FEDERAL TRADE COMMISSION

Performance Plan

Fiscal Year 2003 Through Fiscal 2004 

&

President’s Management Agenda

Performance Plan

Federal Trade Commission Performance Measures

Fiscal Years 1999 - 2004

Annual Performance Measures

FY 1999

Actual

FY 2000

Actual

FY 2001

Actual

FY 2002

 Actual

FY 2003

Target

FY 2004

Target

Consumer Protection Mission

Goal 1: Prevent fraud, deception, and unfair business practices in the marketplace.

Objective 1.1–Identify fraud, deception, and unfair practices that cause the greatest consumer injury.

Measure 1.1.1: (FY 2001-2004)Annual

number of consumer complaints and

inquiries entered into database.

---- ---- 430,000 680,000 450,000 500,000

Measure 1.1.2: (FY 2003-2004) Annual

number of consumer complaints and

inquiries related to identity theft

entered into database.

---- ---- ---- ---- 155,000 170,000

Objective 1.2–Stop fraud, deception and unfair practices through law enforcement:

Measure 1.2.1: Dollar savings for 

consumers from FTC actions which 

stop fraud.

$454

million

$265

million

$487 

million

$561

million

 $400 

million

 $400 

million

Measure 1.2.2: (FY 2001-2002) Total

expenditures of deceptive or unfair 

advertising campaigns stopped.

---- ---- $86 

million

$40

million

---- ----

Measure 1.2.3:(FY 2003-2004) Number

of data searches conducted by FTC

and other law enforcement personnel

of the FTC’s Consumer Sentinel.

---- ---- ---- ---- 20,000 20,000

Measure 1.2.4: (FY 2003-2004)

Number of data searches conducted by

law enforcement personnel reviewing

the FTC’s Identity Theft complaints.

---- ---- ---- ---- 1,400 1,500

Objective 1.3–Prevent consumer injury through education:

Measure 1.3.1: Number of education 

publications distributed or accessed 

electronically by consumers.

8.6

 million

 11.0 

million

15.0

million

19.3

million

14.0

million

15.0

million

Measure 1.3.2: (FY 2003-2004) Annual

number of education publications

related to Identity Theft distributed or

accessed electronically.

---- ---- ---- ---- 2.5 

million

2.5 

million

Measure 1.3.3: (FY 2003-2004) Annual

number of Spanish-language 

education publications distributed or

accessed electronically.

---- ---- ---- ---- Determine

baseline

Compare

to 

baseline
Performance Plan

FY 1999

Actual

FY 2000

Actual

FY 2001

Actual

FY 2002

 Actual

FY 2003

Target

FY 2004

Target

Federal Trade Commission Performance Measures

Maintaining Competition Mission

Goal 2: Prevent anticompetitive mergers and other anticompetitive business practices in the

marketplace.

Objective 2.1–Identify anticompetitive mergers and practices that cause the greatest consumer injury:

Measure 2.1.1: (FY 2001-2004) Percent 

of HSR second requests resulting in 

enforcement action.

---- ---- 68% 68% 60-80% 60-80%

Measure 2.1.2: (FY 2001-2003)

Number of nonmerger investigations

opened per year.

45 25 56 59 45-70 ----

Measure 2.1.3: (FY 2004) Percent of

nonmerger investigations which result

in enforcement action.

---- ---- ---- ---- ---- 60-80%

Objective 2.2–Stop anticompetitive mergers and practices through law enforcement:

Measure 2.2.1: Positive outcome of

cases brought by FTC due to alleged

violations.

80% 95% 94% 100% 80% 80%

Measure 2.2.2: (FY 1999-2003) Dollar

savings for consumers resulting from

FTC actions stopping anticompetitive

mergers.

$1,200

million

$2,980

million

$2,500

million

$726

million

$800

million

----

Measure 2.2.3: (FY 2004) Volume of

commerce in markets in which FTC

took action to prevent anticompetitive

mergers.

---- ---- ---- ---- ---- $40 

billion

Measure 2.2.4: (FY 2001-2003) Dollar

savings for consumers resulting from

FTC actions stopping anticompetitive

nonmerger activity.

---- ---- $157

million

$86

million

 $200

million

----

Measure 2.2.5: (FY 2004) Volume of

commerce in markets in which FTC

took action to prevent anticompetitive

conduct.

---- ---- ---- ---- ---- $20 

billion

Objective 2.3–Prevent consumer injury through education:

Measure 2.3.1:(FY 2001-2003)

Quantify number of education and 

outreach efforts.

---- ---- Determine

baseline

(141)

285 325 ----

Measure 2.3.2: (FY 2001-2003) 

Quantify number of hits on antitrust 

information on FTC Web site.

---- ---- Determine

baseline

(2.6 million)

4.3

 million

3.5 

million

----

Measure 2.3.3: (FY 2004) Measure and

establish appropriate targets for the

number of hits on the FTC antitrust

Web site relevant to business and legal

communities.

---- ---- ---- ---- ---- Determine

baseline

Measure 2.3.4: (FY 2004) Measure and

establish appropriate targets for the

number of hits on the FTC antitrust

Web site relevant to policy makers and

the general public.

---- ---- ---- ---- ---- Determine

baseline
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

Consumer Protection Mission

Goal 1: To prevent fraud, deception, and unfair business practices in the marketplace.

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

consumer injury.

FY 2003 Budgeted Resources: 112 FTE $22,328,000

Data Collection and Sharing

To identify the most serious forms of fraud and deception, the FTC relies on its complaint

database, which is accessible to an increasing number of law enforcement partners. The

FTC’s database has grown dramatically in past years, and FTC staff have recruited many new

law enforcement partners at home and abroad.

The FTC has created the largest database of consumer complaints in the world. Complaints

are collected by the FTC’s Consumer Response Center, which responds to calls to its toll-free

numbers and to postal and online complaints. The FTC also receives complaint data from a

broad array of public and private organizations in the United States and Canada. Through

December 2002, more than 2.2 million entries are in the FTC’s database. 

The FTC shares complaint data through Consumer Sentinel, a secure Web site that provides

access to fraud and identity theft complaints to more than 610 law enforcement organizations

in the United States, Canada, and Australia. Consumer Sentinel is a unique and effective

enforcement tool that enables law enforcers to access data right at their desks. Although the

FTC is not empowered to act on behalf of individual consumers, consumer complaint data

accessed through Consumer Sentinel enables the FTC and its law enforcement partners to

coordinate their enforcement efforts and identify and target the most serious consumer

problems. Moreover, with the coordinated international launch in FY 2001 of econsumer.gov,

a Web site where consumers can file cross-border complaints, the FTC took the Consumer

Sentinel model to the global marketplace. As of December 2002, partners in 17 countries,

including the United States, can access the information contained in econsumer.gov.

The FTC will continue to expand the complaint database and increase its use by recruiting

and training additional law enforcement partners. The FTC also will make better use of its

rich store of data by identifying repeat offenders and sharing this information with other law

enforcers. Further, the FTC will increase its capacity to analyze data quickly in order to

respond to frauds and identity theft in their incipient stages and help prevent consumer

injury. The data will be used to provide more information to the public – giving consumers

information to protect themselves from scams and identity theft, and informing public policy

discussions about consumer protection issues in the marketplace. The FTC also will

continue to collect data on consumers’ experiences and general inquiries through focus

groups, surveys, copytesting, and other methods of monitoring the marketplace in order to
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

better target enforcement and education resources. The FTC will continue to enhance its

system to track and analyze privacy-related complaints more effectively. 

The FTC will establish a new performance measure in FY 2003 under Objective 1.1 to report

the annual number of consumer complaints and inquiries entered into the database relating

to identity theft. Although Congress established the FTC as the central clearinghouse for

identity theft complaints, the Commission – a civil law enforcement agency – has no

enforcement over identity theft crimes. The information contained in the FTC’s database,

however, directly supports these criminal prosecutions. The Commission has learned from

experience that hands-on information and training provided to its customer law enforcement

agencies greatly enhances their abilities to mine the information in the complaint database

and ultimately prosecute identity theft crimes more successfully. Consequently, the FTC

initiated identity theft training for local, state, and federal criminal enforcement groups and,

through December 2002, trained approximately 520 law enforcers from more than 165

agencies. Through a new performance measure under Objective 1.2, the FTC will track the

number of accesses by law enforcement personnel to monitor the success of these training

programs and to determine how such training should be modified to better meet the needs

of its partner agencies.

Finally, in FY 2002 the Commission contracted for two surveys of several thousand

consumers regarding fraud that they have experienced, including identity theft. Through

these surveys, the FTC seeks to learn whether complaints in the database are representative

of consumers’ actual experiences. If so, the FTC will explore the possibility of developing a

“rule of thumb” to infer how many cases of fraud have occurred for every complaint received.

The agency also expects that the survey results will help determine whether certain classes

of consumers are not represented in the database, so that it can target those populations

with education about filing complaints through Consumer Sentinel. After receipt and review

of the survey results, the Commission will review its enforcement efforts to better ensure that

it is addressing the most costly and prevalent forms of fraud. The survey of identity theft will

allow the FTC to better assess the nature and prevalence of identity theft and to judge the

effectiveness of agency efforts to assist and educate consumers, identity theft victims, law

enforcement officials, and industry representatives. The agency also may seek to revise its

GPRA performance measures at that time based on the information received.

Privacy Issues

In FY 2003, the FTC’s Consumer Protection Mission will continue to explore and place great

emphasis on privacy issues. The FTC will maintain its scrutiny of the privacy implications

of new and emerging technologies. Amendments to the Telemarketing Sales Rule, approved

by the Commission in December 2002, will be implemented. The FTC also will devote

resources to three important privacy initiatives – identity theft, credit reporting, and the

Children’s Online Privacy Protection Act (COPPA). The FTC will continue to use its data

mining and analytical skills to develop custom investigative reports that will enable criminal

law enforcement agencies to identify and prosecute appropriate identity theft cases. The FTC

will keep working with the credit reporting industry to ensure the accuracy of consumers’

credit information. Finally, the FTC will use survey results that it has gathered, industry

results, and traditional surveillance methods to identify Web sites that are collecting

personal information from children without first obtaining parental consent. Through
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

education, voluntary compliance efforts, and law enforcement, the FTC will seek to bring

these entities into compliance with COPPA.

Unsolicited Commercial E-mails (Spam)

The FTC receives thousands of unsolicited commercial e-mails or spam messages a day,

forwarded by groups and individuals worldwide. Since 1998, the FTC has maintained an

electronic mailbox (uce@ftc.gov) to which Internet customers are encouraged to forward spam.

This spam database is searchable, enabling FTC staff to track trends and identify law

enforcement targets. For example, FTC attorneys and investigators search the spam

database when researching potential cases. In FY 2003, resources will be used to enhance

the spam database that stores these messages. Developing the capability to search,

manipulate, and analyze the data will help the FTC put it to use for case generation,

evidentiary support in litigation, trend analysis, and legislative recommendations.

1. GPRA Five-Year Strategies

• Expand the FTC’s comprehensive information system (consumer complaint database)

to keep pace with the global marketplace.

• Strengthen capabilities to analyze the increasing volume of complaint data.

• Continuously upgrade Consumer Sentinel services to assist law enforcement partners.

• Ensure the privacy and security of database information.

• Search for better methods of collecting information to keep abreast of new consumer

protection problems in traditional markets and emerging markets such as the Internet.

2. FY 2003 Implementation Plan

• Recruit new partners in the United States and abroad to contribute complaint data

to Consumer Sentinel; add to the group of state, local, federal, and international law

enforcement agencies accessing information in Consumer Sentinel; and train new

partners on how to take full advantage of its features.

• Facilitate the exchange of data with law enforcement officials in other countries;

expand the use of econsumer.gov by recruiting additional partners, providing more

information on the site, and increasing complaint collection and sharing.

• Enhance analysis of data to make it more useful to private and public sector partners.

• Enhance the system’s capacity to collect privacy-related complaints in the database.

• Increase the number and utility of identity theft complaints in the database.
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

• Monitor the marketplace to identify illegal practices that may not be fully captured by

the database by, for example, using technology to monitor the Internet and conducting surveys. 

• Collect data on consumers’ experiences and general inquiries through focus groups,

surveys, copytesting, and other methods of monitoring the marketplace in order to

better target enforcement and education resources.

• Identify consumer protection issues emerging as a result of changes in the marketplace, for example, the increasing use of new technologies, such as new push

technology and digital television and Internet telephony, the use of new payment

systems, changes in demographics (the aging population, immigration, etc.), and

globalization; explore them through public workshops, hearings, surveys, etc. 

3. FY 2003 Performance Measures

In FY 2003, the agency will:

• Increase the number of consumer complaints and inquiries in the FTC’s comprehensive information system by at least 450,000, and

• As part of this increase in total consumer complaints and inquiries, enter at least

155,000 consumer complaints and inquiries relating to identity theft.

The FTC continues to focus law enforcement resources on the most serious consumer

protection problems identified through its consumer complaint database. The data

enable the FTC to rapidly detect and respond to fraud, deception, and other illegal

practices, and to help prevent consumer injury in a timely fashion. Furthermore, by

broadly sharing its fraud complaints through Consumer Sentinel with external

partners, the FTC can enhance the effectiveness of law enforcement agencies across

the United States, Canada, and Australia. The FTC also continues to focus on identity

theft and uses its resources to collect information from identity theft victims and share

that information with its law enforcement partners.

4. Program Evaluations

• Use the results of the consumer fraud and identity theft surveys to evaluate the

representative value of complaints entered into the database and whether an increase

in the number of complaints is due to an increase in the occurrence of fraud or an

increase in the reporting of fraud by consumers.

• Assess whether the FTC’s law enforcement and education efforts are addressing the

leading problem areas identified by the complaint database. 

• Determine the extent to which Consumer Sentinel services are used by law enforcement partners. 

• Assess privacy and security protections for the database by reviewing complaints, if

any, and evaluating the policies in place. 
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

Objective 1.2: Stop fraud, deception, and unfair practices through law enforcement.

FY 2003 Budgeted Resources: 408 FTE $73,136,000

The FTC’s programs to help stop fraud, deception, and unfair practices range from protecting

consumer privacy, to investigating high-tech fraud, deceptive marketing of health care

products and services, to pursuing international law enforcement matters. The FTC will

continue to work in these and other areas to help prevent and reduce consumer injury

caused by these practices.

Privacy

The FTC plays a vital role in protecting consumers’ privacy and will continue to focus its

efforts in this area in FY 2003. The FTC’s approach on privacy issues encompasses both

enforcement and education, and focuses on telemarketing, unsolicited e-mail (spam), identity

theft, and pretexting (obtaining consumers’ financial information under false pretenses), as

well as enforcement of the Children’s Online Privacy Protection Act, the Gramm-Leach-Bliley

Act, and the Telemarketing Sales Rule (TSR) as amended in December 2002.

The amendments to the TSR include the development of a centralized national “do-not-call”

database. Through one simple Web site registration or telephone call, a consumer will be

able to register his or her preference not to receive telemarketing calls from organizations

under the FTC’s jurisdiction. Covered telemarketers would be prohibited from calling any

consumer who had placed his or her telephone number in the database. The amendments

also address the use of “pre-acquired account information.” Consumers and law enforcers

are concerned that, unbeknownst to the consumer, frequently a telemarketer already has the

consumer’s billing information in hand before that telemarketer ever initiates a sales call to

the consumer. Account information that has been “pre-acquired” can be misused, resulting

in unauthorized charges on consumers’ accounts. The TSR amendments also impose new

restrictions on the practice of “call abandonment” and require telemarketers to transmit

caller-ID information. 

Enforcement efforts will continue to focus on cases involving sensitive personal or financial

information, and claims touting the privacy and security features of products and services.

E-commerce

The electronic marketplace continues to be a fertile ground for frauds and deception – both

traditional frauds and new forms of technological trickery. The FTC will pursue new

consumer protection issues that are emerging with the convergence of technologies and new

payment systems. 

Internet fraud and deception remain a law enforcement priority for the FTC. The FTC will

continue to lead efforts to coordinate law enforcement with officials throughout the United

States and abroad. Two key elements of its global enforcement efforts using the Internet are

(1) sharing complaint data through Consumer Sentinel and the recently created international

Web site, econsumer.gov, and (2) training enforcement officials here and abroad on the

newest Internet technologies and how to bring cases involving those technologies. Since FY
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

2000, staff has offered 27 “hands-on” training programs to more than 1,750 law enforcement

personnel representing 20 countries, 38 states, 23 federal agencies and 19 Canadian

agencies. FTC staff has followed this outreach by working with groups of its law enforcement

partners (called “Netforces”) on joint cases, or sweeps, identified through this training.

Globalization

As the marketplace becomes more global, the Commission staff is continuing its work on

cross-border fraud and devoting more attention to enforcement actions that have a crossborder component. U.S. consumers often receive telemarketing or e-mail solicitations from

vendors outside the United States. The FTC works to combat fraud regardless of the source.

In October 2002, the agency unveiled a five-point plan to fight cross-border fraud, which

includes: (1) advocating an Organization for Economic Cooperation and Development (OECD)

Recommendation on Cross-Border Fraudulent and Deceptive Commercial Practices; (2)

issuing a report to Congress with recommendations for legislative changes strengthening the

FTC’s ability to combat cross-border fraud; (3) conducting a workshop on public/private

partnerships to fight cross-border fraud; (4) pursuing bilateral and multilateral cooperation

arrangements; and (5) providing technical assistance to developing countries on consumer

protection issues. In January 2003, the FTC launched a new Web site,

www.ftc.gov/crossborder, to help consumers identify, stop, and avoid cross-border fraud.

Consistent with the five-point plan, on February 19 and 20, the FTC will hold a workshop on

public- private partnerships to fight cross-border fraud. As the FTC pursues these initiatives

relating to cross-border fraud, we will work to identify measures that will enable us to report

on our performance in this area.

Health Care Products and Services

The FTC is placing increased priority on a growing problem area: the deceptive marketing of

products that may affect consumer health and safety. The FTC is focusing on dietary

supplements and other health products promoted on the Internet. Consumer demand for

these products is increasing, and fraudulent or deceptive claims about the products can pose

risks to consumers’ well-being. 

New Performance Measures

The FTC will establish two new performance measures under this objective in FY 2003 – to

report the number of data searches by FTC and other law enforcement personnel of the FTC’s

Consumer Sentinel complaints and the number of data searches by law enforcement

personnel of the FTC’s identity theft complaints. 

The FTC will eliminate the performance measure reporting the total expenditures of deceptive

or unfair advertising campaigns stopped. This measure has not proven to be appropriate

in evaluating performance. When first created, the Commission based it on prior year data

that included several large national advertising claims that were terminated as a result of

FTC action. Since that time, the agency has increased its focus on deceptive Internet

advertising claims. Internet advertising is very broadly disseminated, but is considerably

less expensive than traditional advertising campaigns. In addition, last fiscal year, the FTC

did a better job of identifying problems in traditional ads early on, further reducing the dollar

volume of deceptive ads that were stopped. As a result of the changes in performance
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

measures, the section below has been consolidated into one section. In past versions, this

information was divided into two sections: Stopping Fraud and Ensuring Broad-Based

Protections for Consumers.

As discussed in Objective 1.1, the FTC is conducting surveys of various consumers. The

results will be used to evaluate the FTC’s enforcement and identity theft campaigns and to

determine whether other measures should be adopted to evaluate performance in this area.

1. GPRA Five-Year Strategies

• Lead and coordinate a nationwide attack on telemarketing fraud by continuing to lead

federal and state law enforcement sweeps, and by using Consumer Sentinel data to (1)

identify targets and (2) coordinate with other federal and state agencies to prosecute

actions against these targets.

• Target high-tech frauds that have moved to the Internet and exploit other new

technologies. 

• Develop additional international law enforcement partnerships to tackle the growing

problem of cross-border fraud. 

• Increase the capacity to respond rapidly, with enforcement and other approaches, to

fast-moving technology-based scams.

• Ensure that basic consumer protection principles are applied in new markets such

as the Internet and in newly deregulated markets.

• Monitor national advertising in print, television, radio, and online to identify illegal

practices that may not be fully captured by the database. 

• Focus law enforcement on violations that create the greatest risks to consumer health,

safety, and economic well-being.

• Develop policies to address newly emerging consumer protection issues resulting from

changes in the marketplace.

• Encourage self-regulation and private initiatives, where appropriate, in lieu of regulation or law enforcement.

2. FY 2003 Implementation Plan

• Target for federal-state sweeps or other law enforcement initiatives, the most

significant areas of telemarketing and other types of fraud, such as direct mail scams,

predatory lending, and unauthorized billing (“cramming”).

• Stop the most pernicious Internet-related scams, such as unauthorized charges on

consumers’ phone bills through dialer programs, the misuse of pre-acquired customer

account information, and deceptive spam, as they are identified through Consumer

Sentinel, the spam database, Internet surfs, and other monitoring. 
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

• Enforce the provisions of the TSR dealing with “pre-acquired account information”;

implement TSR amendments creating a national do-not-call registry that would be

binding on all telemarketers under the FTC’s jurisdiction; and increase enforcement

of privacy-related amendments to the TSR.

• Continue enforcement activities against fraudulent and deceptive spam promoting

chain letters, pyramid schemes, or other kinds of “get-rich-quick” schemes.

• Recruit new local, state, federal, and international law enforcement partners for antifraud initiatives.

• Follow nationwide Internet training for law enforcement partners with joint “Netforce”

enforcement sweeps.

• Further initiatives to fight cross-border fraud.

• Continue to equip the FTC’s Internet Lab to keep pace with technology and support

rapid response law enforcement capability. 

• Target law enforcement efforts to fight advertising and marketing practices that are

most injurious to consumers; identify targets based on complaint data and other

forms of monitoring.

• Identify industries where a high percentage of companies are not in compliance with

provisions of consumer protection laws or regulations and bring those companies into

compliance through law enforcement and business guidance or by encouraging selfregulatory programs.

• Continue enforcement efforts against the abusive practice of pretexting that causes

consumers concern about the security of their personal financial information. 

• Bring privacy and security cases involving sensitive information and claims touting

the privacy and security features of products and services. 

• Ensure that there is broad compliance with consumer protection laws, rules, and

guides in the electronic marketplace; target law enforcement to the most serious

violations.

• Implement regulations governing franchising, telemarketing sales, and telephone

billing services.

• Address cutting-edge consumer protection issues in emerging areas – e-commerce,

globalization, privacy of personal information, and the marketing of new products and

services and newly deregulated services.
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

3. FY 2003 Performance Measures

In FY 2003, the agency will:

• Save consumers approximately $400 million by helping to stop Internet scams and

other types of fraud.

Preventing economic injury to consumers is the ultimate goal of the FTC’s anti-fraud

campaign. The FTC saves consumers money each time a fraudulent operator is

stopped through successful litigation or settlement with the agency. The FTC

increases these consumer savings by leading joint law enforcement initiatives with

federal, state, and international partners. The amount of consumer savings will vary

each year based on the number and types of fraud stopped.

Consumer savings are calculated by totaling the estimated annual fraudulent sales

of defendants in the 12 months prior to the FTC’s filing a complaint. The calculation

actually may underestimate the agency’s impact because it assumes that the fraud

would have continued for only one more year and it ignores any deterrent effect of FTC

enforcement. It provides, however, a uniform method for calculating savings and

minimizes speculation about the likely duration of the fraud. 

• Reduce consumer injury through law enforcement by providing access to essential

data for law enforcement purposes through the Consumer Sentinel. In FY 2003, the

goal is that FTC and law enforcement personnel will conduct 20,000 data searches of

the FTC’s Consumer Sentinel.

• Of those 20,000 data searches, 1,400 will be conducted by law enforcement personnel

reviewing the FTC’s identity theft complaints. 

The FTC’s Consumer Sentinel and identity theft data serve as a rich source of

information for FTC staff and its law enforcement partners as they investigate and

pursue instances of potential fraud, deception, and unfair practices. The expanded

access to and use of this information is critical as the FTC works to help stop these

practices. By tracking the number of accesses by both internal and external law

enforcement personnel, the FTC hopes to demonstrate the value of the information

contained in these databases. Generally, those personnel who are accessing the

system are seeking information directly relevant to enforcement action - whether they

are building a case, investigating a company, identifying potential witnesses, or

gathering information for a sentencing hearing. In particular, the FTC will track the

number of accesses that external agencies perform of the identity theft data in

evaluating identity theft training programs for outside law enforcement agencies.

4. Program Evaluations

• Review the results of the consumer fraud and identity theft surveys and assess the

overall trends revealed by review of the database to determine whether the amount

of resources dedicated to the program should be altered or the program’s priorities

modified, and create new performance measures, if appropriate. 

• Assess the litigation success rate for obtaining preliminary relief in fraud cases.
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

• Determine the success of leveraging resources through coordinated joint law enforcement initiatives.

• Evaluate the success of self-regulatory programs.

• Determine whether there are new industries or areas of marketing that require law

enforcement or that may be appropriate for self-regulation.
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

Objective 1.3: Prevent consumer injury through education.

FY 2003 Budgeted Resources: 49 FTE $8,762,000

The FTC’s education efforts target identified areas of fraud and deception, and areas where

information gaps are greatest because of rapid changes in the marketplace, such as new

technology-based products and services, privacy of personal information, new types of

payment systems, and global transactions. The agency makes creative use of new

technologies and private and public partners to reach new and under-served audiences,

particularly those who may not seek information directly from the FTC. The FTC will expand

its consumer education program to reach these new audiences, build new partnerships to

help distribute its messages, and continue to create and support education Web sites,

including FTC’s international site, econsumer.gov. In addition, every case that the FTC brings

contains a consumer education component – targeting the message to consumers about the

fraud that has occurred. To reach the expanding population of Hispanic consumers in the

United States, the FTC instituted an Hispanic Outreach Program. We also cooperate with

organizations such as the NAACP and the National Council of La Raza to work with minority

communities and have targeted education campaigns to reach the young adults who enlist

in the military. The FTC will continue to publicize its consumer complaint and identity theft

toll-free numbers and seek to hold constituent service conferences with congressional offices

as part of its effort to increase public awareness of its programs and inform the public of the

ways to contact the FTC to obtain information or file a complaint. 

The FTC will establish two new performance measures to report the annual number of

education publications distributed to or accessed electronically by consumers relating to

identity theft, and the annual number of Spanish-language publications distributed to or

accessed electronically by consumers. These measures will highlight the outreach the agency

is performing in the identity theft area and its efforts to reach the nation’s growing Hispanic

population. In carrying out these functions, the FTC strives to ensure that any publicly

disseminated data or information subject to the Data Quality Act (section 515 of Pub. L. No.

106-554) meets basic quality standards.

1. GPRA Five-Year Strategies

• Focus consumer and business education efforts on areas where fraud, deception,

unfair practices, and information gaps cause the greatest injury.

• Creatively use technology, including new interactive media, to extend the reach of

consumer and business education.

• Increase public awareness of FTC’s online education materials and the availability of

its toll-free helpline and online complaint form to provide one-on-one information and

increase data collection to support law enforcement.

• Encourage private and public partners to participate in education initiatives.
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

2. FY 2003 Implementation Plan 

• Deliver information to more consumers, industry members, and law enforcement

partners faster and more efficiently.

• Focus education on high-profile and emerging issues where consumer information

gaps are greatest, for example, globalization, Internet scams, online privacy, and

identity theft.

• Plan a consumer awareness campaign to let consumers know that they should report

their privacy-related complaints to the FTC.

• Continue an outreach program to increase consumer awareness of the privacy

information required by the Gramm-Leach-Bliley Act.

• Increase education efforts about frauds that cause consumers the greatest financial

injury.

• Through greater outreach, lead more consumers to the FTC’s Web site (ftc.gov) and

the “one-stop” government Web site for consumer information (consumer.gov).

• Expand coverage of FTC messages, including the toll-free helplines, through marketing, new products, technology, and a speakers bureau.

• Continue efforts to identify and reach under-served audiences, businesses, and law

enforcement offices.

3. FY 2003 Performance Measures

In FY 2003, the agency will:

• Provide education messages online and in print to 14 million recipients.

Education programs benefit consumers by alerting them to their rights under various

consumer protection laws and providing practical tips on how to recognize and avoid

scams and rip-offs. To reach the broadest possible audience, the FTC makes maximum use of the national media, the agency’s ftc.gov Web site, and the interagency

firstgov.gov Web site. The FTC’s messages also reach the public through the Consumer Response Center and hundreds of partners who distribute FTC materials, link

to the FTC Web site, or post FTC messages on their Web sites.

The number of education messages distributed by the FTC has been increasing

steadily. In FY 2000, the performance target of 8.7 million was exceeded with a total

of 11 million. In FY 2001, the performance target of 10 million was exceeded with a

total of 15 million. In FY 2002, the performance target of 10.5 million was exceeded

with a total of 19.3 million, including nearly 7.0 million print publications and more

than 12.0 million electronic accesses to FTC publications. In light of the actual
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

numbers of education messages distributed, this performance target is being raised

in FY 2003 from the original target of 11 million to 14 million.

• As part of the 14 million education messages, provide education messages related to

identity theft online and in print to 2.5 million recipients.

The FTC has coordinated with other government agencies and organizations to

develop and disseminate comprehensive consumer education materials for victims of

identity theft and those concerned with preventing this crime. The FTC’s most

popular publication, “Identity Theft: When Bad Things Happen to Your Good Name,”

is available in print and online. The FTC also distributes CDs containing this

publication, thus enabling other federal agencies to print and distribute it. The FTC

also joined with several companies and privacy organizations to make available a

universal identity theft affidavit that victims of identity theft can submit to creditors.

This form, available online in both Spanish and English, will help victims recoup their

losses and restore their legitimate credit records more quickly.

• Continue to build the agency’s new Hispanic Outreach Program and establish a

baseline for the new performance measure of the annual number of Spanish-language

education publications distributed to or accessed electronically by consumers. 

Since this program began in January 2002, the FTC has created a dedicated page of

the FTC Web site, Proteccion para el Consumidor, to mirror the English-language page,

and translated 44 consumer publications as of December 2002. It also translated the

FTC Consumer Complaint Form and provided a Spanish translation of the “bestseller”

on identity theft – Robo de Identidad: Algo malo puede pasarle a su buen nombre. As

of December 2002, the FTC had distributed more than 66,000 print and electronic

copies of the Spanish version of this publication. The universal identity theft affidavit

has been translated into Spanish and is available on the FTC Web site. In conjunction

with these efforts, the Commission is conducting media outreach and providing press

interviews in Spanish. The FTC will continue to translate more documents into

Spanish and conduct other outreach activities in FY 2003. The majority of these

translations should be completed by the first quarter of FY 2003, thus allowing the

agency to establish a baseline and performance targets for subsequent years.

4. Program Evaluations

• Determine the number of publications distributed or accessed online to evaluate

outreach efforts and identify topics of particular consumer interest.

• Assess whether the appropriate mix of media is being used to communicate consumer

education messages and whether the FTC is making the best use of the available

media and technology. 

• Assess the number and range of public and private organizations that partner with

FTC to do outreach; the more private and public partners the FTC has, and the larger

those partners are, the greater its potential to reach different types of audiences, both

business and consumer.
 Performance Plan

Consumer Protection Mission Fiscal Year 2003

• Determine whether the FTC needs to reach new audiences, in light of any changes in

demographics, advertising, and marketing practices.

• Review the focus of FTC education efforts and adjust them based on changing

consumer and business needs.

• Assess the consumer education needs of the Spanish-speaking population. Census

data shows that the United States has a large and growing Spanish-speaking

population. Because these consumers may not speak English or are non-native

speakers of the language, they may be less aware of the nuances and the complexities

of disclosures, advertisements, or other aspects of consumer transactions. The FTC

will assess the vulnerabilities of this group and then craft a strategy to meet their

needs.

• Use the results of the consumer fraud and identity theft surveys to determine whether

certain classes of consumers are not represented in the FTC database, and target

consumer education to close any gaps.

• Review trends or patterns in complaints, if any, filed under the Data Quality Act to

determine appropriate techniques or strategies for improving the quality of publicly

disseminated data or information that are subject to the Act.
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

Consumer Protection Mission

Goal 1: To prevent fraud, deception, and unfair business practices in the marketplace.

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

consumer injury.

FY 2004 Budgeted Resources: 112 FTE $23,479,000

To identify the most prevalent and serious forms of fraud and deception, the FTC relies on

its complaint database, which is accessible to an increasing number of law enforcement

partners. The FTC’s database has grown dramatically in past years, and FTC staff have

recruited many new law enforcement partners at home and abroad.

The FTC shares complaint data through Consumer Sentinel, a secure Web site that provides

access to fraud and identity theft complaints to more than 610 law enforcement organizations

in the United States, Canada, and Australia. Consumer Sentinel is a unique and effective

enforcement tool that permits law enforcers to access data right at their desks. Although the

FTC is not empowered to act on behalf of individual consumers, consumer complaint data

accessed through Consumer Sentinel enable the FTC and its law enforcement partners to

coordinate their enforcement efforts and to identify and target the most serious consumer

problems. Moreover, the FTC will continue to work with its international partners to access

and share the information contained in econsumer.gov, a Web site where consumers can file

cross-border complaints.

Through its database and other data collection efforts, such as Web surveys/“surfs” and

systematic data analysis, the FTC and its law enforcement partners can identify and target

the most egregious cases of fraud and deception, coordinate enforcement efforts, and respond

quickly to emerging problems before too much financial damage is inflicted. 

In addition, the FTC will continue to measure performance by reporting the annual number

of consumer complaints and inquiries entered into the database relating to identity theft.

This information directly supports criminal prosecutions as the agency’s law enforcement

partners with criminal jurisdiction search the database to identify malfeasors and victims as

part of ongoing investigations or prosecutions. 

Finally, the FTC’s Consumer Protection Mission will continue to review its programs in light

of the consumer fraud and identity theft surveys of several thousand consumers initiated in

FY 2002. Through these surveys, the FTC seeks to determine the representative value of

complaints in the database. By FY 2004, the Commission hopes to have established a “rule

of thumb” to infer how many cases of fraud have occurred for every complaint received. The

FTC also will seek to use the survey results to determine whether certain classes or types of

consumers are not represented in the database. After receipt and review of the survey

results, the FTC will review its enforcement efforts to ensure that it is addressing the most

costly and prevalent forms of fraud through its enforcement activities. The survey of identity
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

theft will allow the FTC to better assess the nature and prevalence of identity theft and to

judge the effectiveness of agency efforts to assist and educate consumers, identity theft

victims, law enforcement officials, and industry representatives. The FTC also may seek to

revise its GPRA performance measures at that time based on the information provided

through the surveys.

1. GPRA Five-Year Strategies

• Expand the FTC’s comprehensive information system (consumer complaint database)

to keep pace with the global marketplace.

• Strengthen capabilities to analyze the increasing volume of complaint data.

• Continuously upgrade Consumer Sentinel’s services to assist law enforcement partners.

• Ensure the privacy and security of database information.

• Search for better methods of collecting information to keep abreast of new consumer

protection problems in traditional markets and emerging markets such as the Internet.

2. FY 2004 Implementation Plan

• Recruit new partners in the United States and abroad to contribute complaint data

to Consumer Sentinel; add to the group of state, local, federal, and international law

enforcement agencies accessing information in Consumer Sentinel; and train new

partners in how to take full advantage of its features.

• Facilitate the exchange of data with law enforcement officials in other countries;

expand the use of econsumer.gov by recruiting additional partners, providing more

information on the site, and increasing complaint collection and sharing.

• Enhance analysis of data to make it more useful to private and public sector partners.

• Enhance the system’s capacity to collect privacy-related complaints in the database.

• Increase the number and utility of identity theft complaints in the database.

• Monitor the marketplace to identify allegedly illegal practices that may not be fully

captured by the database by, for example, using technology to monitor the Internet

and conducting surveys. 

• Collect data on consumers’ experiences and general inquiries through focus groups,

surveys, research, readability studies, and other methods of monitoring the

marketplace in order to better target enforcement and education resources.
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

• Identify consumer protection issues emerging as a result of changes in the marketplace, for example, the increasing use of new technologies, such as new push

technology and digital television and Internet telephony, the use of new payment

systems, changes in demographics (the aging population, immigration, etc.), and

globalization; explore them through public workshops, hearings, surveys, etc. 

3. FY 2004 Performance Measures

In FY 2004, the agency will:

• Increase the number of consumer complaints and inquiries in the FTC’s comprehensive information system by at least 500,000, and

• As part of this increase in total consumer complaints and inquiries, enter at least

170,000 consumer complaints and inquiries relating to identity theft.

The FTC continues to focus law enforcement resources on the most serious consumer

protection problems identified through its consumer complaint database. The data

enables the FTC to rapidly detect and respond to fraud, deception, and other illegal

practices, and to help prevent consumer injury in a timely fashion. Furthermore, by

broadly sharing its fraud complaints through Consumer Sentinel with external

partners, the FTC can enhance the effectiveness of law enforcement agencies across

the United States, Canada, and Australia. The FTC also continues to focus on

identity theft and uses its resources to collect information from identity theft victims

and share that information with its law enforcement partners.

4. Program Evaluations

• Use the results of the consumer fraud and identity theft surveys to evaluate the

representative value of complaints entered into the database and whether an increase

in the number of complaints is due to an increase in the occurrence of fraud or an

increase in the reporting of fraud by consumers.

• Assess whether the FTC’s law enforcement and education efforts are addressing the

leading problem areas identified by the complaint database. 

• Determine the extent to which Consumer Sentinel services are used by law enforcement partners. 

• Assess privacy and security protections for the database by reviewing complaints, if

any, and evaluating the policies in place. 
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

Objective 1.2: Stop fraud, deception, and unfair practices through law enforcement.

FY 2004 Budgeted Resources: 408 FTE $76,968,000

 

The FTC operates a range of programs to help stop fraud, deception, and unfair practices.

The FTC will continue to focus efforts on high-tech fraud, deceptive marketing of health care

products and services, consumer privacy, and international law enforcement, among other

areas.

E-commerce

The Commission long has been mindful that the growth of e-commerce may spur the growth

of online fraud and deception. Law enforcement resources will be used to attack new forms

of complex and fast-moving high-tech fraud, a continued growth in deceptive online health

claims, and online privacy practices that violate Section 5 of the FTC Act and the Children’s

Online Privacy Protection Act. The Commission also will monitor the need to train law

enforcement partners to keep pace with technologically based scams. As the Internet grows,

so does the need for coordinated law enforcement to meet those consumer protection

challenges. Critical to that effort will be a highly educated cadre of law enforcement partners.

Health Care Products and Services

The deceptive marketing of products that may affect consumer health and safety continues

to be an FTC priority. The FTC is focusing on dietary supplements and other health products

promoted on the Internet. Consumer demand for these products is increasing, and

fraudulent or deceptive claims about the products can pose risks to consumers’ well-being.

Privacy

The FTC will continue to highlight the protection of consumers’ private information in FY

2004. The Commission’s approach in this arena will encompass both enforcement and

education, as the FTC focuses on telemarketing, unsolicited e-mail (spam), identity theft, and

pretexting, as well as enforcement of the Children’s Online Privacy Protection Act, the

Gramm-Leach-Bliley Act, and the Telemarketing Sales Rule (TSR). The TSR was amended

in December 2002, and the Commission will continue in FY 2004 initiatives to implement

the creation of a centralized national “do-not-call” database and enforce violations of the

rule. Other enforcement efforts in privacy will center on cases involving sensitive personal

or financial information, and claims touting the privacy and security features of products and

services. 

Globalization

As the marketplace becomes more global, the FTC is involved on two fronts: law enforcement

and policy development. With respect to law enforcement, cases increasingly involve an

international component as defendants, their operations, or their assets are moved offshore,

making it difficult to locate and stop scams or to provide redress to consumers. The FTC is

meeting these challenges by building international partnerships to assist in identifying and

pursuing these cases. As the FTC continues to developing initiatives relating to cross-border
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

fraud, we will work to measure and report our performance in this area. On the policy side,

the FTC is promoting international development of market-oriented consumer protection

policies. 

1. GPRA Five-Year Strategies

• Lead and coordinate a nationwide attack on telemarketing fraud by continuing to lead

federal and state law enforcement sweeps, and by using Consumer Sentinel data to (1)

identify targets and (2) coordinate with other federal and state agencies to prosecute

actions against these targets.

• Target high-tech frauds that have moved to the Internet and exploit other new

technologies. 

• Develop additional international law enforcement arrangements to tackle the growing

problem of cross-border fraud. 

• Increase the capacity to respond rapidly, with enforcement and other approaches, to

fast-moving technology-based scams.

• Ensure that basic consumer protection principles are applied in new markets such

as the Internet and in newly deregulated markets.

• Monitor national advertising in print, television, radio, and online to identify illegal

practices that may not be captured fully by the database. 

• Focus law enforcement on violations that create the greatest risks to consumer health,

safety, and economic well-being.

• Develop policies to address newly emerging consumer protection issues resulting from

changes in the marketplace.

• Encourage self-regulation and private initiatives, where appropriate, in lieu of regulation or law enforcement.

2. FY 2004 Implementation Plan

• Target for federal-state sweeps or other law enforcement initiatives, the most

significant areas of telemarketing and other types of fraud, such as direct mail scams,

predatory lending, and unauthorized billing (“cramming”).

• Stop the most pernicious Internet-related scams, such as unauthorized charges on

consumers’ phone bills through dialer programs, the misuse of pre-acquired customer

account information, and deceptive spam, as they are identified through the Consumer

Sentinel, the spam database, through Internet surfs, and other monitoring. 

• Enforce the provisions of the TSR dealing with “pre-acquired account information”;

continue to implement TSR amendments creating a national do-not-call registry; and

increase enforcement of privacy-related amendments to the TSR.
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

• Continue enforcement activities against fraudulent and deceptive spam promoting

chain letters, pyramid schemes, or other kinds of “get-rich-quick” schemes.

• Recruit new local, state, federal, and international law enforcement partners for antifraud initiatives.

• Conduct joint enforcement sweeps with law enforcement partners. 

• Further initiatives to fight cross-border fraud.

• Continue to equip the FTC’s Internet Lab to keep pace with technology and support

rapid response law enforcement capability. 

• Target law enforcement efforts at advertising and marketing practices that are most

injurious to consumers; identify targets based on complaint data and other forms of

monitoring.

• Identify industries where a high percentage of companies are not in compliance with

provisions of consumer protection laws or regulations and bring those companies into

compliance through law enforcement and business guidance or by encouraging selfregulatory programs.

• Continue enforcement efforts against the abusive practice of pretexting that causes

consumers concern about the security of their personal financial information. 

• Bring privacy and security cases involving sensitive information and claims touting

the privacy and security features of products and services. 

• Ensure that there is broad compliance with consumer protection laws, rules, and

guides in the electronic marketplace; target law enforcement to the most serious

violations.

• Implement regulations governing franchising, telemarketing sales, and telephone

billing services.

• Address cutting-edge consumer protection issues in emerging areas – e-commerce,

globalization, privacy of personal information, and the marketing of new products and

services and newly deregulated services.

3. FY 2004 Performance Measures

In FY 2004, the agency will:

• Save consumers approximately $400 million by stopping Internet scams and other

types of fraud.

Preventing economic injury to consumers is the ultimate goal of the FTC’s anti-fraud

efforts. The FTC saves consumers money each time a fraudulent operator is stopped

by successful litigation or settlement with the agency. The FTC increases these con-
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

sumer savings by leading joint law enforcement initiatives with federal, state, and

international partners. The amount of consumer savings will vary each year based on

the number and types of fraud stopped.

Consumer savings are calculated by totaling the estimated annual fraudulent sales

of defendants in the 12 months prior to the FTC’s filing a complaint. The calculation

actually may underestimate the agency’s impact because it assumes that the fraud

would have continued for only one more year and it ignores any deterrent effect of FTC

enforcement. It provides, however, a uniform method for calculating savings and

minimizes speculation about the likely duration of the fraud. 

• Reduce consumer injury through law enforcement by providing access to essential

data for law enforcement purposes through the Consumer Sentinel. In FY 2004, the

goal is that FTC and other law enforcement personnel will conduct 20,000 data

searches of the FTC’s Consumer Sentinel complaints.

• Of those 20,000 data searches, 1,500 will be conducted by other law enforcement

personnel reviewing the FTC’s identity theft complaints. 

The FTC’s Consumer Sentinel and identity theft data are a rich source of information

for FTC staff and its law enforcement partners as they investigate and pursue

instances of potential fraud, deception, and unfair practices. The expanded access

to and use of this information is critical as the FTC works to stop these practices. By

tracking the number of accesses by both internal and external law enforcement

personnel, the FTC hopes to demonstrate the value of the information contained in

these databases. Generally, those personnel who are accessing the system are

seeking information directly relevant to enforcement action – whether they are

building a case, investigating a company, identifying potential witnesses, or gathering

information for a sentencing hearing. In particular, the FTC will track the number of

accesses that external agencies perform of the identity theft data in evaluating identity

theft programs for outside law enforcement agencies.

4. Program Evaluations

• Assess the results of the consumer fraud and identity theft surveys and the overall

trends revealed by review of the database to determine whether the amount of

resources dedicated to the program should be altered or the program’s priorities

modified, and create new performance measures, if appropriate. 

• Assess the litigation success rate for obtaining preliminary relief in fraud cases.

• Determine the success of leveraging resources through coordinated joint law enforcement initiatives.

• Evaluate the success of self-regulatory programs.

• Determine whether there are new industries or areas of marketing that require law

enforcement or that may be appropriate for self-regulation.
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

Objective 1.3: Prevent consumer injury through education.

FY 2004 Budgeted Resources: 49 FTE $9,242,000

The FTC’s education efforts target identified areas of fraud and deception, and areas where

information gaps are greatest because of rapid changes in the marketplace, such as new

technology-based products and services, privacy of personal information, new types of

payment systems, and global transactions. The agency creatively uses new technologies and

private and public partnerships to reach new and under-served audiences, particularly those

who may not seek information directly from the FTC. The FTC will expand its consumer

education program to reach these new audiences, build new partnerships to help distribute

its messages, and continue to create and support education Web sites, including FTC’s

international site, econsumer.gov. In addition, every case that the FTC brings possesses a

consumer education component – targeting the message to the fraud that has occurred. To

reach the expanding population of Hispanic consumers in the United States, the FTC

instituted an Hispanic Outreach Program in FY 2002. We also cooperate with organizations

such as the NAACP and the National Council of La Raza to work with minority communities

and have targeted educational campaigns to reach the young adults who enlist in the

military. The FTC will continue to publicize its consumer complaint and identity theft tollfree numbers in an ongoing effort to increase public awareness of its programs and inform

the public of the ways to contact the FTC to obtain information or file a complaint. In

carrying out these functions, the FTC strives to ensure that any publicly disseminated data

or information subject to the Data Quality Act (section 515 of Pub. L. No. 106-554) meets

basic quality standards.

1. GPRA Five-Year Strategies

• Focus consumer and business education efforts on areas where fraud, deception,

unfair practices, and information gaps cause the greatest injury.

• Creatively use technology, including new interactive media, to extend the reach of

consumer and business education.

• Increase public awareness of FTC’s online education materials and the availability of

its toll-free helpline and online complaint form to provide one-on-one information and

increase data collection to support law enforcement.

• Encourage private and public partners to participate in education initiatives.

2. FY 2004 Implementation Plan 

• Deliver information to more consumers, industry members, and law enforcement

partners faster and more efficiently.

• Focus education on high-profile and emerging issues where consumer information

gaps are greatest.
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

• Implement a consumer awareness campaign to let consumers know that they should

report their privacy-related complaints to the FTC.

• Continue an outreach program to increase consumer awareness of the privacy

information required by the Gramm-Leach-Bliley Act.

• Increase education efforts about frauds that cause consumers the greatest financial

injury.

• Through greater outreach, lead more consumers to the FTC’s Web site (ftc.gov) and

the “one-stop” government Web site for consumer information (consumer.gov).

• Expand coverage of FTC messages, including the toll-free helplines, through marketing, new products, technology, and a speakers bureau.

• Continue efforts to identify and reach under-served audiences, businesses, and law

enforcement offices.

3. FY 2004 Performance Measures

In FY 2004, the agency will:

• Provide education messages online and in print to 15 million recipients.

Education programs benefit consumers by alerting them to their rights under various

consumer protection laws and providing practical tips on how to recognize and avoid

scams and rip-offs. To reach the broadest possible audience, the FTC maximizes its

use of the national media, the agency’s ftc.gov Web site, and the interagency firstgov.

gov Web site. The FTC’s messages also reach the public through the Consumer

Response Center and hundreds of partners who distribute FTC materials, link to the

FTC Web site, or post FTC messages on their Web sites. Continuing from the

increased FY 2003 target of 14 million, the target for this performance measure has

been raised to 15 million in FY 2004.

• As part of the 15 million education messages, provide education messages related to

identity theft online and in print to 2.5 million recipients.

The FTC has coordinated with other government agencies and organizations to

develop and disseminate comprehensive consumer education materials for victims of

identity theft and those concerned with preventing this crime. The FTC’s most

popular publication, “Identity Theft: When Bad Things Happen to Your Good Name,”

is available in print and online. The FTC also distributes CDs containing this

publication, thus enabling other federal agencies to print and distribute it. Thus, the

distribution numbers reported in this measure may be lower than actual numbers.

• Continue to build the agency’s Hispanic Outreach Program and work from the

baseline of the targeted annual number of Spanish-language education publications
 Performance Plan

Consumer Protection Mission Fiscal Year 2004

distributed to or accessed electronically by consumers that will be established for this

performance measure in FY 2003. 

The FTC first began this program in January 2002 to reach the growing Hispanic

population in the United States. As of December 2002, the FTC had created a

dedicated page of the FTC Web site, Proteccion para el Consumidor, to mirror the

English-language page, and translated 44 consumer publications. It also translated

the FTC Consumer Complaint Form and provided a Spanish translation of the

“bestseller” on identity theft – Robo de Identidad: Algo malo puede pasarle a su buen

nombre. The universal identity theft affidavit has been translated into Spanish and

also is available on the FTC Web site. The majority of the translations of FTC

publications should be completed by the first quarter of FY 2003, thus allowing the

FTC to establish a baseline and performance targets for subsequent years. The first

time the agency will measure its performance under this new program will be FY

2004.

4. Program Evaluations

• Determine the number of publications distributed or accessed online to evaluate

outreach efforts and identify topics of particular consumer interest.

• Assess whether the appropriate mix of media is being used to communicate consumer

education messages and whether the FTC is making the best use of the available

media and technology. 

• Assess the number and range of public and private organizations that partner with

FTC to do outreach; the more private and public partners the FTC has, and the larger

those partners are, the greater its potential to reach different types of audiences, both

business and consumer.

• Determine whether the FTC needs to reach new audiences, in light of any changes in

demographics, advertising, and marketing practices, and as a result of any further

information from the consumer fraud and identity theft surveys.

• Review the focus of FTC education efforts and adjust them based on changing

consumer and business needs.

• Continue to assess the consumer education needs of the Spanish-speaking

population. Census data shows that the United States has a large and growing

Spanish-speaking population. Because these consumers may not speak English or

are non-native speakers of the language, they may be less aware of the nuances and

the complexities of disclosures, advertisements, or other aspects of consumer

transactions. The FTC will assess the vulnerabilities of this group and then craft a

strategy to meet their needs. 

• Review trends or patterns in complaints, if any, filed under the Data Quality Act to

determine appropriate techniques or strategies for improving the quality of publicly

disseminated data or information that are subject to the Act.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

Maintaining Competition Mission

Goal 2: To prevent anticompetitive mergers and other anticompetitive business

practices in the marketplace.

Objective 2.1: Identify anticompetitive mergers and practices that cause the greatest

consumer injury.

FY 2003 Budgeted Resources: 54 FTE $8,303,000

After a decade of rapid growth, overall merger activity declined during FY 2001 and FY 2002.

In addition, revisions to the Hart-Scott-Rodino Act (HSR) reporting thresholds, effective in FY

2001, significantly reduced the number of transactions subject to the notification

requirement. Still, identifying anticompetitive mergers continues as a top priority in the

FTC’s Maintaining Competition Mission and poses significant challenges for the agency.

Despite the revised HSR filing thresholds and the decline in merger activity generally, the

FTC still faces a demanding merger review workload:

• The number of mergers remains high by historic standards. Although down from the

record-setting years 1998-2000, the 1,187 transactions subject to the new HSR filing

thresholds in FY 2002 was only 16% fewer than the average annual number of

mergers that would have been reportable under the revised thresholds during FY

1990 to FY 2000 (1,378), a period widely recognized as a merger wave of historic

proportions.

• Although the 2001 amendments to the HSR Act reduced the number of merger

transactions subject to the reporting requirement, they did not change the standard

of legality. As a result, the FTC now devotes more attention to the identification of

unreported, usually consummated, mergers that could harm consumers. Moreover,

during FY 2002, the FTC shifted substantial resources to enforcement actions

involving consummated mergers.

Notwithstanding the significant demands imposed by merger review, the recent decline in

merger activity has enabled the FTC to increase its efforts to identify appropriate targets for

nonmerger investigations, making the balance between merger and nonmerger activities more

consistent with historic allocations.

1. GPRA Five-Year Strategies

• Administer the Hart-Scott-Rodino (HSR) premerger notification program, under which

parties to certain mergers and acquisitions must report the planned transactions in

advance to the FTC and Department of Justice to allow for antitrust review. Track and

maintain the timeliness of merger review under the HSR Program.

• In light of the higher HSR premerger reporting thresholds effective in early 2001,

continue increased use of various means to identify possibly illegal mergers that are

not subject to the HSR reporting requirement.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

• Improve use of the initial 30-day period after HSR filings (or 15 days for a cash tender

offer or a bankruptcy sale) to determine whether a merger is likely to harm

competition, including reducing delays in interagency clearance (i.e., the process

used by the FTC and the Department of Justice Antitrust Division to determine which

of the two will investigate a particular transaction) and timely review of filings to avoid

unnecessary extended investigations. 

• Through hearings, Bureau of Economics studies, and other means, identify emerging

trends and focus on potentially anticompetitive business practices or other issues that

need to be addressed because of changes in the economy, technology, and the

marketplace.

• Continue the use of task forces, such as the FTC’s Noerr-Pennington Task Force and

the State Action Task Force, and other means to examine the scope of exemptions to

the antitrust laws to identify possible categories of harmful conduct that, while

ostensibly protected from antitrust challenge, are in fact not exempt from the antitrust

laws.

• Refine the investigative and decisional tools used in both merger and nonmerger

investigations through continuous learning.

2. FY 2003 Implementation Plan

A. All Programs

• Ensure timeliness of review. Monitor the time and resources needed to conduct

preliminary investigations. Review the progress of all ongoing investigations on at least

a monthly basis. For mergers filed under the HSR program, maintain statistics on the

average time needed to “clear” transactions that do not require further review. 

Review and analyze these statistics on a regular basis.

• Articulate FTC policies and procedures through speeches, electronic and print media,

and other means to inform potentially aggrieved parties that they may lodge

complaints with the FTC, as well as to help parties stay in compliance with the

antitrust laws.

B. Mergers Filed Under HSR

• In the initial review of each HSR filing, determine compliance with reporting requirements; prepare and transmit to management officials a summary of the transaction

and a recommendation regarding further review.

• Promptly determine whether further review is needed to determine whether the

transaction may be anticompetitive. If further review is deemed unnecessary,

recommend early termination of the statutory waiting period. If additional review is

required, seek investigational clearance from the Department of Justice through the

interagency liaison process. Seek prompt resolution of clearance requests, whether

initiated by the FTC or the Department of Justice, to maximize the portion of the

initial waiting period available for investigation.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

• Following clearance, use the remainder of the initial 30-day waiting period after filing

(15 days in certain instances) to investigate and reach a sound and well-informed

determination of whether the proposed merger raises sufficiently serious threat of

harm to consumers to expand the investigation by issuing requests for additional

information (“second requests”) and seeking Commission approval for use of

compulsory process authority.

C. HSR Compliance Enforcement

• To promote voluntary compliance with HSR premerger notification requirements,

vigorously pursue violations. Monitor compliance of merging entities and fully investigate apparent violations.

• If an investigation indicates that a merging party has failed to comply with requirements of the HSR Act and that an enforcement action would be in the public interest,

seek to negotiate a consent order for civil penalties sufficient to deter similar conduct

in the future.

• If an appropriate consent order cannot be negotiated, prepare a recommendation that

the Department of Justice file an action for civil penalties under the HSR Act; if filed,

conduct or assist in litigation of the action.

D. Mergers Not Subject to HSR

• In light of the statutory increase in HSR filing thresholds effective in FY 2001, continue increased efforts to identify mergers that are not subject to HSR requirements

but that are potentially anticompetitive, using techniques such as (1) monitoring the

trade press and Internet resources, (2) responding to and following up on case leads

from Congressional offices, other Executive Branch agencies, and state and local

government, and (3) encouraging consumers, businesses, and the bar to notify the

FTC of possibly anticompetitive mergers.

• Seek interagency clearance for investigation of transactions raising concerns and, if

obtained, conduct appropriate investigation, including use of the Commission’s

compulsory process authority if warranted. When appropriate, seek voluntary

postponement of the transaction or other measures to facilitate possible future relief.

E. Nonmerger Practices

• Seek interagency clearance for investigation of business practices raising concerns

and, if obtained, conduct appropriate investigation, including use of the Commission’s

compulsory process authority if warranted.

• Devote additional scrutiny to selected issues or industry practices raising significant

consumer concerns or involving potential for significant consumer injury. Continue

in-depth studies of important competition issues, such as the study on the

significance of generic drugs in the pharmaceutical marketplace (completed in FY

2002), the study of factors underlying the pricing of refined petroleum products (to be

completed in FY 2003), the workshop on possible anticompetitive efforts to restrict

competition on the internet, which took place during the fall of 2002, and the

hearings on intellectual property and antitrust, which took place during FY 2002.
Performance Plan

1

 The FTC will compute this measure by dividing the number of second request investigations that result

in enforcement action during the relevant fiscal year (without regard to when the investigation commenced),

by the total number of second request investigations that concluded during the year with or without

enforcement action (again, without regard to when the investigation commenced). “Enforcement action”

includes Commission authorization of a complaint for preliminary injunction in federal court, issuance of an

administrative complaint, a consent agreement, or the parties’ abandonment of a proposed transaction based

on FTC antitrust concerns.

2

 The FTC also investigates mergers that are not subject to HSR reporting requirements, but there is no

benchmark directly comparable to the issuance of a second request in those matters, and the overall number

of non-HSR merger investigations is too small to permit a meaningful statistical measure.

Maintaining Competition Mission Fiscal Year 2003

3. FY 2003 Performance Measures

In FY 2003, the agency will:

• Continue effective screening of HSR premerger notification filings to identify those that

most likely present antitrust concerns, so that between 60% and 80% of HSR requests

for additional information result in enforcement action.1

A percentage below 60% may suggest that the FTC is targeting

enforcement resources ineffectively by investigating too many competitively benign transactions (and unduly burdening businesses as a

result), while a percentage higher than 80% may suggest that the

agency is focusing too narrowly and thus potentially allowing

problematic transactions to go forward without sufficient review.

2

• Open a comparable number of new nonmerger investigations as in each of FYs 1991

through 1999 (from 45 to 70 new investigations per year), if that number of nonmerger investigations continues to be appropriate in light of marketplace conduct and

the need to deter anticompetitive business practices.

4. Program Evaluations

• Review and refine data-monitoring systems relevant to (1) the timeliness of the HSR

review process and (2) the degree to which appropriate resources are being devoted

to initial review of each matter prior to issuance of an investigative second request.

• Review significant deviations from the statistical benchmarks for timely and efficient

review of merger transactions and take corrective action where necessary.

• Conduct periodic meetings between the Director of the Bureau of Competition and

heads of litigation divisions to ensure that substantive standards are applied

consistently and uniformly.

• Assess the significance (quantitatively in terms of the aggregate size of markets

investigated and potential dollar savings to consumers, and qualitatively in deterrence

value and precedential significance) of the matters investigated each year.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

• Continue a study of the merger review process begun in March 2002 with a series of

national public workshops to obtain information and ideas from a broad range of

knowledgeable parties, including corporate personnel, outside and in-house attorneys,

economists, and consumer groups. The workshops addressed topics such as using

more voluntary information submissions before issuance of a second request,

reducing the scope and content of the second request, negotiating modifications to the

second request, and focusing on special issues concerning electronic records and

accounting or financial data. In December 2002, the FTC announced a number of

procedural reforms designed to improve the quality and efficiency of the merger review

process by expediting the gathering of relevant information and reducing the burdens

on parties and also issued a companion paper entitled “Best Practices for Data, and

Economic and Financial Analyses in Antitrust Investigations.” These modifications

represent the first tangible result of the review of merger investigation procedures,

and the FTC will continue to collect public input to assist it in enhancing and refining

the process.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

Objective 2.2: Stop anticompetitive mergers and practices through law enforcement.

FY 2003 Budgeted Resources: 406 FTE $63,119,000

Maintaining competitive markets through effective antitrust law enforcement is integral to

a healthy U.S. economy. The FTC plays a vital role in this effort by bringing cases to block

anticompetitive mergers and halt anticompetitive business practices.

The FTC seeks to maintain an appropriate balance between its merger and nonmerger

enforcement efforts, but the statutory timetable governing the HSR merger review process

requires that merger review is the first priority. Over the decade ending in FY 2000, an

unprecedented level of merger activity required the shifting of resources from nonmerger

activities to the merger arena. Merger activity has declined to a more manageable level since

2000, permitting renewed emphasis on the nonmerger area.

Merger enforcement responsibilities continue to place significant demands on the FTC’s

resources, however, for the following reasons:

• Mergers continue to grow in size, scope, and complexity. For example, the total dollar

value of reported transactions in FY 2001 was about 4.3% higher in constant dollars

than the average annual total dollar value reported during FYs 1990 to 2000, and

nearly 60% of the transactions reported during FY 2002 exceeded $100 million in

value. The size of mergers affects the FTC’s workload because large, diversified firms

are likely to be involved in more markets than smaller firms and more likely to be

significant players in the markets in which they compete, thus increasing the

likelihood and scope of antitrust review. Also, as our economy produces more new

technologies and becomes more knowledge-based, the resulting complexity of many

mergers requires extensive inquiry.

• The number of mergers raising antitrust concerns, not the overall number of filings,

primarily drives the FTC’s merger workload. In FY 2002, the FTC took enforcement

action in 24 mergers, a level 14% higher than the average volume of merger

enforcement activity during the 1991 to 2000 decade.

• Challenging a consummated merger typically entails resource-intensive litigation.

In the nonmerger area, increased emphasis on case identification and investigations will

likely result in an increase in enforcement actions in FY 2003. The scope of antitrust

exemption doctrines such as Noerr-Pennington and state action, restraints on competition

among professionals, and anticompetitive abuses of the standards-setting process will

continue to receive scrutiny. During FY 2002, the FTC opened 59 nonmerger investigations

and moved another 17 ongoing nonmerger investigations forward into a more advanced

phase. These developing matters should result in a number of consent agreements or

administrative complaints in FY 2003.

Two factors place increasing demands on the FTC’s antitrust enforcement mission in both

the merger and nonmerger segments:

• FTC antitrust investigations increasingly involve highly technological industries, such

as defense and aerospace, cable television, and information technology, as well as the
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

growing field of health care services, including hospitals, nursing homes, health

maintenance organizations, and pharmaceutical companies. More so than ever before,

FTC investigations may involve difficult scientific and technical material. In addition,

antitrust matters increasingly intersect with intellectual property, raising difficult

issues on how to reconcile two different bodies of law with similar goals. These trends

require more and more specialized knowledge and expertise.

• The FTC will likely be involved in more antitrust litigation during FY 2003 because of

changes in HSR merger prenotification requirements and an increased focus on

cutting-edge legal issues. Litigation is resource intensive compared to preconsummation settlements that can resolve antitrust concerns. Although the FTC

receives notification of fewer proposed mergers in advance because of modifications

in the HSR reporting thresholds, the agency continues to monitor unreported mergers.

Unreported mergers are much more likely to have been consummated by the time the

FTC can complete an investigation, so any such merger that threatens competition

likely will require litigation, rather than a pre-consummation consent agreement, to

obtain relief. In the nonmerger area, the agency will examine anticompetitive conduct

to which the applicability of one of the exemptions to the antitrust laws may be

unclear. Because liability may be unclear in these instances, costly litigation is a

likely possibility. Nevertheless, cases that add clarity to legal standards can have

substantial benefit over a broad range of commerce.

In addition to significant staff time over a lengthy period, antitrust litigation requires

significant expenditures for travel, stenographic reporting, and expert witnesses.

Moreover, the increasing emphasis on quantitative evidence and econometric analysis

in antitrust investigations and litigation requires that the FTC spend more resources

in analysis and understanding of the issues. Merging firms increasingly rely on

sophisticated accounting, econometric, and other data-intensive economic studies

regarding competitive effects, entry issues, and efficiency and failing company

defenses, requiring analogous investments by the FTC.

The FTC must also maintain an effective compliance program so that consumers receive the

benefits of competition obtained through the FTC’s investigation and litigation efforts. This

objective focuses on devising and drafting effective compliance orders in individual matters,

a highly fact-specific process. In addition, the FTC conducts general and historical analyses

on the effectiveness of various kinds of merger and nonmerger remedies, such as divestiture

orders. As the number and complexity of competition cases rise, so do the resource needs

of the compliance program associated with those cases. The FTC continues to absorb some

of this ever-increasing workload through more efficient use of resources.

1. GPRA Five-Year Strategies

• Save consumers millions of dollars a year directly by working to stop anticompetitive

mergers and anticompetitive conduct.

• Save consumers money indirectly by negotiating consent orders and winning litigated

orders that have significant remedial, precedential, and deterrent effects in merger

and nonmerger cases.

• Improve negotiation, litigation, and economic skills through continuous learning.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

• Continue to ensure that divestiture remedies in Commission orders are achieved in

a timely fashion, employing, where appropriate, requirements that suitable divestitures be arranged before consummation of a merger.

• Ensure that administrative litigation and adjudication reach a timely resolution.

2. FY 2003 Implementation Plan

A. All Programs

• Review the progress of all ongoing investigations on at least a monthly basis. Monitor

time and resource expenditures.

• Continue to strengthen the timeliness, efficiency, and effectiveness of nonmerger

investigations through the restoration of resources to the nonmerger program, to the

extent permitted by the level of merger activity.

• Monitor the timeliness of administrative adjudication and issue to the public on a

quarterly basis a status report on the progress of all cases before the administrative

law judges.

• Enhance the FTC’s ability to investigate and litigate matters involving high-tech

segments of the economy by obtaining technical support from independent industry

experts and experts in intellectual property law.

• Enhance the FTC’s ability to litigate complex cases by investing in more sophisticated

use of technology to support litigation, including document management and courtroom presentations.

• Arrange seminars featuring distinguished scholars speaking on substantive research

and analysis of important antitrust law and policy issues.

• Integrate assessments of investigative and enforcement activity with new learning on

law and economic policy to further the FTC’s objective of (1) bringing enforcement

actions only when anticompetitive effects from the challenged practices or mergers are

likely and (2) not overlooking anticompetitive practices or mergers.

• Participate in planning, developing, improving and conducting agency-wide training

programs in basic and advanced legal skills for FTC attorneys, including such areas

as taking and defending depositions, written discovery, trial advocacy, negotiation

skills, and advanced legal writing, as well as mission-specific procedures and

substantive law. A comprehensive series of legal skills training programs, begun late

in FY 2002, helped to accelerate newly entering attorneys’ rapid development into

important contributors to the agency’s enforcement work.

• Complete a series of national public workshops on merger remedies. Analyze input

from a broad range of knowledgeable parties, including corporate personnel, outside

and in-house attorneys, economists, and consumer groups, on topics such as

structuring asset packages for divestitures, timing of divestitures – upfront or after,

evaluating the competitive adequacy of proposed buyers, and assessing preservation

of competition after divestitures.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

• Refine policies on the suitability and effectiveness of different remedies and policies

relating to remedies, such as disgorgement of illegal profits, and various requirements

associated with divestiture orders in merger cases.

B. Merger Enforcement

• During the initial HSR review period, carefully identify those merger transactions that

are likely to raise potentially significant competitive concerns. Employ HSR second

requests and other appropriate investigative techniques during the extended HSR

waiting period to obtain documents, testimony, and other evidence.

• In non-HSR investigations, employ appropriate investigative tools other than HSR

second requests to obtain documents, testimony, and other evidence.

• For both HSR and non-HSR merger investigations, complete the analysis of likely

competitive effects of the transaction, based on evidence gathered, and prepare

recommendations to Bureau management and the Commission on whether settlement

or litigation is warranted.

• Where appropriate, seek to negotiate a consent order to protect consumers by

correcting the competitive problem, while permitting the benign aspects of a merger

to proceed.

• If an effective consent order cannot be negotiated to protect consumers from harmful

effects of a merger, recommend that the Commission undertake litigation to challenge

the merger, either by seeking a preliminary injunction from a federal court to block

the merger (if it has not been consummated) or by issuing an administrative complaint

against the merger (when the merger has already occurred, when the grant of a

preliminary injunction does not result in abandonment of the merger, or when it is in

the public interest to proceed with a full trial on the merits despite denial of an

injunction).

• Litigate the preliminary injunction action or administrative complaint, employing

outside experts as necessary to address economic or technical issues. Pursue or

defend appeals as appropriate.

• For management review, collect data regarding the FTC’s efficiency in investigating

mergers, including (1) the amount of time required to complete the HSR review

process, (2) the number of HSR matters requiring issuance of an investigative second

request, (3) the number of HSR investigations that result in enforcement action, (4)

the number of such matters resolved through a “quick look” investigation (that is, one

not requiring the parties to produce all of the documents and information called for

by the second request), (5) the volume of material obtained from the parties, (6) the

number of hours of staff time spent on investigations, and (7) other costs associated

with investigations.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

C. Merger Compliance

• Track the time between issuance of Commission remedial orders in merger cases and

the implementation of divestitures, licenses, or other affirmative relief. Seek civil

penalties where appropriate if the respondent fails to fulfill its obligations under the

order in a timely fashion.

• Monitor other aspects of compliance with the Commission’s merger consent orders

and litigated orders. Seek civil penalties where appropriate if the respondent fails to

fulfill its obligations under the order.

• Modify orders when warranted by changed conditions of fact or law or when otherwise

required in the public interest.

D. Nonmerger Enforcement

• Employ appropriate investigative techniques, including compulsory process if

authorized, to obtain relevant information and to assess whether the practice in

question is harming consumers.

• If the evidence is sufficient to establish reason to believe that the law has been

violated, prepare a recommendation for authorization to engage in consent

negotiations or to submit a complaint recommendation to the Commission.

• If an investigation indicates that a business practice is anticompetitive, seek to

negotiate a consent order that protects consumers by effectively correcting the

competitive problem.

• If a satisfactory consent order cannot be negotiated, recommend that the Commission

undertake litigation to challenge the practice in question, either through the

Commission’s adjudicative process, or by asking a federal court to enjoin the

challenged practice. In appropriate cases, recommend that the Commission authorize

the filing of a federal court action for consumer redress or restitution. Pursue

litigation authorized by the Commission, employing outside experts as necessary to

address economic or technical issues. Pursue or defend appeals as appropriate.

E. Nonmerger Compliance

• Monitor compliance with the Commission’s nonmerger consent orders and litigated

orders. Seek civil penalties and other relief where appropriate if the respondent fails

to fulfill its obligations under the order.

• Modify orders when warranted by changed conditions of fact or law or when otherwise

required in the public interest.
Performance Plan

3

 The agency may prevent an anticompetitive result from a proposed merger by (1) conducting successful

litigation to block the merger, (2) negotiating a settlement to resolve anticompetitive aspects of the merger

while allowing the underlying transaction to go forward, or (3) identifying antitrust concerns sufficient to

cause the parties to abandon the transaction without court action. The consumer savings estimate does not

include transactions abandoned by the parties for business considerations unrelated to antitrust.

Settlements are subject to Commission approval, and require sufficient supporting evidence for the

Commission to have “reason to believe” that a law violation would occur.

4

 For example, though the $726 million total estimated consumer savings from merger enforcement in

FY 2002 was slightly less than the target average of $800 million, adding the total of $2.5 billion in FY 2001

results in a two-year total of $3.2 million. Thus, the agency is close to reaching its FYs 2001-2005 target of

$4 billion after only two years.

5

 In addition to the mode of analysis, the ability to calculate consumer savings can be affected by the

nature of the harm. In some cases the harm that would result from a merger or other practice is not

necessarily an immediate price increase but some other restriction on competition, such as the blocking of

innovation that promises new or better products in the future. It is much more difficult to calculate a dollar

estimate of consumer savings in such cases, and the agency generally will not attempt to do so.

6

 This methodology is explained in the analytical guidelines used by the FTC and the Department of

Justice to determine when to challenge a horizontal merger. See U.S. Dept. of Justice and Federal Trade

Commission, Horizontal Merger Guidelines §§ 1.1, 1.2.

Maintaining Competition Mission Fiscal Year 2003

3. FY 2003 Performance Measures

In FY 2003, the agency will:

• For cases in which the Commission finds reason to believe the law has been violated,

achieve a positive result (including consent orders, litigation successes, and, for

mergers, transactions abandoned based on FTC antitrust concerns) in at least 80%

of those cases.

• Maintain pace to save consumers at least $4 billion over the period of FYs 2000 to

2005 by taking action against anticompetitive mergers that would otherwise increase

prices.3 While the agency expects to average at least $800 million in consumer savings

per year during the five-year period, external factors, such as level of merger activity,

may affect this measure in any given year.4

Estimates of consumer savings from the Maintaining Competition mission take into

account three principal factors: (1) the volume of commerce in the markets affected

by a merger or other anticompetitive practice, (2) the percentage increase in price that

likely would have resulted from the merger or other anticompetitive practice absent

enforcement action, and (3) the likely duration of the anticompetitive price increase.

This information generally will be available in merger investigations and some, but not

all, nonmerger investigations, depending on the nature of the analysis required for the

violation.5 In some cases, detailed pricing data or other case-specific information will

enable the calculation of a relatively accurate estimate of the likely price increase for

a particular merger. In most cases, however, the agency relies on a “default”

methodology for estimating consumer savings, derived from the analytical method

used to identify the relevant market.6 Under that methodology, prices of products in

the relevant market generally could be increased by at least 5% before a significant

number of consumers would turn to potential substitute products that are outside

that market. In these cases, the agency will conservatively estimate that a net loss to
Performance Plan

7

 One reason for the conservative approach is that, in some instances, a proposed merger may create

consumer savings through efficiencies that partially could offset losses to consumers due to reduced

competition. The 1% figure takes into account the possibility of such efficiencies.

8

 The two-year time frame also is based on the analytical guidelines used by the FTC and the Department

of Justice for the analysis of horizontal mergers. Under the Horizontal Merger Guidelines, an enforcement

action is not likely if the entry of significant new competitors would occur within two years. See id. § 3.0. This

is because the prospect of rapid entry is likely to deter anticompetitive pricing. Therefore, it can be assumed

that the benefits of merger enforcement persist for at least two years. In some cases, the facts may indicate

that anticompetitive prices could be maintained for more than two years.

9 See, e.g., Philip Nelson and Su Sun, Consumer Savings from Merger Enforcement: A Review of the

Antitrust Agencies’ Estimates, 69 ANTITRUST LAW JOURNAL 921, 936-7 (2002).

10 See Appendix Relating to Objective 2.1 of this Performance Plan

11 Id.

Maintaining Competition Mission Fiscal Year 2003

consumers amounting to at least 1% of the relevant market(s) would occur absent

enforcement action.7

The FTC assumes that the duration of the anticompetitive price increase generally will

be at least two years.8 Case-specific estimates of consumer savings, if available, are

used to validate the reasonableness of the 1%, two-year default parameters. These

default parameters may significantly underestimate the likely consumer savings in

some cases.

The FTC’s use of this performance measure, and use of a similar measure by the

Department of Justice, has generated some constructive criticism.9 The issues that

have been raised relate to (1) how well the measure correlates with the substantive

legal standard that applies to mergers, (2) an apparent assumption of agency

infallibility implicit in the measure (i.e., that every merger enforcement action taken

by the FTC benefits consumers), (3) possible perverse incentives for the agency to

pursue inappropriate policies, and (4) difficulty in comparing agency performance

from one year to the next based on this measure.

The Commission acknowledges these concerns.10 While the consumer savings

measure can be an appropriate indicator of the scope of the FTC’s merger enforcement

activities, it can be subject to misinterpretation.11 Consequently, the FTC anticipates

adopting a revised measure of the scope of merger enforcement activity, beginning

with FY 2004, which should offer similar benefits with fewer drawbacks.

• Maintain pace to save consumers at least $1 billion over the period of FYs 2000 to

2005 by taking action to stop anticompetitive nonmerger activity. While the agency

expects to average at least $200 million in consumer savings per year during the fiveyear period, external factors, such as the level of resources available for nonmerger

enforcement, may affect this measure in any given year.

As with merger investigations, estimates of consumer savings depend on (1) the

volume of commerce in the markets affected by an anticompetitive practice, (2) the

percentage increase in price that likely would have resulted from the merger or other

anticompetitive practice absent enforcement action, and (3) the likely duration of the
Performance Plan

12 The legal standards for challenging nonmerger practices often do not require the definition of markets

and the analysis of entry conditions to the extent necessary for merger analysis. Therefore, the evidence

normally developed during the course of a nonmerger investigation may not be sufficient to make reliable

calculations of consumer savings from the enforcement action. The agency will assess the costs and benefits

of collecting the information needed to estimate on a more consistent basis the consumer benefit from

nonmerger enforcement. It should be noted, however, that much of the value of nonmerger enforcement lies

in its deterrent effect. Thus, an enforcement action involving a relatively small market may be valuable in

deterring a similar practice involving a much larger market. This deterrent effect is inherently difficult to

quantify, however.

Maintaining Competition Mission Fiscal Year 2003

anticompetitive price increase. Case-specific estimates of consumer savings are often,

but not always, available in nonmerger matters. Where specific figures are not

available, the agency will conservatively estimate that consumer savings resulting

from antitrust enforcement action amount to at least 1% of the amount of commerce

in the market(s) affected by the anticompetitive conduct.12

Many of the issues discussed above in connection with merger consumer savings

apply in the nonmerger area as well.

4. Program Evaluations

• Evaluate effectiveness of FTC merger policy by conducting retrospective studies of FTC

enforcement actions, or decisions not to take enforcement action, to determine if

actual outcomes were consistent with the goals the Commission sought to achieve.

• Assess the deterrence value and precedential significance of the enforcement actions

brought during the year.

• Review statistical data relating to timely and efficient review of merger transactions,

including (1) the amount of time required to complete the HSR review process, (2) the

number of HSR matters requiring issuance of an investigative second request, (3) the

number of such matters resolved through a “quick look” investigation (that is, one not

requiring the parties to produce all of the documents and information called for by the

second request), (4) the volume of material obtained from merging parties in response

to second requests, (5) the number of staff hours devoted to each investigation, and

(6) the overall costs associated with each investigation. Take corrective action where

necessary. Determine an appropriate basis of comparison with historic benchmarks,

in light of revised reporting thresholds in 2001.

• Review and evaluate the timeliness and effectiveness of the Commission’s merger

consent orders and litigated orders and make adjustments to future orders where

appropriate.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

Objective 2.3: Prevent consumer injury through education.

FY 2003 Budgeted Resources: 45 FTE $6,951,000

The Commission increases awareness of antitrust law through guidance to the business

community; outreach efforts to federal, state and local agencies, business groups and

consumers; development and publication of antitrust guidelines and policy statements; and

speeches and publications. In carrying out these functions, the FTC strives to ensure that

any publicly disseminated data or information subject to the Data Quality Act (section 515

of Pub. L. No. 106-554) meets basic quality standards.

1. GPRA Five-Year Strategies

• Continue to educate businesses and consumers about antitrust issues through traditional means – guidelines, advisory opinions, speeches – and develop other avenues

of communication, such as the FTC Web site (ftc.gov).

• Continue to provide advice to other governmental entities upon request.

2. FY 2003 Implementation Plan

• Evaluate the need for and, as appropriate, develop and issue guidelines to help

businesses understand and comply with the application of the antitrust laws in

certain areas, such as horizontal mergers, international operations, intellectual

property, health care, and collaboration among competitors.

• Provide Commission and staff advisory opinions on competition issues. 

• Upon request of other governmental entities considering proposed regulatory and

legislative actions, prepare and submit comments or testimony to share information

and analysis about how the proposed action may affect competition and consumers.

• Prepare and file amicus briefs in appropriate competition matters.

• Monitor the content of Commission complaints, press releases, and analyses to aid

public comment to ensure they are “transparent,” that is, that they explain in

sufficient detail and with sufficient clarity the evidence and theory of a case, within

the constraints of confidentiality. In appropriate cases in which the Commission

determines that enforcement action would not be in the public interest, issue

statements explaining the Commission’s reasoning.

• Make available prepared texts of speeches; as appropriate, develop other materials

that explain Commission policies and procedures; circulate economic papers on

competition issues.

• Arrange presentations by Commissioners and staff at seminars, panel discussions,

and conferences, to explain how the Commission analyzes mergers and business

practices.
Performance Plan

Maintaining Competition Mission Fiscal Year 2003

• Support outreach efforts to international bodies to explain U.S. competition perspectives; aid the development of antitrust laws and programs in developing nations

by participating in technical missions.

• Respond to correspondence, e-mail, and telephone calls from the public. Provide

informal guidance, particularly on HSR matters. Evaluate inquiries and complaints

about potentially anticompetitive practices, and respond to questions about the

antitrust laws and the FTC.

• Make available on the FTC’s Web site the guidelines issued by the agency, advisory

opinions, advocacy comments, written press releases, texts of speeches, Bureau of

Economics reports, and other materials that explain the Commission’s policies and

procedures.

• Continue to hold public hearings and workshops to expand understanding of

increasingly significant public policy issues, such as factors that affect the price of

refined petroleum products, and the implications of antitrust and patent law and

policy for innovation and other aspects of consumer welfare.

3. FY 2003 Performance Measures

In FY 2003, the agency will:

• Work to prevent consumer injury through education by planning, preparing, and

delivering at least 325 speeches, presentations, testimony, advisory opinions,

advocacy comments, and amicus briefs.

• Work to prevent consumer injury through education by planning, preparing, and

publishing antitrust-related content on the FTC’s Web site that is of sufficient utility

to visitors that it generates at least 3.5 million hits.

4. Program Evaluations

• Assess whether education and outreach efforts target the right audiences and address

the issues that have the most impact on the marketplace.

C Seek input from consumer groups, business groups, bar groups and other FTC

“customers” and “stakeholders” on the effectiveness of FTC educational efforts.

Assess methods of measuring the success of educational efforts on a consistent,

reliable basis.

• Evaluate the transparency of FTC merger review policy by assessing the extent to

which significant changes in such policy are communicated to stakeholders.

• Review trends or patterns in complaints, if any, filed with the agency under the Data

Quality Act to determine appropriate techniques or strategies for improving the quality

of publicly disseminated data or information that are subject to the Act. 
Performance Plan

1 See, e.g., Philip Nelson and Su Sun, Consumer Savings from Merger Enforcement: A Review of the

Antitrust Agencies’ Estimates, 69 Antitrust Law Journal 921, 936-7 (2002).

2

 Merger Guidelines Section 0.1.

3

Id.

Maintaining Competition Mission Fiscal Year 2003

Appendix Relating to Objective 2.1

Commentators have raised concerns about the FTC’s use of performance measures that

purport to represent actual dollar savings to consumers that result from FTC antitrust

enforcement actions1 Some of the specific concerns are that:

C the measure may not correlate with the substantive legal standard that applies to

mergers;

C the measure assumes infallibility, i.e., that every merger enforcement action taken by the

FTC benefits consumers;

C the measure, like many other measures, could create perverse incentives for the agency

to pursue inappropriate policies; and

C because of the influence of external factors, as well as the agency’s ability to affect the

measure through policy choices, the consumer savings measure is not a good basis for

comparing the FTC’s performance across years.

The following discussion addresses each of these points.

Legal Standard With respect to the substantive legal standard, Section 7 of the Clayton Act

does not require proof that prices would increase if the merger were permitted as an element

of illegality; rather, it prohibits mergers the effect of which “may be substantially to lessen

competition, or to tend to create a monopoly.” This raises two questions: (1) whether “lessen

competition” is tantamount to a price increase, and (2) whether it is appropriate to assume

that merger enforcement action would produce consumer savings in every instance, given the

use of the word “may” in the statute.

While it is true that courts do not require proof of, and agencies do not focus on, the

likelihood that a merger will result in price increases, per se, the applicable standards

correlate closely with the likely effects on price. Under the Merger Guidelines, “[t]he unifying

theme . . . is that mergers should not be permitted to create or enhance market power or to

facilitate its exercise.”2 The Guidelines further explain that “[m]arket power to a seller is the

ability profitably to maintain prices above competitive levels for a significant period of time.”3

In other words, when challenging a merger, the FTC does not seek to prove directly that the

merger would raise prices to consumers, but the agency does rely on evidence that it would

“create or enhance market power or facilitate its exercise,” and it is well accepted in antitrust

economics that market power generally leads to higher prices, among other adverse effects.

It is possible for market power primarily to affect some non-price element of competition

(such as in innovation), but in that atypical instance the “dollar value” of consumer savings

should serve as a reasonable proxy for the non-price harm to consumers.
Performance Plan

4 FTC v. Elders Grain, 868 F.2d 901.

5 See 15 U.S.C. § 45(b).

Maintaining Competition Mission Fiscal Year 2003

The statutory language “may be substantially to lessen competition . . .” suggests that every

merger prevented under Section 7 would not necessarily have harmed consumers if allowed

to go forward. As applied by the courts, however, the legal standard is more rigorous than

the words of the statute suggest. “Of course the word “may” should not be taken literally, for

if it were, every acquisition would be unlawful.”4 Clearly, the courts do not require proof that

a merger would harm competition as a matter of certainty before determining whether to

block the merger. Applying Section 7 requires predicting the future, and the applicable

methodology, antitrust economics, remains an inexact science despite considerable gains in

knowledge over the years.

Assumption of Infallibility The discussion of probability versus certainty relates to the

second general criticism of the consumer savings performance measure, namely that the FTC

assumes all its actions benefit consumers, despite the inevitability that, at least in rare

instances, even very well-grounded conclusions that a particular merger would harm

consumers may be incorrect. While it is true that the FTC cannot be expected to predict

without error the outcome of every one of thousands of proposed merger transactions

annually, enforcement decisions nevertheless are based on a very rigorous examination of

hard evidence, and, in any case, the consumer savings measure is designed to estimate the

overall benefit of merger enforcement rather than to compare the impact of one merger case

versus another.

While it is unclear what GPRA requires in terms of the level of certainty in the information

underlying performance measure results, it seems likely that GPRA calls for good faith “best

estimates” on performance measures, rather than total certitude in the accuracy of reported

results. The basic assumption inherent in the consumer savings measure – that the FTC

correctly assesses the outcome of mergers it chooses to challenge – is subject, at least

potentially, to a very demanding, external review, because the FTC does not, on its own, have

the ability to block a merger. To prevent the consummation of a merger it believes to be

illegal, the FTC must offer proof sufficient to persuade a federal court, with vigorous

opposition from the parties, to enter an injunction. The level of proof required to prevail in

federal court litigation may well exceed the standard typically applied in the GPRA

performance measurement context.

Most merger cases are resolved by settlement, and those that do settle are not exposed to the

rigor of litigation. It is generally not possible to tell in advance, however, which matters will

settle and which will not, so for both policy and practical reasons the agency applies the same

internal standard in all cases. Moreover, as a matter of law, FTC Commissioners must have

“reason to believe” a proposed merger would violate the law before voting to approve a

consent agreement,

5

 and there is no reason to believe that Commissioners fail to take this

responsibility seriously.

A fundamental premise of merger policy is that mergers are presumptively procompetitive.

Recognizing that stopping a procompetitive merger may be as harmful as permitting an

anticompetitive merger, the FTC carefully analyzes a great deal of evidence, obtains

additional information from customers, competitors, and others with relevant information,

and gives the parties ample opportunity to be heard before deliberating whether to take
Performance Plan

6 See Nelson and Sun, supra note 1 at 949. (“The authors generally agree with the agencies’

characterizations of the GPRA estimates as rough estimates of the merger enforcement efforts’ value, which

are likely to be conservative.”)

7 See id. at 950.

Maintaining Competition Mission Fiscal Year 2003

enforcement action against a merger. While not every decision can be accurate, this cautious

approach maximizes the quality of FTC enforcement decisions.

Finally, the consumer savings measure is designed to measure the net effect of FTC merger

enforcement, not the effect of each individual case. The 1% figure is conservative enough to

take some error into account.6

Incentives A risk with any performance measure is that it may create an incentive to

maximize one aspect of performance at the expense of others. With respect to the consumer

savings measure, for example, a shift toward an unduly restrictive merger policy would not

help consumers, but it might produce a higher value on this measure.7 The presence of other

measures focusing on different facets of performance can serve as a system of checks and

balances. For example, a shift toward an inappropriately stringent merger policy might

appear to increase consumer savings, but cause the agency to lose more cases in court,

lowering the score on Performance Measure 2.2.1. In addition, cases are more likely to settle

when the FTC has credibility in the eyes of respondents, i.e., the agency is perceived as

choosing its cases wisely and is likely to win the cases that it litigates. An inappropriately

stringent merger policy would likely reduce the agency’s credibility among the relevant

stakeholders, leading to fewer settlements, more litigation and, again, less success in the

courts.

Use of the Measure When the agency’s performance is graded by a mix of performance

measures, each focusing on different aspects of performance, the danger of perverse

incentives is minimized. Still, the consumer savings measure is likely more useful as a

means of demonstrating the overall value of the FTC’s merger enforcement work, including

the magnitude of consumer benefit versus the costs of merger enforcement (either direct to

the taxpayers or overall). For example, the $2.5 billion in consumer savings obtained

through FTC merger enforcement in FY 2001 was 97 times the amount allocated for merger

enforcement in the FTC’s budget for that year, 36 times the amount budgeted for all of the

FTC’s Maintaining Competition Mission, and 17 times the entire FTC budget for FY 2001.

The consumer savings measure may be less useful as a means of comparing the FTC’s

performance in one year versus another, since the amount of merger activity in the

marketplace largely drives the FTC’s merger enforcement agenda. For example, one case

accounted for more than half the reported consumer savings in merger enforcement in FY

2001. The measure may also be ill-suited as a means of motivating performance. Setting

a very ambitious “target” for consumer savings may be more likely to induce questionable

enforcement decisions than to result in better overall performance. Although the measure

is informative about the scope and impact of FTC merger enforcement, the FTC will consider

whether there may be a more suitable substitute for FY 2004.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

Maintaining Competition Mission

Goal 2: To prevent anticompetitive mergers and other anticompetitive business

practices in the marketplace.

Objective 2.1: Identify anticompetitive mergers and practices that cause the greatest

consumer injury.

FY 2004 Budgeted Resources: 54 FTE $8,626,000

After a decade of rapid growth, overall merger activity declined during FY 2001 and 2002.

In addition, revisions to the Hart-Scott-Rodino Act (HSR) reporting thresholds, effective in

2001, significantly reduced the number of transactions subject to the notification

requirement. Still, identifying anticompetitive mergers continues as a top priority in the

FTC’s Maintaining Competition Mission and poses significant challenges for the agency.

Despite the revised HSR filing thresholds and the decline in merger activity generally, the

FTC still faces a demanding merger review workload:

• The number of mergers remains high by historic standards. Although down from the

record-setting years 1998-2000, the 1187 transactions subject to the new HSR filing

thresholds in 2002 was only 16% fewer than the average annual number of mergers

that would have been reportable under the revised thresholds during 1990 to 2000

(1,378), a period widely recognized as a merger wave of historic proportions.

• Although the 2001 amendments to the HSR Act reduced the number of merger

transactions subject to the reporting requirement, they did not change the standard

of legality. As a result, the FTC now devotes more attention to the identification of

unreported, usually consummated, mergers that could harm consumers. Moreover,

during 2002, the FTC shifted substantial resources to enforcement actions involving

consummated mergers.

Notwithstanding the significant demands imposed by merger review, the recent decline in

merger activity has enabled the FTC to increase its efforts to identify appropriate targets for

nonmerger investigations, making the balance between merger and nonmerger activities more

consistent with historic allocations.

Under this objective, the FTC seeks to focus its investigative resources on those activities

most likely to harm consumers significantly. The goal is to avoid overlooking antitrust

problems by focusing too narrowly, but also to avoid spending resources unproductively by

investing in too many investigations that do not yield evidence of a problem. The two

performance measures in use through FY 2003 under this objective – the percentage of HSR

second requests resulting in enforcement action and the number of nonmerger investigations

opened – provide useful information about the FTC’s performance in identifying

anticompetitive mergers and practices, but neither tells a comprehensive story. The first

measure indicates the agency’s effectiveness in screening HSR filings for those likely to raise

antitrust issues, but does not reveal the level of activity in this area. Conversely, the second

measure indicates the number of nonmerger investigations, but does not reveal information

about the results of those investigations.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

The addition of two new measures should alleviate this problem. First, the number of HSR

second requests, coupled with the current measure of how frequently second requests result

in enforcement action, should give a fuller picture of both the extent to which the FTC uses

the second request mechanism and how effectively the agency targets the mergers that

threaten competition. Second, the frequency with which significant nonmerger investigations

result in enforcement action, coupled with the number of new investigations opened, should

similarly provide a fuller picture of both the extent of FTC nonmerger activity and the

agency’s effectiveness in targeting activity that threatens competition.

1. GPRA Five-Year Strategies

• Administer the Hart-Scott-Rodino (HSR) premerger notification program, under which

parties to certain mergers and acquisitions must report the planned transactions in

advance to the FTC and Department of Justice to allow for antitrust review. Track and

maintain the timeliness of merger review under the HSR Program.

• In light of the higher HSR premerger reporting thresholds effective in early 2001,

continue increased use of various means to identify possibly illegal mergers that are

not subject to the HSR reporting requirement.

• Improve use of the initial 30-day period after HSR filings (or 15 days for a cash tender

offer or a bankruptcy sale) to determine whether a merger is likely to harm

competition, including reducing delays in interagency clearance (i.e., the process

used by the FTC and the Department of Justice Antitrust Division to determine which

of the two will investigate a particular transaction) and timely review of filings to avoid

unnecessary extended investigations. 

• Through hearings, Bureau of Economics studies, and other means, identify emerging

trends and focus on potentially anticompetitive business practices or other issues that

need to be addressed because of changes in the economy, technology, and the

marketplace.

• Continue the use of task forces, such as the FTC’s Noerr-Pennington Task Force and

the State Action Task Force, and other means to examine the scope of exemptions to

the antitrust laws to identify possible categories of harmful conduct that, while

ostensibly protected from antitrust challenge, are in fact not exempt from the antitrust

laws.

• Refine the investigative and decisional tools used in both merger and nonmerger

investigations through continuous learning.

2. FY 2004 Implementation Plan

A. All Programs

• Ensure timeliness of review. Monitor the time and resources needed to conduct preliminary investigations. Review the progress of all ongoing investigations on at least

a monthly basis. For mergers filed under the HSR program, maintain statistics on the

average time needed to “clear” transactions that do not require further review. 

Review and analyze these statistics on a regular basis.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

• Articulate FTC policies and procedures through speeches, electronic and print media,

and other means to inform potentially aggrieved parties that they may lodge

complaints with the FTC, as well as to help parties stay in compliance with the

antitrust laws.

B. Mergers Filed Under HSR

• In the initial review of each HSR filing, determine compliance with reporting requirements; prepare and transmit to management officials a summary of the transaction

and a recommendation regarding further review.

• Promptly determine whether further review is needed to determine whether the

transaction may be anticompetitive. If further review is deemed unnecessary,

recommend early termination of the statutory waiting period. If additional review is

required, seek investigational clearance from the Department of Justice through the

interagency liaison process. Seek prompt resolution of clearance requests, whether

initiated by the FTC or the Department of Justice, to maximize the portion of the

initial waiting period available for investigation.

• Following clearance, use the remainder of the initial 30-day waiting period after filing

(15 days in certain instances) to investigate and reach a sound and well-informed

determination of whether the proposed merger raises sufficiently serious threat of

harm to consumers to expand the investigation by issuing requests for additional

information (“second requests”) and seeking Commission approval for use of

compulsory process authority.

C. HSR Compliance Enforcement

• To promote voluntary compliance with HSR premerger notification requirements,

vigorously pursue violations. Monitor compliance of merging entities and fully investigate apparent violations.

• If an investigation indicates that a merging party has failed to comply with requirements of the HSR Act and that an enforcement action would be in the public interest,

seek to negotiate a consent order for civil penalties sufficient to deter similar conduct

in the future.

• If an appropriate consent order cannot be negotiated, prepare a recommendation that

the Department of Justice file an action for civil penalties under the HSR Act; if filed,

conduct or assist in litigation of the action.

D. Mergers Not Subject to HSR

• In light of the statutory increase in HSR filing thresholds effective in FY 2001, continue increased efforts to identify mergers that are not subject to HSR requirements

but that are potentially anticompetitive, using techniques such as (1) monitoring the

trade press and Internet resources, (2) responding to and following up on case leads

from Congressional offices, other Executive Branch agencies, and state and local

government, and (3) encouraging consumers, businesses, and the bar to notify the

FTC of possibly anticompetitive mergers.
Performance Plan

1

 The FTC will compute this measure by dividing the number of second request investigations that

result in enforcement action during the relevant fiscal year (without regard to when the investigation

commenced), by the total number of second request investigations that concluded during the year with

or without enforcement action (again, without regard to when the investigation commenced).

“Enforcement action” includes Commission authorization of a complaint for preliminary injunction in

federal court, issuance of an administrative complaint, a consent agreement, or the parties abandonment

of a proposed transaction based on FTC antitrust concerns.

2

 The FTC also investigates mergers that are not subject to HSR reporting requirements, but there is

no benchmark directly comparable to the issuance of a second request in those matters, and the overall

number of non-HSR merger investigations is too small to permit a meaningful statistical measure

Maintaining Competition Mission Fiscal Year 2004

• Seek interagency clearance for investigation of transactions raising concerns and, if

obtained, conduct appropriate investigation, including use of the Commission’s

compulsory process authority if warranted. When appropriate, seek voluntary

postponement of the transaction or other measures to facilitate possible future relief.

E. Nonmerger Practices

• Identify potentially anticompetitive nonmerger business practices through the same

means used to identify potentially anticompetitive mergers not subject to HSR, as well

as pursuing investigative leads developed by staff in other investigations, and using

task forces to identify harmful practices in selected areas.

• Seek interagency clearance for investigation of business practices raising concerns

and, if obtained, conduct appropriate investigation, including use of the Commission’s

compulsory process authority if warranted.

• Devote additional scrutiny to selected issues or industry practices raising significant

consumer concerns or involving potential for significant consumer injury. Continue

in-depth studies of important competition issues, such as the study on the

significance of generic drugs in the pharmaceutical marketplace (completed in FY

2002), the study of factors underlying the pricing of refined petroleum products (to be

completed in FY 2003), the workshop on possible anticompetitive efforts to restrict

competition on the internet, which took place during the fall of 2002, and the

hearings on intellectual property and antitrust, which took place during FY 2002.

3. FY 2004 Performance Measures

In FY 2004, the agency will:

• Continue effective screening of HSR premerger notification filings to identify those that

most likely present antitrust concerns, so that between 60% and 80% of HSR requests

for additional information result in enforcement action.1

A percentage below 60% may suggest that the FTC is targeting

enforcement resources ineffectively by investigating too many competitively benign transactions (and unduly burdening businesses as a

result), while a percentage higher than 80% may suggest that the

agency is focusing too narrowly and thus potentially allowing

problematic transactions to go forward without sufficient review.

2

 In

conjunction with this measure, and to facilitate evaluation of results,
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

the FTC will also report the number of second requests issued each

year.

• Effectively target nonmerger investigative resources, so that between 60 and 80% of

nonmerger investigations in which the Commission issues a resolution authorizing the

use of compulsory process result in enforcement action.

The issuance of a compulsory process resolution indicates that the

Commission has found the matter to be serious enough to warrant the

use of its compulsory process authority and also generally correlates

with those investigations to which the agency devotes meaningful

resources. In conjunction with this measure, and to facilitate evaluation

of results, the FTC will also report the number of nonmerger

investigations opened and the number in which the Commission

authorizes the use of compulsory process each year.

4. Program Evaluations

• Review and refine data-monitoring systems relevant to (1) the timeliness of the HSR

review process and (2) the degree to which appropriate resources are being devoted

to initial review of each matter prior to issuance of an investigative second request.

• Review significant deviations from the statistical benchmarks for timely and efficient

review of merger transactions and take corrective action where necessary.

• Conduct periodic meetings between the Director of the Bureau of Competition and

heads of litigation divisions to ensure that substantive standards are applied

consistently and uniformly.

• Assess the significance (quantitatively in terms of the aggregate size of markets

investigated and potential dollar savings to consumers, and qualitatively in deterrence

value and precedential significance) of the matters investigated each year.

• Continue to seek improvements in the merger review process to improve further the

effectiveness and efficiency of investigations. In 2002, for example, the FTC

conducted a series of national public workshops to obtain information and ideas from

a broad range of knowledgeable parties, including corporate personnel, outside and

in-house attorneys, economists, and consumer groups. The workshops addressed

topics such as using more voluntary information submissions before issuance of a

second request, reducing the scope and content of the second request, negotiating

modifications to the second request, and focusing on special issues concerning

electronic records and accounting or financial data. As an initial result of the

workshops, the FTC announced a number of procedural reforms to improve the

merger review process by expediting the gathering of relevant information and

reducing the burdens on parties and also issued a companion paper entitled “Best

Practices for Data, and Economic and Financial Analyses in Antitrust Investigations.”

The FTC will continue to collect public input to assist it in enhancing and refining the

process.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

Objective 2.2: Stop anticompetitive mergers and practices through law enforcement.

FY 2004 Budgeted Resources: 406 FTE $65,596,000

Maintaining competitive markets through effective antitrust law enforcement is integral to

a healthy U.S. economy. The FTC plays a vital role in this effort by bringing cases to block

anticompetitive mergers and halt anticompetitive business practices.

The FTC seeks to maintain an appropriate balance between its merger and nonmerger

enforcement efforts, but the statutory timetable governing the HSR merger review process

requires that merger review is the first priority. Over the decade ending in FY 2000, an

unprecedented level of merger activity required the shifting of resources from nonmerger

activities to the merger arena. Merger activity has declined to a more manageable level since

2000, permitting renewed emphasis on the nonmerger area.

Merger enforcement responsibilities continue to place significant demands on the FTC’s

resources, however, for the following reasons:

• Mergers continue to grow in size, scope, and complexity. For example, the total dollar

value of reported transactions in FY 2001 was about 4.3% higher in constant dollars

than the average annual total dollar value reported during 1990 to 2000, and nearly

60% of the transactions reported during FY 2002 exceeded $100 million in value. The

size of mergers affects the FTC’s workload because large, diversified firms are likely

to be involved in more markets than smaller firms and more likely to be significant

players in the markets in which they compete, thus increasing the likelihood and

scope of antitrust review. Also, as our economy produces more new technologies and

becomes more knowledge-based, the resulting complexity of many mergers requires

extensive inquiry.

• The number of mergers raising antitrust concerns, not the overall number of filings,

primarily drives the FTC’s merger workload. In FY 2002, the FTC took enforcement

action in 24 mergers, a level 14% higher than the average volume of merger

enforcement activity during the 1991 to 2000 decade.

• Challenging a consummated merger typically entails resource-intensive litigation.

In the nonmerger area, increased emphasis on case identification and investigations will

likely result in an increase in enforcement actions in FY 2003. The scope of antitrust

exemption doctrines such as Noerr-Pennington and state action, restraints on competition

among professionals, and anticompetitive abuses of the standards-setting process will

continue to receive scrutiny. During FY 2002, the FTC opened 59 nonmerger investigations

and moved another 17 ongoing nonmerger investigations forward into a more advanced

phase. These developing matters should result in a number of consent agreements or

administrative complaints in FY 2003 and FY 2004.

Two factors place increasing demands on the FTC’s antitrust enforcement mission in both

the merger and nonmerger segments:

• FTC antitrust investigations increasingly involve highly technological industries, such

as defense and aerospace, cable television, and information technology, as well as the
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

growing field of health care services, including hospitals, nursing homes, health

maintenance organizations, and pharmaceutical companies. More so than ever before,

FTC investigations may involve difficult scientific and technical material. In addition,

antitrust matters increasingly intersect with intellectual property, raising difficult

issues on how to reconcile two different bodies of law with similar goals. These trends

require more and more specialized knowledge and expertise. 

Cases involving highly technical subject matter increasingly require the agency to

obtain outside technical expertise to assist staff with the factual issues that arise. 

In particular, the increasing importance of intellectual property considerations creates

a need for additional in-house expertise in intellectual property law to supplement the

agency’s existing capabilities in antitrust cases involving high-tech industries.

• The FTC likely will be involved in more antitrust litigation during FY 2004 because of

changes in HSR merger prenotification requirements and an increased focus on

cutting-edge legal issues. Litigation is resource-intensive compared to preconsummation settlements that can resolve antitrust concerns. Although the FTC

receives notification of fewer proposed mergers in advance because of modifications

in the HSR reporting thresholds, the agency continues to monitor unreported mergers.

Unreported mergers are much more likely to have been consummated by the time the

FTC can complete an investigation, so any such merger that threatens competition

likely will require litigation, rather than a pre-consummation consent agreement, to

obtain relief. In the nonmerger area, the agency will examine anticompetitive conduct

to which the applicability of one of the exemptions to the antitrust laws may be

unclear. Because liability may be unclear in these instances, costly litigation is a

likely possibility. Nevertheless, cases that add clarity to legal standards can have

substantial benefit over a broad range of commerce.

In addition to significant staff time over a lengthy period, antitrust litigation requires

significant expenditures for travel, stenographic reporting, and expert witnesses.

Moreover, the increasing emphasis on quantitative evidence and econometric analysis

in antitrust investigations and litigation requires that the FTC spend more resources

in analysis and understanding of the issues. Merging firms increasingly rely on

sophisticated accounting, econometric, and other data-intensive economic studies

regarding competitive effects, entry issues, and efficiency and failing company

defenses, requiring analogous investments by the FTC.

As a result of the expected increase in litigation in FY 2004, and particularly the

increasing proportion of cases dealing with highly technical markets, the FTC likely

will need substantially more assistance from technical consultants and expert

witnesses.

The FTC must also maintain an effective compliance program so that consumers receive the

benefits of competition obtained through the FTC’s investigation and litigation efforts. This

objective focuses on devising and drafting effective compliance orders in individual matters,

a highly fact-specific process. In addition, the FTC conducts general and historical analyses

on the effectiveness of various kinds of merger and nonmerger remedies, such as divestiture

orders. As the number and complexity of competition cases rise, so do the resource needs

of the compliance program associated with those cases. The FTC continues to absorb some

of this ever-increasing workload through more efficient use of resources.
Performance Plan

3 See, e.g., Philip Nelson and Su Sun, Consumer Savings from Merger Enforcement: A Review of the

Antitrust Agencies’ Estimates, 69 ANTITRUST LAW JOURNAL 921, 936-7 (2002). Among the issues that have

been raised are (1) the measure may not correlate with the substantive legal standard that applies to

mergers, (2) the measure assumes infallibility, i.e., that every merger enforcement action taken by the FTC

benefits consumers, (3) the measure, like many other measures, could create perverse incentives for the

agency to pursue inappropriate policies, and (4) because of the influence of external factors, as well as the

agency’s ability to affect the measure through policy choices, the consumer savings measure is not a good

basis for comparing the FTC’s performance across years.

Maintaining Competition Mission Fiscal Year 2004

The measurement of consumer savings resulting from antitrust enforcement, used to

evaluate the FTC’s performance under this objective through FY 2003, provided useful

information about the breadth and magnitude of the FTC’s enforcement activities, but also

received some criticism,3 and also was subject to misinterpretation. Consequently, in FY

2004, the FTC will assess the breadth and magnitude of its enforcement activities by

measuring the amount of commerce involved in markets in which the agency takes

enforcement action. This approach should provide the same benefits as the previous one,

with fewer drawbacks.

1. GPRA Five-Year Strategies

• Save consumers substantial amounts both directly, by stopping anticompetitive

mergers and conduct, and indirectly, by negotiating consent orders and winning

litigated orders that have significant remedial, precedential, and deterrent effects.

• Improve negotiation, litigation, and economic skills through continuous learning.

• Continue to ensure that divestiture remedies in Commission orders are achieved in

a timely fashion, employing, where appropriate, requirements that suitable divestitures be arranged before consummation of a merger.

• Ensure that administrative litigation and adjudication reach a timely resolution.

2. FY 2004 Implementation Plan

A. All Programs

• Enhance the agency’s intellectual property expertise in light of the increasing

significance of patents and other intellectual property issues in antitrust cases.

• Support increased antitrust litigation by retaining qualified economists to serve as

expert witnesses in trials.

• Further enhance the FTC’s ability to investigate and litigate complex matters involving

high-tech segments of the economy by increasing technical support from independent

industry experts.

• Continue support of the FTC’s ability to litigate complex cases by investing in more

sophisticated use of technology to support litigation, including document management

and courtroom presentations.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

• Review the progress of all ongoing investigations on at least a monthly basis. Monitor

time and resource expenditures.

• Monitor the timeliness of administrative adjudication and issue to the public on a

quarterly basis a status report on the progress of all cases before the administrative

law judges.

• Continue seminars featuring distinguished scholars speaking on substantive research

and analysis of important antitrust law and policy issues.

• Integrate assessments of investigative and enforcement activity with new learning on

law and economic policy to further the FTC’s objective of (1) bringing enforcement

actions only when anticompetitive effects from the challenged practices or mergers are

likely and (2) not overlooking anticompetitive practices or mergers.

• Participate in planning, developing, improving and conducting agency-wide training

programs in basic and advanced legal skills for FTC attorneys, including such areas

as taking and defending depositions, written discovery, trial advocacy, negotiation

skills, and advanced legal writing, as well as mission-specific procedures and

substantive law.

B. Merger Enforcement

• During the initial HSR review period, carefully identify those merger transactions that

are likely to raise potentially significant competitive concerns. Employ HSR second

requests and other appropriate investigative techniques during the extended HSR

waiting period to obtain documents, testimony, and other evidence.

• In non-HSR investigations, employ appropriate investigative tools other than HSR

second requests, to obtain documents, testimony, and other evidence.

• For both HSR and non-HSR merger investigations, complete the analysis of likely

competitive effects of the transaction, based on evidence gathered, and prepare

recommendations to Bureau management and the Commission on whether settlement

or litigation is warranted.

• Where appropriate, seek to negotiate a consent order to protect consumers by

correcting the competitive problem, while permitting the benign aspects of a merger

to proceed.

• If an effective consent order cannot be negotiated to protect consumers from harmful

effects of a merger, recommend that the Commission undertake litigation to challenge

the merger, either by seeking a preliminary injunction from a federal court to block

the merger (if it has not been consummated) or by issuing an administrative complaint

against the merger (when the merger has already occurred, when the grant of a

preliminary injunction does not result in abandonment of the merger, or when it is in

the public interest to proceed with a full trial on the merits despite denial of an

injunction).
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

• Litigate the preliminary injunction action or administrative complaint, employing

outside experts as necessary to address economic or technical issues. Pursue or

defend appeals as appropriate.

• For management review, collect data regarding the FTC’s efficiency in investigating

mergers, including (1) the amount of time required to complete the HSR review

process, (2) the number of HSR matters requiring issuance of an investigative second

request, (3) the number of HSR investigations that result in enforcement action, (4)

the number of such matters resolved through a “quick look” investigation (that is, one

not requiring the parties to produce all of the documents and information called for

by the second request), (5) the volume of material obtained from the parties, (6) the

number of hours of staff time spent on investigations, and (7) other costs associated

with investigations.

C. Merger Compliance

• Track the time between issuance of Commission remedial orders in merger cases and

the implementation of divestitures, licenses, or other affirmative relief. Seek civil

penalties where appropriate if the respondent fails to fulfill its obligations under the

order in a timely fashion.

• Monitor other aspects of compliance with the Commission’s merger consent orders

and litigated orders. Seek civil penalties where appropriate if the respondent fails to

fulfill its obligations under the order.

• Modify orders when warranted by changed conditions of fact or law or when otherwise

required in the public interest.

D. Nonmerger Enforcement

• Employ appropriate investigative techniques, including compulsory process if

authorized, to obtain relevant information and to assess whether the practice in

question is harming consumers.

• If the evidence is sufficient to establish reason to believe that the law has been

violated, prepare a recommendation for authorization to engage in consent

negotiations or to submit a complaint recommendation to the Commission.

• If an investigation indicates that a business practice is anticompetitive, seek to

negotiate a consent order that protects consumers by effectively correcting the

competitive problem.

• If a satisfactory consent order cannot be negotiated, recommend that the Commission

undertake litigation to challenge the practice in question, either through the

Commission’s adjudicative process, or by asking a federal court to enjoin the

challenged practice. In appropriate cases, recommend that the Commission authorize

the filing of a federal court action for consumer redress or restitution. Pursue

litigation authorized by the Commission, employing outside experts as necessary to

address economic or technical issues. Pursue or defend appeals as appropriate.
Performance Plan

4

 The agency may prevent an anticompetitive result from a proposed merger by (1) conducting

successful litigation to block the merger, (2) negotiating a settlement to resolve anticompetitive aspects

of the merger while allowing the underlying transaction to go forward, or (3) identifying antitrust concerns

sufficient to cause the parties to abandon the transaction without court action. The volume of affected

commerce measure does not include transactions abandoned by the parties for business considerations

unrelated to antitrust. Settlements are subject to Commission approval, and require sufficient supporting

evidence for the Commission to have “reason to believe” that a law violation would occur.

5

 In general, the commerce “directly affected” means the volume of sales in the relevant market(s)

affected by the challenged practice. The “indirectly affected” commerce may vary from case to case, but

in general it means the volume of sales in markets in which one or more participants are engaging in the

same practice challenged in the Commission’s enforcement action. In general, when the Commission

Maintaining Competition Mission Fiscal Year 2004

E. Nonmerger Compliance

• Monitor compliance with the Commission’s nonmerger consent orders and litigated

orders. Seek civil penalties and other relief where appropriate if the respondent fails

to fulfill its obligations under the order.

• Modify orders when warranted by changed conditions of fact or law or when otherwise

required in the public interest.

3. FY 2004 Performance Measures

In FY 2004, the agency will:

• For cases in which the Commission finds reason to believe the law has been violated,

achieve a positive result (including consent orders, litigation successes, and, for

mergers, transactions abandoned based on FTC antitrust concerns) in at least 80%

of those cases.

• Take action against mergers4 that would harm competition affecting $40 billion in

annual sales.

While the agency expects to protect competition in markets averaging

at least $40 billion in sales per year over a period of time, external

factors, such as level of merger activity, may affect this measure in any

given year.

• Take action against anticompetitive conduct that affects at least $20 billion in

commerce.

Nonmerger enforcement actions can benefit competition both directly,

by halting specific conduct by specific parties, and indirectly, by

communicating to similarly situated parties that similar conduct will be

challenged. A single action may have only a limited effect in this

regard, but multiple actions generally have been quite effective in

stopping a particular anticompetitive practice. Therefore, the FTC will

compute this measure by measuring the amount of commerce directly

affected by its order, and adding to that number one-third of the

amount of commerce indirectly affected (i.e., the sales of similarly

situated parties engaging in similar practices).5 While the agency
Performance Plan

successfully brings three cases challenging a particular practice, it is enough to send a unequivocal signal

about FTC enforcement intentions to others who may be engaging in the same practice, and consequently

puts an end to the practice as a practical matter.

Maintaining Competition Mission Fiscal Year 2004

expects to protect competition in markets averaging at least $20 billion

in sales per year over a period of time, external factors, such as the

level of merger activity in the marketplace, may affect this measure in

any given year.

4. Program Evaluations

• Evaluate effectiveness of FTC merger policy by conducting retrospective studies of FTC

enforcement actions, or decisions not to take enforcement action, to determine if

actual outcomes were consistent with the goals the Commission sought to achieve.

• Assess the deterrence value and precedential significance of the enforcement actions

brought during the year.

• Review statistical data relating to timely and efficient review of merger transactions,

including (1) the amount of time required to complete the HSR review process, (2) the

number of HSR matters requiring issuance of an investigative second request, (3) the

number of such matters resolved through a “quick look” investigation (that is, one not

requiring the parties to produce all of the documents and information called for by the

second request), (4) the volume of material obtained from merging parties in response

to second requests, (5) the number of staff hours devoted to each investigation, and

(6) the overall costs associated with each investigation. Take corrective action where

necessary. Determine an appropriate basis of comparison with historic benchmarks,

in light of revised reporting thresholds in 2001.

• Review and evaluate the timeliness and effectiveness of the Commission’s merger

consent orders and litigated orders and make adjustments to future orders where

appropriate.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

Objective 2.3: Prevent consumer injury through education.

FY 2004 Budgeted Resources: 45 FTE $7,221,000

The Commission increases awareness of antitrust law through guidance to the business

community; outreach efforts to federal, state and local agencies, business groups and

consumers; development and publication of antitrust guidelines and policy statements; and

speeches and publications. In carrying out these functions, the FTC strives to ensure that

any publicly disseminated data or information subject to the Data Quality Act (section 515

of Pub. L. No. 106-554) meets basic quality standards.

One performance measure used under this objective through FY 2003 quantified the number

of education and outreach efforts such as speeches, participation on panels, testimony,

advisory opinions, advocacy comments, amicus briefs, etc. While these activities have been

and remain important, the current performance measure does not effectively indicate the

FTC’s performance in education and outreach for two reasons. First, the various items

counted are not of equal weight: a speech describing a new policy initiative before several

hundred antitrust lawyers at an ABA meeting has far more significance than a speech simply

describing past actions before a much smaller group, for example, yet no effective way of

distinguishing among different efforts has been identified. Second, measurements of

activities, such as the number of speeches given, may indicate the level of effort put toward

an objective, but not the agency’s effectiveness in accomplishing it.

The second measure used under this objective through FY 2003, the number of hits on

relevant content on the FTC’s Web site, does not have these drawbacks. Visitors to the FTC

Web site will have little interest in matters that hold no relevance or importance to the public,

and therefore will not visit the applicable pages. At the same time, matters that are of great

importance to the public – as determined by the public – will draw a large number of visitors.

The number of hits will reflect these differences. For example, if two speeches are posted on

the site, the more significant one should draw more interest and attention, and therefore

more hits on the applicable page.

Because Objective 2.3 has two different components – (1) educating the legal and business

communities about applicable legal standards and enforcement policies to facilitate

compliance with the law, and (2) educating the public in general, as well as policymakers,

about the benefits of competition – the FTC will separate the Web hits data in order to report

under two different measures, each applicable to one of the two components of this objective.

1. GPRA Five-Year Strategies

• Continue to educate businesses and consumers about antitrust issues through traditional means – guidelines, advisory opinions, speeches – and develop other avenues

of communication, such as the FTC Web site (ftc.gov).

• Continue to provide advice to other governmental entities upon request.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

2. FY 2004 Implementation Plan

• Evaluate the need for and, as appropriate, develop and issue guidelines to help

businesses understand and comply with the application of the antitrust laws in

certain areas, such as horizontal mergers, international operations, intellectual

property, health care, and collaboration among competitors.

• Provide Commission and staff advisory opinions on competition issues. 

• Upon request of other governmental entities considering proposed regulatory and

legislative actions, prepare and submit comments or testimony to share information

and analysis about how the proposed action may affect competition and consumers.

• Prepare and file amicus briefs in appropriate competition matters.

• Monitor the content of Commission complaints, press releases, and analyses to aid

public comment to ensure they are “transparent,” that is, that they explain in

sufficient detail and with sufficient clarity the evidence and theory of a case, within

the constraints of confidentiality. In appropriate cases in which the Commission

determines that enforcement action would not be in the public interest, issue

statements explaining the Commission’s reasoning.

• Make available prepared texts of speeches; as appropriate, develop other materials

that explain Commission policies and procedures; circulate economic papers on

competition issues.

• Arrange presentations by Commissioners and staff at seminars, panel discussions,

and conferences, to explain how the Commission analyzes mergers and business

practices.

• Support outreach efforts to international bodies to explain U.S. competition perspectives; aid the development of antitrust laws and programs in developing nations

by participating in technical missions.

• Respond to correspondence, e-mail, and telephone calls from the public. Provide

informal guidance, particularly on HSR matters. Evaluate inquiries and complaints

about potentially anticompetitive practices, and respond to questions about the

antitrust laws and the FTC.

• Make available on the FTC’s Web site the guidelines issued by the agency, advisory

opinions, advocacy comments, written press releases, texts of speeches, Bureau of

Economics reports, and other materials that explain the Commission’s policies and

procedures.

• Continue to hold public hearings and workshops to expand understanding of

increasingly significant public policy issues, such as factors that affect the price of

refined petroleum products, and the implications of antitrust and patent law and

policy for innovation and other aspects of consumer welfare.
Performance Plan

Maintaining Competition Mission Fiscal Year 2004

3. FY 2004 Performance Measures

In FY 2004, the agency will:

• Measure and establish appropriate targets for the number of hits on the FTC antitrust

Web site on pages that are relevant to the business and legal communities.

• Measure and establish appropriate targets for the number of hits on the FTC antitrust

Web site on pages that are relevant to policy makers and the public at large.

4. Program Evaluations

• Assess whether education and outreach efforts target the right audiences and address

the issues that have the most impact on the marketplace.

• Seek input from consumer groups, business groups, bar groups and other FTC

“customers” and “stakeholders” on the effectiveness of FTC educational efforts. Assess

methods of measuring the success of educational efforts on a consistent, reliable

basis.

• Evaluate the transparency of FTC merger review policy by assessing the extent to

which significant changes in such policy are communicated to stakeholders.

• Review trends or patterns in complaints, if any, filed with the agency under the Data

Quality Act to determine appropriate techniques or strategies for improving the quality

of publicly disseminated data or information that are subject to the Act. 
Performance Plan

President’s Management Agenda

President’s Management Agenda

The FTC is a small, citizen-centered, results-oriented agency with a large mission. Demands

on the agency have grown dramatically over the past decade as commerce has become

increasingly electronic and the economy has gone high-tech and global. During this period,

the agency has found new ways to meet these growing demands and reach out to more

consumers and businesses without an appreciable addition of personnel. To address these

issues, the FTC has been engaged in long-term, concerted efforts to work smarter and more

effectively.

The FTC has been working to improve management and program performance. The agency

has an outstanding record of assessment, realignment, innovation, and improvement. There

are several efforts underway to address, among other areas, recruitment and training,

performance and costs, and reporting and systems. The FTC is committed to managing its

resources effectively and achieving immediate, concrete, and measurable results in each of

the five management initiative areas: human capital; competitive sourcing; e-government;

financial management; and integration of budget and performance.

Initiative: Human Capital Management

• Knowledge Management The FTC is engaged in a systematic program to improve staff

training of all types – professional, managerial, technical, and administrative. Training

is a key component to working smarter and improving productivity. It is also critical in

managing FTC attrition, especially in the ranks of lawyers and economists, where career

training and professional development are valued highly. New and innovative training

programs have resulted in increased interest and participation from all segments of the

workforce. For the past three years, the FTC’s training and development program has

been guided by its Training Council, composed of representatives throughout the agency.

In recognition of the FTC's commitment to provide employees with high quality training

opportunities, the agency received the Distinguished Service Award from the Training

Officers Conference. Finally, the FTC will shortly implement its first e-learning program.

E-learning will offer an array of self-directed training opportunities in all mission-critical

areas as well as personal and professional development. The agency is currently

establishing its database and reporting infrastructure, which will be followed by several

pilot runs of programs in preparation of expanded e-learning offerings.

• Leadership As a key part of it management improvement efforts, the FTC implemented

three training programs. The Manager Series is the cornerstone of the agency’s

management development and is mandatory for all supervisors and managers. The

program focuses on employee relations, performance management, and labor relations.

The Leadership Series introduces participants to contemporary issues and concepts for

today’s manager. Finally, the Best Practices in Management and Leadership Series

provides participants with current theory and best practice approaches to important

areas of human resource management.

• Performance Management The FTC recently completed a study of its performance

management system. The study involved four steps: collecting information from inside

and outside the FTC; identifying issues and possible solutions; obtaining input from FTC

managers and employees on the identified solutions; and preparing a report with findings

and recommendations. The FTC issued the final report in August 2002, recommending
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President’s Management Agenda

that the current system be retained with minor improvements. The study also served to

focus managers on good performance management. As a result of manager input, efforts

are currently underway to clarify and strengthen performance elements and standards

for positions with the largest population of employees. Management-wide training on the

updated performance management policy will commence in Spring 2003.

• Strategic Alignment The FTC continues to examine a range of management and support

positions to determine which ones can be eliminated to put more staff at the front lines

of the agency’s missions. As part of this effort, in the late 1990s, the agency reduced by

24 percent the Office of the Executive Director, the agency’s management and

administrative organization. The FTC moved some administrative positions to other

organizations where the work could be performed more efficiently, but eliminated most

of these positions to free FTE for attorneys, investigators, and other positions at the front

lines of the agency’s competition and consumer protection missions. These examinations

continue today.

• Core Competencies In the rapidly growing electronic and global marketplace, the FTC

needs professionals with specialized skills to investigate complex economic issues and

apply sophisticated legal precedents to antitrust and consumer protection litigation.

Attorneys account for approximately 54 percent of the FTC’s permanent workforce, and

Ph.D. economists account for an additional 8 percent. These professionals are supported

by staff with technical skills and expertise, such as paralegals, data analysts, and

computer specialists, and a core complement of staff with solid management and

operational skills. The FTC is working to recruit and retain highly qualified individuals

by offering hiring and relocation bonuses, moving expenses, high starting salaries, large

cash awards, as well as non-monetary benefits such as time-off, training and

development opportunities, and assignments to high profile cases. We are identifying

core competencies to recruit applicants with specific knowledge and skills needed to

support our mission, particularly in the legal area. Based on FY 2002 statistics, attorney

and overall agency attrition appears to be leveling off from the high rates of the last five

years.

• Workforce Mix In 1996, the agency began an Honors Paralegal Program to relieve

attorneys of the routine tasks in investigations and litigation, and to allow them to focus

on complex matters of policy, analysis, and strategy. The Bureaus of Competition and

Consumer Protection and the Office of the General Counsel participate in the program,

which has approximately 50 employees at any given time. Honors Paralegals are recent

college graduates, hired at the GS-7 level under expedited procedures of the Outstanding

Scholar Program, and generally work for the agency for one to three years under term

appointments before moving on to graduate or professional school. The Bureau of

Economics established a similar program, focusing on recent college graduates with

degrees in economics to provide technical support to Ph.D. economists.

• Delayering The agency also examines decision processes to eliminate layers of review.

The Bureau of Competition has already removed a level of management from its reporting

structure, streamlining decision making on recommendations to the Commission

concerning investigations and litigation. The Bureau of Consumer Protection also has

streamlined review to ensure that actions were considered at an early stage, thus

eliminating unnecessary work on investigations and projects. The Office of General

Counsel has capped the number of reviewers’ signatures on official memoranda at two,

speeding recommendations to the Commission and other agency actions. The General
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President’s Management Agenda

Counsel also delegated approval or decision making authority to lower-level managers on

several types of matters. 

• Restructuring The FTC restructured its regional office system to use FTE more

efficiently. In 1999, the agency closed two offices (Boston and Denver) located in areas

of the country with a relatively low incidence of consumer fraud. The agency also

consolidated Regional competition mission FTE into two offices (New York and San

Francisco) so they could handle resource-intensive merger cases more effectively.

Previously, the FTC also consolidated regional consumer contact functions into the FTC’s

centralized Consumer Response Center (CRC). The CRC now offers two toll-free telephone

numbers that allow consumers from across the country to contact the FTC with

complaints and requests for consumer education materials. 

• Continuing Assessment of Workforce Across the FTC, a number of clerical and

administrative staff will retire over the next five years, and the development of new

technology will allow for accomplishment of more administrative tasks electronically. The

agency will transfer these support positions to the front lines of the missions, either in law

enforcement or consumer education. The FTC is also focusing on training and employee

development for staff who are not yet ready to retire, but who are performing tasks that

could be automated. We are also analyzing statistics for potential retirements among the

supervisory and management ranks and developing strategies for knowledge management

and succession.

Initiative: Competitive Sourcing

• FAIR Act Through increased scrutiny, the FTC identified 54 commercial FTE in its 2002

FAIR Act inventory, a net increase of 12 FTE or 29 percent over 2001. In the past year,

a net of two FTE (five percent) of the 2000 baseline year’s inventory were converted to

commercial positions. The agency will continue to look for opportunities to convert or

compete commercial positions as opportunities arise. These efforts will include

conversion of several positions currently held by clerical and administrative staff who will

retire over the next five years.

• Reimbursable Support Service Arrangements The FTC has streamlined support,

administrative, and technical functions, and has eliminated positions through

reimbursable support service arrangements. The areas in which these changes have

occurred include significant agency services, such as payroll/personnel,

accounting/payment system operations, health unit, retirement counseling, and the

transit subsidy program.

• Performance Based Service Contracting The FTC has met OMB’s 20 percent target of

using performance-based contracts for services. The agency’s largest service contracts

are now performance-based, including: the Consumer Response Center; Help Desk

Services; Reproduction/Mailroom/Warehouse Services; Consumer Redress Fund

Administration; and Internet Services for Library Cataloging.
Performance Plan

President’s Management Agenda

Initiative: Expanding e-Government

• e-Government The FTC has been a leader in the use of technology and the Internet to

inform citizens of our mission without having to enlarge its workforce significantly.

Starting in the mid 1990s, the FTC began building interlinked public consumer protection

Web sites, many in connection with other domestic or foreign law enforcement agencies,

to educate consumers and to collect and analyze data on a broad range of consumer

protection issues, including high-tech fraud and identity theft. The FTC will continue to

use the Internet and electronic systems to reach the public on more consumer and

competition topics.

• Integrated One-Stop Systems The FTC maintains an Internet site, ftc.gov, that provides

a wide array of information about the actions and operations of the agency, and direct

access to consumer and business education information and publications. In the last two

years, electronic distribution of education materials has surpassed print distribution.

The site also permits citizens to file online complaints about consumer fraud and identity

theft; these complaints are used to target the agency’s law enforcement and education

efforts. Consumers currently can access the Web site (including the complaint form) in

four different languages. Via the consumer.gov/sentinel link, consumers can view

summary data collected by the FTC, such as the scams that garner the most frequent

consumer complaints; the scams that cost consumers most; the number of identity theft

complaints, by state; the types of identity theft most frequently reported; and how to spot

and avoid fraud and deception online and off. The FTC Web site also has a direct link to

the government-wide public site, FirstGov.gov, and to the Small Business Administration’s

(SBA) one-stop services: the U.S. Business Advisor (www.business.gov) and SBA’s online

business guide to legal and regulatory information (www.businesslaw.gov).

• Citizen Information Access The FTC for many years has recognized that the complexity

of the federal government makes it difficult for citizens to know where to go for

information and assistance on consumer issues. In 1997, the FTC led a group of five

agencies with consumer protection responsibilities to create a Web site, consumer.gov, as

a "one-stop" link to a broad range of federal consumer information resources available

online. Consumer.gov links to documents located on the Web sites of its participating

federal agencies – which have grown from five to more than 180 agencies as of December

2002. This site has become the portal for interagency consumer information that the

federal government provides to the pubic through FirstGov.gov.

• Cross-agency Information Sharing The FTC Consumer Response Center receives consumer complaints and inquiries through two toll-free telephone lines and postal and

electronic mail. Information from these complaints is collected in a database, which

contained more than 2.2 million entries as of December 2002. The FTC also developed

and hosts a secure Web site, Consumer Sentinel, that makes the consumer complaints

accessible to other federal, state, local, and international law enforcement partners. The

nearly one million fraud complaints in the database are accessible to more than 610 law

enforcement partners (e.g., the FBI, the Postal Inspection Service, 50 State Attorneys

General), and the more than 380,000 identity theft complaints to approximately 500

domestic partners (e.g., the Secret Service, Social Security Administration Inspector

General, U.S. Attorney Offices) as of December 2002. Collecting this information in one

database and sharing it electronically with other agencies reduce redundancy and help

the law enforcement community identify general trends in consumer issues, track the

illegal activities of specific businesses, and coordinate investigations and litigation. 
Performance Plan

President’s Management Agenda

• Electronic Filing The FTC is developing a process that will permit electronic filing of

required information about proposed mergers and acquisitions under the Hart-ScottRodino Premerger Notification Act. This system will be deployed in FY 2003 and shared

with the Department of Justice. Electronic options will allow businesses to select the

submission method that is most effective and efficient for them, and will reduce the FTC’s

administrative cost of reviewing and analyzing the filings.

• Reducing the Burden on the Public The growing use of sophisticated electronic systems

and software in litigation requires the FTC to keep its technology current, not only to be

competitive in the courtroom, but also to reduce the paperwork burden on the public.

The FTC has developed the ability to interface with computerized document production

systems which allow law firms to provide documents and information to the agency more

efficiently. In addition, the agency is employing state-of-the-art computerized systems

that support agency attorneys’ litigation preparation and courtroom presentations.

• Developing E-procurement The FTC’s planned and ongoing procurement enhancements

are designed around the Integrated Acquisition Environment (IAE), one of the

Administration’s e-government initiatives. As requirements arise, the FTC uses the

government-wide FED BIZ OPPS Web site. This site provides a single location at which

interested vendors can view and, if interested, respond to government requirements for

goods and services. The FTC plans to convert to the Business Process Network (BPN) Web

site, an expansion of Central Contract Registration Web site, by October 1, 2003. This

site provides Federal agencies with a single source for vendor contact and payment

information and requires that each vendor maintain all appropriate information on a

current basis. Additionally, the FTC plans to register in BPN for intra-governmental

transactions by Spring 2003. The FTC is also preparing for the implementation of the

new Federal Procurement Data System - Next Generation, a central point for consolidated

collection and access of statistical and management information related to government

acquisitions. 

• Information Requirements The FTC has initiated a management information

requirements project to provide managers with ready information to support data

gathering and decision making. The agency will accomplish this goal by employing

standard data definitions and providing timely, accurate, and useful standard reports and

ad hoc reporting capabilities. The agency anticipates that the project will be a multi-year

effort, with the first major round of improvements planned for the spring of 2003. 

• Improving Productivity The recent analysis of agency information requirements

revealed that efficient and effective document management is the primary need. The FTC

has begun to implement a comprehensive document management system with the

fundamental goal of streamlining the process of sending documents and other

information through any electronic channel (e.g., Internet, database, e-mail), in any

spoken language, regardless of its original data format. The cycle of creating, editing,

approving, publishing, and removing outdated content traditionally has been filled with

impediments. The agency is re-engineering basic work processes to enable targeted,

accurate interchange of electronic information without technological barriers. Users will

be able to generate, publish, and find information with virtually no learning curve or

technical assistance. By establishing consistent work flows and templates that cross

organizational boundaries, the system will assure that information from across the agency

can be readily shared, reused, recombined, and re-purposed to a variety of uses.
Performance Plan

President’s Management Agenda

Initiative: Improved Financial Performance

• Audited Financial Statements Without a statutorily mandated requirement, the FTC

has prepared Audited Financial Statements in a timely manner that comply with

government-wide accounting standards for five consecutive years (1997 - 2001). Each

year, the agency has received an unqualified opinion with no material weaknesses. 

• Accurate and Timely Financial Information The FTC maintains a small, highly skilled,

in-house financial staff but contracts with the Department of Interior’s National Business

Center (NBC) for more routine accounting, payroll, personnel, and voucher payment

services. The result is the best use of agency resources and a significant improvement

in the accuracy and timeliness of financial data available to agency managers. The FTC

meets all Treasury, OMB, and agency financial reporting deadlines.

• Federal Accounting and Transaction Standards The FTC is in general compliance with

all Federal accounting principles and standards. The FTC’s accounting system conforms

in all material respects with the principles, standards, and related requirements specified

in the Federal Financial Management Improvement Act of 1996. The Joint Financial

Management Improvement Program has evaluated and qualified the American

Management System’s Federal Financial System (FFS) software, used by NBC.

• Integrating Financial and Performance Management Systems The FTC maintains a

data warehouse, updated daily, that accommodates both financial and program

performance data. Costs are related to Mission activities in the data warehouse and

support day-to-day operations. Efforts are underway to improve the integration of the

data by tying a broader range of costs (e.g., training, information technology, performance

awards, furnishings) to program performance activities in the financial system.

Initiative: Integrating Budget and Performance

• Integrating Planning/Evaluation and Budget The FTC assigns responsibilities to its

budget staff according to program area. The FTC’s Budget Office works closely with the

programs to build budget plans that ensure the most efficient use of the agency’s

resources to achieve the goals of the annual GPRA Performance Plan. The agency also

monitors implementation of operating plans by programs through the use of financial

systems and periodic reports. The Budget Office conducts detailed reviews of the status

of programs’ budget execution throughout the fiscal year to ensure that funds are

sufficient to meet objectives. The FTC requires program managers to report on GPRA

Performance Measures each quarter; the FTC’s Commissioners review this information

twice a year.

• Linking Goals and Objectives to Results The FTC’s Strategic Plan under the

Government Performance and Results Act (GPRA) identifies five-year strategies and

performance measures that are an integral part of the fiscal year budget requests. Over

the past year, the FTC re-examined its performance measures and revamped those that

did not effectively measure its outcomes. The FTC will develop its Strategic Plan for FY

2003 - 2008 over the next several months, and will continue its ongoing effort to

articulate strategies and develop measures that effectively relate to outcomes and that

integrate budget and performance. The annual Performance Plans provide an assessment

of the savings and benefits to consumers and businesses expected from the requested
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President’s Management Agenda

level of resources. Budget requests tie to the GPRA objectives, and all requests to

increase resources are justified in the Performance Plan and tie to programs.

• Aligning Budget Accounts and Program Activities The agency allocates resources to

programs based on program goals and workload projections. As workload projections

change throughout the year, we shift resources allocations accordingly making certain

to comply with Congressional parameters. The FTC uses its annual GPRA Performance

Plan as the guideline to align agency resources to achieve targets. FTC budget staff work

closely with program managers to ensure alignment of budget accounts, staff, and

program activities to support program goals.

• Integrating Technology The FTC implements a life cycle management approach to

managing and developing agency technology. Through this approach, the agency

identifies existing products and services, determines how frequently each should be

reassessed, and schedules reassessments for the next several years. When a new project

is proposed, technical staff evaluate its cost and relative need, and, if justified, make a

recommendation to senior program managers. Review and decision making by program

managers ensures that technological projects are aligned with the agency mission and

integrated with performance in budget requests.

• Improving Integration The agency is working to improve the link between performance

and budget, both by refining the selection and the measurement of performance goals

and measures, and by developing improved management processes for data use and

analysis. Over time, this work will enhance agency performance by improving the quality,

access, and timeliness of management information throughout the FTC.