 

SAFE WEB Act to more effectively address cross-border fraud by providing the 

Commission new tools to overcome barriers to cross-border cooperation in 

consumer protection investigations and cases. The OIA will also continue the 

Commission’s work assisting nations that are moving toward market-based 

economies to develop and implement sound polices that support competition 

and protect consumers.

Chapter 7. Competition

A. Promoting Cooperation and Convergence Through 

Bilateral Relationships 

Cooperation with antitrust agencies abroad is a key component of the 

FTC’s competition enforcement agenda, resulting in closer collaboration on 

cross-border actions and convergence toward internationally consistent 

consumer welfare-based competition policies. The FTC routinely coordinates 

with colleagues in foreign antitrust agencies on the analysis and resolution of 

43

The FTC in 2007: A Champion for consumers and competition
cases of mutual concern. This results in more efficient and effective review of 

multijurisdictional mergers and suspected anticompetitive conduct. Recent 

examples of international coordination in merger enforcement include: 

Boston Scientific/Guidant. Boston Scientific’s proposed $27 billion bid 

to take over Guidant raised concerns in several medical device markets, 

particularly stents and other devices used to treat vascular diseases. 

The FTC coordinated its review with the European Commission (EC), the 

Canadian Competition Bureau, and the Japan Fair Trade Commission. 

The FTC’s review resulted in a consent order requiring the divestiture 

of Guidant’s vascular business to an FTC-approved buyer. Canada closed 

its investigation because remedies obtained by the FTC and the EC 

adequately resolved competition concerns in Canada.

Linde/BOC Group. Linde’s proposed $14.4 billion acquisition of the 

BOC Group raised competitive concerns in numerous local markets for 

atmospheric gases, and in the world market for bulk refined helium in 

which a combined Linde/BOC would have become the largest supplier. 

FTC staff worked with EC and Australian competition agency staff to 

address these concerns and cooperated on the remedial phase of the 

case to maintain competition in the worldwide helium market.

Through the OIA, the FTC continues to foster its bilateral ties through 

consultations in Washington, D.C. and in foreign capitals, as well as through 

continued formal and informal case coordination. The OIA maintains regular 

contacts with the competition agencies of our major trading partners such 

as Canada, Mexico, the European Union (EU) and its principal member-states, 

Japan, Korea, and Australia. Cooperation with other important jurisdictions 

such as Brazil, the Russian Federation, and countries in Central and Eastern 

Europe continues to grow as well.

The FTC also continues to work closely with the two most populous 

countries in the world, China and India, as they seek to develop and implement 

effective competition laws. The Chairman and senior staff visited China in the 

past year and, with the DOJ Antitrust Division, have been providing valuable 

input to Chinese authorities as they draft their anti-monopoly law.

The FTC also builds on its strong bilateral relationships to promote policy 

convergence through formal and informal working arrangements with other 

agencies, many of which seek the FTC’s views on new policy initiatives. For 

example, during the past year, the FTC consulted with the EC regarding the EC’s 

review of its policies on abuse of dominance and on remedies policies, with the 

Canadian Competition Bureau on merger remedies and health care, and with 

the Japanese Fair Trade Commission on abuse of dominance and revisions 

to its merger guidelines. The Commission also is consulting with the EC on 

its new draft guidelines for the review of non-horizontal mergers. The FTC 

will continue to seek opportunities to share its experience with competition 

agencies around the world.





44

Federal Trade Commission
B. Promoting Convergence Through Multilateral 

Competition Fora 

Multilateral competition fora provide significant opportunities 

for antitrust agencies to promote mutual understanding and further 

international cooperation. The FTC participates actively in several such fora, 

including the International Competition Network (ICN), the Organization 

for Economic Cooperation and Development (OECD), the United Nations 

Conference on Trade and Development (UNCTAD), and the Asia-Pacific Economic 

Cooperation (APEC).

ICN. The ICN, which includes 100 competition agency 

members from 88 jurisdictions, is an important forum 

for international competition officials to work towards 

procedural and substantive convergence, including 

promoting best practices in antitrust enforcement and policy. The FTC plays 

a leadership role in the ICN’s major projects. For example, the FTC co-chairs 

the ICN’s Unilateral Conduct working group, which is producing a report on 

the objectives of unilateral conduct rules and the definition and assessment 

of dominance and market power. The Commission chairs the ICN subgroup 

on Merger Notification and Procedures and is preparing a report on defining 

45

The FTC in 2007: A Champion for consumers and competition

Commissioner Kovacic

Realizing the Benefits of Comparative Study

Commissioner William E. Kovacic has focused extensively on how U.S. 

and foreign competition and consumer protection agencies can benefit by 

studying the experience of other jurisdictions. He has emphasized that 

modern international experience provides valuable opportunities for any single 

jurisdiction to improve its own operations by emulating superior techniques from others. 

Commissioner Kovacic has identified two elements of effective comparative study. The 

first is an accurate understanding of the jurisdiction whose experience is to be studied. 

To foster understanding of the U.S. experience, Commissioner Kovacic has written 

extensively and delivered many presentations in the United States and abroad about the 

evolution of modern U.S. competition and consumer protection enforcement norms and on 

the intellectual foundations of modern U.S. policy. 

The second element is a process to identify superior practices. Multilateral bodies 

such as the International Competition Network (ICN) and the Organization for Economic 

Cooperation and Development (OECD) are useful means to this end. In discussions with 

foreign officials at meetings of the ICN and OECD, Commissioner Kovacic has explained 

how the FTC since the late 1970s has used the evaluation of past litigation and nonlitigation programs to guide decisions about future policies. These presentations have 

helped encourage the world’s competition and consumer protection authorities to conduct 

assessments of completed projects, institutional arrangements, and operational procedures. 

Among other results, the efforts of Commissioner Kovacic and FTC officials played a 

major part in leading the OECD Competition Committee to convene a session on ex post

evaluation in 2005 and to conduct a planned follow-up session later in 2007. 
the scope of transactions subject to merger review. The FTC also plays a key 

role in the ICN’s working group on Competition Policy Implementation, which 

assists new competition agencies to strengthen their institutional capacity and 

performance. Finally, the Commission serves on the ICN’s Steering Group and 

will continue to play an active part in this organization, including at the ICN’s 

seventh annual conference in Moscow in May.

OECD. The OECD Competition Committee is 

an important venue for antitrust officials from 

developed countries to share their experiences and 

promote best practices. The Committee recently held sessions on competition 

and energy security, competition and innovation, analysis of bidding markets 

in merger investigations, assessment of vertical mergers, and enhancing 

competition in real estate transactions. Upcoming topics include competition 

in legal services, guidance to the business community on the assessment of 

dominance, efficiencies in merger investigations, competition issues in public 

procurement, and the evaluation of actions and resources by competition 

agencies. 

The OECD is planning to hold a Global Forum on Competition, with 

representatives from more than 20 agencies in non-member developing 

countries. The FTC is also helping to design a major session on the relationship 

between competition and consumer protection, and will also participate in 

other regional OECD programs targeted to non-members such as the Latin 

America Competition Forum.

UNCTAD. The FTC participates in UNCTAD’s 

Intergovernmental Group of Competition Experts 

and selected regional competition programs. 

During the past year, the FTC participated in UNCTAD’s programs on the relation 

between competition agencies and regulatory authorities, and on competition 

provisions in regional trade agreements. The Commission will continue to be 

involved in UNCTAD’s upcoming work including programs on ex post evaluations 

of competition initiatives.

Free trade agreements. U.S. free trade agreements often include a 

chapter on competition issues. The FTC participates in U.S. delegations that 

negotiate competition chapters of free trade agreements, which in the past 

year included Korea, Thailand, and Malaysia.

Chapter 8. Consumer Protection

Rapid increases in technology and globalization have accelerated the pace 

of new consumer protection challenges, such as spam, spyware, telemarketing 

fraud, data security, and privacy that cross national borders and raise both 

enforcement and policy issues. The Internet and modern communications 

devices, such as Voice over Internet Protocol (VoIP), have provided tremendous 

benefits to consumers but have also aided telemarketing fraud and raised 

Staff Profile

Pablo Zylberglait

Office of 

International Affairs

Pablo has networked with our law 

enforcement partners 

all over the world. He 

negotiated memoranda 

of understanding with 

consumer protection 

agencies in Ireland 

(2003), Mexico (2005), 

and Costa Rica (2006), 

and worked with the U.S. 

Trade Representative 

on consumer protection 

provisions for several 

free trade agreements, 

most notably Chile 

(2003) and Singapore 

(2003). 

Pablo also 

coordinates the 

Commission’s technical 

cooperation efforts in 

consumer protection 

and serves as the FTC’s 

principal staff delegate 

to the ICPEN and the 

Iberoamerican Forum 

of Consumer Protection 

Agencies.

46

Federal Trade Commission
fresh privacy concerns. To address these issues, the FTC has a comprehensive 

international consumer protection program that focuses on providing 

consumers in the global marketplace with sound and effective protections that 

maximize economic benefit and consumer choice. 

A. The U.S. SAFE WEB Act

 In the coming year, the FTC will implement the U.S. SAFE WEB Act of 2006, 

which was signed into law in December 2006, and which provides the FTC with 

updated tools for the 21st century. It allows the FTC to cooperate more fully with 

foreign law enforcement authorities in the area of cross-border fraud and other 

practices harmful to consumers that are increasingly global in nature, such as 

fraudulent spam, spyware, misleading health and safety advertising, privacy 

and security breaches, and telemarketing fraud.

Specifically, the U.S. SAFE WEB Act enhances FTC 

authority in four areas that are essential to crossborder enforcement cooperation. First, the Act 

authorizes the FTC to share confidential information, 

such as documents and testimony, with appropriate 

limitations and assurances of confidentiality, with 

its foreign law enforcement counterparts. This will 

help the Commission’s law enforcement efforts and 

U.S. consumers. Second, it permits the FTC to use its 

investigative power on behalf of foreign law enforcement 

agencies if it determines that the cooperation is 

consistent with the U.S. public interest. Third, the Act 

permits the FTC to protect the confidentiality of information it receives 

from foreign agencies. Finally, the Act contains several provisions that will 

strengthen the FTC’s bilateral and multilateral enforcement relationships, such 

as permitting the FTC to enter into international cooperation agreements and 

staff exchanges with foreign counterparts. The U.S. SAFE WEB Act also confirms 

the FTC’s authority to take action in cross-border cases and obtain remedies, 

including restitution for injured U.S. and foreign consumers. 

B. International Law Enforcement Cooperation 

Increased globalization also requires the FTC to cooperate in international 

policy and law enforcement efforts to develop flexible market-oriented 

standards to address long standing, as well as emerging, consumer protection 

issues. To achieve these goals, the FTC works directly with its consumer 

protection and other law enforcement partners in international organizations 

and foreign agencies. For example, the FTC continues to participate actively 

in the International Consumer Protection Enforcement Network (ICPEN) and 

supported the ICPEN’s operations this year by hosting the Secretariat. The FTC 

will also continue to work within the OECD and the Organization of American 

States on consumer protection matters, for example, by developing dispute 

resolution and redress guidelines and model laws. FTC staff also met directly 

“Congress has taken an important step 

in the fight to combat cross-border fraud 

by passing the U.S. SAFE WEB Act. Just 

as today’s marketplace has gone global, 

so have scams and deception. Scammers 

cannot hide behind foreign borders to 

escape FTC law enforcers.” 

Chairman Majoras

Statement on Passage of U.S. SAFE WEB Act

(Dec. 11, 2006)

47

The FTC in 2007: A Champion for consumers and competition
with hundreds of foreign officials in Washington, D.C. on consumer protection 

issues, and reciprocated by meeting with their foreign counterparts in official 

visits to over 20 countries in the past year. 

Privacy and Information Security Issues. The FTC has in particular 

undertaken recent steps to strengthen international cooperation on privacy 

and information security issues, including work within both APEC and the 

OECD to coordinate the enforcement of privacy laws. In 2006, for example, the 

FTC and its foreign partners called for increased cross-border law enforcement 

and public/private sector cooperation to combat spam. The OECD provided 

recommendations in this area in April 2006 when it issued the OECD Toolkit 

to Combat Spam, a comprehensive report that focuses on legislation, 

enforcement, education, technology, and public-private partnerships to fight 

spam. The FTC also co-chairs the London Action Plan (LAP) on international 

spam enforcement cooperation. The LAP’s December 2006 meeting, held jointly 

with the European Union’s Contact Network of Spam Authorities, focused on 

online threats beyond spam, including spyware and malware. 

Canada. The FTC also continues to build its special relationship with 

its Canadian counterparts by expanding its partnerships with Canadian 

regional entities to fight cross-border fraud, including mass marketing fraud 

by Canadians targeting U.S. and Canadian consumers. The FTC participates 

in several regional partnerships with Canadian enforcers in Ontario, British 

Columbia, Quebec, Alberta, and the Atlantic Provinces. In February 2007, for 

example, working in cooperation with the local and provincial police in Ontario, 

the FTC obtained a court order that shut down a Canadian telemarketer that 

targeted consumers throughout the U.S., falsely claiming it could reduce their 

credit card interest rates.

Cross-Border Cases. In 2006, the FTC’s Bureau 

of Consumer Protection, with assistance from its 

international consumer protection personnel, filed 

eight new cases with a significant international 

aspect in federal court and continued to litigate 

and investigate dozens of other matters involving 

foreign parties, witnesses, and evidence. The FTC 

contacted and received assistance from agencies 

in approximately 15 countries in these cases and 

investigations. 

Chapter 9. International Technical Assistance

The FTC, through the OIA, is also renewing its commitment to assist 

developing nations as they move toward market-based economies by assisting 

with development and implementation of competition and consumer 

protection laws and policies. Last year was another busy period for the 

FTC’s international technical assistance program, which provides training 

and other education. Since its inception in the early 1990s, the program has 

48

Federal Trade Commission

“I received the following pages, unsolicited, 

from British Columbia regarding a mega-million 

lottery. I did not call or contact them in any way 

prior to, or after, receiving their communication 

that I am a ‘winner.’ I do hope this information is 

helpful in protecting others against this fraud.”

Washington Consumer

February 2007
conducted hundreds of training missions in developing nations, employing 

the Commission’s legal and economic expertise. In a typical training mission, 

a lawyer and economist team conducts a three or four day interactive 

case simulation with staffs from the newly created enforcement agencies 

that involve substantive and procedural issues likely to be encountered in 

a real investigation. These activities, funded mostly by the U.S. Agency for 

International Development (USAID), are an important part of the FTC’s efforts 

to promote sound competition and consumer protection policies around the 

world. The FTC works in close cooperation with the DOJ Antitrust Division in 

conducting its antitrust activities in this program. During the coming year, the 

FTC will work with USAID and other funding agencies to find opportunities to 

expand the program, particularly in the consumer protection area.

In 2006, the FTC sent 34 different staff experts on 30 technical assistance 

missions to 17 countries. The FTC was most active this year in the ten-nation 

ASEAN community, India, Russia, Azerbaijan, South Africa, Central America, and 

Egypt. The Commission also conducted missions in Jordan and Ethiopia, and 

concluded a highly successful program in Mexico. As part of its ASEAN program, 

the FTC continues to maintain a resident advisor in Jakarta, Indonesia, who 

works with the ASEAN Office of the Secretary General, as well as with the 

competition and consumer protection authorities in Indonesia and Vietnam. 

49

The FTC in 2007: A Champion for consumers and competition
“The agency 

will continue to 

provide guidance to 

consumers in how 

to avoid the latest 

scams and frauds, 

and to businesses 

in how to comply 

with their legal 

obligations.”

Looking Ahead

The FTC’s accomplishments in the past year presage the challenges and 

opportunities we will face in the next 12 months as we renew our commitment 

to champion for consumers and competition. With merger activity on the 

rise, we will review hundreds of mergers, increasingly in dynamic industries 

characterized by significant intellectual property interests. We will continue 

to focus our nonmerger antitrust scrutiny on areas that have a tremendous 

impact on consumers’ lives – health care and pharmaceuticals, energy, 

technology, and real estate – with special attention directed at the interface 

between antitrust and intellectual property. We will root out and prosecute 

fraudulent business schemes in broad sectors of the economy, seeking 

restitution for consumers where appropriate, and use the new tools that the 

U.S. SAFE WEB Act provides for combatting cross-border fraud. 

And we will continue our pursuit of a “culture of security” through 

our work to protect consumers’ privacy and data security and 

eradicate identity theft.

As always, the FTC’s enforcement efforts will be buttressed and 

informed by its many policy tools, including hearings, workshops, 

and studies to learn about the newest developments, emerging 

technologies, and concerns in the marketplace. For example, on 

the competition side, the Commission intends to conduct a study 

on authorized generic drugs and issue reports on broadband 

connectivity and the relationship between intellectual property 

and competition law and policy; while its consumer protection 

mission will be informed by workshops on spam and current debt 

collection practices, as well as by the Tech-ade town hall meetings. 

The agency will continue to provide guidance to consumers in how 

to avoid the latest scams and frauds, and to businesses in how to comply with 

their legal obligations. It will also draw on resources from its newly-created 

Office of International Affairs to most effectively coordinate with its foreign 

partners to combat international threats, and will continue to work with other 

domestic law enforcement agencies in its fight against consumer fraud. We are 

honored to work on behalf of American consumers and will strive continuously 

to protect the free market from those that would distort or cheat it.

“Our ultimate goal is to identify 

future challenges and opportunities 

in fulfilling our core mission of 

protecting consumers. At the FTC, 

we recognize that being prepared 

for the future is critical if we are 

to foster confidence in consumers 

that they will benefit from new 

technologies, while being protected 

from undue risks that they create.”

Chairman Majoras

Remarks at Public Hearings on Protecting 

Consumers in the Next Tech-ade

(Nov. 6, 2006)

50

Federal Trade Commission
Senior Staff of the FTC 

Chief of Staff Brian Huseman

Executive Director Charles Schneider

Deputy Executive Directors Christina Perez

 Sonna L. Stampone

Director, Bureau of Competition Jeffrey Schmidt

Deputy Directors Kenneth L. Glazer

 David P. Wales

Director, Bureau of Consumer Protection Lydia B. Parnes

Deputy Directors Eileen Harrington

 Mary Beth Richards

Director, Bureau of Economics Michael Salinger

Deputy Directors Mark Frankena

 Paul A. Pautler

General Counsel William Blumenthal

Principal Deputy General Counsel John D. Graubert

Director, Office of International Affairs Randolph W. Tritell

 Deputy Directors Hugh G. Stevenson

 Elizabeth Kraus

James C. Hamill

Director, Office of Congressional Relations Jeanne Bumpus

Director, Office of Public Affairs Nancy Ness Judy

Director, Office of Policy Planning Maureen K. Ohlhausen

Deputy Director James C. Cooper

Secretary of the Commission Donald S. Clark

Chief Administrative Law Judge Stephen J. McGuire

Inspector General Howard L. Sribnick

51

The FTC in 2007: A Champion for consumers and competition

Left to right: Michael Salinger, Nancy Ness Judy, Donald S. Clark, Jeanne Bumpus, Charles Schneider, Lydia Parnes, 

Jeffrey Schmidt, Brian Huseman, Maureen K. Ohlhausen, Randolph W. Tritell, William Blumenthal.
FTC Annual Awards - October 2006

Chairman’s Award

Carolyn Shanoff

Louis D. Brandeis Award

Joseph Brownman

Janet D. Steiger Outstanding Team Award

E-Premerger Deployment Team

Identity Theft Team

Schering-Plough Team

Spyware Team

Richard C. Foster Award

Darlene Cossette

Joyce Moore

Louise Woodson

James M. Mead Award

Dawne Holz

Patricia Thompson

Howard Shapiro

Paul Rand Dixon Award

David Balan

Christopher Couillou

Christopher Garmon

Geoffrey Green

David Narrow

Alain Sheer

Kim Vandecar

Mary Gardiner Jones Award

Pamela Timus

Award for Excellence in Supervision

Sherron Greulich

Deborah Kelly

Carrie Klein

Daniel Salsburg

Thomas Syta

52

Federal Trade Commission
Otis B. Johnson Award

Claudia Bourne Farrell

Allyson Himelfarb

Alan Krause

Stefano Sciolli

Excellence in Economics Award

Keith Anderson

Outstanding Scholarship Award

Christopher Taylor

Stephen Nye Award

Rozina Bhimani

Malini Mithal

Mary Elizabeth O’Neill

Leon Higgenbotham, Jr. Award

Jill Coleman

Robert Sussman

Eleanor F. Greasley Award

Emily Anderson

Tammy John

Lula Little 

53

The FTC in 2007: A Champion for consumers and competition
Principal Contributors to Report

Michael D. Bergman Project Coordinator

Jeanine Balbach and Stefano Sciolli Bureau of Competition

Michael F. Ostheimer Bureau of Consumer Protection

Russell W. Damtoft Office of International Affairs

Dawne Holz Graphics and Design

Contributing staff members also include Marian Bruno, William E. Cohen, 

John F. Daly, Rachel Miller Dawson, Timothy A. Deyak, Stacy Feuer, 

John D. Graubert, Marc Groman, Nathan Hawthorne, Brian Huseman, 

Daniel Kaufman, Carrie Klein, Elizabeth Kraus, Michael Lezaja, Gregory P. Luib, 

Sara Razi, John H. Seesel, Kelly Signs, Yael Weinman, Beth Arvan Wiggins, and 

Brad Winter. Covers designed by Tawanda Shannon.

54

Federal Trade Commission
“The record of accomplishments in the interest of fair 

competition ... warrant that this body shall have a habitation 

adequate to its needs and in keeping with the importance of the 

tasks which it has accomplished and will continue to perform in 

the protection of American trade.”

Franklin D. Roosevelt

Address at the Cornerstone Laying Ceremonies for the New Federal 

Trade Commission Building, July 12, 1937